PJ AMERICA INC, S-1, 1997-06-26

PJ AMERICA INC
S-1, 1997-06-26
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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 26, 1997.

REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PJ AMERICA, INC.
(EXACT NAME OF THE REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 5812 61-1308435
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
9109 PARKWAY EAST
BIRMINGHAM, ALABAMA 35206
(205) 836-1212
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
DOUGLAS S. STEPHENS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
PJ AMERICA, INC.
9109 PARKWAY EAST
BIRMINGHAM, ALABAMA 35206
(205) 836-1212
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
IVAN M. DIAMOND, ESQ. DAN BUSBEE, ESQ.
GREENEBAUM DOLL & MCDONALD PLLC LOCKE PURNELL RAIN HARRELL
3300 NATIONAL CITY TOWER (A PROFESSIONAL CORPORATION)
LOUISVILLE, KENTUCKY 40202-3197 2200 ROSS AVENUE, SUITE 2200
(502) 589-4200 DALLAS, TEXAS 75201-6776
(214) 740-8000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]^
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE OFFERING PRICE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED (1) PER SHARE (2) (2) FEE
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<S> <C> <C> <C> <C>
Common Stock, $.01 for value..... 1,380,000 $17.00 $23,460,000 $7,110
shares
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</TABLE>
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(1) Includes 180,000 shares which the Underwriters have the option to purchase
to cover over-allotments, if any.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 promulgated under the Securities Act of 1933 and
based upon the average high and low prices per share as reported by the
Nasdaq National Market on June 24, 1997.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JUNE 26, 1997

1,200,000 SHARES

LOGO

PJ AMERICA, INC.

COMMON STOCK

Of the 1,200,000 shares of Common Stock offered hereby, 750,000 shares are
being sold by PJ America, Inc. (the "Company"), a franchisee of Papa John's
International, Inc., and 450,000 shares are being sold by the Selling
Stockholders. See "Principal and Selling Stockholders." The Company will not
receive any of the proceeds from the sale of shares by the Selling
Stockholders.

The Common Stock is traded on the Nasdaq National Market under the symbol
"PJAM." On June 24, 1997, the last reported sale price of the Company's Common
Stock as reported by the Nasdaq National Market was $17.00 per share. See
"Price Range of Common Stock."

SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR THE ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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<TABLE>
<CAPTION>
Proceeds to
Price to Underwriting Proceeds to Selling
Public Discount(1) Company(2) Stockholders
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<S> <C> <C> <C> <C>
Per Share........................ $ $ $ $
Total(3)......................... $ $ $ $
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</TABLE>
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(1) See "Underwriting" for information concerning indemnification of the
Underwriters and other matters.
(2) Before deducting expenses payable by the Company estimated at $ .
(3) The Company has granted to the Underwriters a 30-day option to purchase up
to an additional 180,000 shares of Common Stock, solely to cover over-
allotments, if any. If the Underwriters exercise this option in full, the
Price to Public will total $ , the Underwriting Discount will total
$ , the Proceeds to Company will total $ and the Proceeds to
Selling Stockholders will total $ . See "Principal and Selling
Stockholders" and "Underwriting."

The shares of Common Stock are offered by the Underwriters named herein when,
as and if delivered to and accepted by the Underwriters and subject to their
right to reject any order in whole or in part. It is expected that delivery of
certificates representing the shares will be made against payment therefor at
the office of Montgomery Securities on or about , 1997.

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MONTGOMERY SECURITIES ALEX. BROWN & SONS
incorporated

, 1997
<PAGE>

[Front Exterior of free- PJ AMERICA, INC. [Papa John's
standing PJ America Papa International,
John's Restaurant] "1994 Franchisee of the
Year" plaque awarded to
Extra Cheese, Inc.]

[Portion of "Pizza Papa [Large Papa John's [Portion of "Pizza Papa
John's" exterior sign] Pizza with "The Works"] John's" exterior sign]

[Papa John's delivery] ["Pizza Papa John's" [Pizza Papa John's
Logo] exterior
Sign with Papa John's
Restaurant]

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK OF
THE COMPANY, INCLUDING STABILIZING BIDS, SYNDICATE COVERING TRANSACTIONS AND
THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK
OF THE COMPANY ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 103 OF
REGULATION M. SEE "UNDERWRITING."
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the financial
statements and the more detailed information appearing elsewhere in this
Prospectus. Unless otherwise noted, all information in this Prospectus assumes
no exercise of the Underwriters' over-allotment option, and all references to
the "Company" include PJ America, Inc. and its subsidiaries. See "The Company"
and Note 1 of Notes to PJ America, Inc. and Subsidiaries Supplemental
Consolidated Financial Statements.

The Company succeeded to the businesses of five Papa John's International,
Inc. franchisees (the "Reorganization"). The Reorganization was completed on
October 30, 1996, concurrent with the closing of the Company's initial public
offering (the "IPO"). On June 5, 1997, a subsidiary of the Company merged with
Ohio Pizza Delivery Co. ("OPD") in a transaction accounted for as a pooling of
interests. Accordingly, supplemental consolidated financial statements
reflecting such transaction are included in this Prospectus. The Company
operates on a 52- or 53-week fiscal year ending on the last Sunday in December
of each year. Fiscal year 1995 had 53 weeks.

THE COMPANY

PJ America is the largest franchisee of "Papa John's" pizza delivery and
carry-out restaurants. At June 24, 1997, the Company owned and operated 58 Papa
John's restaurants in the Birmingham, Alabama area; in the Norfolk, Richmond
and Virginia Beach, Virginia areas; in East Texas; and in the Akron, Ohio area.
In addition to its existing territories, the Company has entered into a
development agreement with its franchisor, Papa John's International, Inc.
("PJI"), to develop Papa John's restaurants in the Ventura, Kern, San Luis
Obispo, and Santa Barbara counties, as well as the northwestern portion of Los
Angeles County (the "California Counties"). Further, the Company has been
granted by PJI the rights to enter into development agreements for Papa John's
restaurants in the Vancouver, Canada area and Puerto Rico. In addition, the
Company has an option, exercisable during 1998, to acquire the operations and
development rights for Papa John's restaurants in Utah from an affiliate of the
Company. On June 5, 1997, the Company acquired through a merger eight Papa
John's restaurants in the Akron, Ohio area. The Company intends to continue
pursuing selective strategic acquisitions of existing Papa John's franchisees.
At June 24, 1997, PJI and its franchisees (including the Company) operated
1,320 Papa John's restaurants in 39 states.

The key elements of the Papa John's concept include a focused menu of high
quality pizza and related items, an effective commissary, distribution and
equipment supply system and an efficient in-store operating design. Papa John's
original, medium thick crust is made from fresh dough (never frozen) produced
in PJI's regional commissaries. Every pizza is prepared using real mozzarella
cheese, pizza sauce made from fresh-packed tomatoes (not concentrate), a
proprietary mix of savory spices and a choice of high quality meat and
vegetable toppings in generous portions. This focused menu and the use of
quality ingredients enables Papa John's restaurants to concentrate on
consistently "Delivering the Perfect Pizza!"(TM) PJI's commissary system
supplies pizza dough, food products and paper products twice weekly to each of
the Company's restaurants. This commissary system enables PJI to closely
monitor and control product quality and consistency, while lowering food costs
for its franchisees. PJI also provides the Company assistance with restaurant
design and site selection and a complete equipment package for new restaurants.
This assistance provides the Company with a convenient, cost-effective means of
opening restaurants while ensuring a consistent restaurant appearance. The in-
store operating design includes specific areas for order taking, pizza
preparation and routing, resulting in simplified operations, lower training and
labor costs, increased efficiency and improved consistency and product quality.
The Company's restaurants are typically 1,200 to 1,500 square feet in size and
are located in strip centers or free-standing buildings which provide
visibility, curb appeal and accessibility.

3
<PAGE>

weeks ended March 30, 1997, the 41 restaurants that were open throughout the
period generated average sales of $732,000, average restaurant cash flow
(operating income plus depreciation) of $135,000 (or 18.4% of sales) and
average restaurant operating income after royalties of $114,000 (or 15.6% of
sales). However, there can be no assurance that such results can be maintained.
The average cash investment, including franchise fees, to open the 41 new
restaurants was approximately $175,000, exclusive of land and pre-opening
expenses. The Company expects that its average cash investment for restaurants
opened in 1997 will approximate $210,000, as the Company may increase the
proportion of free standing units. The Company also anticipates that occupancy
costs and the cash investment required to open restaurants in its new
territories will be higher than those experienced in its existing markets.

The Company's growth strategy focuses on further developing the Papa John's
concept through: (i) building out its existing markets; (ii) acquiring and
developing new territories; and (iii) strategically acquiring existing Papa
John's franchisee groups and territories, if available. The Company's objective
is to become the leading chain of pizza delivery restaurants in each of its
markets. Through a market-by-market expansion strategy focused on clustering
restaurants, the Company seeks to increase consumer awareness and take
advantage of operational and advertising efficiencies. During 1996, the Company
opened seven restaurants. In 1997 to date, the Company has opened four
restaurants and acquired eight restaurants from another Papa John's franchisee.
The Company anticipates that it will open an additional eight restaurants by
the end of 1997 and twelve restaurants in 1998.

The Company was organized as a Delaware corporation in August 1996, its
principal executive offices are located at 9109 Parkway East, Birmingham,
Alabama 35206, and its telephone number is (205) 836-1212.

RECENT DEVELOPMENTS

On June 5, 1997, the Company acquired eight Papa John's restaurants from OPD
in the Akron, Ohio area in a transaction that has been accounted for as a
pooling of interests. Supplemental Consolidated Financial Statements are
presented elsewhere in this Prospectus. In addition, on June 26, 1997, the
Company entered into an agreement with a PJI franchisee to acquire one Papa
John's restaurant adjacent to its Akron, Ohio area and a development agreement
to develop three additional Papa John's restaurants in such territory. See
"Selected Consolidated Financial Data" and "Certain Transactions."

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Company......................... 750,000 shares
Common Stock offered by the Selling Stockholders............ 450,000 shares
Common Stock to be outstanding after the offering........... 5,783,084 shares(1)
Use of proceeds............................................. To fund restaurant development
and acquisitions and for general
corporate purposes
Nasdaq National Market symbol............................... PJAM
</TABLE>

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(1) Excludes (i) a warrant issued to PJI to purchase 225,000 shares of Common
Stock at $11.25 per share and (ii) 375,500 shares of Common Stock issuable
upon the exercise of stock options as of June 24, 1997. See "Management--
Compensation of Directors," "--1996 Stock Ownership Incentive Plan" and
"Certain Transactions."

4
<PAGE>

SUMMARY FINANCIAL AND RESTAURANT DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA AND NUMBER OF RESTAURANTS)

The following tables set forth summary financial and restaurant data for the
Company. The table "Income Statement Data--PJ America" represents the results
of operations of the Company for the entire period presented and the
acquisition of the Virginia restaurants from October 30, 1996 (the closing date
of the IPO).

The table "Income Statement Data--PJ America Supplemental" represents the
results of operations of the Company restated to give retroactive effect to the
merger with OPD on June 5, 1997, which was accounted for as a pooling of
interests, as if the merger had occurred at the beginning of fiscal 1995.

The table "Pro Forma Income Statement Data--PJ America" represents the
results of operations of the Company as if the acquisition of the Virginia
restaurants had occurred at the beginning of 1995 and has been retroactively
restated to reflect the merger with OPD as if it also had occurred at the
beginning of 1995. In addition, the table "Restaurant Data--PJ America"
represents certain restaurant data for the Company's restaurants for each of
the years presented. See Note 3 below and "Certain Transactions."

<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE MONTHS ENDED
----------------------------- -----------------------
DEC. 25, DEC. 31, DEC. 29, MAR. 29, MAR. 30,
1994 1995 1996 1996 1997
-------- -------- -------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA--
PJ AMERICA:
Restaurant sales....... $6,415 $10,457 $16,846 $2,998 $ 8,770
Operating income....... 554 1,074 1,662 290 982
Income before income
taxes ................ 532 1,009 1,670 272 1,137
Net income(1).......... 338 641 1,078 172 728
INCOME STATEMENT DATA--
PJ AMERICA
SUPPLEMENTAL:
Restaurant sales....... $16,744 $24,550 $4,915 $10,606
Operating income....... 1,856 2,510 520 1,181
Income before income
taxes................. 1,779 2,521 503 1,336
Net income(1).......... 1,095 1,580 309 845
PRO FORMA INCOME
STATEMENT DATA--PJ
AMERICA:
Restaurant sales....... $29,386 $37,968 $8,523 $10,606
Operating income....... 2,815 3,530 756 1,181
Income before income
taxes................. 2,582 3,405 689 1,336
Net income............. 1,605 2,143 427 845
Net income per share... $ 0.47 $ 0.57 $ 0.12 $ 0.16
Weighted average
shares................ 3,435(2) 3,750(2) 3,444 5,191
RESTAURANT DATA--PJ
AMERICA:
Percentage change in
comparable restaurant
sales(3) ............. 24.1% 3.3% 4.7% (1.7%) 11.9%
Average sales for
restaurants open for
full period(3)........ $ 731 $ 727 $ 721 $ 166 $ 187
Number of restaurants
open at end of period. 27 46 54 49 57
</TABLE>

<TABLE>
<CAPTION>
MARCH 30, 1997
----------------------
ACTUAL AS ADJUSTED(4)
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<S> <C> <C>
BALANCE SHEET DATA--PJ AMERICA SUPPLEMENTAL:
Total assets........................................... $24,779 $36,460
Total debt, including current maturities............... -- --
Stockholders' equity................................... 22,324 34,005
</TABLE>
- --------
(1) Net income reflects a pro forma provision for income taxes assuming the
Company's predecessors, and OPD where appropriate, were C corporations,
rather than S corporations for each period. See "Prior S Corporation Status
of the Company's Predecessors" and "Certain Transactions."
(2) See Note 6 of PJ America, Inc. and Subsidiaries Supplemental Consolidated
Financial Statements and "Certain Transactions."
(3) Includes restaurants open throughout the periods being compared excluding
the eight Papa John's restaurants acquired in the OPD merger. Fiscal 1995
comparable restaurant sales have been adjusted to reflect a 52-week period
versus a 53-week period.
(4) Adjusted to reflect the sale of 750,000 shares of Common Stock offered by
the Company hereby at an assumed public offering price of $17.00 per share
and the application of the estimated net proceeds therefrom. See "Use of
Proceeds" and "Capitalization."

5
<PAGE>

RISK FACTORS

In addition to the other information contained elsewhere in this Prospectus,
prospective investors should consider the following factors in evaluating an
investment in the Common Stock offered hereby:

UNCERTAINTIES OF EXPANSION STRATEGY

The Company has grown rapidly in recent periods and intends to continue
pursuing an aggressive growth strategy. The Company plans to use a portion of
the proceeds from this offering to open approximately eight additional
restaurants during the remainder of 1997 primarily in existing markets and
approximately twelve restaurants during 1998 primarily in new markets. The
Company has entered into a development agreement with PJI to develop Papa
John's restaurants in the California Counties and has been granted by PJI the
rights to enter into development agreements for Papa John's restaurants in the
Vancouver, Canada area and Puerto Rico. The Company estimates that these
territories could support approximately 90 to 100 Papa John's restaurants.
However, the Company has not entered into development agreements for the
Vancouver, Canada area and Puerto Rico, and there can be no assurance that the
Company will enter into development agreements for such territories or that
the terms of the development agreements offered by PJI will be acceptable to
the Company. If the Company fails to meet its development obligations, PJI
could, among other remedies, terminate the Company's development rights in
such areas.

In the course of its expansion, the Company will enter new geographic
regions in which it has no previous operating experience and where the Papa
John's brand name is relatively unknown. There can be no assurance that the
Company's restaurants will be successful in such new markets. In addition, the
Company intends to continue pursuing acquisitions of existing PJI franchisees
as part of its overall expansion strategy. The Company recently acquired eight
Papa John's restaurants in the Akron, Ohio area. There can be no assurance
that the Company will be able to successfully integrate the operations of
these restaurants or other Papa John's restaurants which may be acquired in
the future or to manage successfully the combined enterprise on a profitable
basis. The Company may face competition in acquiring existing PJI franchisees
from PJI, which has a right to approve and a right of first refusal with
respect to the sale of all Papa John's restaurants (which in certain instances
has been waived), and other PJI franchisees. There can be no assurance that
the Company will be able to acquire additional PJI franchises on terms
acceptable to the Company, if at all. See "--Dependence on PJI; Franchisee
Status," "Business--Expansion and Site Selection," "--Development and
Franchise Agreements" and "Certain Transactions."

The Company's continued growth will depend primarily upon its ability to
open and operate additional restaurants profitably. The opening of new
restaurants will depend upon a number of factors, many of which are beyond the
control of the Company. These factors include, among other things, selection
and availability of suitable locations, negotiation of acceptable lease or
purchase terms, timely construction of restaurants, securing required
governmental permits and approvals, and employment and training of qualified
personnel. Timely development of new territories by all Papa John's
franchisees, including the Company, also is dependent upon their ability to
obtain adequate food supplies for their restaurants. While the Company expects
to obtain such supplies for the California Counties and the Vancouver, Canada
area from PJI's commissary and distribution system, such facility for
Vancouver, Canada has not yet been opened. In Puerto Rico, the Company does
not expect that PJI will open a commissary; therefore, the Company will be
dependent upon its or PJI's ability to contract with local entities to provide
the Company with dough and other food supplies. The inability of PJI or the
Company, or both, to achieve their respective growth plans could have a
material adverse effect on the Company's business, financial condition and
results of operations. Moreover, the Company's current expansion plan may pose
significant strains on the Company's managerial, operational, financial and
other resources. There can be no assurance that the Company will be able to
open the number of restaurants anticipated in a timely manner or that existing
restaurants or new restaurants opened by the Company will be operated
profitably. See "Business--Expansion and Site Selection."

6
<PAGE>

DEPENDENCE ON PJI; FRANCHISEE STATUS

The success of the Company will, in large part, be dependent upon the
success of the Papa John's system. In addition, significant matters relating
to the Company's growth and operational strategies must be coordinated with,
and approved by, PJI. In particular, PJI must approve the opening by the
Company of any new restaurant, including restaurants opened within the
Company's existing franchise territories. PJI also maintains discretion over
the menu items that may be offered in the Company's restaurants. The Company's
right to use PJI's trademarks and service marks are significant to the
Company's business. The franchise and development agreements with PJI require
the Company to pay to PJI certain fees on or before the opening of new
restaurants, as well as monthly royalties. PJI may increase the royalty fee to
5% of sales after a franchise agreement has been in effect for between three
to five years. In no event may the royalty fee be increased to an amount
greater than the royalty fee currently in effect for new Papa John's
franchisees. These agreements also provide for the termination of the Company
as a franchisee upon the failure of the Company to comply with certain
restrictions and applicable obligations. Should the Company fail to comply
with the development agreements for restaurants within the covered
territories, PJI could, among other remedies, terminate the Company's right to
open additional restaurants in such territories. PJI's consent is required for
the Company's acquisition of existing Papa John's restaurants from other
franchisees. In addition, PJI may choose not to grant additional development
rights to the Company. PJI's approval is also required for the renewal of
existing franchise agreements beyond the initial renewal period. There can be
no assurance that the Company will be able to obtain any such consents or
approvals from PJI. See "Business--Development and Franchise Agreements" and
"--Trademarks."

The Company currently purchases most of its food supplies and all of its
restaurant equipment from PJI. The Company is dependent on frequent deliveries
of food supplies from PJI's commissaries. The Company also elects, but is not
required, to purchase advertising, promotional and other materials from PJI.
Currently, the Company's restaurants are being supplied by PJI's Garner, North
Carolina; Jackson, Mississippi; and Rotterdam, New York commissaries; and
PJI's Dallas, Texas distribution center. The Company's development of
additional territories is dependent upon PJI's opening commissaries or
distribution centers to service such areas and the ability of such
commissaries to adequately service the Company's and PJI's restaurants. While
the Company expects to obtain such supplies for the California Counties and
the Vancouver, Canada expanding area from PJI's commissary distribution
system, such facility for Vancouver, Canada has not yet been opened. In Puerto
Rico, the Company does not expect that PJI will open a commissary; therefore,
the Company will be dependent upon its or PJI's ability to contract with local
entities to provide the Company with dough and other food supplies. PJI's
failure to deliver food supplies from its commissaries to the Company or to
continue expanding and successfully operating its commissary and distribution
system would adversely affect the Company. See "Business--Papa John's
International, Inc." and "--Marketing Programs."

LIMITED COMBINED OPERATING HISTORY

The Company opened its first restaurant in 1991 and has experienced rapid
growth in restaurant openings, revenues and level of operations. At June 24,
1997, 21 restaurants (36.2%) had been open less than two years. Consequently,
operating results achieved to date may not be indicative of the results that
may be achieved by any existing or new restaurant in the future.

INCREASES IN OPERATING COSTS; AVAILABILITY AND COST OF INSURANCE

An increase in operating costs could adversely affect the profitability of
the Company. Factors such as inflation, increased food costs, increased labor
and employee benefit costs and the availability of qualified management and
hourly employees may adversely affect the Company's operating costs. Most of
these factors are beyond the control of the Company. PJI currently purchases
all of the cheese which it supplies to its franchisees from one supplier.
Cheese currently represents approximately 40% of the Company's food costs. The
price of cheese, as well as that of other commodities, is subject to seasonal
fluctuations, weather, demand and other factors. In September 1997, the second
phase of an increase in the minimum wage, from $4.75 to $5.15, will be
implemented in accordance with the Federal Fair Labor Standards Act of 1996,
which could adversely affect the Company.

7
<PAGE>

A risk of the Company, as with other companies which offer delivery
services, is the potential for claims resulting from traffic accidents
involving its delivery personnel. The Company does not have, and has not in
the past offered, guaranteed delivery times. The Company maintains excess
liability coverage on its delivery drivers in an amount believed by management
to be adequate. In addition, the Company maintains property, casualty and
liability insurance on its business and employees. However, a change in the
cost or availability of such insurance, or the incurrence of a significant
number of claims or liability in excess of policy limits, could adversely
affect the Company.

GEOGRAPHIC CONCENTRATION

All of the Company's restaurants are currently located in Alabama, Virginia,
Texas and Ohio. The Company's geographic concentration exposes its business to
certain risks, including economic and weather conditions and demographic and
population changes in those regions. There can be no assurance that adverse
developments in the geographic regions in which the Company's business is
concentrated will not have an adverse effect on its future results of
operations or financial condition. See "Business--Restaurant Locations."

HIGHLY COMPETITIVE INDUSTRY; EASE OF ENTRY INTO BUSINESS

The restaurant industry is highly competitive and is affected by changes in
consumer tastes, as well as national, regional and local economic conditions
and demographic trends. The performance of individual restaurants can be
affected by changes in traffic patterns, local demographics and the type,
number and location of competing restaurants. The quick-service restaurant
industry is extremely competitive with respect to price, service, location and
food quality. The Company competes with a variety of other restaurants in the
quick-service restaurant industry, including those that offer dine-in, carry-
out and delivery services. These competitors include national and regional
chains, franchisees of other restaurant chains and local owner-operated
restaurants. Many competitors have been in existence longer and have a more
established market presence and substantially greater financial, marketing and
other resources than the Company. Due primarily to the relatively low start-up
cost of pizza delivery and carry-out restaurants, there are no major barriers
to entry into the pizza delivery and carry-out restaurant business. See
"Business--Competition."

CONFLICTS OF INTEREST

Certain directors and executive officers of the Company own interests in
other Papa John's franchisees. In addition, Richard F. Sherman, Chairman of
the Board of the Company, is a director of PJI, and Charles W. Schnatter, a
director of the Company, is Senior Vice President, General Counsel, Secretary
and a director of PJI. An agreement between the Company and PJI provides that
a representative of PJI will serve on the Board of Directors of the Company
until October 1999. Mr. Schnatter serves as the representative of PJI on the
Board. Such directors and officers may have conflicts of interest with respect
to transactions between the Company and such franchisees or PJI. In addition,
such directors and officers may have conflicts of interest with respect to
corporate opportunities suitable for both the Company and such franchisees or
PJI. See "Certain Transactions."

DEPENDENCE UPON KEY PERSONNEL

Management of the Company is dependent on the continuing services of Douglas
S. Stephens, the Company's President and Chief Executive Officer, and other
key personnel. The Company maintains $3,000,000 in key man life insurance on
Mr. Stephens. The loss of the services of Mr. Stephens or other key personnel
could have a material adverse effect on the Company's business. See
"Management."

CONTROL BY OFFICERS AND DIRECTORS

Upon completion of this offering, the Company's executive officers and
directors will, in the aggregate, beneficially own 30.9% of the outstanding
Common Stock (29.9% if the Underwriters' over-allotment option is exercised in
full). These persons, if acting together, will have substantial control over
matters requiring approval by the stockholders of the Company, including the
election of directors. See "--Anti-Takeover Provisions," "Management" and
"Principal and Selling Stockholders."

8
<PAGE>

GOVERNMENT REGULATION

The restaurant industry is subject to numerous Federal, state and local
government regulations, including those relating to the preparation and sale
of food and building and zoning requirements. Also, the Company is subject to
laws governing its relationship with employees, including minimum wage
requirements, overtime, working conditions and citizenship requirements. The
failure to obtain or retain food licenses or an increase in the minimum wage
rate, employee benefit costs or other costs associated with employees, could
adversely affect the Company. In September 1997, the second phase of an
increase in the minimum wage will be implemented in accordance with the
Federal Fair Labor Standards Act of 1996, which could adversely affect the
Company. See "Business--Government Regulation."

RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS

The Company has been granted the rights to enter into development agreements
to open Papa John's restaurants in the Vancouver, Canada area and Puerto Rico.
The Company's ability to establish international operations is subject to
various risks, including changing political and economic conditions, currency
fluctuations, trade barriers, trademark rights, adverse tax consequences and
government regulations relating to, among other things, the preparation and
sale of food, building and zoning requirements, wages, working conditions, and
the Company's relationship with its employees. There can be no assurance that
the Company will be successful in establishing international operations.

ANTI-TAKEOVER PROVISIONS

The Company's Certificate of Incorporation and By-laws, as well as Delaware
corporate law, contain certain provisions that could have the effect of making
it more difficult for a third party to acquire, or of discouraging a third
party from attempting to acquire, or take control of the Company. These
provisions could limit the price that certain investors might be willing to
pay in the future for shares of Common Stock. Certain of these provisions
allow the Company to issue, without stockholder approval, preferred stock
having voting rights senior to those of the Common Stock. Other provisions
impose various procedural and other requirements that could make it more
difficult for stockholders to effect certain corporate actions. In addition,
the Company's Board of Directors is divided into three classes with staggered
three-year terms which may make it more difficult for a third party to gain
control of the Board of Directors. As a Delaware corporation, the Company is
subject to Section 203 of the Delaware General Corporation Law which, in
general, prevents an "interested stockholder" (defined generally as a person
owning 15% or more of a corporation's outstanding voting stock) from engaging
in a "business combination" for three years following the date such person
became an interested stockholder unless certain conditions are satisfied. As a
result, third parties may be discouraged from attempting to acquire or take
control of the Company. See "Description of Capital Stock--Certain Corporate
Governance Matters."

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, the Company will have 5,783,084 shares of
Common Stock outstanding. Of these shares, 1,200,000 shares sold in this
offering, as well as the 2,070,000 shares sold in the IPO, will be freely
transferable without restriction or limitation under the Securities Act of
1933, as amended (the "Securities Act"), except for any shares purchased by
"affiliates" of the Company, as such term is defined in Rule 144 under the
Securities Act. The remaining 2,513,084 shares constitute "restricted
securities" within the meaning of Rule 144 such that the sale of such
securities would be restricted for one year from the date they were acquired.
The stockholders in the Reorganization, OPD and PJI, the holder of a warrant
to purchase 225,000 shares of Common Stock, will be entitled to certain
registration rights with respect to such shares. Further, the Company has
registered 760,000 shares of Common Stock reserved for issuance pursuant to
the Company's incentive compensation programs. At June 24, 1997, there were
outstanding options to purchase 375,500 shares of Common Stock. Options to
purchase shares become exercisable in four equal annual installments beginning
one year from the date of the grant. Sales of substantial amounts of shares of
Common Stock in the public market after this offering or the perception that
such sales could occur may adversely affect the market price of the Common
Stock. See "Shares Eligible for Future Sale."

9
<PAGE>

The Company, its directors and executive officers, and certain stockholders
have agreed with the Underwriters not to sell or otherwise dispose of any
shares of Common Stock, any options to purchase Common Stock or any securities
convertible or exchangeable for shares of Common Stock for a period of 120
days after the date of this Prospectus without the prior written consent of
Montgomery Securities, except for (i) up to 350,000 shares which may be issued
in connection with acquisitions and (ii) shares issued pursuant to the
exercise of options granted under the Directors Plan or the 1996 Plan. See
"Underwriting."

LIMITED PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE

The Common Stock has traded on the Nasdaq National Market since October 1996
and has a limited public market history. There can be no assurance that future
market prices for the shares will equal or exceed the price to public set
forth on the cover page of this Prospectus. The price at which the Common
Stock will trade will depend upon a number of factors, including, but not
limited to, the Company's historical and anticipated operating results and
general market and economic conditions, some of which factors are beyond the
Company's control. Factors such as quarterly fluctuations in the Company's or
other restaurant companies, including PJI, financial and operating results,
announcements by the Company or others, and developments affecting the
Company, PJI, its clients or the industry generally, could also cause the
market price of the Common Stock to fluctuate substantially. In addition, the
stock market has from time to time experienced extreme price and volume
fluctuations. These broad market fluctuations may adversely affect the market
price of the Common Stock. See "Price Range of Common Stock" and
"Underwriting."

10
<PAGE>

RECENT DEVELOPMENTS

PRIOR S CORPORATION STATUS OF THE COMPANY'S PREDECESSORS

From their inception through October 29, 1996, all but one of the Company's
predecessors were treated for Federal and state income tax purposes as S
corporations under Subchapter S of the Internal Revenue Code of 1986, as
amended, and comparable provisions of state income tax laws. Accordingly,
through October 29, 1996, the earnings of such of the Company's predecessors
were taxed for Federal and certain state income tax purposes directly to the
stockholders of the Company's predecessors. On October 29, 1996, the Company's
predecessors became subject to Federal and state income taxes.

The Company made distributions to its stockholders in each fiscal year from
1994 through October 29, 1996 to provide stockholders with funds to assist in
paying Federal and state income taxes on the undistributed earnings of the
Company. The Company used approximately $2.0 million of the proceeds from the
IPO to pay all undistributed S corporation earnings (as determined for income
tax purposes) of the Company ("Undistributed S Corporation Earnings") through
October 29, 1996. See "Dividend Policy."

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 750,000 shares of
Common Stock offered hereby at an assumed public offering price of $17.00 per
share are estimated to be $11,680,625 ($14,579,975 if the Underwriters' over-
allotment option is exercised in full). The Company will not receive any of
the proceeds from the sale of shares of the Common Stock by the Selling
Stockholders.

The net proceeds of this offering will be used to fund new restaurant
development and for general corporate purposes. The Company plans to open
twelve new Papa John's restaurants in 1997, four of which have been opened to
date, and twelve new Papa John's restaurants in 1998. A portion of the
remaining net proceeds of the offering may be used to acquire other Papa
John's franchisees. Although the Company intends to pursue such acquisitions,
the Company is not currently in any negotiations, nor does it have any pending
material agreements or understandings, concerning any material acquisition at
the date of this Prospectus. However, the Company has an option and rights of
first refusal to acquire the operations and development rights for certain
Papa John's restaurants owned by affiliates. Pending such uses, the Company
will invest the net proceeds in short-term, investment grade, interest-bearing
securities. See "Certain Transactions."

DIVIDEND POLICY

The Company intends to retain any future earnings for use in its business
and does not intend to pay cash dividends in the foreseeable future. The
payment of future dividends, if any, will be at the discretion of the
Company's Board of Directors and will depend upon, among other things, future
earnings, operations, capital requirements, restrictions in future financing
agreements, the general financial condition of the Company and general
business conditions. Certain of the Company's predecessors made cash
distributions to their stockholders of $9,000, $932,000 and $3.4 million in
1994, 1995 and 1996, respectively, which were related to the S corporation
status of the Company's predecessors. See "Description of Capital Stock--
Common Stock."

11
<PAGE>

PRICE RANGE OF COMMON STOCK

The Company's Common Stock has been quoted on the Nasdaq National Market
under the symbol "PJAM" since its IPO on October 24, 1996. The Company's price
to the public was $12.50 per share. The table below sets forth for the fiscal
quarters indicated the reported high and low sale prices of the Common Stock,
as reported on the Nasdaq National Market.

<TABLE>
<CAPTION>
HIGH LOW
------ ------
1996
<S> <C> <C>
Fourth quarter (from October 25, 1996)................... $22.25 $15.50
<CAPTION>
1997
<S> <C> <C>
First quarter............................................ $19.25 $14.00
Second quarter (through June 24, 1997)................... 18.88 12.13
</TABLE>

On June 24, 1997, the last reported sale price for the Company's Common
Stock as reported by the Nasdaq National Market was $17.00 per share. As of
June 24, 1997, there were 66 holders of record of Common Stock, although the
Company believes that the number of beneficial owners of its Common Stock is
substantially greater.

CAPITALIZATION

The following table sets forth the capitalization of PJ America
Supplemental, which represents the capitalization of the Company, restated to
give retroactive effect to the merger with OPD as of March 30, 1997, and as
adjusted to give effect to the issuance and sale by the Company of 750,000
shares of Common Stock in this offering (at an assumed public offering price
of $17.00 per share) and the application of the net proceeds therefrom. This
table should be read in conjunction with PJ America, Inc. and Subsidiaries
Supplemental Consolidated Financial Statements and the Notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
MARCH 30, 1997
----------------
AS
ACTUAL ADJUSTED
------- --------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt, including current maturities............ $ -- $ --
------- -------
Stockholders' equity:
Preferred Stock, $1.00 par value, 1,000,000 shares
authorized; no shares outstanding.................... $ -- $ --
Common Stock, $.01 par value, 20,000,000 shares
authorized; 5,033,084 shares outstanding; 5,783,084
shares outstanding, as adjusted(1)................... 50 58
Paid-in capital....................................... 20,029 31,702
Retained earnings..................................... 2,245 2,245
------- -------
Total stockholders' equity.......................... 22,324 34,005
------- -------
Total capitalization.............................. $22,324 $34,005
======= =======
</TABLE>
- --------
(1) Excludes (i) a warrant issued to PJI to purchase 225,000 shares of Common
Stock at $11.25 per share and (ii) options to purchase 375,500 shares of
Common Stock issuable upon the exercise of stock options as of June 24,
1997. See "Management--Compensation of Directors," "--1996 Stock Ownership
Incentive Plan" and "Certain Transactions."

12
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

PJ AMERICA

The following table represents the results of operations of the Company for
the entire period presented and the acquisition of the Virginia restaurants
from October 30, 1996 (the closing date of the IPO).

The selected consolidated financial data of the Company as of and for the
years ended December 26, 1993, December 25, 1994, December 31, 1995 and
December 29, 1996 are derived from the consolidated financial statements of PJ
America, Inc. and Subsidiary which have been audited by Ernst & Young LLP,
independent auditors. The selected consolidated financial data as of and for
the year ended December 28, 1992 and as of and for the three months ended
March 29, 1996 and March 30, 1997 are unaudited.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE MONTHS ENDED
------------------------------------------------ -----------------------
DEC. 28, DEC. 26, DEC. 25, DEC. 31, DEC. 29, MAR. 29, MAR. 30,
1992 1993 1994 1995 1996 1996 1997
----------- -------- -------- -------- -------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Restaurant sales....... $1,318 $3,127 $6,415 $10,457 $16,846 $2,998 $ 8,770
Costs and expenses:
Cost of sales........ 433 1,054 2,098 3,511 5,537 1,005 2,777
Salaries and
benefits............ 406 888 1,677 2,647 4,244 761 2,235
Other operating
expenses............ 344 772 1,481 2,393 3,922 677 2,059
General and
administrative
expenses............ 131 229 433 557 1,016 181 464
Depreciation and
amortization........ 50 79 172 275 465 84 253
------ ------ ------ ------- ------- ------ -------
Total costs and
expenses.......... 1,364 3,022 5,861 9,383 15,184 2,708 7,788
------ ------ ------ ------- ------- ------ -------
Operating income
(loss)................ (46) 105 554 1,074 1,662 290 982
Other income
(expense), net........ -- (6) (22) (65) 8 (18) 155
------ ------ ------ ------- ------- ------ -------
Income (loss) before
income taxes.......... (46) 99 532 1,009 1,670 272 1,137
Income tax expense
(benefit)(1).......... (17) 36 194 368 592 100 409
------ ------ ------ ------- ------- ------ -------
Net income
(loss)(1)......... $ (29) $ 63 $ 338 $ 641 $ 1,078 $ 172 $ 728
====== ====== ====== ======= ======= ====== =======
BALANCE SHEET DATA (END
OF PERIOD):
Total assets........... $ 432 $ 823 $1,655 $ 2,491 $22,373 $23,548
Total debt, including
current maturities.... -- 300 427 1,066 -- --
Stockholders' equity... 314 435 995 1,073 20,578 21,305
</TABLE>

- --------
(1) Net income reflects a pro forma provision for income taxes assuming the
Company's predecessors were C corporations rather than S corporations for
each period.

13
<PAGE>

PJ AMERICA SUPPLEMENTAL

The following table represents the results of operations of the Company
restated to give retroactive effect to the merger with OPD on June 5, 1997,
accounted for as a pooling of interests, as if the merger had occurred at the
beginning of fiscal 1995.

The selected financial data as of and for the years ended December 31, 1995
and December 29, 1996 are derived from supplemental consolidated financial
statements of PJ America, Inc. and Subsidiaries which have been audited by
Ernst & Young LLP, independent auditors, whose reports thereon are included
elsewhere in this Prospectus. The selected consolidated financial data for the
three months ended March 29, 1996 and March 30, 1997 are unaudited.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE MONTHS ENDED
------------------ -----------------------
DEC. 31, DEC. 29, MAR. 29, MAR. 30,
1995 1996 1996 1997
-------- -------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Restaurant sales................... $16,744 $24,550 $4,915 $10,606
Costs and expenses:
Cost of sales.................... 5,630 8,064 1,647 3,373
Salaries and benefits............ 4,158 6,113 1,226 2,715
Other operating expenses......... 3,820 5,833 1,122 2,480
General and administrative
expenses........................ 887 1,402 278 564
Depreciation and amortization.... 393 628 122 293
------- ------- ------ -------
Total costs and expenses....... 14,888 22,040 4,395 9,425
------- ------- ------ -------
Operating income................. 1,856 2,510 520 1,181
Other income (expense)........... (77) 11 (17) 155
------- ------- ------ -------
Income before income taxes....... 1,779 2,521 503 1,336
Income tax expense............... 684 941 194 491
------- ------- ------ -------
Net income(1).................. $ 1,095 $ 1,580 $ 309 $ 845
======= ======= ====== =======
BALANCE SHEET DATA (END OF PERIOD):
Total assets....................... $ 3,628 $23,614 $24,779
Total debt, including current
maturities........................ 1,071 70 --
Stockholders' equity............... 1,885 21,518 22,324
</TABLE>

- --------

(1) Net income reflects a pro forma provision for income taxes assuming the
Company's predecessors and OPD were C corporations rather than S
corporations for the periods presented.

14
<PAGE>

PRO FORMA INFORMATION--PJ AMERICA (UNAUDITED)

The following table represents the results of operations of the Company as
if the acquisition of the Virginia restaurants had occurred at the beginning
of 1995 and has been retroactively restated to reflect the merger with OPD as
if it also had occurred at the beginning of 1995. See "Certain Transactions."

The pro forma financial data do not purport to represent what the Company's
financial position or results of operations actually would have been if such
transactions in fact had occurred on those dates, and should not be used to
project the Company's financial position or results of operations for any
future period.

<TABLE>
<CAPTION>
FISCAL YEAR
ENDED(1) THREE MONTHS ENDED
------------------ --------------------
DEC. 31, DEC. 29, MAR. 29, MAR. 30,
1995 1996 1996 1997
-------- -------- --------- ---------
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Restaurant sales...................... $29,386 $37,968 $ 8,523 $ 10,606
Costs and expenses:
Cost of sales....................... 9,946 12,643 2,867 3,373
Salaries and benefits............... 7,306 9,329 2,155 2,715
Other operating expenses............ 7,170 9,379 2,064 2,480
General and administrative expenses. 1,373 2,020 439 564
Depreciation and amortization....... 776 1,067 242 293
------- ------- -------- ---------
Total costs and expenses.......... 26,571 34,438 7,767 9,425
------- ------- -------- ---------
Operating income...................... 2,815 3,530 756 1,181
Other income (expense), net........... (233) (125) (67) 155
------- ------- -------- ---------
Income before income taxes............ 2,582 3,405 689 1,336
Income tax expense.................... 977 1,262 262 491
------- ------- -------- ---------
Net income(2)..................... $ 1,605 $ 2,143 $ 427 $ 845
======= ======= ======== =========
Net income per share.................. $ 0.47 $ 0.57 $ 0.12 $ 0.16
======= ======= ======== =========
Weighted average shares............... 3,435 3,750 3,444 5,191
</TABLE>

- --------

(1) See Note 6 to the PJ America, Inc. and Subsidiaries Supplemental
Consolidated Financial Statements.
(2) Net income reflects a pro forma provision for income taxes assuming the
Company's predecessors and OPD were C corporations rather than S
corporations for the periods presented.

15
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

The Company is the largest franchisee of Papa John's pizza delivery and
carry-out restaurants. At June 24, 1997, the Company owned and operated 58
Papa John's restaurants in the Birmingham, Alabama area; in the Norfolk,
Richmond and Virginia Beach, Virginia areas; in East Texas; and in the Akron,
Ohio area. At June 24, 1997, PJI and its franchisees (including the Company)
operated 1,320 Papa John's restaurants in 39 states.

The Company succeeded to the businesses of five PJI franchisees in the
Reorganization which was completed on October 30, 1996 concurrent with the
closing of the Company's IPO. The Reorganization was an exchange of non-
monetary assets by stockholders and has been accounted for at historical cost.

On June 5, 1997, a subsidiary of the Company merged with OPD acquiring eight
Papa John's restaurants in the Akron, Ohio area. This transaction was
accounted for as a pooling of interests. Accordingly, supplemental
consolidated financial statements reflecting such transaction are included in
this Prospectus.

The Company's restaurants operate under separate franchise agreements, which
generally have terms between five and ten years (with renewal options between
five and ten years) and require payment of monthly royalties equal to 4% of
restaurant sales. The Company also has entered into development agreements
with PJI to open a certain number of restaurants over a defined period of time
within specific geographic areas. The Company's development agreements
generally require it to pay a non-refundable fee per restaurant covered by the
respective agreements and which fee is typically credited against the initial
franchise fee that the Company is required to pay for each new restaurant
opened. The Company amortizes development and franchise fees over a 20-year
period, beginning with the opening of a restaurant. See "Business--Franchise
and Development Agreements."

The Company's growth strategy focuses on further developing the Papa John's
concept through: (i) building out its existing markets; (ii) acquiring and
developing new territories; and (iii) strategically acquiring existing Papa
John's franchisee groups and territories, if available. The Company's market-
by-market expansion strategy focuses on clustering restaurants, thereby
increasing consumer awareness and enabling the Company to take advantage of
operational and advertising efficiencies. To date, the Company believes that
this strategy has contributed to increases in comparable restaurant sales,
although there can be no assurance that comparable restaurant sales will
continue to be positive. The Company expects that its average cash investment,
including franchise fees, required to open restaurants in 1997 will
approximate $210,000. The Company anticipates that the cash investment
required to open restaurants in its new territories will be higher than that
experienced in its existing markets. Pre-opening costs are expensed as
incurred.

SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS

Certain statements under the captions "Prospectus Summary," "Risk Factors,"
"Recent Developments," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business," and elsewhere in this
Prospectus, constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements include
statements regarding the intent, belief or current expectations of the Company
and its management. Forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. These factors include, among other things: (i) the
successful implementation of the Company's expansion strategy; (ii) the
Company's dependence upon the success of the Papa John's system; (iii) the
Company's ability to compete in an intensely competitive industry; and (iv)
other factors referred to in this Prospectus under the heading "Risk Factors."

16
<PAGE>

RESULTS OF OPERATIONS--PJ AMERICA

The following table sets forth the percentage relationship to restaurant
sales for certain income statement data of the Company for the entire period
presented and the acquisition of the Virginia restaurants from October 30,
1996 (the closing date of the IPO). Net income reflects a pro forma provision
for income taxes assuming the Company's predecessors were C corporations
rather than S corporations for each period.

<TABLE>
<CAPTION>
THREE MONTHS
FISCAL YEAR ENDED ENDED
-------------------------- -----------------
DEC. 25, DEC. 31, DEC. 29, MAR. 29, MAR. 30,
1994 1995 1996 1996 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Restaurant sales............... 100.0% 100.0% 100.0% 100.0% 100.0%
Costs and expenses:
Cost of sales................ 32.7 33.6 32.9 33.5 31.6
Salaries and benefits........ 26.1 25.3 25.2 25.4 25.5
Other operating expenses..... 23.1 22.9 23.3 22.6 23.5
General and administrative
expenses.................... 6.8 5.3 6.0 6.0 5.3
Depreciation and
amortization................ 2.7 2.6 2.7 2.8 2.9
----- ----- ----- ----- -----
Total costs and expenses... 91.4 89.7 90.1 90.3 88.8
----- ----- ----- ----- -----
Operating income............... 8.6 10.3 9.9 9.7 11.2
Other income (expense), net.... (0.3) (0.7) -- (0.6) 1.8
----- ----- ----- ----- -----
Income before income taxes..... 8.3 9.6 9.9 9.1 13.0
Income tax expense............. 3.0 3.5 3.5 3.3 4.7
----- ----- ----- ----- -----
Net income................. 5.3% 6.1% 6.4% 5.8% 8.3%
===== ===== ===== ===== =====
</TABLE>

Three Months Ended March 30, 1997 Compared to Three Months Ended March 29,
1996.

Restaurant Sales. Restaurant sales increased 193% to $8.8 million for the
three months ended March 30, 1997, from $3.0 million for the comparable period
in 1996. The increase was primarily attributable to the 46 restaurants open
throughout the period ended March 30, 1997 (includes 25 Virginia restaurants
acquired on October 30, 1996), as compared to the 15 restaurants open
throughout the period ended March 29, 1996, the three restaurants opened in
the first quarter of 1997, and an 11.9% increase in comparable restaurant
sales.

Costs and Expenses. Cost of sales, which consists of food, beverage and
paper costs, decreased as a percentage of restaurant sales to 31.6% for the
three months ended March 30, 1997, from 33.5% for the comparable period in
1996. This decrease was primarily attributable to the acquisition of the
Virginia restaurants which are included in the period ended March 30, 1997,
slightly lower cheese costs, and a maturing restaurant base.

Salaries and benefits, which consist of all store level employee wages,
taxes, and benefits increased slightly as a percentage of restaurant sales to
25.5% for the three months ended March 30, 1997, from 25.4% for the comparable
period in 1996. The increase in salaries and benefits as a percentage of
restaurant sales was primarily due to the increase in minimum wage in October
1996, partially offset by improved labor utilization.

Other operating expenses include other restaurant level operating costs, the
material components of which are automobile mileage reimbursement for delivery
drivers, rent, royalties, utility expenses, pre-opening expenses and
advertising expenses. Other operating expenses increased as a percentage of
restaurant sales to 23.5% for the three months ended March 30, 1997, from
22.6% for the comparable period in 1996. This increase was primarily
attributable to the acquisition of the Virginia restaurants, which
historically have had higher operating expenses as a percentage of restaurant
sales, partially offset by increased leverage of expenses as a result of
comparable store sales increases and increased purchasing power.

17
<PAGE>

General and administrative expenses decreased as a percentage of restaurant
sales to 5.3% for the three months ended March 30, 1997, from 6.0% for the
comparable period in 1996. This decrease was primarily due to the leveraging
of general and administrative expenses as a result of increased sales,
partially offset by additional corporate infrastructure necessary to support
planned growth.

Depreciation and amortization was relatively consistent as a percentage of
restaurant sales at 2.9% for the three months ended March 30, 1997, from 2.8%
for the comparable period in 1996.

Other Income (Expense). Other income (expense), consisting primarily of
investment income for the quarter ended March 30, 1997, was approximately
$155,000. The increase in investment income was a result of earnings on funds
received from the IPO. Investment balances are considered available to fund
growth and acquisitions.

1996 Compared to 1995.

Restaurant Sales. Restaurant sales increased 61.1% to $16.8 million in 1996
from $10.5 million in 1995. The increase in restaurant sales was attributable
to sales from the six new restaurants opened in 1996, a full year of
operations for the five restaurants opened during 1995, a 4.7% increase in
comparable restaurant sales for restaurants open throughout both fiscal years
and the acquisition of 25 Virginia restaurants on October 30, 1996. The
increase in comparable restaurant sales was primarily attributable to
continued market penetration, partially offset by the impact of inclement
weather in the first quarter of 1996.

Costs and Expenses. Cost of sales increased $2.0 million, but decreased as a
percentage of restaurant sales to 32.9% in 1996 from 33.6% in 1995. This
percentage decrease was primarily attributable to the acquisition of the
Virginia restaurants on October 30, 1996, when cheese costs were below the
average for all of 1996. Average cheese costs throughout the first three
quarters of 1996 were higher than the comparable periods in 1995.

Salaries and benefits increased $1.6 million, but decreased slightly as a
percentage of restaurant sales to 25.2% in 1996 from 25.3% in 1995.

Other operating expenses increased $1.5 million, and increased as a
percentage of restaurant sales to 23.3% in 1996 from 22.9% in 1995. This
percentage increase was primarily due to the acquisition of the Virginia
restaurants, which historically have had higher other operating expenses as a
percentage of restaurant sales.

General and administrative expenses increased $459,000, and increased as a
percentage of restaurant sales to 6.0% in 1996 from 5.3% in 1995. The dollar
and percentage increases were primarily due to expenses of $120,000 for two
new executives relocating to the Company's offices in Birmingham, Alabama, and
the addition of restaurant supervisory and corporate support personnel.

Depreciation and amortization increased by $190,000, and increased as a
percentage of restaurant sales to 2.7% in 1996 from 2.6% in 1995. The dollar
increase was primarily due to the addition of new and acquired restaurants.
The percentage increase was primarily due to 1995 being a 53-week year.

Other Income (Expense). Other income (expense), which consists primarily of
interest income and interest expense, increased $73,000 to $8,000 of income in
1996 from $65,000 of expense in 1995. The increase in other income was
primarily due to the payoff of Company debt, plus interest income earned on
investments as a result of the IPO.

1995 Compared to 1994.

Restaurant Sales. Restaurant sales increased 63.0% to $10.5 million in 1995
from $6.4 million in 1994. The increase in restaurant sales was attributable
to sales from the five new restaurants opened in 1995, a full year of
operations for the four restaurants opened in 1994, and a 6.6% increase in
comparable restaurant sales for the six restaurants open throughout both
fiscal years. The increase in comparable restaurant sales was primarily
attributable to increased market penetration in Birmingham, Alabama and the
surrounding areas.

18
<PAGE>

Costs and Expenses. Cost of sales increased $1.4 million and increased as a
percentage of restaurant sales to 33.6% in 1995 from 32.7% in 1994. This
percentage increase resulted from an increase in topping portion on pizzas and
more aggressive discounting.

Salaries and benefits increased $970,000, but decreased as a percentage of
restaurant sales to 25.3% in 1995 from 26.1% in 1994. The decrease in salaries
and benefits as a percentage of restaurant sales was primarily due to better
labor utilization and a smaller percentage of new restaurants opened in 1995
as compared to 1994.

Other operating expenses increased $912,000, but decreased as a percentage
of restaurant sales to 22.9% in 1995 from 23.1% in 1994. The decrease was
attributable to decreases in other operating expenses as a percentage of
restaurant sales in the Birmingham, Alabama area, partially offset by higher
other operating expenses for new restaurants opened in Texas.

General and administrative expenses increased $124,000 in 1995 to $557,000
from $433,000 in 1994, but decreased as a percentage of restaurant sales to
5.3% in 1995 from 6.8% in 1994. The dollar increase was the result of the
addition of restaurant supervisory and corporate support personnel. The
percentage decrease was primarily due to an increase in restaurant sales
without a proportionate increase in general and administrative expenses.

Depreciation and amortization increased $103,000 in 1995 to $275,000 from
$172,000 in 1994, but decreased slightly as a percentage of restaurant sales
to 2.6% in 1995 from 2.7% in 1994. The dollar increase was primarily related
to the opening of additional restaurants.

Other Income (Expense). Other expenses increased to $65,000 in 1995 from
$22,000 in 1994, primarily due to increased interest expense on borrowings.

RESULTS OF OPERATIONS--PJ AMERICA SUPPLEMENTAL

The following table sets forth the percentage relationship to restaurant
sales for certain income statement data of the Company, restated to give
retroactive effect to the merger with OPD on June 5, 1997, which was accounted
for as a pooling of interests, as if it had occurred at the beginning of
fiscal 1995. Net income reflects a pro forma provision for income taxes
assuming that the Company and OPD were C corporations rather than
S corporations for each period.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE MONTHS ENDED
----------------- ----------------------
DEC. 31, DEC. 29, MAR. 29, MAR. 30,
1995 1996 1996 1997
-------- -------- --------- ---------
<S> <C> <C> <C> <C>
Restaurant sales.................. 100.0% 100.0% 100.0% 100.0%
Costs and expenses:
Cost of sales................... 33.6 32.8 33.5 31.8
Salaries and benefits........... 24.8 24.9 25.0 25.6
Other operating expenses........ 22.8 23.8 22.8 23.4
General and administrative
expenses....................... 5.3 5.7 5.7 5.3
Depreciation and amortization... 2.4 2.6 2.4 2.8
----- ----- --------- ---------
Total costs and expenses...... 88.9 89.8 89.4 88.9
----- ----- --------- ---------
Operating income.................. 11.1 10.2 10.6 11.1
Other income (expense), net....... (0.5) -- (0.4) 1.5
----- ----- --------- ---------
Income before income taxes........ 10.6 10.2 10.2 12.6
Income tax expense................ 4.1 3.8 3.9 4.6
----- ----- --------- ---------
Net income.................... 6.5% 6.4% 6.3% 8.0%
===== ===== ========= =========
</TABLE>

19
<PAGE>

Three months ended March 30, 1997 compared to three months ended March 29,
1996.

Restaurant Sales. Restaurant sales increased 116% to $10.6 million for the
three months ended March 30, 1997, from $4.9 million for the comparable period
in 1996. The increase was primarily attributable to the 54 restaurants open
throughout the period ended March 30, 1997 (includes 25 Virginia restaurants
acquired on October 30, 1996), as compared to the 22 restaurants open
throughout the period ended March 29, 1996, the three restaurants opened in
the first quarter of 1997, and an 11.9% increase in comparable restaurant
sales.

Costs and Expenses. Cost of sales decreased as a percentage of restaurant
sales to 31.8% for the three months ended March 30, 1997, from 33.5% for the
comparable period in 1996. This decrease was primarily attributable to the
acquisition of the Virginia restaurants which are included in the period ended
March 30, 1997, slightly lower cheese costs, and a maturing restaurant base.

Salaries and benefits increased slightly as a percentage of restaurant sales
to 25.6% for the three months ended March 30, 1997, from 25.0% for the
comparable period in 1996. The increase in salaries and benefits as a
percentage of restaurant sales was primarily due to the increase in minimum
wage in October 1996, partially offset by better labor utilization.

Other operating expenses increased as a percentage of restaurant sales to
23.4% for the three months ended March 30, 1997, from 22.8% for the comparable
period in 1996. This increase was primarily attributable to the acquisition of
the Virginia restaurants, which historically have had higher operating
expenses as a percentage of restaurant sales, partially offset by increased
leverage of expenses as a result of comparable store sales increases and
increased purchasing power for various expenses.

General and administrative expenses decreased as a percentage of restaurant
sales to 5.3% for the three months ended March 30, 1997, from 5.7% for the
comparable period in 1996. This decrease was primarily due to the leveraging
of general and administrative expenses as a result of increased sales,
partially offset by additional corporate infrastructure necessary to support
planned growth.

Depreciation and amortization increased as a percentage of restaurant sales
to 2.8% for the three months ended March 30, 1997, from 2.4% for the
comparable period in 1996. This increase was primarily attributable to the
acquisition of the Virginia restaurants, which historically had higher
depreciation expense as a percentage of sales.

1996 Compared to 1995.

Restaurant Sales. Restaurant sales increased 46.6% to $24.5 million in 1996
from $16.7 million in 1995. The increase in restaurant sales was attributable
to sales from the seven new restaurants opened in 1996, a full year of
operations for the six restaurants opened during 1995, a 4.7% increase in
comparable restaurant sales for restaurants open throughout both fiscal years,
and the acquisition of 25 Virginia restaurants on October 30, 1996. The
increase in comparable restaurant sales was primarily attributable to
continued market penetration in Alabama and Virginia, partially offset by the
impact of inclement weather in the first quarter of 1996.

Costs and Expenses. Cost of sales increased $2.4 million, but decreased as a
percentage of restaurant sales to 32.8% in 1996 from 33.6% in 1995. This
percentage decrease was primarily attributable to the acquisition of the
Virginia restaurants on October 30, 1996, when cheese costs were below the
average for all of 1996. Average cheese costs throughout the first three
quarters of 1996 were higher than the comparable periods in 1995.

Salaries and benefits increased $2.0 million and increased slightly as a
percentage of restaurant sales to 24.9% in 1996 from 24.8% in 1995.

20
<PAGE>

Other operating expenses increased $2.0 million, and increased as a
percentage of restaurant sales to 23.8% in 1996 from 22.8% in 1995. This
percentage increase was primarily due to the acquisition of the Virginia
restaurants, which historically have had higher other operating expenses as a
percentage of restaurant sales.

General and administrative expenses increased $515,000, and increased as a
percentage of restaurant sales to 5.7% in 1996 from 5.3% in 1995. The dollar
increase was primarily due to expenses of $120,000 for two new executives
relocating to the Company's offices in Birmingham, Alabama, and the addition
of restaurant supervisory and corporate support personnel.

Depreciation and amortization increased by $234,000, and increased as a
percentage of restaurant sales to 2.6% in 1996 from 2.4% in 1995. The dollar
increase was primarily due to the addition of new and acquired restaurants.
The percentage increase was primarily due to 1995 being a 53-week year.

Other Income (Expense). Other income (expense), which consists primarily of
interest income and interest expense, increased $88,000 to $11,000 of income
in 1996 from $77,000 of expense in 1995. The increase in other expense was
primarily due to the payoff of Company debt, plus interest income earned on
investments as a result of the Company's IPO.

PRO FORMA RESULTS OF OPERATIONS--UNAUDITED

The following table sets forth the percentage relationship to restaurant
sales for certain income statement data as if the acquisition of the Virginia
restaurants had occurred at the beginning of 1995 and has been retroactively
restated to reflect the merger with OPD as if it also had occurred at the
beginning of 1995. Net income reflects a pro forma provision for income taxes
assuming the Company's predecessors and OPD were C corporations rather than S
corporations for the periods presented.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE MONTHS ENDED
----------------- ------------------
DEC. 31, DEC. 29, MAR. 29, MAR. 30,
1995 1996 1996 1997
-------- -------- --------- ---------
<S> <C> <C> <C> <C>
Restaurant sales.................. 100.0% 100.0% 100.0% 100.0%
Costs and expenses:
Cost of sales................... 33.8 33.3 33.6 31.8
Salaries and benefits........... 24.9 24.6 25.3 25.6
Other operating expenses........ 24.4 24.7 24.2 23.4
General and administrative
expenses....................... 4.7 5.3 5.2 5.3
Depreciation and amortization... 2.6 2.8 2.8 2.8
----- ----- --------- ---------
Total costs and expenses...... 90.4 90.7 91.1 88.9
----- ----- --------- ---------
Operating income.................. 9.6 9.3 8.9 11.1
Other income (expense), net....... (0.8) (0.3) (0.8) 1.5
----- ----- --------- ---------
Income before income taxes........ 8.8 9.0 8.1 12.6
Income tax expense................ (3.3) (3.3) (3.1) (4.6)
----- ----- --------- ---------
Net income.................... 5.5% 5.7% 5.0% 8.0%
===== ===== ========= =========
</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

The Company requires capital primarily for the development and acquisition
of new restaurants. Total capital expenditures, including those of OPD, for
the three months ended March 30, 1997 and the year ended December 29, 1996
were approximately $1.0 million and $1.3 million, respectively.

The Company has financed its restaurant development principally through
internally generated funds and, prior to the IPO, through short-term credit
facilities with its lenders. Cash provided by operating activities, including
those of OPD, in the three months ended March 30, 1997 and the year ended
December 29, 1996 was $1.6 million and $3.6 million, respectively.

21
<PAGE>

The Company received $19.2 million in net cash proceeds from its IPO in
October 1996. In 1996, the Company used approximately $2.0 million of the IPO
proceeds to fund final S corporation distributions to stockholders, $400,000
for the purchase of equipment and $3.5 million to retire indebtedness
outstanding at the IPO. The remaining net proceeds of approximately $13.3
million were invested in various short-term investments and are expected to be
used for the development and acquisition of restaurants and for general
corporate purposes. The Company's cash, cash equivalents and investments,
including those of OPD, as of March 30, 1997 were $16.6 million.

The Company estimates that its total capital expenditures for the remainder
of 1997 will be approximately $2.0 million and $3.5 million in 1998, primarily
for the opening of new restaurants. The Company may also acquire the
operations of other Papa John's franchisees if such operations become
available on terms satisfactory to the Company. The Company expects that funds
remaining from its IPO, the proceeds from this offering and cash flow from
operations will provide sufficient funds to finance its capital expenditures
and potential acquisitions through 1998. The Company has not sought and does
not have commitments for any credit facilities.

IMPACT OF INFLATION

The Company does not believe inflation has materially affected earnings
during the past three years. Substantial increases in costs, particularly
labor, employee benefits or food costs, could have a significant impact on the
Company.

22
<PAGE>

BUSINESS

GENERAL

The Company is the largest franchisee of "Papa John's" pizza delivery and
carry-out restaurants. At June 24, 1997, the Company owned and operated 58
Papa John's restaurants in the Birmingham, Alabama area; in the Norfolk,
Richmond and Virginia Beach, Virginia areas; in East Texas; and in the Akron,
Ohio area. The Company has entered into a development agreement with PJI to
develop Papa John's restaurants in the California Counties and has been
granted by PJI the rights to enter into development agreements for Papa John's
restaurants in the Vancouver, Canada area and Puerto Rico. On June 5, 1997,
the Company acquired eight Papa John's restaurants from OPD in the Akron, Ohio
area in a transaction that was accounted for as a pooling of interests. In
addition, the Company has an option, exercisable during 1998, to acquire the
operations and development rights for Papa John's restaurants in Utah from an
affiliate of the Company.

PAPA JOHN'S INTERNATIONAL, INC.

General. The Papa John's concept was initiated in 1985 with the opening of
the first Papa John's restaurant by PJI, a publicly-held company headquartered
in Louisville, Kentucky. At June 24, 1997, the Papa John's restaurant system
consisted of 1,320 restaurants in 39 states, including 360 restaurants
operated by PJI, 58 restaurants operated by the Company and 902 restaurants
operated by other franchisees. The key elements of the Papa John's concept
include a focused menu of high quality pizza and related items, an effective
commissary distribution and equipment supply system and an efficient in-store
operating design.

Menu. Papa John's restaurants offer a focused menu of high quality, value
priced pizza, breadsticks and cheesesticks. Papa John's original, medium thick
crust is made from fresh dough (never frozen) produced in PJI's regional
commissaries. Every pizza is prepared using real mozzarella cheese, pizza
sauce made from fresh-packed tomatoes (not concentrate), a proprietary mix of
savory spices and a choice of high quality meat and vegetable toppings in
generous portions. Fresh onions and green peppers are chopped daily at all
restaurants and are purchased from local produce suppliers. Each pizza is
complemented by the addition of a container of Papa John's special garlic
sauce (for dipping the crust) and two pepperoncinis. This focused menu and use
of quality ingredients enables Papa John's restaurants to concentrate on
consistently "Delivering the Perfect Pizza!"(TM). On October 1, 1996, PJI and
its franchisees began offering thin crust pizza in substantially all of their
markets. The Company is currently offering thin crust pizza in all of its
markets.

Purchasing and Distribution. PJI's commissary system supplies pizza dough
and other food and paper products twice weekly to each of its franchised
restaurants. PJI currently operates seven regional commissaries in Louisville,
Kentucky; Garner, North Carolina; Orlando, Florida; Jackson, Mississippi;
Denver, Colorado; Phoenix, Arizona; and Rotterdam, New York. PJI also operates
one distribution center in Dallas, Texas. PJI expects to open new commissaries
and distribution centers as PJI and its franchisees expand into new
territories. Specifically, PJI has begun construction of an additional
commissary in Des Moines, Iowa which is expected to be opened in the third
quarter of 1997. PJI's commissary system enables it to closely monitor and
control product quality and consistency, while lowering food and operating
costs for its franchisees. All Papa John's restaurants are required to
purchase a proprietary mix of savory spices and dough from PJI. Produce is
purchased locally by each franchisee to ensure freshness. Franchisees may
purchase other goods from approved suppliers or PJI, which has negotiated
purchasing agreements with most of its suppliers. The Company believes that
these agreements enable it to benefit from volume discounts which result in
prices the Company believes are below those which it could otherwise obtain.
In addition, all the equipment, counters and smallwares required to open a
Papa John's restaurant are available from PJI. PJI also provides layout and
design services and recommends subcontractors, signage installers and
telephone systems to its franchises. Although not required to do so, the
Company purchases substantially all of its food products, paper products and
restaurant equipment from PJI.

Restaurant Layout and Design. Papa John's restaurants are typically 1,200 to
1,500 square feet in size and are located in strip centers or free-standing
buildings which provide visibility, curb appeal and accessibility. The
exterior of a Papa John's restaurant is generally characterized by backlighted
awnings, neon window designs and

23
<PAGE>

other visible signage. The layout is designed to facilitate a smooth flow of
food orders through the restaurant. The layout includes specific areas for
order taking, pizza preparation and routing, resulting in simplified
operations, lower training and labor costs, increased efficiency and improved
consistency and quality of food products. The decor of a restaurant has a
vibrant red and white color scheme with green striping, and includes a bright
menu board, custom counters and a carry-out customer area. The counters are
designed to allow customers to watch the employees slap out the dough and put
sauce and toppings on pizzas. Although most Papa John's restaurants are
designed primarily for carry-out and delivery service, certain of the
Company's restaurants have seating areas which may accommodate up to 30
customers. PJI provides the Company assistance with restaurant design, site
selection and a complete equipment package for new restaurants. This
assistance provides the Company with a convenient, cost-effective means of
opening restaurants while ensuring a consistent restaurant appearance.

RESTAURANT LOCATIONS

The following table sets forth the location and number of Company
restaurants at June 24, 1997 (exclusive of three restaurants under
construction at such date).

<TABLE>
<CAPTION>
NUMBER OF
LOCATION RESTAURANTS
-------- -----------
<S> <C>
Birmingham, Alabama area...................................... 17
Norfolk, Richmond and Virginia Beach, Virginia areas.......... 28
East Texas.................................................... 5
Akron, Ohio area.............................................. 8
---
Total restaurants......................................... 58
===
</TABLE>

UNIT ECONOMICS

The Company believes the performance of its Papa John's restaurants has been
exceptional. The Company's average unit volumes have historically exceeded the
average of the Papa John's franchise system. During the 52 weeks ended March
30, 1997, the 41 restaurants that were open throughout the period generated
average sales of $732,000, average restaurant cash flow (operating income plus
depreciation) of $135,000 (or 18.4% of sales) and average restaurant operating
income after royalties of $114,000 (or 15.6% of sales). However, there can be
no assurance that such results can be maintained. The average cash investment,
including franchise fees, to open these 41 restaurants was approximately
$175,000, exclusive of land and pre-opening expenses. The Company expects that
its average cash investment for restaurants opened in 1997 will approximate
$210,000. The Company anticipates entering into Puerto Rico by the end of
1997, and new restaurant development in 1998 will be primarily in Puerto Rico
and California. The Company expects that occupancy costs and the cash
investment required to open restaurants in its new territories will be higher
than that experienced in its existing markets. The Company leases, rather than
owns, most of its properties and expects to continue to do so in the future.

EXPANSION AND SITE SELECTION

The Company's growth strategy will focus on further developing the Papa
John's concept through: (i) building out its existing markets; (ii) acquiring
and developing new territories; and (iii) strategically acquiring existing
Papa John's franchisee groups and territories, if available. The Company's
objective is to become the leading chain of pizza delivery restaurants in each
of its development markets. Through a market-by-market expansion strategy
focused on clustering restaurants, the Company seeks to increase consumer
awareness and take advantage of operational and advertising efficiencies.
During 1996, the Company opened eight restaurants. In 1997 to date, the
Company has opened four restaurants and acquired eight restaurants from
another Papa John's franchisee. The Company anticipates that it will open an
additional eight restaurants by the end of 1997 and twelve restaurants in
1998.

In addition to developing its existing territories, the Company has entered
into a development agreement with PJI to develop Papa John's restaurants in
the California Counties. Such agreement requires the Company to

24
<PAGE>

open three Papa John's restaurants in 1998, five additional restaurants per
year through 2004, and four restaurants in 2005. PJI has also granted the
Company the rights to enter into development agreements for Papa John's
restaurants in the Vancouver, Canada area and Puerto Rico. California, Canada
and Puerto Rico are new markets for Papa John's restaurants. In addition, the
Company has an option, exercisable during 1998, to acquire the operations and
development rights for Papa John's restaurants in Utah from an affiliated
party which currently owns and operates five restaurants. The development
rights with respect to the Utah territory provide for eight Papa John's
restaurants to be opened by December 31, 1997, with an additional six
restaurants to be opened in 1998, 1999 and 2000. There can be no assurance
that the Company will exercise the option for the Utah territory or that, if
exercised, such restaurants will be developed. PJI has waived its right of
first refusal with respect to the Company's possible acquisition of the Utah
territory.

The Company also has a right of first refusal, which expires on August 31,
2001, to acquire from an affiliated party the operations and development
rights for Papa John's restaurants in (i) Iowa, including the Moline and Rock
Island, Illinois areas (but excluding the Council Bluffs area of Iowa), in
which eight restaurants are currently open, and (ii) in the Baton Rouge,
Lafayette and Lake Charles, Louisiana areas, in which six restaurants are
currently open. The development rights with respect to such territories
provide that a total of 24 additional Papa John's restaurants will be opened
through 2002. There are no agreements, however, with respect to the Company's
acquisition of such territories, and there can be no assurance that such
territories will be acquired. PJI has waived its right of first refusal with
respect to the Company's possible acquisition of the Iowa and Louisiana
territories described above. In addition, certain officers, directors and
stockholders of the Company own interests in Papa John's franchisees that
operate in certain areas in Michigan, Ohio and South Carolina. PJI has waived
its right of first refusal with respect to the Company's possible acquisition
of such franchisees.

The Company devotes significant resources to the investigation and
evaluation of potential sites. The site selection process focuses on trade
area demographics, target population density, household income levels and
competitive factors. Management inspects each potential Company restaurant
location and the surrounding market before a site is approved. The Company's
restaurants are typically located in strip shopping centers or free-standing
buildings that provide visibility, curb appeal and accessibility. All site
selections must be approved by PJI. Papa John's restaurant design may be
configured to fit a wide variety of building shapes and sizes, thereby
increasing the number of suitable locations for Papa John's restaurants.

MARKETING PROGRAMS

The Company has restaurant-level marketing programs which target the
delivery area of each restaurant, making extensive use of distinctive print
materials in direct mail and store-to-door couponing. The Company tailors its
store-to-door coupons according to customer buying habits as tracked by the
Company's point of sale computer systems used in each restaurant. Local
marketing efforts also include a variety of community-oriented activities with
schools, sports teams and other organizations. The Company currently
supplements its local marketing efforts with a limited amount of radio and
television advertising. The Company believes that its marketing programs are
cost-effective and significantly increase Papa John's visibility among
potential customers. The Company's advertising expenditures as a percentage of
restaurant sales for the three month period ended March 30, 1997, were 6.2%.

The Company's restaurant-level marketing efforts are supported by print and
electronic advertising materials that are produced by the Papa John's
Marketing Fund, Inc. (the "Marketing Fund") for use by both PJI and its
franchisees. The required Marketing Fund contribution is established from time
to time by the governing board of the Marketing Fund and is currently 0.8% of
restaurant sales. The maximum required contribution for PJI franchisees is
1.5% of restaurant sales and can be increased above 1.5% only upon approval by
not less than 60% of Marketing Fund members. In addition, PJI may require the
Company to participate in an advertising cooperative for its designated market
area and to contribute a minimum amount of restaurant sales for local
advertising. PJI also provides each of its franchisees with catalogs for
uniforms and promotional items and pre-approved, print marketing materials
that can be ordered from PJI.

25
<PAGE>

RESTAURANT OPERATIONS

Management and Employees. A typical Company restaurant employs a restaurant
manager, two or three assistant managers and approximately 25 hourly
employees, most of whom work part-time. The restaurant manager is responsible
for the day-to-day operation of the restaurant and for the maintenance of
Company established operating standards. The Company seeks to hire experienced
restaurant managers and staff, and to motivate and retain them by providing
opportunities for advancement and performance-based financial incentives. In
addition, the Company has established the 1996 Stock Ownership Incentive Plan,
which will enable the Company to provide long-term equity-based incentives for
corporate and restaurant management personnel. See "Management--1996 Stock
Ownership Incentive Plan." The Company believes that it has a low managerial
turnover rate in comparison to the quick service restaurant industry and that
this low turnover rate results in decreased training costs and higher
productivity.

The Company employs 13 area supervisors, each of whom has responsibility for
overseeing four to six Company restaurants. The Company also employs regional
operations directors who oversee area supervisors and managers within their
respective markets.

Training. The Company has full-time training coordinators in its Alabama and
Virginia markets. In addition, PJI provides an on-site training team as
needed. Each regional area supervisor and restaurant manager is required to
complete PJI's two-week training program in which instruction is given on all
aspects of PJI's systems and operations. The program includes classroom
instruction and hands-on training at an operating Papa John's restaurant. In
addition, the Company has developed a specific education and safety program
for its delivery drivers.

Point-of-Sale System. Currently, all but four of the Company's existing
restaurants are equipped with the Papa John's PROFIT SystemSM. The Company
believes that this technology increases speed and accuracy in order taking and
pricing, reduces paper work and allows the restaurant manager to better
monitor and control food and labor costs. The point-of-sale system enhances
restaurant-level marketing capabilities through a database that provides
information on customers and their buying habits with respect to the Company's
products. The Company anticipates that in late 1997, polling capabilities will
allow the Company to obtain current restaurant reporting information, thereby
improving the speed, accuracy and efficiency of restaurant-level reporting.
Pursuant to its franchise agreements, the Company is required to equip the
four restaurants which do not have point-of-sale equipment with the Papa
John's PROFIT SystemSM by March 1998.

Reporting. Managers at restaurants prepare daily reports of sales, cash
deposits and operating costs. Physical inventories of all food and beverage
items are taken weekly. The Company's area supervisors prepare weekly profit
and loss statements for each of the restaurants. The Company believes that the
PROFIT SystemSM helps simplify and accelerate many of these reporting
functions.

Hours of Operation. The Company's restaurants are open seven days a week,
typically from 11:00 a.m. to 12:00 midnight Sunday through Thursday, and from
11:00 a.m. to 1:30 a.m. on Friday and Saturday.

DEVELOPMENT AND FRANCHISE AGREEMENTS

Development and Franchise Agreements. The Company has entered into
development agreements with PJI for the right to construct one or more Papa
John's restaurants pursuant to a development schedule within specified
geographic areas. The Company's existing territories consist of the
Birmingham, Alabama area; the Norfolk, Richmond and Virginia Beach, Virginia
areas; East Texas; and the Akron, Ohio area. The Company has entered into a
development agreement with PJI to develop Papa John's restaurants in the
California Counties. In addition, PJI has granted the Company the rights to
enter into development agreements for Papa John's restaurants in the
Vancouver, Canada area and Puerto Rico. See "Certain Transactions."

Generally, a franchise agreement is executed when the Company secures a
restaurant location. Each per restaurant development fee is typically credited
against PJI's franchise fee, which is payable to PJI upon signing the
franchise agreement for a specific location. The franchise fees payable with
respect to the Company's

26
<PAGE>

restaurants range between $10,000 and $18,500, depending upon the date of
execution of the development agreement. With respect to the California
Counties and the Vancouver and Puerto Rico territories, the Company expects to
pay PJI's standard franchise fee at the time the franchise agreement is
entered into, which is currently $20,000.

Under each of the Company's franchise agreements, the Company pays PJI a
royalty fee of 4% of sales, PJI's current standard royalty fee. Under such
agreements, PJI may increase the royalty fee to 5% of sales after the
agreement has been in effect for between three to five years. In no event may
the royalty fee be increased to an amount greater than the royalty fee
currently in effect for new PJI franchisees.

PJI's franchise agreements authorize the Company to use its trade names,
trademarks and service marks with respect to specific Papa John's restaurants.
PJI also provides general construction specifications, designs, color schemes,
signs, equipment, preparation methods for food and beverages, marketing
concepts, operations and financial control methods, management training,
technical assistance and materials. Each franchise agreement prohibits the
Company from transferring a franchise without the prior approval of PJI. PJI
has the contractual right to terminate a franchise agreement for a variety of
reasons, including a franchisee's failure to make payments when due or failure
to adhere to PJI's policies and standards. Many state franchise laws limit the
ability of a franchisor to terminate or refuse to renew a franchise. See "--
Government Regulation."

The development agreements, and each of the franchise agreements, prohibit
the Company, during the term of the agreements and for a two-year period
following their termination or expiration, from owning or operating any other
pizza delivery or take-out restaurant within ten to fifty miles of the
franchise granted or any other Papa John's franchise. In addition, the Company
and its senior executive officers have agreed through October 1999 not to
operate any restaurant concepts other than Papa John's without PJI's approval.
Also, the Company's directors (other than Messrs. Sherman, Schnatter and Hart)
have agreed not to be actively involved in the management of other restaurant
concepts during such period without PJI's consent.

Existing Territories. In order for the Company to maintain its development
rights under the agreements relating to the Birmingham, Alabama area; the
Norfolk, Richmond and Virginia Beach, Virginia areas; East Texas; and the
Akron, Ohio area, the Company is required to open five more stores during 1997
and 1998, respectively. Once the Company completes this development schedule,
it may open additional restaurants in these territories subject to PJI's
consent.

Franchise Restaurant Development. PJI assists the Company in selecting sites
and developing restaurants. PJI provides the Company with the physical
specifications for typical restaurants, both for free-standing restaurants and
restaurants located in strip shopping centers. The Company procures virtually
all of the design plans, counters and equipment for its restaurants from PJI
at prices the Company believes are favorable. The Company is responsible for
selecting the location for its restaurants but must obtain PJI's approval of
each restaurant design and each location based on accessibility and visibility
of the site and targeted demographic factors, including population, density,
income, age and traffic. The Company is responsible for all costs and expenses
incurred in locating, acquiring and developing restaurant sites.

Franchise Training and Support. Each regional operations director and area
supervisor must satisfactorily complete PJI's two-week training program and
must also devote his or her full business time and efforts to the operation of
the Company's restaurants. Each of the Company's restaurant managers report to
an area supervisor and are also required to complete PJI's two-week training
program. See "--Restaurant Operations--Training."

Franchise Operations. All Company restaurants are required to operate their
Papa John's restaurants in compliance with PJI's policies, standards and
specifications, including matters such as menu items, ingredients, materials,
supplies, services, fixtures, furnishings, decor and signs. The Company has
full discretion to determine the prices to be charged to its customers.

Reporting. PJI collects weekly and monthly sales and other operating
information from the Company. The Company has agreements with PJI permitting
PJI to electronically debit the Company's bank accounts for the

27
<PAGE>

payment of royalties, Marketing Fund contributions and purchases from PJI.
This system significantly reduces the resources needed to process payables. In
1995, PJI implemented a requirement that new and existing franchisees purchase
and install the PROFIT SystemSM in all of their restaurants.

COMPETITION

The restaurant industry is intensely competitive with respect to price,
service, location and food quality, and there are many well-established
competitors with substantially greater financial and other resources than the
Company. Such competitors include a large number of national and regional
restaurant chains, as well as local pizza restaurant operators. Some of the
Company's competitors have been in existence for a substantially longer period
than the Company and may be better established in the markets where the
Company's restaurants are, or may be, located. Within the pizza segment of the
restaurant industry, the Company believes that its primary competitors are the
national pizza chains, including Pizza Hut, Domino's and Little Caesar's. A
change in the pricing, marketing or promotional strategies or product mix of
one or more of these competitors could have a material adverse impact on the
Company's sales and earnings. In general, there is also active competition for
management personnel and real estate sites suitable for Papa John's
restaurants.

The restaurant business is often affected by changes in consumer tastes,
national, regional or local economic conditions, demographic trends, traffic
patterns and the type, number and location of competing restaurants. In
addition, factors such as inflation, increased food, labor and benefits costs
and the lack of experienced management and hourly employees may adversely
affect the restaurant industry in general and the Company's restaurants in
particular.

GOVERNMENT REGULATION

The Company is subject to various Federal, state and local laws affecting
its business. Each Papa John's restaurant is subject to licensing and
regulation by a number of governmental authorities, which include health,
safety, sanitation, building and fire agencies in the state or municipality in
which the restaurant is located. Difficulties in obtaining or failures to
obtain required licenses or approvals can delay or prevent the opening of a
new restaurant in a particular area. The Company is also subject to Federal
and state environmental regulations, but these have not had a material effect
on the Company's operations.

The Company's relationship with PJI is governed by the laws of several
states which regulate substantive aspects of the franchisor-franchisee
relationship. Substantive state laws that regulate the franchisor-franchisee
relationship presently exist or are being considered in a substantial number
of states and bills have been introduced in Congress (one of which is now
pending) which would provide for Federal regulation of substantive aspects of
the franchisor-franchisee relationship. These current and proposed franchise
relationship laws limit, among other things, the duration and scope of non-
competition provisions, the ability of a franchisor to terminate or refuse to
renew a franchise and the ability of a franchisor to designate sources of
supply.

The Company's restaurant operations are also subject to Federal and state
laws governing such matters as wages, working conditions, citizenship
requirements and overtime. Some states have set minimum wage requirements
higher than the Federal level, and the Federal government recently increased
the Federal minimum wage. In September 1997, the second phase of an increase
in the minimum wage will be implemented in accordance with the Federal Fair
Labor Standards Act of 1996. Significant numbers of hourly personnel at the
Company's restaurants are paid at rates related to the Federal minimum wage
and, accordingly, increases in the minimum wage will increase labor costs at
the Company's restaurants. Other governmental initiatives such as mandated
health insurance, if implemented, could adversely affect the Company as well
as the restaurant industry in general. The Company is also subject to the
Americans With Disabilities Act of 1990, which, among other things, may
require certain minor renovations to its restaurants to meet federally-
mandated requirements. The cost of these renovations is not expected to be
material to the Company.

28
<PAGE>

The Company has been granted by PJI the rights to enter into development
agreements for Papa John's restaurants in the California Counties, the
Vancouver, Canada area, and Puerto Rico. The Company's ability to establish
international operations is subject to various risks, including changing
political and economic conditions, currency fluctuations, trade barriers,
adverse tax consequences, and government regulations relating to, among other
things, the preparation and sale of food, building and zoning requirements,
wages, working conditions, and the Company's relationship with its employees.
There can be no assurance that the Company will be successful in establishing
its international operations or that such risks will not have a material
adverse effect on the Company in the future.

TRADEMARKS

The Company's rights to use PJI's trademarks and service marks are
significant to the Company's business. PJI is the owner of the Federal
registration of the trademark "Papa John's." PJI has also registered "Pizza
Papa John's" and design as a trademark and a service mark. PJI owns Federal
registrations for the marks "Pizza Papa John's Delivering the Perfect Pizza!"
and design, "Call Your Papa," "Perfect Pizza Perfect Price," "Delivering the
Perfect Pizza!," "We Deliver Perfection," "The Official Pizza of Summer," and
"Pizza Papa John's Print Network." PJI has applied for the registration of
"Pizza Papa John's Better Ingredients, Better Pizza" and design, "Better
Ingredients, Better Pizza" and design, and miscellaneous design (Papa John's
logo). PJI is aware of the use by other persons in certain geographic areas of
names and marks which are the same as or similar to the Company's marks. It is
PJI's policy to pursue registration of its marks whenever possible and to
vigorously oppose any infringement of its marks.

PROPERTIES

All but one of the Company's restaurants are located in leased space. The
initial terms of most of the Company's leases are three to five years and
provide for one or more options to renew for at least one additional term. The
Company's leases generally specify a fixed annual rent with fixed increases,
or increases based on changes in the Consumer Price Index, at various
intervals during the lease term. Generally, the leases are net leases which
require the Company to pay all or a portion of the cost of insurance,
maintenance and utilities.

The Company leases approximately 7,000 square feet of corporate office space
collectively in Alabama, Virginia, Kentucky and Ohio.

EMPLOYEES

At March 30, 1997, the Company had approximately 1,500 employees of which
approximately 1,280 were restaurant employees, approximately 200 were
restaurant management and supervisory personnel and approximately 20 were
corporate personnel. Most restaurant employees are part-time and are paid on
an hourly basis. None of the Company's employees are currently represented by
a labor union, and the Company is not aware of any union organizing activity
among its employees. The Company believes that its relationship with its
employees is good.

LITIGATION

The Company is involved in lawsuits and claims arising in the normal course
of business. In the opinion of management of the Company, although the
outcomes of these lawsuits and claims are uncertain, in the aggregate they
will not have a material adverse effect on the Company's business, financial
condition or results of operations.

29
<PAGE>

MANAGEMENT

EXECUTIVE OFFICERS, DIRECTORS AND CERTAIN KEY EMPLOYEES

The following table sets forth certain information concerning each of the
Company's directors and executive officers and certain key employees:

<TABLE>
<CAPTION>
NAME AGE POSITION(S) WITH THE COMPANY
---- --- ----------------------------
<S> <C> <C>
Richard F. Sher- 53 Chairman of the Board
man(1)(2)(3)
Douglas S. Ste- 33 President, Chief Executive Officer and Director
phens(1)
D. Ross Davison 35 Vice President--Chief Financial Officer and Treasurer
James S. Riekel 37 Vice President--Operations
Robert W. Curtis 32 Senior Operations Director--Alabama
Stephen M. Saun- 28 Operations Director--Virginia
ders
James C. Bradshaw 29 Operations Director--East Texas
Stephen E. Reed 45 Operations Director--Ohio
J. David Walker 27 Controller
Michael M. 53 Vice Chairman of the Board
Fleishman(2)
Martin T. 61 Director
Hart(2)(3)
Frank O. Keen- 54 Director
er(3)
Stephen P. Lang- 43 Director
ford(2)
Charles W. 35 Director
Schnatter(3)
</TABLE>
- --------
(1) Member of the Executive Committee of which Mr. Sherman is Chairman.
(2) Member of the Compensation Committee of which Mr. Fleishman is Chairman.
(3) Member of the Audit Committee of which Mr. Hart is Chairman.

Richard F. Sherman has served as a director and Chairman of the Board of the
Company or certain predecessors since 1991. Mr. Sherman is a private investor
who has been a franchisee and a consultant to PJI since 1991. From 1993 to
present, Mr. Sherman has been a director of PJI. From 1987 to 1991, Mr.
Sherman was Chairman of the Board and President of Rally's Hamburgers, Inc.
From 1984 to 1987, Mr. Sherman was President and a director of Church's
Chicken, Inc. From 1971 to 1984, Mr. Sherman was Group Executive Vice
President and director of Hardee's Food Systems, Inc. and its parent, Imasco
USA, Inc. Mr. Sherman serves on the board of directors of Taco Cabana, Inc.,
Hartz Restaurants, Inc. and Reed's Jewelers, Inc.

Douglas S. Stephens has served as a director, President and Chief Executive
Officer of the Company or certain predecessors since 1991. From 1989 to 1991,
Mr. Stephens was the Vice President of Information Systems for the Kentucky
Lottery Corporation. From 1986 to 1989, Mr. Stephens was a systems consultant
for Andersen Consulting, a division of Arthur Andersen, LLP, an international
professional services firm.

D. Ross Davison has served as Vice President--Chief Financial Officer and
Treasurer of the Company since 1996. From 1985 to 1996, Mr. Davison was with
Arthur Andersen, LLP, an international professional services firm, and his
most recent position was Senior Manager. From 1983 to 1985, Mr. Davison was
with Cotton and Allen, P.S.C., a certified public accounting firm. Mr. Davison
is a licensed Certified Public Accountant.

James S. Riekel has served as Vice President--Operations of the Company and
a predecessor since 1992. From 1983 to 1992, Mr. Riekel was with Domino's
Pizza, Inc., where his most recent position was Regional Operations Director.

30
<PAGE>

Michael M. Fleishman has served as a director and Secretary of the Company
or certain predecessors since 1994. In June 1997 he became Vice Chairman of
the Board. Since 1970, Mr. Fleishman or his professional service corporation
has been a member of the law firm of Greenebaum Doll & McDonald PLLC, which
provides legal services to the Company. Mr. Fleishman served as a director of
Chi-Chi's, Inc. from 1983 to 1987. Mr. Fleishman also served as a director of
Rally's Hamburgers, Inc. from 1988 through April 1996.

Martin T. Hart has served as a director of the Company or certain
predecessors since 1992. Mr. Hart is a Denver-based private investor. Mr. Hart
has been a Trustee of MassMutual Corporate Investors and MassMutual
Participation Investors since 1991. Mr. Hart serves on the Board of Directors
of Schuler Homes, Inc., Optical Securities Group, Inc. and PNB Financial Group
(a bank holding company).

Frank O. Keener has served as a director of the Company or certain
predecessors since 1994. Since 1993, Mr. Keener has served as Executive Vice
President of First American National Bank, Nashville, Tennessee. From 1991 to
1993, Mr. Keener served as Senior Vice President of Dominion Banks. From 1989
to 1990, Mr. Keener was President and Chief Executive Officer of the Kentucky
Lottery Corporation.

Stephen P. Langford has served as a director of the Company or certain
predecessors since 1994. Mr. Langford has been involved in the television
industry since 1979 and has been the General Sales Manager of WAVE TV, an NBC
affiliate, from 1987 through January 1997. Mr. Langford currently serves on
the Executive Board of the Sales Advisory Council of the Television Bureau of
Advertising and as Chairman of the fifth district of the American Advertising
Federation.

Charles W. Schnatter has served as a director of the Company since August
1996. Mr. Schnatter has served as General Counsel and Secretary of PJI since
1991 and has been a director and a Senior Vice President of PJI since 1993.
From 1988 to 1991, Mr. Schnatter was an attorney with Greenebaum Doll &
McDonald PLLC. Mr. Schnatter has been a franchisee of PJI since 1989.

The Company's Certificate of Incorporation divides the Board of Directors
into three classes, with regular three year staggered terms and initial terms
of one, two and three years for each of Class I, Class II and Class III
directors, respectively. Accordingly, Messrs. Fleishman and Hart will hold
office until the annual meeting of stockholders to be held in 1998, Messrs.
Keener, Sherman and Stephens will hold office until the 1999 annual meeting
and Messrs. Langford and Mr. Schnatter will hold office until the 2000 annual
meeting.

CERTAIN KEY EMPLOYEES

Robert W. Curtis has served as Senior Operations Director--Alabama of the
Company or certain predecessors since January 1993. From May 1992 through
December 1992, Mr. Curtis was a franchise consultant for PJI. From 1984
through 1992, Mr. Curtis was employed by Domino's Pizza, Inc., where his most
recent position was area supervisor.

Stephen M. Saunders has served as Operations Director--Virginia of the
Company or certain predecessors since 1995. From 1993 to 1995, Mr. Saunders
was a supervisor and restaurant manager for certain predecessors of the
Company. From 1987 to 1993, Mr. Saunders was a restaurant manager at Domino's
Pizza, Inc.

James C. Bradshaw has served as Operations Director--East Texas of the
Company or a predecessor since September 1994. From 1986 to 1994, Mr. Bradshaw
was employed by Domino's Pizza, Inc., where his most recent position was area
supervisor.

Stephen E. Reed has served as Operations Director--Ohio of the Company or a
predecessor since March 1995. From 1993 through March 1995, Mr. Reed was a
franchise consultant for PJI. Prior to 1993, Mr. Reed was a franchisee of
Freshens Yogurt.

J. David Walker has served as Controller since October 1996. From 1992
through October 1996, Mr. Walker was with Ernst & Young LLP, where his most
recent position was Supervising Senior. Mr. Walker is a licensed Certified
Public Accountant.

31
<PAGE>

COMMITTEES OF THE BOARD OF DIRECTORS

Executive Committee. The members of the Executive Committee are Messrs.
Sherman and Stephens. To the extent permitted under the Delaware General
Corporation Law, the Board of Directors has delegated all of its powers to the
Executive Committee.

Compensation Committee. The members of the Compensation Committee are
Messrs. Sherman, Fleishman, Hart and Langford, all of whom are non-employee
directors. The Compensation Committee makes recommendations to the full Board
of Directors concerning compensation and benefits for executive officers of
the Company.

Audit Committee. The members of the Audit Committee are Messrs. Sherman,
Hart, Keener and Schnatter, all of whom are non-employee directors. The Audit
Committee, among other things, makes recommendations concerning the engagement
of independent auditors, reviews the results and scope of the annual audit and
other services provided by the Company's independent auditors and reviews the
adequacy of the Company's internal accounting controls.

COMPENSATION OF DIRECTORS

Directors are reimbursed for reasonable out-of-pocket expenses incurred in
attending Board and Committee meetings. Directors who are employees of the
Company do not receive additional compensation for services rendered as a
director.

Directors not employed by the Company are eligible to participate Non-
Employee Directors 1996 Stock Incentive Plan (the "Directors Plan"). The
Directors Plan provided for an initial grant of options to purchase shares of
Common Stock (the "Initial Grant Date"). Each non-employee director received
options to purchase 12,000 shares on the Initial Grant Date (the "Initial
Grants"). Each new non-employee director will be granted options to purchase
12,000 shares of Common Stock on the date of his or her election. The Company
will thereafter annually issue, beginning on the first anniversary of the
Initial Grant Date, to each of the Company's non-employee directors, options
to purchase 4,000 shares of Common Stock. Initial grants of options to
purchase Common Stock were at an exercise price equal to the IPO price of
$12.50 per share. Thereafter, all options will be granted at the fair market
value of the Common Stock on the date of grant. A total of 160,000 shares are
reserved for issuance under the Directors Plan. All options granted under the
Directors Plan will become exercisable in four equal annual installments,
beginning on the first anniversary of such option's date of grant.

EXECUTIVE COMPENSATION

The following table sets forth information concerning the annual and long-
term compensation paid, earned or accrued by the Company's Chief Executive
Officer and its other executive officers for services rendered in all
capacities to the Company for the years indicated.

32
<PAGE>

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
SECURITIES
UNDERLYING STOCK
NAME AND PRINCIPAL OPTIONS
POSITION YEAR SALARY(1) BONUS (NO. OF SHARES)
- ------------------ ---- --------- ------- ----------------
<S> <C> <C> <C> <C>
Douglas S. Stephens 1996 $80,000 $47,250 62,500
President and Chief 1995 75,000 36,000
Executive Officer 1994 55,900 40,000
D. Ross Davison(2) 1996 37,500 7,500 27,500
Chief Financial Officer
and Treasurer
James S. Riekel(2) 1996 10,000 5,000 20,000
Vice President and Chief
Operating Officer
</TABLE>
- --------
(1) Perquisites and other personal benefits paid to each named executive
officer were less than 10% of the officer's annual salary and bonus.
(2) Represents partial-year compensation. Mr. Davison first became an
executive officer of the Company in July 1996. Mr. Riekel first became an
executive officer of the Company in October 1996.

OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth information as to stock options granted to
the named executive officers during the 1996 fiscal year.

<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
NO. OF % OF TOTAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM(2)
OPTIONS EMPLOYEES EXERCISE EXPIRATION -------------------
NAME GRANTED(1) IN 1996 PRICE DATE 5% 10%
- ---- ---------- ---------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Douglas S. Stephens..... 62,500 23.5% $12.50 10/24/06 $491,324 $1,245,111
D. Ross Davison......... 27,500 10.3 12.50 10/24/06 216,183 547,849
James S. Riekel......... 20,000 7.5 12.50 10/24/06 157,224 398,436
</TABLE>
- --------
(1) All options were awarded under the 1996 Stock Ownership Incentive Plan
have a term of ten years and vest immediately in the event of a change in
control of the Company. These options become exercisable in four equal
annual installments beginning October 24, 1997, the first anniversary of
the grant date; provided, however, the stock options shall vest in the
event of a change of control of the Company.
(2) These columns illustrate hypothetical appreciation in value of the stock
options and are not a forecast of future appreciation. The amounts shown
are pre-tax and assume the options will be held throughout the entire ten-
year term.

33
<PAGE>

AGGREGATE OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES

Set forth below is information with respect to unexercised stock options
held by the named executive officers at the end of the Company's 1996 fiscal
year. None of the options held by named executive officers vested during 1996;
therefore there were no exercises.

<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
FISCAL YEAR-END FISCAL YEAR-END(1)
------------------------- -------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Douglas S. Stephens......... -- 62,500 -- $414,063
D. Ross Davison............. -- 27,500 -- 182,188
James S. Riekel............. -- 20,000 -- 132,500
</TABLE>
- --------
(1) Based on the difference between the option exercise price and the last
reported sale price of the Common Stock ($19.13) as reported on the Nasdaq
National Market on December 27, 1996, the last trading day of the
Company's 1996 fiscal year.

Ross Davison serves as Vice President, Chief Financial Officer and Treasurer
pursuant to a two-year Employment Agreement with the Company dated June 28,
1996 (the "Employment Agreement"). Under the terms of the Employment
Agreement, Mr. Davison is paid an annual salary of not less than $75,000, and
is guaranteed a bonus of at least $15,000 during the first twelve months of
employment. Pursuant to the Employment Agreement, Mr. Davison was granted
options to purchase 27,500 shares of the Company's Common Stock at an exercise
price of $12.50, equal to the IPO price. Mr. Davison's stock options shall
vest upon his death or disability.

EMPLOYEE AWARDS GRANTED

Pursuant to the Company's 1996 Stock Ownership Incentive Plan (the "1996
Plan"), certain executive officers of the Company received options upon
completion of the IPO. Mr. Stephens, Chief Executive Officer, President and
Director, was granted options to purchase 62,500 shares of Common Stock. Mr.
Davison, Vice President--Chief Financial Officer and Treasurer, received
options to purchase 27,500 shares of Common Stock. Mr. Riekel, Vice
President--Operations, received options to purchase 20,000 shares of Common
Stock. All options to purchase Common Stock under the 1996 Plan are granted at
an exercise price equal to the fair market value of the Common Stock on the
date the option is granted. The initial grants of options to purchase shares
of Common Stock were granted at an exercise price equal to the IPO price and
will become exercisable in four equal annual installments, beginning on the
first anniversary of the grant date.

1996 STOCK OWNERSHIP INCENTIVE PLAN

The 1996 Plan provides for the granting of any of the following awards
("Employee Awards") to eligible employees of the Company and its subsidiaries:
(i) stock options which do not constitute "incentive stock options" within the
meaning of section 422 of the Internal Revenue Code of 1986, as amended ("non-
qualified stock options"); (ii) incentive stock options; (iii) restricted
shares; and (iv) performance units. The 1996 Plan is intended to provide
incentives and rewards for employees to support the implementation of the
Company's business plan and to associate the interests of employees with those
of the Company's stockholders.

The 1996 Plan is administered by a committee composed of two or more
directors or the entire Board (the "Committee"). In administering the 1996
Plan, the Committee will determine, among other things: (i) individuals to
whom grants of Employee Awards will be made; (ii) the type and size of
Employee Awards; (iii) the terms of an Employee Award including, but not
limited to, a vesting schedule, exercise price, restriction or performance
criteria; and (iv) the length of any relevant performance, restriction or
option period. The Committee may also construe, interpret and correct defects,
omissions and inconsistencies in the 1996 Plan.

34
<PAGE>

The Common Stock subject to the 1996 Plan will be authorized but unissued
shares or previously acquired shares. The 1996 Plan provides that 600,000
shares of Common Stock will be available for grant of Employee Awards, and the
total number of shares of Common Stock with respect to which stock options may
be granted to any individual over the term of the 1996 Plan may not exceed 40%
of the total shares authorized for the 1996 Plan. The total number of shares
of Common Stock available for awards of restricted stock is 20% of the total
shares authorized under the 1996 Plan. Pursuant to the 1996 Plan, the number
and kind of shares to which Employee Awards are subject may be appropriately
adjusted in the event of certain changes in capitalization of the Company,
including stock dividends and splits, reclassification, recapitalization,
reorganizations, mergers, consolidations, spin-offs, split-ups, combinations
or exchange of shares and certain distributions and repurchases of shares.

Stock Options. The Committee may grant stock options to eligible individuals
in the form of an incentive stock option or a non-qualified stock option. The
exercise period for any stock option will be determined by the Committee at
the time of grant, but may not exceed ten years from the date of grant (five
years in the case of an incentive stock option granted to a "Ten-Percent
Stockholder" as defined in the 1996 Plan). The exercise price per share of
Common Stock covered by a stock option may not be less than 100% of the fair
market value of a share of Common Stock on the date of grant (110% in the case
of an incentive stock option granted to a Ten-Percent Stockholder). The
exercise price is payable, at the Committee's discretion, in cash, in shares
of already owned Common Stock, any combination of cash and shares, or such
other consideration as the Board of Directors deems reasonable. Stock options
will become exercisable in installments as determined by the Committee and as
set forth in the optionee's option agreement. Each option grant may be
exercised in whole, at any time, or in part, from time to time, after the
option becomes exercisable.

If a participant's employment terminates for any reason other than for
cause, unless the Committee in its sole discretion determines otherwise,
outstanding stock options, to the extent they are then exercisable, may be
exercised within 90 days after the date of termination (but in no event beyond
the stated term of the option); provided, however, Mr. Davison's options will
automatically vest in full and be exercisable at any time within one year
following the date of his death or disability (but in no event beyond the
stated term of his option). In the event of termination for cause, all
options, whether or not exercisable, will terminate.

Restricted Stock. Subject to the limitations of the 1996 Plan, the Committee
may grant restricted stock to eligible individuals. Restricted stock awards
are shares of Common Stock that are subject to restrictions on transfer or
other incidents of ownership where the restrictions lapse based solely on
continued employment with the Company for specified periods or based upon the
attainment of specified performance standards in either case, as the Committee
may determine. The Committee will determine all terms and conditions pursuant
to which restrictions upon restricted stock will lapse. At the discretion of
the Committee, certificates representing shares of restricted stock will be
deposited with the Company until the restriction period ends. Grantees of
restricted stock will have all the rights of a stockholder with respect to the
restricted stock and may receive dividends, unless the Committee determines
otherwise. Dividends may, at the discretion of the Committee, be deferred
until the restriction period ends and may bear interest if the Committee so
determines.

If a grantee's employment terminates by reason of death or disability prior
to the expiration of the restriction period applicable to any restricted
shares then held by the grantee, all restrictions pertaining to such shares
immediately lapse. Upon termination for any other reason, all restricted
shares are forfeited.

Performance Units. The Committee may grant performance units to eligible
individuals. Each performance unit will specify the performance goals, the
performance period and the number of performance units granted. The
performance period will be not less than one year, nor more than five years,
as determined by the Committee. Performance goals are those objectives
established by the Committee which may be expressed in terms of earnings per
share, price of the Common Stock, pre-tax profit, net earnings, return on
equity or assets, revenues or any combination of the above. Performance goals
may relate to the performance of the Company, a subsidiary, a division or
other operating unit of the Company. Performance goals may be established as a
range of goals if the Committee so desires.

35
<PAGE>

If the Committee determines that the performance goals have been met, the
grantee will be entitled to the appropriate payment with respect thereto. At
the option of the Committee, payment may be made solely in shares of Common
Stock, solely in cash, or a combination of cash and shares of Common Stock.

Change in Control. Generally, in the event of a "change in control" (as
defined in the 1996 Plan) of the Company, all outstanding stock options become
fully vested and immediately exercisable in their entirety. In addition, if
provided in an optionee's agreement, the optionee will be permitted to sell
the option to the Company generally for an amount equal to the excess of (x)
the fair market value over (y) the per share exercise price for such shares
under the stock option. In addition, all restrictions on restricted stock
lapse upon a change in control and outstanding performance units become fully
vested and payable in an amount equal to the greater of (i) the maximum amount
payable under the performance unit multiplied by a percentage equal to the
percentage that would have been earned assuming the rate at which the
performance goals have been achieved as of the date of the change in control
would have continued until the end of the performance cycle or (ii) the
maximum amount payable multiplied by the percentage of the performance cycle
completed at the time of the change in control.

Amendments and Termination. The Board may at any time terminate and, from
time to time, may amend or modify the 1996 Plan; provided, however, that no
amendment may impair the rights of a participant with respect to outstanding
Employee Awards without the participant's consent. Any such action of the
Board may be taken without the approval of the Company's stockholders, but
only to the extent that such stockholder approval is not required by
applicable law or regulation. The 1996 Plan will terminate in August 2006.

CERTAIN TRANSACTIONS

REORGANIZATION

Merger. The Company was formed to acquire the business and operations of the
Company's predecessors in the Reorganization, which occurred on October 30,
1996. Pursuant to an Agreement dated June 10, 1996, as amended July 10, 1996,
and related Plan of Merger, the stockholders of the Company's predecessors
received shares of Common Stock of the Company in the proportion determined by
the respective boards of directors of each of the Company's predecessors
through arm's length negotiations. The factors considered by each of the
Company's predecessors in determining the exchange ratio included revenues,
financial condition and results of operations, and past and projected earnings
for each predecessor. An aggregate of 3,000,000 shares of Common Stock were
issued to the stockholders of the Company's predecessors in the
Reorganization.

Indemnification Agreement. The Company's predecessors and each of their
stockholders entered into an Indemnification Agreement (the "Indemnification
Agreement") pursuant to which the stockholders of the Company's predecessors
made customary representations and warranties to the Company with respect to
the business, assets, financial condition and operations of the Company's
predecessors. In addition, the stockholders of the Company's predecessors
indemnified the Company for a period of 18 months from October 30, 1996,
against breaches of such representations and warranties as well as other
breaches of the Indemnification Agreement, or breaches of the June 10, 1996
Agreement (as amended July 10, 1996) or the Plan of Merger. The stockholders
of the Company's predecessors established an escrow account in support of such
indemnities, which is funded with an aggregate of $100,000 in cash and 300,000
shares of Common Stock received in the Reorganization. In general, the
Indemnification Agreement provides the sole remedy for claims brought in
connection with the Reorganization, and the aggregate amount of the claims is
limited to the cash and shares deposited in the escrow account.

Undistributed S Corporation Earnings. Following the closing of the IPO, the
Company made distributions to stockholders of the Company's predecessors,
which include certain officers, directors and 5% stockholders of the Company,
in the aggregate amount of approximately $2.0 million with respect to
Undistributed S Corporation Earnings. Such distributions were paid from a
portion of the net proceeds of the IPO. See "Prior S Corporation Status of
Company's Predecessors."

36
<PAGE>

Stockholder Loans. From time to time prior to the Reorganization, Michael M.
Fleishman, Frank O. Keener, Stephen P. Langford, Richard F. Sherman, Douglas
S. Stephens, Jack A. Laughery, Martin T. Hart and Michael J. Grisanti, who
were all stockholders of certain Company's predecessors, and who are officers,
directors and/or 5% stockholders of the Company, have advanced funds to the
Company's predecessors. Such stockholder loans were repaid with a portion of
the proceeds of the IPO. On October 30, 1996, the Company's predecessors
repaid obligations to the following persons in the following amounts: Messrs.
Fleishman, $169,073; Grisanti, $188,250; Hart, $188,250; Keener, $174,117;
Langford, $166,352; Laughery, $188,250; Sherman, $355,297; and Stephens,
$137,047.

Registration Rights Agreement. The Company granted certain registration
rights to the stockholders of the Company's predecessors, who received shares
of Common Stock of the Company in connection with the Reorganization. The
Company also granted certain registration rights to PJI in connection with the
warrant issued to PJI to purchase 225,000 shares of Common Stock. See
"Description of Capital Stock--Registration Rights Agreement."

Guarantees. From time to time, certain of the Company's predecessors have
borrowed funds from banks. These borrowings, which were guaranteed by the
stockholders of certain of the Company's predecessors based on their
proportionate ownership in each predecessor, totaled $2.0 million at October
30, 1996. Such guarantees were released in connection with the repayment of
the outstanding loans with a portion of the proceeds from the IPO. The former
stockholders of certain of the Company's predecessors include the following
officers, directors and/or 5% stockholders of the Company: Messrs. Fleishman,
Grisanti, Hart, Keener, Langford, Laughery, Sherman and Stephens.

PJI Warrant. In connection with the Company's IPO, the Company issued a
warrant to PJI to purchase 225,000 shares of Common Stock at $11.25 per share.
The warrant was issued in consideration for, among other things, the rights to
enter into development agreements for the California Counties; Vancouver,
Canada and the surrounding area; Puerto Rico; as well as the waiver of PJI's
$3,000 per market transfer fee with respect to the restaurants acquired in the
Reorganization as well as any other Papa John's restaurants acquired by the
Company within twelve months from the closing of the IPO. The Company expects
to pay all standard development and franchise fees in connection with opening
restaurants in these territories. The warrant will be exercisable in whole or
in part at any time within five years from the closing date of the IPO. In
addition, the warrant will be transferable subject to applicable securities
laws restrictions.

Consulting Fees. In connection with the Company's IPO, Messrs. Sherman, Hart
and Fleishman, and Jason T. Fleishman (Mr. Fleishman's son) and Judy H. Keener
(Mr. Keener's wife) received $78,750, $56,250, $51,500, $38,500 and $35,000,
respectively, for consulting services provided with respect to the
structuring, organization and implementation of the IPO. Such payments were
made from a portion of the proceeds of the IPO.

OTHER TRANSACTIONS AND AGREEMENTS

Utah Option Agreement. PJ Utah, LLC ("PJ Utah") holds the development and
franchise rights for Papa John's restaurants in Utah. The Company and PJ Utah
have entered into an option agreement granting the Company the option to
acquire for cash the operations and development rights for the franchised Papa
John's restaurants in Utah. The option is exercisable at any time during 1998.
The purchase price of the option is equal to the aggregate amount invested in
the Papa John's restaurants, operations (including operating losses, if any)
and related matters in Utah by PJ Utah, including interest paid to a third
party and/or its members on any loans, an imputed yield on all equity invested
in PJ Utah equal to the "prime rate," as published in The Wall Street Journal,
plus $10,000 for each store that is open at the time the option is exercised.
The option expires on December 31, 1998. The Company expects, but is not
obligated, to exercise such option in 1998. PJ Utah is owned by the following
officers, directors and/or 5% stockholders of the Company: Messrs. Davison
(2.0%), Fleishman (11.5%), Grisanti (7.75%), Hart (7.75%), Keener (16.75%),
Langford (9.25%), Laughery (10.25%), Riekel (2.0%), Sherman (19.5%) and
Stephens (9.25%).

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<PAGE>

In connection with the option agreement, the Company provides operational
supervision and managerial services (e.g., payroll, accounting, tax, human
resources and other administrative services) to PJ Utah on a fee-for-service
basis. The cost to PJ Utah for such services is $20,000 per month. The
Company's predecessors began providing such services on August 1, 1996 and
expect to continue to provide such services through December 31, 1998. The
Company believes these fees are comparable to fees that would be charged by
unaffiliated third parties for comparable services.

Right of First Refusal; Management Services (Iowa markets). PJ Iowa, LC ("PJ
Iowa") holds the Papa John's development and franchise rights for Papa John's
restaurants in Iowa, including the Moline and Rock Island, Illinois areas, but
excluding the Council Bluffs area. The Company has obtained a right of first
refusal to acquire such franchise and development rights; however, there is no
agreement or understanding between the Company and PJ Iowa or its stockholders
for the Company to acquire such entity or any of its assets. PJ Iowa is owned
in part by the following officers, directors and/or 5% stockholders of the
Company: Messrs. Grisanti (18.0%), Hart (18.0%), Laughery (21.0%), Riekel
(2.5%) and Sherman (21.0%), The right of first refusal expires in August 2001.
The Company provides operational supervision, managerial and administrative
services to PJ Iowa at a cost of approximately $5,000 per month depending on
the services rendered.

Right of First Refusal; Management Services (Louisiana markets). PJ
Louisiana, Inc. ("PJ Louisiana") holds the Papa John's development and
franchise rights for Baton Rouge, Lafayette and Lake Charles, Louisiana and
the surrounding areas. The Company has obtained a right of first refusal to
acquire such franchise and development rights; however, there is no agreement
or understanding between the Company and PJ Louisiana or its stockholders for
the Company to acquire such entity or any of its assets. PJ Louisiana is owned
in part by Messrs. Curtis (2.375%), Fleishman (18.525%), Keener (18.525%),
Langford (18.525%), Sherman (18.525%), and Stephens (18.525%). The right of
first refusal expires in August 2001. The Company provides operational
supervision, managerial and administrative services to PJ Louisiana at a cost
of approximately $5,000 per month depending on the services rendered.

Other Transactions with PJI. All Papa John's restaurants are required to
purchase a proprietary mix of savory spices and dough from PJI. Franchisees
may purchase other goods from approved suppliers or PJI, which has negotiated
purchasing agreements with most of its suppliers. In addition, all the
equipment, counters and smallwares required to open a Papa John's restaurant
are available from PJI. PJI also provides layout and design services and
recommends subcontractors, signage installers and telephone systems to its
franchises. Although not required to do so, the Company's restaurants purchase
substantially all of its food products, paper products and restaurant
equipment from PJI.

The Company has entered into development agreements with PJI for the right
to construct one or more Papa John's restaurants pursuant to a development
schedule within specified geographic areas. The Company's existing territories
consist of the Birmingham, Alabama area; the Norfolk, Richmond and Virginia
Beach, Virginia areas; East Texas; and the Akron, Ohio area. The Company has
entered into a development agreement for the California Counties. In addition,
PJI has granted the Company the rights to enter into development agreements
for Papa John's restaurants in the Vancouver, Canada area and Puerto Rico.

The Company has entered into two development agreements with respect to its
Alabama territory. At the time of execution of the first Alabama development
agreement, the Company paid a one-time, non-refundable development fee of
$16,700 to PJI. Under the second Alabama development agreement and under the
development agreement for its Texas territory, the Company paid a non-
refundable fee of $3,500 for each of the restaurants covered by development
agreements. Under the Virginia development agreement, the Company paid a
development fee of $84,000. Under the California Counties development
agreement, the Company paid a development fee of $185,000. With respect to the
Company's Vancouver and Puerto Rico territories, the Company will be required
to pay a non-refundable development fee based on the number of restaurants to
be covered by the development agreements.

38
<PAGE>

Under each of the Company's franchise agreements, the Company pays PJI a
royalty fee of 4% of sales, which totaled $673,828 in 1996. Under such
agreements, PJI may increase the royalty fee to 5% of sales after the
agreement has been in effect for between three to five years. In no event may
the royalty fee be increased to an amount greater than the royalty fee
currently in effect for new PJI franchisees. The terms and conditions of the
Company's franchise agreements are the same as PJI's standard franchise
agreements with unaffiliated persons.

The franchise agreements executed under the first Alabama development
agreement and the Ohio development agreement provide for a term of five years.
These franchise agreements renew automatically for an additional five-year
term if the Company is in compliance with the franchise agreement and can
secure the premises for such term. Furthermore, the franchises granted
pursuant to this development agreement may be renewed for four additional
five-year terms, provided that the Company meets certain conditions,
including, but not limited to, agreeing to execute the form of PJI franchise
agreement then being offered to new franchisees. The franchise agreements
executed under the second Alabama development agreement and under the Virginia
and Texas development agreements provide for an initial term of ten years and
can be renewed for additional terms of five to ten years, subject to the same
conditions contained in the franchise agreements described above.

Waiver of Right of First Refusal by PJI and Transfer Fees of PJI. PJI waived
its right of first refusal with regard to the Company's acquisition of the
Iowa and Louisiana markets described above, PJI has also waived its right of
first refusal with respect to certain markets in Michigan, Ohio and South
Carolina, the franchise and development rights of which are also owned by
affiliated franchisees. If the Company does not exercise its right of first
refusal, PJI would still have such right. In addition, PJI waived its $3,000
per restaurant transfer fee with respect to the 44 restaurants acquired in the
Reorganization as well as any other Papa John's restaurants acquired by the
Company until November 1, 1997.

Acquisition of Eight Papa John's Restaurants in the Akron, Ohio Area. On
June 5, 1997, the Company acquired eight Papa John's restaurants from OPD in
the Akron, Ohio area in a transaction that has been accounted for as a pooling
of interests. The OPD stockholders received approximately 278,000 shares of
the Company's Common Stock with piggy-back registration rights for such
shares. The total value of the transaction was approximately $4.6 million
based on a market value of the Company's Common Stock of $16.50 per share. The
number of shares of Common Stock issued in the merger is subject to adjustment
based on the stockholders' equity of OPD as shown on the closing date balance
sheet. Any such adjustment is not expected to be material. The purchase price
was determined through arm's-length negotiations between Company officers and
principal shareholders of OPD. The factors considered in determining the
exchange ratio included the revenues, financial condition and results of
operations of OPD and the recent market prices of the Company's Common Stock.

Charles W. Schnatter, a director of the Company and Senior Vice President,
General Counsel and a director of Papa John's International, Inc., owned 5.0%
of OPD and received approximately 13,900 shares of the Company's Common Stock
in the merger, and his brother, John H. Schnatter, Chairman and Chief
Executive Officer of PJI, owned 12.5% of OPD and received approximately 34,750
shares of the Company's Common Stock in the merger.

39
<PAGE>

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth at June 24, 1997 certain information with
respect to beneficial ownership of the Common Stock by: (i) each person known
by the Company to be the beneficial owner of more than five percent of the
outstanding Common Stock; (ii) each director and executive officer of the
Company; (iii) each Selling Stockholder; and (iv) all directors and executive
officers of the Company as a group.

<TABLE>
<CAPTION>
SHARES
BENEFICIALLY SHARES
OWNED PRIOR TO BENEFICIALLY
THE OWNED AFTER THE
OFFERING(1) SHARES TO BE OFFERING(2)
----------------- SOLD IN -----------------
NAME AND ADDRESS NUMBER PERCENT OFFERING NUMBER PERCENT
---------------- --------- ------- ------------ --------- -------
<S> <C> <C> <C> <C> <C>
D. Ross Davison............ -- * -- -- *
Michael M. Fleishman(3).... 312,930 6.2% 60,000 252,930 4.4%
Michael J. Grisanti(4)..... 218,713 4.3 22,650 196,063 3.4
Martin T. Hart(5).......... 218,711 4.3 30,000 188,711 3.3
Frank O. Keener(6)......... 459,603 9.1 90,000 369,603 6.4
Stephen P. Langford(7)..... 257,164 5.1 50,000 207,164 3.6
Jack A. Laughery(8)........ 285,080 5.7 20,000 265,080 4.6
Patricia J. O'Brien(4)..... 1,000 * 900 100 *
James S. Riekel(4)......... 60,294 1.2 5,000 55,294 1.0
Stephen M. Saunders(4)..... 24,118 * 2,500 21,618 *
Charles W.
Schnatter(9)(10).......... 18,904 * -- 18,904 *
John H. Schnatter(9)(10)... 34,761 * 6,950 27,811 *
Richard F. Sherman(11)..... 542,351 10.8 92,000 450,351 7.8
Douglas S. Stephens(4)..... 292,464 5.8 50,000 242,464 4.2
Roger P. Tennyson(9)(12)... 111,234 2.2 20,000 91,234 1.6
All executive officers and
directors as a group (nine
persons).................. 2,162,421 43.0% 450,000 1,785,421 30.9%
</TABLE>
- --------
*Less than one percent.
(1) In accordance with Securities and Exchange Commission rules, a person is
deemed to have beneficial ownership of any securities as to which such
person, directly or indirectly, has or shares voting power or investment
power and of any securities with respect to which such person has the
right to acquire such voting or investment power within 60 days. Except as
otherwise noted in the accompanying footnotes, the named persons have sole
voting and investment power.
(2) The Company has granted the Underwriters an over-allotment option,
exercisable not later than 30 days after the date of this Prospectus, to
purchase an aggregate of 180,000 shares of Common Stock at the public
offering price set forth on the cover page of this Prospectus, less the
underwriting discount. If the Underwriters exercise the option in full,
the Company will sell an additional 180,000 shares, resulting in all
executive officers and directors as a group owning 1,785,421 shares
(29.9%) after the closing of the offering. See "Underwriting."
(3) Includes 20,000 shares held by his wife, and 3,000 shares held by his wife
as custodian for their minor child. The address for Mr. Fleishman is 3300
National City Tower, Louisville, Kentucky 40202.
(4) The address for Messrs. Grisanti, Riekel, Saunders, Stephens and Ms.
O'Brien is 9109 Parkway East, Birmingham, Alabama 35206.
(5) Includes an aggregate of 160,880 shares held by family members. The
address for Mr. Hart is 875 Race Street, Denver, Colorado 80206.
(6) The address for Mr. Keener is 300 Deaderick Street, Third Floor,
Nashville, Tennessee 37237.
(7) The address for Mr. Langford is 1115 Mount Auburn Road, Evansville,
Indiana 47720.
(8) The address for Mr. Laughery is 800 Tiffany Blvd., Suite 305, Rocky Mount,
North Carolina 27804.

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<PAGE>

(9) Subject to final adjustment based on stockholders' equity of OPD on the
closing date balance sheet.
(10) The address for Messrs. Schnatter is 11492 Bluegrass Parkway, Suite 175,
Louisville, Kentucky 40299. Excludes 225,000 shares of Common Stock
beneficially owned by PJI pursuant to a presently exercisable warrant.
Charles W. Schnatter and John H. Schnatter each disclaims beneficial
ownership of the securities underlying such warrant.
(11) Includes 418,327 shares held by Mr. Sherman, as trustee of the Richard
Sherman Trust, and 72,352 shares held by his family members. The address
for Mr. Sherman and the Trust is 202 Schooner Lane, Duck Key, Florida
33050.
(12) The address for Mr. Tennyson is 8750 Staghorn Road, Indianapolis, Indiana
46260.

DESCRIPTION OF CAPITAL STOCK

GENERAL

The Company's Certificate of Incorporation provides that the authorized
capital stock of the Company consists of 20,000,000 shares of Common Stock,
par value $.01 per share, and 1,000,000 shares of Preferred Stock, par value
$1.00 per share. Upon completion of this offering, 5,783,084 shares of Common
Stock will be issued and outstanding (5,963,084 shares if the Underwriters'
over-allotment option is exercised in full), and no shares of Preferred Stock
will be issued or outstanding.

COMMON STOCK

The holders of Common Stock are entitled to one vote per share owned of
record on all matters voted upon by stockholders. Subject to the requirements
(including preferential rights) of any Preferred Stock outstanding, holders of
Common Stock are entitled to receive dividends if, as and when declared by the
Board out of funds legally available therefor. In the event of a liquidation,
dissolution or winding up of the Company, holders of Common Stock are entitled
to share equally and ratably in the assets of the Company, if any, remaining
after the payment of all liabilities of the Company and the liquidation
preferences of any outstanding Preferred Stock. Holders of the Common Stock
have no preemptive rights, no cumulative voting rights and no rights to
convert their Common Stock into any other securities, and there are no
redemption or sinking fund provisions with respect to the Common Stock.
National City Bank acts as the transfer agent and registrar for the Common
Stock.

PREFERRED STOCK

The Board has the authority to issue the authorized shares of Preferred
Stock in one or more series and to fix the designations, powers, preferences,
rights, qualifications, limitations and restrictions of all shares of each
such series, including, without limitation, dividend rates, conversion rights,
voting rights, redemption and sinking fund provisions, liquidation preferences
and the number of shares constituting each such series, without any further
vote or action by the stockholders. The issuance of Preferred Stock could
decrease the amount of earnings and assets available for distribution to
holders of Common Stock or adversely affect the rights and powers, including
voting rights, of the holders of Common Stock. The issuance of Preferred Stock
also could have the effect of delaying, deterring or preventing a change in
control of the Company without further action by the stockholders.

CERTAIN CORPORATE GOVERNANCE MATTERS

The Company's Certificate of Incorporation and the By-laws provide that the
Board is divided into three classes. Two classes of directors consist of two
directors each and one class consists of three directors, with the term of
office of the first class to expire at the 1998 annual meeting of
stockholders, the term of office of the second class to expire at the 1999
annual meeting of stockholders, and the term of office of the third class
elected at the 1997 annual meeting, to expire at the 2000 annual meeting of
stockholders. At each succeeding annual meeting of stockholders, directors
will be elected to a three-year term of office.

41
<PAGE>

The Company's Certificate of Incorporation and the By-laws provide that: (i)
the number of directors of the Company will be fixed by resolution of the
Board, but in no event will be less than three nor more than 15 directors;
(ii) the directors of the Company in office from time to time will fill any
vacancy or newly created directorship on the Board, with any new director to
serve in the class of directors to which he or she is so elected; (iii)
directors of the Company may be removed only for cause by the holders of at
least a majority of the Company's voting stock; (iv) stockholder action can be
taken only at an annual or special meeting of stockholders and not by written
consent in lieu of a meeting; and (v) except as described below, special
meetings of stockholders may be called only by the Chairman of the Board, the
President of the Company or by a majority of the total number of directors of
the Company, and the business permitted to be conducted at any such meeting is
limited to that stated in the notice of the special meeting. The By-laws also
require that stockholders desiring to bring any business before an annual
meeting of stockholders deliver written notice thereof to the Secretary of the
Company not fewer than 60 days nor more than 90 days in advance of the annual
meeting of stockholders; provided, however, if the date of the meeting is not
furnished to stockholders in a notice, or is not publicly disclosed by the
Company, more than 70 days prior to the meeting, notice by the stockholder, to
be timely, must be delivered to the President or Secretary of the Company not
later than the close of business on the tenth day following the day on which
such notice of the date of the meeting was mailed or such public disclosure
was made.

The By-laws also provide that stockholders desiring to nominate persons for
election as directors must make their nominations in writing to the President
of the Company not fewer than 60 days nor more than 90 days prior to the
scheduled date for the annual meeting; provided, however, if fewer than 70
days notice or prior public disclosure of the scheduled date for the annual
meeting is given or made, notice by the stockholders, to be timely, must be
delivered to the President or Secretary of the Company not later than the
close of business on the tenth day following the day on which such notice of
the date of the meeting was mailed or such public disclosure was made.

Under applicable provisions of the Delaware General Corporation Law, the
approval of a Delaware corporation's board of directors, in addition to
stockholder approval, is required to adopt any amendment to the corporation's
certificate of incorporation, but a corporation's by-laws may be amended
either by action of its stockholders or, if the corporation's certificate of
incorporation so provides, its board of directors. The Certificate of
Incorporation and By-laws provide that the provisions summarized above may not
be amended by the stockholders, nor may any provision inconsistent therewith
be adopted by the stockholders, without the affirmative vote of the holders of
at least 85% of the Company's voting stock, voting together as a single class.

The foregoing provisions of the Certificate of Incorporation and By-laws may
discourage or make more difficult the acquisition of control of the Company by
means of a tender offer, open market purchase, proxy contest or otherwise.
These provisions may have the effect of discouraging certain types of coercive
takeover practices and inadequate takeover bids and to encourage persons
seeking to acquire control of the Company first to negotiate with the Company.
The Company's management believes that the foregoing measures provide benefits
to the Company and its stockholders by enhancing the Company's ability to
negotiate with the proponent of any unfriendly or unsolicited proposal to take
over or restructure the Company and that such benefits outweigh the
disadvantages of discouraging such proposals because, among other things,
negotiation of such proposals could result in an improvement of their terms.

The Company is a Delaware corporation and is subject to Section 203 of the
Delaware General Corporation Law. In general, Section 203 prevents an
"interested stockholder" (defined generally as a person owning 15% or more of
the corporation's outstanding voting stock) from engaging in a "business
combination" (as defined in Section 203) with a Delaware corporation for three
years following the date such person became an interested stockholder unless:
(i) before such person became an interested stockholder, the board of
directors of the corporation approved either the transaction in which the
interested stockholder became an interested stockholder or the business
combination; (ii) upon consummation of the transaction that resulted in the
stockholder becoming an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the corporation

42
<PAGE>

outstanding at the time such transaction commenced (excluding stock held by
directors who are also officers of the corporation and by employee stock plans
that do not provide employees with the rights to determine confidentially
whether shares held subject to the plan will be tendered in a tender or
exchange offer); or (iii) following the transaction in which such person
became an interested stockholder, the business combination is approved by the
board of directors of the corporation and authorized at a meeting of
stockholders by the affirmative vote of the holders of at least two-thirds of
the outstanding voting stock of the corporation not owned by the interested
stockholder. Under Section 203, the restrictions described above also do not
apply to certain business combinations proposed by an interested stockholder
following the public announcement or notification (as required by Section 203)
of a transaction which is one of certain extraordinary transactions involving
the corporation, is with or by a person who either has not been an interested
stockholder during the previous three years or who became an interested
stockholder with the approval of a majority of the corporation's directors,
and is approved or not opposed by a majority of the board of directors then in
office.

REGISTRATION RIGHTS AGREEMENTS

The Company has granted certain registration rights to the stockholders of
the Company's predecessors and former stockholders of OPD who will hold after
the offering an aggregate of 2,513,084 shares of Common Stock of the Company,
and to PJI with respect to the 225,000 shares of Common Stock covered by the
warrant issued to PJI, for the registration of shares of Common Stock owned by
such stockholders in a registration statement filed by the Company under the
Securities Act of 1933. The Company will pay the fees and expenses of the
registrations, while such stockholders and PJI will pay all underwriting
discounts and commissions. These registration rights expire in October 2001
and are subject to certain conditions and limitations, including the right of
underwriters to limit the number of shares owned by such stockholders and PJI
included in such registration.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, the Company will have outstanding
5,783,084 shares of Common Stock (5,963,084 shares if the Underwriters' over-
allotment option is exercised in full). The 1,200,000 shares sold in this
offering (1,425,000 shares if the Underwriters' over-allotment option is
exercised in full), along with the 2,070,000 shares sold in the IPO, will be
freely tradable without restriction or further registration under the
Securities Act, unless held by "affiliates" of the Company as that term is
defined in Rule 144 under the Securities Act. The remaining 2,513,084 shares
outstanding are "restricted securities" as that term is defined under Rule 144
and were issued by the Company in private transactions in reliance upon one or
more exemptions under the Securities Act. Such restricted securities may be
resold in a public distribution only if registered under the Securities Act
(which registration is contemplated with respect to all of such restricted
securities as described below) or pursuant to an exemption therefrom,
including Rule 144. The Company, its directors and certain stockholders of the
Company have agreed that they will not sell or otherwise dispose of any shares
of Common Stock, any options to purchase Common Stock or any securities
convertible or exchangeable for shares of Common Stock for a period of 120
days after the date of this Prospectus without the prior written consent of
Montgomery Securities, except for (i) up to 350,000 shares which may be issued
in connection with acquisitions and (ii) shares issued pursuant to the
exercise of options granted under the Directors Plan or the 1996 Plan.

In general, under Rule 144, a person (or persons whose shares are
aggregated), including an affiliate of the Company, who has beneficially owned
restricted securities for at least one year is entitled to sell within any
three month period a number of shares that does not exceed the greater of the
average weekly trading volume during the four calendar weeks preceding such
sale or 1% of the then outstanding shares of the Common Stock, provided
certain manner of sale and notice requirements and requirements as to the
availability of current public information about the Company are satisfied. In
addition, affiliates of the Company must comply with the restrictions and
requirements of Rule 144, other than the holding period, to sell shares of
Common Stock. A person who is deemed not to have been an "affiliate" of the
Company at any time during the 90 days preceding a sale by such person, and
who has beneficially owned such shares for at least two years, would be
entitled to sell such shares without regard to the volume limitations
described above.

43
<PAGE>

UNDERWRITING

The underwriters named below, represented by Montgomery Securities and Alex.
Brown & Sons Incorporated (the "Representatives"), have severally agreed,
subject to the terms and conditions contained in the underwriting agreement
(the "Underwriting Agreement") among the Company, the Selling Stockholders and
the Underwriters, to purchase from the Company and the Selling Stockholders
the number of shares of Common Stock indicated below opposite their respective
names at the price less the underwriting discount set forth on the cover page
of this Prospectus. The Underwriting Agreement provides that the obligations
of the Underwriters are subject to certain conditions precedent and that the
Underwriters are committed to purchase all of such shares if they purchase
any.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
------------ ---------
<S> <C>
Montgomery Securities........................................... 600,000
Alex. Brown & Sons Incorporated................................. 600,000
---------
Total....................................................... 1,200,000
=========
</TABLE>

The Representatives have advised the Company and the Selling Stockholders
that the Underwriters propose initially to offer the shares of Common Stock to
the public on the terms set forth on the cover page of this Prospectus. The
Underwriters may allow to selected dealers a concession of not more than
$ per share, and the Underwriters may allow to selected dealers, and such
dealers may reallow, a concession of not more than $ per share to certain
other dealers. After the offering, the public offering price and other selling
terms may be changed by the Representatives. The Common Stock is offered
subject to receipt and acceptance by the Underwriters, and to certain other
conditions, including the right to reject an order in whole or in part.

The Company and the Selling Stockholders have granted an option to the
Underwriters, exercisable during the 30-day period after the date of this
Prospectus, to purchase up to a maximum of 180,000 additional shares of Common
Stock to cover over-allotments, if any, at the same price per share as the
initial 1,200,000 shares to be purchased by the Underwriters. To the extent
that the Underwriters exercise this option, the Underwriters will be
committed, subject to certain conditions, to purchase such additional shares
in approximately the same proportion as set forth in the above table. The
Underwriters may purchase such shares only to cover over-allotments made in
connection with this offering.

The Underwriting Agreement provides that the Company will indemnify the
Underwriters against certain liabilities, including civil liabilities under
the Securities Act of 1933, as amended, or will contribute to payments the
Underwriters may be required to make in respect thereof.

The stockholders of the Company's predecessors, the former stockholders of
OPD, the executive officers and directors of the Company and PJI have agreed
that, for a period of 120 days from the date of this Prospectus, they will not
offer, sell or otherwise dispose of any shares of their Common Stock or
options to acquire shares of Common Stock without the prior written consent of
Montgomery Securities. The Company has agreed not to sell any shares of Common
Stock for a period of 120 days from the date of this Prospectus without the
prior written consent of Montgomery Securities, except for (i) up to 350,000
shares which may be issued in connection with acquisitions and (ii) shares
issued pursuant to the exercise of options granted under the Directors Plan or
the 1996 Plan.

Certain persons participating in this offering may overallot or effect
transactions which stabilize, maintain or otherwise affect the market price of
the Common Stock at levels above those which might otherwise prevail in the
open market. Such transactions may include stabilizing bids, effecting
syndicate covering transactions or imposing penalty bids. A stabilizing bid
means the placing of any bid or effecting any purchase for the purpose of
pegging, fixing or maintaining the price of the Common Stock. A syndicate
covering transaction means the placing of any bid on behalf of the
underwriting syndicate or the effecting of any purchase to reduce a short
position created in connection with the offering. A penalty bid means an
arrangement that permits the Underwriters to reclaim a selling concession from
a syndicate member in connection with the offering when shares of Common Stock
sold by the syndicate member are purchased in syndicate covering transactions.
Such transactions may be effected on the Nasdaq National Market, in the over-
the-counter market, or otherwise.

44
<PAGE>

In connection with this offering, the Underwriters may engage in passive
market making transactions in the Common Stock on the Nasdaq National Market
immediately prior to the commencement of sales in this offering, in accordance
with Rule 103 of Regulation M under the Exchange Act. Passive market making
consists of displaying bids on the Nasdaq National Market limited by the bid
prices of independent market makers and purchases limited by such prices and
effected in response to order flow. Net purchases by a passive market maker on
each day are limited to a specified percentage of the passive market makers
average daily trading volume in the Common Stock during a specified prior
period and must be discontinued when such limit is reached. Passive market
making may stabilize the market price of the Common Stock at a level above
that which might otherwise prevail and, if commenced, may be discontinued at
any time.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Greenebaum Doll & McDonald PLLC, Louisville, Kentucky,
and for the Underwriters by Locke Purnell Rain Harrell (A Professional
Corporation), Dallas, Texas. Mr. Fleishman, whose professional service
corporation is a member of Greenebaum Doll & McDonald PLLC, is a director of
the Company and beneficially owns 312,930 shares of Common Stock of the
Company. A member of Greenebaum Doll & McDonald PLLC who participated in the
preparation of this prospectus beneficially owns 5,000 shares of the Common
Stock of the Company.

EXPERTS

The consolidated financial statements of the Company and its Subsidiary as
of December 31, 1995 and December 29, 1996, the financial statements of OPD as
of December 24, 1995 and December 29, 1996, and the supplemental consolidated
financial statements of PJ America, Inc. and Subsidiaries as of December 31,
1995 and December 29, 1996 have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon appearing elsewhere herein,
and are included in reliance upon such reports given upon the authority of
such firm as experts in accounting and auditing.

AVAILABLE INFORMATION

The Company has filed through the Electronic Data Gathering, Analysis and
Retrieval system with the SEC in Washington, D.C., a Registration Statement on
Form S-1 (the "Registration Statement," which includes all amendments,
exhibits and schedules thereto) pursuant to the Securities Act, and the rules
and regulations promulgated thereunder, with respect to this offering. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all the information set forth in the Registration Statement, certain
parts of which are omitted from this Prospectus in accordance with the rules
and regulations of the SEC, and to which reference is hereby made.

The Company is subject to the informational and reporting requirements of
the Securities Exchange Act of 1934, as amended, and in accordance therewith,
is required to file proxy statements, reports and other information with the
SEC. The Registration Statement, as well as any such report, proxy statement
and other information filed by the Company with the SEC, may be inspected and
copied at the public reference facilities maintained by the SEC at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
following regional offices of the SEC: Northeast Regional Office, 7 World
Trade Center, 13th Floor, New York, New York 10048; and Midwest Regional
Office, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can be obtained from the Public
Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. Such filings may also be obtained from the SEC
through the Internet at http://www.sec.gov.

Statements made in this Prospectus concerning the provisions of any
contract, agreement or other document referred to herein are not necessarily
complete. With respect to each such statement concerning a contract, agreement
or other document filed as an exhibit to the Registration Statement or
otherwise filed with the SEC, reference is made to such exhibit or other
filing for a more complete description of the matter involved, and each such
statement is qualified in its entirety by such reference.

45
<PAGE>

The Company intends to furnish to its stockholders annual reports containing
financial statements audited by an independent accounting firm. The Company
also intends to furnish such other reports as it may determine or as may be
required by law.

----------------

PJI IS NOT IN ANY WAY PARTICIPATING IN, APPROVING OR ENDORSING THIS OFFERING
OF SECURITIES, OR ANY REPRESENTATIONS MADE IN CONNECTION WITH THE OFFERING.
THE GRANT BY PJI OF ANY FRANCHISE OR OTHER RIGHTS TO THE COMPANY IS NOT
INTENDED AS, AND SHOULD NOT BE INTERPRETED AS, AN EXPRESS OR IMPLIED APPROVAL,
ENDORSEMENT OR ADOPTION OF ANY STATEMENT REGARDING ACTUAL OR PROJECTED
FINANCIAL OR OTHER PERFORMANCE WHICH MAY BE CONTAINED IN THE PROSPECTUS.
EXCEPT AS INDICATED IN THE PROSPECTUS, ALL INFORMATION CONTAINED IN THIS
PROSPECTUS HAS BEEN PREPARED BY, AND IS THE SOLE RESPONSIBILITY OF, THE
COMPANY.

ANY REVIEW BY PJI OF THE PROSPECTUS OR THE INFORMATION INCLUDED IN THE
REGISTRATION STATEMENT HAS BEEN CONDUCTED SOLELY FOR THE BENEFIT OF PJI TO
DETERMINE CONFORMANCE WITH PJI'S INTERNAL POLICIES, AND NOT TO BENEFIT OR
PROTECT ANY OTHER PERSON. NO INVESTOR SHOULD INTERPRET SUCH REVIEW BY PJI AND
DISPLAY OF ANY PJI LOGOS, TRADEMARKS OR SERVICE MARKS HEREIN AS AN APPROVAL,
ENDORSEMENT, ACCEPTANCE OR ADOPTION OF ANY REPRESENTATION, WARRANTY, STATEMENT
OR PROJECTION CONTAINED IN THE MATERIALS REVIEWED.

THE ENFORCEMENT OR WAIVER OF ANY OBLIGATION OF THE COMPANY UNDER ANY
AGREEMENT BETWEEN THE COMPANY OR ITS AFFILIATES AND PJI OR PJI'S AFFILIATES IS
A MATTER OF PJI OR PJI'S AFFILIATES SOLE DISCRETION. EXCEPT AS SET FORTH IN
THIS PROSPECTUS, NO INVESTOR SHOULD RELY ON ANY REPRESENTATION, ASSUMPTION OR
BELIEF THAT PJI OR PJI'S AFFILIATES WILL WAIVE ITS RIGHTS OR ENFORCE OR WAIVE
PARTICULAR OBLIGATIONS OF THE COMPANY UNDER SUCH AGREEMENTS.

46
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PJ AMERICA, INC. AND SUBSIDIARY
Report of Independent Auditors.......................................... F-2
Consolidated Balance Sheets as of December 31, 1995, December 29, 1996
and March 30, 1997 (Unaudited)......................................... F-3
Consolidated Statements of Income for the Years Ended December 25, 1994,
December 31, 1995, and December 29, 1996 and the Three Months Ended
March 29, 1996 and March 30, 1997 (Unaudited).......................... F-4
Consolidated Statements of Stockholders' Equity for the Years Ended
December 25, 1994, December 31, 1995, and December 29, 1996 and the
Three Months Ended March 30, 1997 (Unaudited).......................... F-5
Consolidated Statements of Cash Flows for the Years Ended December 25,
1994, December 31, 1995, and the Three Months Ended March 29, 1996 and
March 30, 1997 (Unaudited)............................................. F-6
Notes to Consolidated Financial Statements.............................. F-7
OHIO PIZZA DELIVERY CO.
Report of Independent Auditors.......................................... F-16
Balance Sheets as of December 24, 1995, December 29, 1996 and March 30,
1997 (Unaudited)....................................................... F-17
Statements of Income for the Years Ended December 24, 1995 and December
29, 1996 and the Three Months Ended March 29, 1996 and March 30, 1997
(Unaudited)............................................................ F-18
Statements of Stockholders' Equity for the Years Ended December 24,
1995, and December 29, 1996 and the Three Months Ended March 29, 1996
and March 30, 1997 (Unaudited)......................................... F-19
Statements of Cash Flows for the Years Ended December 24, 1995 and
December 29, 1996 and the Three Months Ended March 29, 1996 and March
30, 1997 (Unaudited)................................................... F-20
Notes to Financial Statements........................................... F-21
PJ AMERICA, INC. AND SUBSIDIARIES SUPPLEMENTAL CONSOLIDATED FINANCIAL
STATEMENTS
Report of Independent Auditors.......................................... F-24
Supplemental Consolidated Balance Sheets as of December 31, 1995,
December 29, 1996 and March 30, 1997 (Unaudited)....................... F-25
Supplemental Consolidated Statements of Income for the Years Ended
December 31, 1995 and December 29, 1996 and the Three Months Ended
March 29, 1996 and March 30, 1997 (Unaudited).......................... F-26
Supplemental Consolidated Statements of Stockholders' Equity for the
Years Ended December 31, 1995 and December 29, 1996 and the Three
Months Ended March 30, 1997 (Unaudited)................................ F-27
Supplemental Consolidated Statements of Cash Flows for the Years Ended
December 31, 1995 and December 29, 1996 and the Three Months Ended
March 29, 1996 and March 30, 1997 (Unaudited).......................... F-28
Notes to Supplemental Consolidated Financial Statements................. F-29
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders
PJ America, Inc.

We have audited the accompanying consolidated balance sheets of PJ America,
Inc. and Subsidiary as of December 31, 1995 and December 29, 1996, and the
related consolidated statements of income, stockholders' equity, and cash
flows for the years ended December 25, 1994, December 31, 1995 and December
29, 1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of PJ America,
Inc. and Subsidiary, at December 31, 1995 and December 29, 1996, and the
consolidated results of their operations and their cash flows for the years
ended December 25, 1994, December 31, 1995 and December 29, 1996, in
conformity with generally accepted accounting principles.

/s/ Ernst & Young LLP

Birmingham, Alabama
February 4, 1997

F-2
<PAGE>

PJ AMERICA, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER MARCH 30,
1995 29, 1996 1997
------------ ----------- -----------
(UNAUDITED)
ASSETS
------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents............... $ 224,379 $ 3,660,843 $ 3,897,002
Accounts receivable..................... 24,010 20,624 39,131
Inventories............................. 58,288 189,078 224,149
Advances to related parties............. 132,725 119,773 97,150
Prepaid expenses and other.............. 5,183 186,294 115,329
Investments............................. -- 12,057,972 12,286,300
Deferred income taxes................... -- 104,203 104,203
---------- ----------- -----------
Total current assets.................. 444,585 16,338,787 16,763,264
Net property and equipment................ 1,820,828 5,244,050 5,957,937
Deferred franchise and development costs,
net of accumulated amortization of
$17,424 in 1995, $91,420 in 1996 and
$101,995 in 1997......................... 225,194 706,795 741,221
Other assets.............................. -- 83,689 85,389
---------- ----------- -----------
Total assets.......................... $2,490,607 $22,373,321 $23,547,811
========== =========== ===========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C> <C>
Current liabilities:
Accounts payable........................ $ 8,481 $ 153,376 $ 143,199
Accrued expenses........................ 343,656 1,571,225 2,028,178
Current maturities of bank debt......... 148,887 -- --
Notes payable to stockholders........... 742,846 -- --
---------- ----------- -----------
Total current liabilities............. 1,243,870 1,724,601 2,171,377
Note payable to bank, less current
maturities............................... 174,138 -- --
Deferred income taxes..................... -- 71,180 71,180
Stockholders' equity:
Preferred stock ($1.00 par value per
share; authorized 1,000,000 shares, no
shares issued and outstanding)......... -- -- --
Common stock ($.01 par value per share;
authorized 20,000,000 shares; issued
and outstanding shares of 1,109.5 in
1995 and 4,755,000 in 1996 and 1997)... 3,085 47,550 47,550
Additional paid-in capital.............. 446,260 20,031,411 20,031,411
Retained earnings....................... 623,254 498,579 1,226,293
---------- ----------- -----------
Total stockholders' equity............ 1,072,599 20,577,540 21,305,254
---------- ----------- -----------
Total liabilities and stockholders'
equity .............................. $2,490,607 $22,373,321 $23,547,811
========== =========== ===========
</TABLE>

(See accompanying notes)

F-3
<PAGE>

PJ AMERICA, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
FOR THE YEARS ENDED THREE MONTHS ENDED
------------------------------------- -----------------------
DECEMBER DECEMBER
DECEMBER 25, 31, 29, MARCH 29, MARCH 30,
1994 1995 1996 1996 1997
------------ ----------- ----------- ----------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Restaurant sales........ $6,414,651 $10,456,893 $16,845,711 $2,997,341 $8,769,605
Restaurant operating
expenses:
Cost of sales......... 2,097,613 3,511,245 5,536,846 1,005,598 2,776,776
Salaries and benefits. 1,676,627 2,646,602 4,243,285 760,616 2,235,447
Other operating
expenses............. 1,481,175 2,392,575 3,922,091 677,287 2,058,681
Depreciation and
amortization......... 172,230 274,875 465,193 84,164 252,554
---------- ----------- ----------- ---------- ----------
5,427,645 8,825,297 14,167,415 2,527,665 7,323,458
---------- ----------- ----------- ---------- ----------
Restaurant operating
income................. 987,006 1,631,596 2,678,296 469,676 1,446,147
General and
administrative
expenses............... 433,222 557,143 1,016,291 180,788 464,522
---------- ----------- ----------- ---------- ----------
Operating income........ 553,784 1,074,453 1,662,005 288,888 981,625
Other (expense) income.. (21,921) (65,604) 7,795 (17,382) 155,428
---------- ----------- ----------- ---------- ----------
Income before income
taxes.................. 531,863 1,008,849 1,669,800 271,506 1,137,053
Income tax expense...... -- -- 228,340 -- 409,339
---------- ----------- ----------- ---------- ----------
Net income.............. $ 531,863 $ 1,008,849 $ 1,441,460 $ 271,506 $ 727,714
========== =========== =========== ========== ==========
Net income per share.... $ 0.15
==========
Weighted average shares
outstanding............ 4,881,687
==========
Pro forma income data
(unaudited) (Note 4)
Historical income before
income taxes........... $ 1,008,849 $ 1,669,800 $ 271,506
Pro forma income tax
expense................ 368,230 591,713 99,100
----------- ----------- ----------
Pro forma net income.... $ 640,619 $ 1,078,087 $ 172,406
=========== =========== ==========
Pro forma net income per
share.................. $ 0.36 $ 0.47 $ 0.10
=========== =========== ==========
Weighted average shares
outstanding............ 1,796,689 2,289,667 1,763,820
=========== =========== ==========
</TABLE>

(See accompanying notes)

F-4
<PAGE>

PJ AMERICA, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK
------------------- ADDITIONAL TOTAL
SHARES PAID-IN RETAINED STOCKHOLDERS'
ISSUED AMOUNT CAPITAL EARNINGS EQUITY
----------- ------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance, December 26,
1993................... 100 $28,500 $ 383,415 $ 23,438 $ 435,353
Net income............ -- -- -- 531,863 531,863
Reverse stock split... -- (27,500) 27,500 -- --
S corporation
distributions........ -- -- -- (8,662) (8,662)
Capital contributions:
Incorporation of
Textra Cheese...... 1 1,000 -- -- 1,000
Issue additional
shares to officer.. 8.5 85 35,345 -- 35,430
----------- ------- ----------- ----------- -----------
Balance, December 25,
1994................... 109.5 $ 2,085 $ 446,260 $ 546,639 $ 994,984
Net income............ -- -- -- 1,008,849 1,008,849
S corporation
distributions........ -- -- -- (932,234) (932,234)
Incorporation of Twice
the Cheese........... 1,000 1,000 -- -- 1,000
----------- ------- ----------- ----------- -----------
Balance, December 31,
1995................... 1,109.5 3,085 446,260 623,254 1,072,599
Net income............ -- -- -- 1,441,460 1,441,460
S Corporation
distributions........ -- -- -- (3,398,312) (3,398,312)
Stock splits and
changes in par value
and authorized
shares............... 1,768,890.5 14,615 (14,615) -- --
Issuance of common
stock (net of
issuance costs)...... 1,755,000 17,550 19,224,691 -- 19,242,241
Acquisition of
Virginia group....... 1,230,000 12,300 290,700 1,832,177 2,135,177
Issuance of warrant to
PJI.................. -- -- 84,375 -- 84,375
----------- ------- ----------- ----------- -----------
Balance, December 29,
1996................... 4,755,000 47,550 20,031,411 498,579 20,577,540
Unaudited:
Net income............ -- -- -- 727,714 727,714
----------- ------- ----------- ----------- -----------
Balance, March 30, 1997. 4,755,000 $47,550 $20,031,411 $ 1,226,293 $21,305,254
=========== ======= =========== =========== ===========
</TABLE>

(See accompanying notes)

F-5
<PAGE>

PJ AMERICA, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED THREE MONTHS ENDED
-------------------------------------- -----------------------
DECEMBER 25, DECEMBER 31, DECEMBER 29, MARCH 29, MARCH 30,
1994 1995 1996 1996 1997
------------ ------------ ------------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income.............. $ 531,863 $1,008,849 $ 1,441,460 $ 271,506 $ 727,714
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization......... 172,230 274,875 465,193 84,164 252,554
Deferred income taxes. -- -- (33,023) -- --
Changes in operating
assets and
liabilities:
Accounts receivable. (7,357) (9,869) 59,370 (8,429) (18,507)
Inventories......... (29,851) 57 (63,128) (16,287) (35,071)
Advances to related
parties............ -- (132,725) 28,693 (4,036) 22,623
Prepaid expenses and
other.............. 27,370 2,307 63,224 (31,260) 70,965
Accounts payable.... 1,143 5,353 (18,225) (8,481) (10,177)
Accrued expenses.... 99,312 113,866 843,335 41,088 54,534
Income taxes
payable............ -- -- -- -- 402,418
Other assets............ -- -- (5,737) 73,276 (1,700)
Deferred franchise and
development costs...... (75,771) (104,147) (90,000) (15,000) (45,000)
--------- ---------- ------------ --------- -----------
Net cash provided by
operating activities... 718,939 1,158,566 2,691,162 386,541 1,420,353
INVESTING ACTIVITIES:
Purchases of property
and equipment.......... (738,660) (797,513) (1,106,954) (71,167) (955,866)
Other................... (8,961) 596 -- -- --
Purchases of
investments............ -- -- (12,057,972) -- (228,328)
Purchase of Virginia
Group, net of cash
acquired............... -- -- 985,170 -- --
--------- ---------- ------------ --------- -----------
Net cash used in
investing activities... (747,621) (796,917) (12,179,756) (71,167) (1,184,194)
FINANCING ACTIVITIES:
Proceeds from bank
borrowings............. -- 450,000 1,000,000 -- --
Proceeds from issuance
of common stock........ -- -- 19,242,241 -- --
Payments on bank
borrowings............. -- (126,975) (2,423,025) (35,871) --
Issuance of (payments
on) stockholder notes.. 127,200 315,646 (1,495,846) (10,803) --
Distributions paid...... (8,662) (932,234) (3,398,312) (57,918) --
Capital contributions... 36,430 1,000 -- -- --
--------- ---------- ------------ --------- -----------
Net cash provided (used)
by financing
activities............. 154,968 (292,563) 12,925,058 (104,592) --
--------- ---------- ------------ --------- -----------
Net increase in cash and
cash equivalents....... 126,286 69,086 3,436,464 210,782 236,159
Cash and cash
equivalents at
beginning of period.... 29,007 155,293 224,379 224,379 3,660,843
--------- ---------- ------------ --------- -----------
Cash and cash
equivalents at end of
period................. $ 155,293 $ 224,379 $ 3,660,843 $ 435,161 $ 3,897,002
========= ========== ============ ========= ===========
</TABLE>

(See accompanying notes)

F-6
<PAGE>

PJ AMERICA, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION, DESCRIPTION OF BUSINESS, AND REORGANIZATION

Basis of Presentation

The accompanying consolidated financial statements include the accounts of
PJ America, Inc. and its wholly-owned subsidiary, PJ Cheese, Inc. (the
"Company"). All significant inter-company transactions between the
consolidated companies have been eliminated. Prior to the Company's initial
public offering (the "Offering") and reorganization, the Company's financial
statements represented the combined financial position, results of operations
and cash flows of Extra Cheese, Inc. (Extra Cheese), Textra Cheese Corp.
(Textra) and Twice the Cheese, Inc. (Twice), collectively referred to herein
as the "Alabama Group." Those financial statements excluded the combined
financial position of PJVA, Inc. and PJV, Inc., collectively referred to as
the "Virginia Group" prior to their acquisition on October 30, 1996 (See Note
5).

The accompanying unaudited consolidated interim financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments, consisting of normal recurring accruals, considered necessary for
a fair presentation have been included. Operating results for the three months
ended March 30, 1997 are not necessarily indicative of the results that may be
expected for the year ending December 28, 1997.

Extra Cheese, Textra, and Twice operated as S corporations through October
30, 1996, when their S corporation elections were terminated. As a result,
they were not subject to federal or state income tax before October 30, 1996.

Pro forma information for the years ended December 31, 1995 and December 29,
1996 have been presented as if the Company had been treated as a C corporation
rather than an S corporation, with an assumed effective income tax rate of
36.5%.

DESCRIPTION OF BUSINESS

The Company operates pizza delivery and carry-out restaurants under the
trademark "Papa John's" in Birmingham, Alabama and the surrounding area;
Norfolk, Richmond, and Virginia Beach, Virginia and surrounding areas; and in
East Texas. At December 29, 1996, the Company operated 46 restaurants. In
addition to the areas the Company currently has restaurants, the Company also
holds franchise and development rights for Ventura, Kern, San Luis Obispo and
Santa Barbara counties in California; Vancouver, Canada and the surrounding
area; and Puerto Rico.

REORGANIZATION

The Company was formed in August, 1996 to succeed to the businesses of five
Papa John's International, Inc. (PJI) franchisees. Extra Cheese entered into
an Agreement dated June 10, 1996, as amended on July 10, 1996, and a Plan of
Merger with Twice, Textra, PJVA, Inc. and PJV, Inc., pursuant to which all
such corporations agreed to be merged into PJ Cheese, Inc. (PJ Cheese), a
wholly-owned subsidiary of Extra Cheese, in exchange for shares of common
stock of Extra Cheese. On October 30, 1996, concurrent with the completion of
the Offering (i) all such corporations merged into PJ Cheese; (ii) Extra
Cheese contributed to PJ Cheese all of the assets of Extra Cheese relating to
its restaurants, with PJ Cheese assuming all of Extra Cheese's liabilities
relating thereto; and (iii) Extra Cheese merged into the Company with the
stockholders of Extra Cheese receiving an aggregate of 3,000,000 shares of
common stock of the Company (the "Reorganization"). Accordingly, the Company
is the parent of PJ Cheese, and PJ Cheese owns all of the Papa John's
restaurants which were owned by Extra Cheese, Textra, Twice, PJVA, Inc. and
PJV, Inc. (collectively, the "Predecessor Companies").

F-7
<PAGE>

PJ AMERICA, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The Reorganization was an exchange of non-monetary assets by stockholders
and has been accounted for at historical cost.

2. SIGNIFICANT ACCOUNTING POLICIES

Fiscal Year

The Company's fiscal year ends on the last Sunday in December of each year.
The 1996 and 1994 fiscal years consisted of 52 weeks. The 1995 fiscal year
consisted of 53 weeks.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from these estimates.

Cash Equivalents

Cash equivalents consist of highly liquid investments with a maturity of
three months or less at date of purchase. These investments are carried at
cost, which approximates fair value.

Inventories

Inventories consist of food products, paper goods and supplies and are
stated at the lower of cost, determined under the first-in, first-out (FIFO)
method, or market. Virtually all of the Company's food products and supplies
are purchased from PJI.

Property and Equipment

Property and equipment are stated at cost. Depreciation is provided using
the straight-line method over the estimated useful lives of the assets, which
range from three to seven years for restaurant and other equipment, and up to
20 years for buildings and improvements. Leasehold improvements are amortized
over the terms of the respective leases, including the first renewal period
(generally five to ten years). Normal repair and maintenance costs are
expensed as incurred.

Investments

The Company determines the appropriate classification of investment
securities at the time of purchase and reevaluates such designation as of each
balance sheet date. All investment securities held by the Company have been
classified as held-to-maturity. Held-to-maturity investment securities are
stated at amortized cost with any amortization of premiums and accretion of
discounts included in interest income.

Development and Franchise Fees

Development fees paid by the Company to PJI for the right to open a certain
number of restaurants in a geographic area are deferred and amortized to
expense on a pro rata basis as each restaurant is opened. Franchise fees are
generally paid when each restaurant is opened and are deferred and amortized.
Deferred development and franchise fees are amortized over a 20 year period
using the straight-line method beginning with the opening of each restaurant.

Advertising and Related Costs

F-8
<PAGE>

PJ AMERICA, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
are expensed as incurred and were approximately $347,000 in 1994, $583,000 in
1995 and $1 million in 1996, and are included in other operating expenses in
the consolidated statements of income.

Stock-Based Compensation

The Company follows the provisions of Accounting Principles Board Opinion
(APB) No. 25 for its stock-based compensation awards (see Note 13).

Income Taxes

On October 29, 1996, the Predecessor Companies terminated their status as S
corporations and the Company became subject to federal and state income taxes.
Concurrently, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 109, "Accounting for Income Taxes," and accordingly, there was no
cumulative effect of adopting SFAS No. 109, and prior year financial
statements were not restated. In accordance with the provisions of SFAS No.
109, deferred income taxes reflect the temporary tax consequences on future
years of differences between the tax and financial statement basis of assets
and liabilities.

Pre-Opening Costs

Pre-opening costs, which represent certain expenses incurred before a
restaurant opens, are expensed as incurred.

Net Income Per Share

Net income per share information is not presented because such data is not
meaningful (See Notes 4 and 5).

Accounting Changes

Effective January 1, 1996, the Company adopted SFAS No. 121, "Accounting for
the Impairment of Long Lived Assets and for Long Lived Assets to be Disposed
Of." The adoption of SFAS 121 had no impact on the Company.

3. INITIAL PUBLIC OFFERING

The Company completed the offering of its common stock on October 30, 1996,
pursuant to which the Company sold 1,755,000 shares of its common stock,
including 135,000 shares exercised to cover underwriter over-allotments, at an
initial public offering price of $12.50 per share. Net proceeds from the
Offering (after deducting the underwriting discount of $1.5 million and
expenses of $1.2 million) were $19.2 million. Such proceeds were partially
used to fully retire the outstanding balance owed to banks and shareholders,
pay S Corporation distributions, and for general corporate purposes.

4. PRO FORMA INFORMATION (UNAUDITED)

The Company terminated its status as an S corporation on October 29, 1996.
Pro forma income taxes have been presented to reflect a provision for federal,
state, and local income taxes at an assumed effective rate of 36.5% prior to
the Reorganization.

Pro forma net income per share is based on the weighted averaged number of
shares of common stock and common stock equivalents outstanding during the
period. The pro forma net income per share amounts were calculated assuming
that the number of shares of common stock in the Offering necessary to
generate sufficient proceeds to fund the payment of the Company's
undistributed S corporation earnings. A summary of the

F-9
<PAGE>

PJ AMERICA, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
components of the weighted average shares of common stock and equivalents
outstanding during the years ended December 31, 1995 and December 29, 1996 is
as follows:

<TABLE>
<CAPTION>
1995 1996
--------- ---------
<S> <C> <C>
Total number of common shares outstanding throughout the
period................................................. 1,770,000 1,770,000
Weighted average number of common shares issued in
connection with the Offering........................... -- 492,116
Shares issuable upon net exercise of outstanding stock
options................................................ -- 26,498
Adjustment to reflect shares issued to pay S corporation
distributions.......................................... 26,689 1,053
--------- ---------
Total weighted average shares and equivalents
outstanding............................................ 1,796,689 2,289,667
========= =========
</TABLE>

5. ACQUISITION OF VIRGINIA GROUP--PRO FORMA INFORMATION (UNAUDITED)

Concurrent with the Reorganization, the Company acquired PJVA, Inc. and PJV,
Inc. (See Note 1). The acquisition was accounted for at historical cost, with
the shareholders of PJVA, Inc. and PJV, Inc. receiving an aggregate of
1,230,000 shares of common stock of the Company.

The following represents the unaudited pro forma results of operations for
the years ended December 31, 1995 and December 29, 1996 as if the
Reorganization occurred at the beginning of the Company's fiscal year. Pro
forma net income reflects an assumed corporate income tax rate of 36.5% prior
to the Reorganization.

<TABLE>
<CAPTION>
1995 1996
----------- -----------
<S> <C> <C>
Restaurant sales................................. $23,099,050 $30,264,352
Restaurant operating expenses:
Cost of sales.................................. 7,827,113 10,115,854
Salaries and benefits.......................... 5,794,983 7,460,499
Other operating expenses....................... 5,742,900 7,468,389
Depreciation and amortization.................. 656,632 905,178
----------- -----------
20,021,628 25,949,920
----------- -----------
Restaurant operating income...................... 3,077,422 4,314,432
General and administrative expenses.............. 1,042,714 1,633,812
----------- -----------
Operating income................................. 2,034,708 2,680,620
Other expense, net............................... 221,466 127,305
----------- -----------
Income before income taxes....................... 1,813,242 2,553,315
Pro forma income tax expense..................... 661,833 912,514
----------- -----------
Pro forma net income............................. $ 1,151,409 $ 1,640,801
=========== ===========
Pro forma net income per share................... $ 0.37 $ 0.48
=========== ===========
Weighted average shares outstanding.............. 3,111,828 3,429,896
=========== ===========
</TABLE>

The pro forma information is not indicative of the results of operations
that actually would have been obtained if the transactions had occurred at the
beginning of the Company's fiscal year. Additionally, the pro forma
information is not intended to be a projection of future results.

F-10
<PAGE>

PJ AMERICA, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

6. INVESTMENTS

A summary of the Company's held-to-maturity securities as of December 29,
1996 follows:

<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED
AMORTIZED HOLDING HOLDING ESTIMATED
COST GAINS LOSSES FAIR VALUE
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
U.S. Government
securities............... $ 8,980,113 $ -- $(1,849) $ 8,978,264
Municipal bonds........... 3,077,859 2,686 (665) 3,079,880
----------- ------ ------- -----------
Total..................... $12,057,972 $2,686 $(2,514) $12,058,144
=========== ====== ======= ===========
</TABLE>

All investment securities have a contractual maturity of one year or less.

7. NET PROPERTY AND EQUIPMENT

Net property and equipment consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 29,
1995 1996
------------ ------------
<S> <C> <C>
Land........................................... $ 114,079 $ 114,079
Building and improvements...................... 567,794 1,235,075
Leasehold improvements......................... 267,266 2,247,597
Restaurant equipment........................... 1,163,859 3,676,972
Other.......................................... 246,138 31,465
---------- -----------
2,359,136 7,305,188
Less accumulated depreciation.................. (538,308) (2,061,138)
---------- -----------
Net property and equipment..................... $1,820,828 $ 5,244,050
========== ===========
</TABLE>

8. ACCRUED EXPENSES

Accrued expenses consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 29,
1995 1996
------------ ------------
<S> <C> <C>
Salaries and wages.............................. $ 79,979 $ 376,492
Taxes, other than income........................ 93,585 260,503
Advertising and royalties....................... 55,593 179,915
Reserve for relocation.......................... -- 116,002
Accrued Offering expenses....................... -- 276,256
Other........................................... 114,499 362,057
-------- ----------
$343,656 $1,571,225
======== ==========
</TABLE>

F-11
<PAGE>

PJ AMERICA, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

9. NOTE PAYABLE TO BANK

Note payable to bank consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 29,
1995 1996
------------ ------------
<S> <C> <C>
Note payable to bank............................ $ 323,025 $ --
Less current maturities of bank debt............ (148,887) --
--------- -----
$ 174,138 $ --
========= =====
</TABLE>

Note payable to bank with interest rates of 8.9% and 8.0% in 1995 and 1996,
respectively, were retired during 1996 with proceeds from the Offering. The
interest payments on the notes payable were approximately $36,000 and $7,000
in 1995 and 1996, respectively (none in 1994).

10. INCOME TAXES

Concurrent with the Reorganization on October 30, 1996, the Predecessor
Companies (See Note 1) terminated their status as S corporations. Accordingly,
the Company is now subject to federal and state income taxes. At the date of
termination of S corporation status, the Company recorded a net deferred tax
asset and corresponding credit to income tax expense for cumulative temporary
differences between the tax basis and the reported amounts of the Company's
assets and liabilities in the consolidated financial statements. These
differences consisted primarily of deferred expenses and accumulated
depreciation on property and equipment. At the date of termination of S
corporation status, the net differences equaled approximately $109,000,
resulting in a net deferred tax asset and corresponding credit to income tax
expense of approximately $40,000.

Additionally, in connection with the termination of the Predecessor
Companies' S corporation status, distributions were made to their stockholders
of approximately $2.0 million, representing substantially all undistributed S
corporation earnings (as determined for tax reporting purposes) at the time of
termination. Prior to the termination of the Company's S corporation status,
distributions paid to stockholders in 1996 were approximately $1.4 million.

A summary of income tax expense for 1996 is as follows:

<TABLE>
<S> <C>
Current
Federal....................................................... $241,340
State and local............................................... 20,023
Deferred (federal and state).................................... 6,934
Deferred tax credit resulting from change in tax status......... (39,957)
--------
Income tax expense.............................................. $228,340
========
</TABLE>

Net deferred tax assets are comprised of the following at December 29, 1996:

<TABLE>
<S> <C>
Deferred tax assets--miscellaneous reserves and accruals........ $104,203
Deferred tax liabilities--accelerated depreciation.............. 71,180
--------
Net deferred tax assets......................................... $ 33,023
========
</TABLE>

F-12
<PAGE>

PJ AMERICA, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The reconciliation of income tax computed at the U.S. federal statutory rate
to income tax expense for the year ended December 29, 1996 is as follows:

<TABLE>
<S> <C>
Income tax expense at U.S. federal statutory rate (attributable
to income before income taxes from operations for the period
October 30, 1996 through December 29, 1996)................... $264,408
State and local income taxes--net.............................. 13,187
Tax exempt interest income..................................... (9,978)
Deferred tax credit resulting from change in tax status........ (39,957)
Other.......................................................... 680
--------
Income tax expense............................................. $228,340
========
</TABLE>

Income tax payments amounted to $225,000 in 1996.

11. RELATED PARTY TRANSACTIONS

Franchisor

Under the terms of area development agreements between the Company and PJI,
the Company paid development fees ranging from $1,700 to $5,000 per
restaurant. Franchise fees ranging from $10,000 to $15,000 have been paid as
each new restaurant was opened. Royalties in the amount of 4% of restaurant
sales are paid monthly to PJI, and a monthly contribution of 0.50% to 0.75% of
sales is paid to the Marketing fund of PJI. The Company is required to buy
certain proprietary food products from PJI's commissary subsidiary and have
elected to buy substantially all other food products, supplies, marketing
materials and equipment from PJI or its subsidiaries.

The Company's franchise and development agreements with PJI contain certain
requirements regarding the number of units to be opened in the future. Should
the Company fail to comply with the required development schedule or with the
requirements of the agreements for restaurants within areas covered by the
development agreements, PJI has the right to terminate the exclusive nature of
the Company franchises. The franchise agreements also provide PJI with
significant rights regarding the business and operations of the Company.

In connection with the Company's Offering, the Company issued a warrant to
PJ USA (a subsidiary of PJI) to purchase 225,000 shares of common stock at
$11.25 per share. The warrant was issued in consideration for, among other
things, the rights to enter into development agreements for certain counties
in California; Vancouver, Canada and the surrounding area; and Puerto Rico.
The Company expects to pay all standard development and franchise fees in
connection with operating restaurants in these territories. The warrant is
exercisable in whole or in part at any time until October 30, 2001. The
portion of the warrant discount attributable to the granting of the various
development rights, approximately $84,000, has been capitalized into deferred
franchise and development costs.

Affiliate Markets

Certain officers and directors of the Company own equity interests in other
entities that franchise Papa John's restaurants. The Company also provides
management and operational supervision services to three related entities; PJ
Utah, LLC, PJ Louisiana, Inc., and PJ Iowa, LLC. Currently, the Company
receives monthly management fees of $20,000 from PJ Utah, $5,000 from PJ
Louisiana, and $5,000 from PJ Iowa. During 1996, the Company received $100,000
from PJ Utah, $20,000 from PJ Louisiana, and $10,000 from PJ Iowa. Management
fee income is netted against general and administrative expenses in the
consolidated statements of income.

F-13
<PAGE>

PJ AMERICA, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

PJ Utah, LLC holds the development and franchise rights for Papa John's
restaurants in Utah. The Company and PJ Utah, LLC have entered into an option
agreement granting the Company the option to acquire for cash the operations
and development rights for the franchised Papa John's restaurants in Utah. The
option is exercisable at any time during 1998, but expires December 31, 1998.
The purchase price of the option is equal to the aggregate amount invested in
the Papa John's restaurants, operations (including operating losses, if any)
and related matters in Utah by PJ Utah, LLC, including interest paid to a
third party and/or its members on any loans, an imputed yield on all equity
invested in PJ Utah, LLC equal to the "prime rate," as published in The Wall
Street Journal, plus $10,000 for each store that is open at the time the
option is exercised. The Company expects, but is not obligated, to exercise
such option in 1998.

The Company has obtained a right of first refusal to acquire franchise and
development rights for PJ Louisiana, Inc. and PJ Iowa, L.C. However, there is
no agreement or understanding between the Company and these entities or
stockholders to acquire such entities or their assets.

Stockholders

Notes payable to stockholders were due on demand and carried interest at
7.0%. The notes payable were fully paid at the closing of the Offering.
Interest expense related to these notes was approximately $34,000 in 1994,
$47,000 in 1995 and $39,000 in 1996. Interest payments were approximately
$18,000 in 1994, $4,000 in 1995 and $98,000 in 1996.

In connection with the Company's Offering, certain officers, directors and
former employees received approximately $250,000 for consulting services
provided to the Company with respect to the structuring, organization and
implementation of the Offering.

12. LEASES

The Company leases office and retail space under operating leases with terms
generally ranging from three to five years and providing for at least one
renewal. Certain leases further provide that the lease payments may be
increased annually based on the Consumer Price Index. Future minimum lease
payments are as follows:

<TABLE>
<S> <C>
1997................................... $ 512,160
1998................................... 459,385
1999................................... 307,210
2000................................... 214,505
2001................................... 101,046
Thereafter............................. 44,038
----------
$1,638,344
==========
</TABLE>

Rent expense was approximately $96,000 in 1994, $150,000 in 1995, and
$271,000 in 1996.

13. STOCK OPTIONS

In August, 1996, the Company adopted the 1996 Stock Ownership Incentive Plan
(the "1996 Plan") and a Non-Employee Directors 1996 Stock Incentive Plan (the
"Director's Plan"). The 1996 Plan reserves 600,000 shares of common stock for
future issuance, for either stock options, performance units, or restricted
stock (which is limited to 120,000 of the total 600,000 shares reserved). All
options granted pursuant to the 1996 Plan must have an exercise price equal to
at least 100% of the fair market value of the underlying shares on the date of
grant, and incentive stock options granted to any employee owning more than
10.0% of the combined voting power of all classes of stock must be granted at
an exercise price at least equal to 110 % of such fair market value. A
compensation committee established by the Board of Directors selects employees
to receive awards under the 1996 Plan and determines terms, conditions, and
limitations applicable to each award. On October 24,

F-14
<PAGE>

PJ AMERICA, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
1996, the Company granted 266,500 stock options under the 1996 Plan, which had
an exercise price of $12.50, the market price of the Company's stock on the
date of grant. Options granted to date under the 1996 Plan will become
exercisable in four equal annual installments, beginning on the first
anniversary of such option's date of grant.

The Director's Plan reserves 160,000 shares of common stock for future
issuance. Each non-employee director received options to purchase 12,000
shares on the initial grant date (the "Initial Grants"). Each new non-employee
director will be granted options to purchase 12,000 shares of common stock on
the date of his or her election. The Company will thereafter annually issue,
beginning on the first anniversary of the initial grant date, to each of the
Company's non-employee directors, options to purchase 4,000 shares of common
stock. Thereafter, all options will be granted at the fair market value of the
common stock on the date of grant. All options granted under the Director's
Plan will become exercisable in four equal annual installments, beginning on
the first anniversary of such option's date of grant. On October 24, 1996, the
Company granted 72,000 stock options under the Director's Plan, which had an
exercise price of $12.50, the market price of the Company's common stock at
the date of the grant.

The Company applies APB Opinion 25, Accounting for Stock Issued to
Employees, and related interpretations in accounting for the 1996 Plan and the
Director's Plan (the "Plans"). Accordingly, no compensation cost has been
recognized for its Plans. Had compensation cost for the Company's plans been
determined based on the fair value at the grant date consistent with the
method prescribed in SFAS No. 123, Accounting for Stock-Based Compensation,
the Company's pro forma net income (as adjusted for pro forma income tax
expense-see Note 4) and earnings per share would have been reduced to the pro
forma amounts indicated below:

<TABLE>
<CAPTION>
1996
----------
<C> <S> <C>
Pro forma net income As reported........................ $1,078,087
As adjusted for SFAS No. 123....... 1,021,782
Primary earnings per share As reported........................ $ 0.47
As adjusted for SFAS No. 123....... 0.45
</TABLE>

The weighted average fair value of the stock options granted during the year
was $5.63. The fair value of each stock option award is estimated on the date
of grant using the Black-Scholes option-pricing model with the following
weighted-average assumptions: expected volatility of 49.1%, risk-free interest
rate of 6.0%, and an expected life of 4 years.

As of December 29, 1996, 333,500 and 88,000 shares were available for future
issuance under the 1996 Plan and Director's Plan, respectively.

F-15
<PAGE>

REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders
Ohio Pizza Delivery Co.

We have audited the accompanying balance sheets of Ohio Pizza Delivery Co.
as of December 24, 1995 and December 29, 1996, and the related statements of
income, stockholders' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Ohio Pizza Delivery Co. at
December 24, 1995 and December 29, 1996, and the results of its operations and
its cash flows for the years then ended, in conformity with generally accepted
accounting principles.

/s/ Ernst & Young LLP

Birmingham, Alabama
April 4, 1997

F-16
<PAGE>

OHIO PIZZA DELIVERY CO.

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 24, DECEMBER 29, MARCH 30,
1995 1996 1997
------------ ------------ ----------
(UNAUDITED)
ASSETS
------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents.............. $ 282,363 $ 415,070 $ 431,262
Accounts receivable.................... 2,297 6,891 4,657
Inventories............................ 33,898 39,656 32,928
Prepaid expenses and other............. 18,309 34,673 34,166
---------- ---------- ----------
Total current assets................. 336,867 496,290 503,013
Net property and equipment............... 761,226 692,336 679,214
Deferred franchise and development costs,
net of accumulated amortization of
$2,072 in 1995, $4,733 in 1996 and
$7,096 in 1997.......................... 39,234 51,573 49,210
---------- ---------- ----------
Total assets......................... $1,137,327 $1,240,199 $1,231,437
========== ========== ==========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C> <C>
Current liabilities:
Accounts payable....................... $ 160,877 $ 35,613 $ 29,551
Accrued expenses....................... 158,741 194,287 182,782
Notes payable.......................... 5,000 70,000 --
---------- ---------- ----------
Total current liabilities............ 324,618 299,900 212,333
Stockholders' equity:
Common stock (no par value per share;
authorized 750 shares; 100 issued and
outstanding).......................... -- -- --
Additional paid-in capital............. 100 100 100
Retained earnings...................... 812,609 940,199 1,019,004
---------- ---------- ----------
Total stockholders' equity........... 812,709 940,299 1,019,104
---------- ---------- ----------
Total liabilities and stockholders'
equity.............................. $1,137,327 $1,240,199 $1,231,437
========== ========== ==========
</TABLE>

(See accompanying notes)

F-17
<PAGE>

OHIO PIZZA DELIVERY CO., INC.

STATEMENTS OF INCOME

<TABLE>
<CAPTION>
FOR THE YEARS ENDED THREE MONTHS ENDED
------------------------- ----------------------
DECEMBER 24, DECEMBER 29, MARCH 29, MARCH 30,
1995 1996 1996 1997
------------ ------------ ----------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Restaurant sales............ $6,287,083 $7,703,943 $1,917,531 $1,836,163
Restaurant operating
expenses:
Cost of sales............. 2,119,217 2,527,257 640,961 595,863
Salaries and benefits..... 1,511,188 1,869,013 465,488 480,195
Other operating expenses.. 1,426,652 1,911,002 444,294 421,398
Depreciation and
amortization............. 118,560 162,124 37,647 40,000
---------- ---------- ---------- ----------
5,175,617 6,469,396 1,588,390 1,537,456
---------- ---------- ---------- ----------
Restaurant operating income. 1,111,466 1,234,547 329,141 298,707
General and administrative
expenses................... 330,266 386,027 97,313 99,955
---------- ---------- ---------- ----------
Operating income............ 781,200 848,520 231,828 198,752
Other (expense) income...... (11,667) 2,785 -- --
---------- ---------- ---------- ----------
Income before income taxes.. 769,533 851,305 231,828 198,752
Income tax expense.......... 9,213 21,964 6,165 4,947
---------- ---------- ---------- ----------
Net income.................. $ 760,320 $ 829,341 $ 225,663 $ 193,805
========== ========== ========== ==========
Pro forma income data
(unaudited) (Note 1):
Historical income before
income taxes............... $ 769,533 $ 851,305 $ 231,828 $ 198,752
Pro forma income tax
expense.................... 315,509 349,035 95,050 81,488
---------- ---------- ---------- ----------
Pro forma net income........ $ 454,024 $ 502,270 $ 136,778 $ 117,264
========== ========== ========== ==========
</TABLE>

(See accompanying notes)

F-18
<PAGE>

OHIO PIZZA DELIVERY CO.

STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK
------------- ADDITIONAL TOTAL
SHARES PAID-IN RETAINED STOCKHOLDERS'
ISSUED AMOUNT CAPITAL EARNINGS EQUITY
------ ------ ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Balance, December 25, 1994.. 100 $-- $100 $ 473,540 $ 473,640
Net income................ -- -- -- 760,320 760,320
S corporation
distributions............ -- -- -- (421,251) (421,251)
--- ---- ---- ---------- ----------
Balance, December 24, 1995.. 100 -- 100 812,609 812,709
Net income................ -- -- -- 829,341 829,341
S corporation
distributions............ -- -- -- (701,751) (701,751)
--- ---- ---- ---------- ----------
Balance, December 29, 1996.. 100 -- 100 940,199 940,299
Unaudited:
Net income................ -- -- -- 193,805 193,805
S corporation
distributions............ -- -- -- (115,000) (115,000)
--- ---- ---- ---------- ----------
Balance, March 30, 1997..... 100 $-- $100 $1,019,004 $1,019,104
=== ==== ==== ========== ==========
</TABLE>

(See accompanying notes)

F-19
<PAGE>

OHIO PIZZA DELIVERY CO.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED THREE MONTHS ENDED
------------------------- ----------------------
DECEMBER 24, DECEMBER 29, MARCH 29, MARCH 30,
1995 1996 1996 1997
------------ ------------ ----------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income................... $760,320 $829,341 $225,663 $193,805
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization.............. 118,560 162,124 37,647 40,000
Changes in operating assets
and liabilities:
Accounts receivable...... 4,154 (4,594) 379 2,234
Inventories.............. (5,776) (5,758) (5,507) 6,728
Prepaid expenses and
other................... (15,202) (16,364) (834) 507
Accounts payable......... 148,849 (125,264) (98,355) (6,062)
Accrued expenses......... (260,097) 35,546 (43,056) (11,505)
Deferred franchise and
development costs........... (14,900) (15,000) -- --
-------- -------- -------- --------
Net cash provided by
operating activities........ 735,908 860,031 115,937 225,707
INVESTING ACTIVITIES:
Purchases of property and
equipment................... (281,031) (173,058) (92,888) (24,515)
Writedown of property and
equipment................... -- 75,016 -- --
Other........................ 43,880 7,469 -- --
-------- -------- -------- --------
Net cash used in investing
activities.................. (237,151) (90,573) (92,888) (24,515)
FINANCING ACTIVITIES:
Proceeds from notes payable.. -- 65,000 120,000 (70,000)
Payments on stockholder
notes....................... (61,750) -- -- --
Distributions paid........... (421,251) (701,751) (45,000) (115,000)
-------- -------- -------- --------
Net cash provided (used) by
financing activities........ (483,001) (636,751) 75,000 (185,000)
-------- -------- -------- --------
Net increase in cash and cash
equivalents................. 15,756 132,707 98,049 16,192
Cash and cash equivalents at
beginning of period......... 266,607 282,363 282,363 415,070
-------- -------- -------- --------
Cash and cash equivalents at
end of period............... $282,363 $415,070 $380,412 $431,262
======== ======== ======== ========
</TABLE>

(See accompanying notes)

F-20
<PAGE>

OHIO PIZZA DELIVERY CO.

NOTES TO FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS

Basis of Presentation

The accompanying statements include the accounts of Ohio Pizza Delivery Co.
(the "Company"). The Company was incorporated in 1991 and began operations in
January 1992. Two individuals and their family members own 80% of the
Company's outstanding common stock.

The accompanying unaudited interim financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments,
consisting of normal recurring accruals, considered necessary for a fair
presentation have been included. Operating results for the three months ended
March 30, 1997 are not necessarily indicative of the results that may be
expected for the year ending December 28, 1997.

Pro forma information for the years ended December 24, 1995 and December 29,
1996 have been presented as if the Company had been treated as a C corporation
rather than an S corporation, with an adjustment to income tax expense to
reflect an assumed effective income tax rate of 41.0%.

Description of Business

The Company operates pizza delivery and carry-out restaurants under the
trademark "Papa John's" in Akron, Ohio, and the surrounding area. At December
29, 1996, the Company operated eight restaurants. The Company is a franchisee
of Papa John's International, Inc. ("PJI").

2. SIGNIFICANT ACCOUNTING POLICIES

Fiscal Year

The Company operates on a 52-53 week fiscal year. The 1996 fiscal year
consisted of 53 weeks and the 1995 fiscal year consisted of 52 weeks.

Use of Estimates

Inventories

Property and Equipment

Property and equipment are stated at cost. Depreciation is provided using
the straight-line method over the estimated useful lives of the assets, which
range from three to seven years for restaurant and other equipment. Leasehold
improvements are amortized over the terms of the respective leases, including
the first renewal period (generally five to ten years). Normal repair and
maintenance costs are expensed as incurred.

Development and Franchise Fees

F-21
<PAGE>

OHIO PIZZA DELIVERY CO.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
fees are generally paid when each restaurant is opened and are deferred and
amortized. Deferred development and franchise fees are amortized over a 20
year period using the straight-line method beginning with the opening of each
restaurant.

Advertising and Related Costs

Advertising and related costs include restaurant activities such as mail
coupons, doorhangers, promotional items, and required contributions to PJI's
production fund (0.50% to 0.75% of restaurant sales) and contributions
required by the franchisor to local market cooperative advertising funds (2%
of sales). Such amounts are expensed as incurred and were approximately
$397,000 in 1995, $516,000 in 1996, and are included in other operating
expenses in the statements of income.

Stock-Based Compensation

The Company follows the provisions of Accounting Principles Board Opinion
(APB) No. 25 for its stock-based compensation awards.

Income Taxes

From November 1991 (inception) through December 25, 1994, the Company was
taxable as a regular C corporation. Effective December 26, 1994, the Company
elected to be taxed under Subchapter S of the Internal Revenue Code. As a
result of the election, federal and state income taxes on the net income of
the Company are payable personally by the stockholders. The statements of
income include a provision for local income taxes for 1995 and 1996.

Pre-Opening Costs

Pre-opening costs, which represent certain expenses incurred before a
restaurant opens, are expensed as incurred.

Accounting Changes

Effective December 25, 1995, the Company adopted Financial Accounting
Standards Board Statement No. 121 (FAS 121), "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." The adoption
of FAS 121 had no impact on the Company.

3. NET PROPERTY AND EQUIPMENT

Net property and equipment consists of the following:

<TABLE>
<CAPTION>
DECEMBER 24, DECEMBER 29,
1995 1996
------------ ------------
<S> <C> <C>
Leasehold improvements.......................... $ 471,856 $ 522,407
Restaurant equipment............................ 555,299 550,986
---------- ----------
1,027,155 1,073,393
Less accumulated depreciation................... (265,929) (381,057)
---------- ----------
Net property and equipment...................... $ 761,226 $ 692,336
========== ==========
</TABLE>

4. ACCRUED EXPENSES

Accrued expenses consists of the following:

<TABLE>
<CAPTION>
DECEMBER 24, DECEMBER 29,
1995 1996
------------ ------------
<S> <C> <C>
Salaries and wages.............................. $ 60,368 $ 63,613
Advertising and royalties....................... 59,516 85,361
Other........................................... 38,857 45,313
-------- --------
$158,741 $194,287
======== ========
</TABLE>

F-22
<PAGE>

OHIO PIZZA DELIVERY CO.

NOTES TO FINANCIAL STATEMENTS--(CONCLUDED)
5. NOTE PAYABLE TO BANK

Note payable to bank consisted of a promissary note with interest rates of
9.0% and 8.75% in 1995 and 1996, respectively, and was retired in January
1997. The promissary note was secured by equipment and Company common stock.
The interest payments on the notes payable were approximately $2,700 and
$9,300 in 1995 and 1996, respectively.

6. RELATED PARTY TRANSACTIONS

Under the terms of area development agreements between the Company and PJI,
the Company paid development fees ranging from $350 to $3,500 per restaurant.
Franchise fees ranging from $1,150 to $15,000 have been paid as each new
restaurant was opened. Royalties in the amount of 4% of restaurant sales are
paid monthly to PJI, and a monthly contribution of 0.50% to 0.75% of sales is
paid to the Marketing fund of PJI. The Company is required to buy certain
proprietary food products from PJI's commissary subsidiary and have elected to
buy substantially all other food products, supplies, marketing materials and
equipment from PJI or its subsidiaries.

The Company's franchise and development agreements with PJI contain certain
requirements regarding the number of units to be opened in the future. The
Company has fulfilled its development agreement with PJI. The franchise
agreements also provide PJI with significant rights regarding the business and
operations of the Company.

7. LEASES

<TABLE>
<S> <C>
1997..................................... $169,064
1998..................................... 152,529
1999..................................... 136,528
2000..................................... 80,032
2001..................................... 39,321
Thereafter............................... 9,723
--------
$587,197
========
</TABLE>

Rent expense was approximately $110,000 in 1995, and $142,000 in 1996.

8. STOCK OPTION

In March, 1995, an employee who is the Operations Director was granted an
option to purchase 5 shares of the Company stock at an exercise price of
$16,500 per share. No compensation expense was recorded as the option was
issued at fair market value as determined by an independent appraisal. The
employee has not exercised the option to acquire Company stock.

9. SHAREHOLDERS AGREEMENT

In April 1992, the shareholders of the Company entered into an agreement
whereby among other things, the transfer or sale of the Company's common stock
was required to be first offered to the Company. Upon the death of a
shareholder, the Company was required to purchase the stock at fair market
value. As a result of this requirement, the Company obtained officers life
insurance for two of their shareholders, who owned 80% of the common stock.

F-23
<PAGE>

REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders
PJ America, Inc.

We have audited the accompanying supplemental consolidated balance sheets of
PJ America, Inc. and Subsidiaries (formed as a result of the consolidation of
PJ America, Inc. and Subsidiary and Ohio Pizza Delivery Co.) as of December
31, 1995 and December 29, 1996, and the related supplemental consolidated
statements of income, stockholders' equity, and cash flows for the years ended
December 31, 1995 and December 29, 1996. These supplemental financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these supplemental financial
statements based on our audits.

In our opinion, the supplemental financial statements referred to above
present fairly, in all material respects, the supplemental consolidated
financial position of PJ America, Inc. and Subsidiaries, at December 31, 1995
and December 29, 1996, and the consolidated supplemental results of their
operations and their cash flows for the years ended December 31, 1995 and
December 29, 1996, after giving retroactive effect to the merger of Ohio Pizza
Delivery Co., as described in the notes to the supplemental consolidated
financial statements, in conformity with generally accepted accounting
principles.

/s/ Ernst & Young LLP

Birmingham, Alabama
June 17, 1997

F-24
<PAGE>

PJ AMERICA, INC. AND SUBSIDIARIES

SUPPLEMENTAL CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER MARCH 30,
1995 29, 1996 1997
------------ ----------- -----------
(UNAUDITED)
ASSETS
------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents............... $ 506,742 $ 4,075,913 $ 4,328,264
Accounts receivable..................... 26,307 27,515 43,788
Inventories............................. 92,186 228,734 257,077
Advances to related parties............. 132,725 119,773 97,150
Prepaid expenses and other.............. 23,492 220,967 149,495
Investments............................. -- 12,057,972 12,286,300
Deferred income taxes................... -- 104,203 104,203
---------- ----------- -----------
Total current assets.................. 781,452 16,835,077 17,266,277
Net property and equipment................ 2,582,054 5,936,386 6,637,151
Deferred franchise and development costs,
net of accumulated amortization of
$19,496 in 1995, $96,153 in 1996 and
$109,091 in 1997......................... 264,428 758,368 790,431
Other assets.............................. -- 83,689 85,389
---------- ----------- -----------
Total assets.......................... $3,627,934 $23,613,520 $24,779,248
========== =========== ===========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C> <C>
Current liabilities:
Accounts payable........................ $ 169,358 $ 188,989 $ 172,750
Accrued expenses........................ 502,397 1,765,512 2,210,960
Current maturities of bank debt......... 153,887 70,000 --
Notes payable to stockholders........... 742,846 -- --
---------- ----------- -----------
Total current liabilities............. 1,568,488 2,024,501 2,383,710
Note payable to bank, less current
maturities............................... 174,138 -- --
Deferred income taxes..................... -- 71,180 71,180
Stockholders' equity:
Preferred stock ($1.00 par value per
share; authorized 1,000,000 shares, no
shares issued and outstanding)......... -- -- --
Common stock ($.01 par value per share;
authorized 20,000,000 shares; issued
and outstanding shares of 1,209.5 in
1995 and 5,033,084 in 1996 and 1997)... 3,085 50,331 50,331
Additional paid-in capital.............. 446,360 20,028,730 20,028,730
Retained earnings....................... 1,435,863 1,438,778 2,245,297
---------- ----------- -----------
Total stockholders' equity............ 1,885,308 21,517,839 22,324,358
---------- ----------- -----------
Total liabilities and stockholders'
equity............................... $3,627,934 $23,613,520 $24,779,248
========== =========== ===========
</TABLE>

(See accompanying notes)

F-25
<PAGE>

PJ AMERICA, INC. AND SUBSIDIARIES

SUPPLEMENTAL CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
FOR THE YEARS ENDED THREE MONTHS ENDED
------------------------ ------------------------
DECEMBER DECEMBER MARCH 29, MARCH 30,
31, 1995 29, 1996 1996 1997
----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Restaurant sales............ $16,743,976 $24,549,654 $4,914,872 $10,605,768
Restaurant operating
expenses:
Cost of sales............. 5,630,462 8,064,103 1,646,559 3,372,639
Salaries and benefits..... 4,157,790 6,112,298 1,226,104 2,715,642
Other operating expenses.. 3,819,227 5,833,093 1,121,581 2,480,079
Depreciation and
amortization............. 393,435 627,317 121,811 292,554
----------- ----------- ---------- -----------
14,000,914 20,636,811 4,116,055 8,860,914
----------- ----------- ---------- -----------
Restaurant operating income. 2,743,062 3,912,843 798,817 1,744,854
General and administrative
expenses................... 887,409 1,402,318 278,101 564,477
----------- ----------- ---------- -----------
Operating income............ 1,855,653 2,510,525 520,716 1,180,377
Other (expense) income...... (77,271) 10,580 (17,382) 155,428
----------- ----------- ---------- -----------
Income before income taxes.. 1,778,382 2,521,105 503,334 1,335,805
Income tax expense.......... 9,213 250,304 6,165 414,286
----------- ----------- ---------- -----------
Net income.................. $ 1,769,169 $ 2,270,801 $ 497,169 $ 921,519
=========== =========== ========== ===========
Pro forma income data
(unaudited) (Note 5)
Historical income before
income taxes............... $ 1,778,382 $ 2,521,105 $ 503,334 $ 1,335,805
Pro forma income tax
expense.................... 683,739 940,748 194,149 490,827
----------- ----------- ---------- -----------
Pro forma net income........ $ 1,094,643 $ 1,580,357 $ 309,185 $ 844,978
=========== =========== ========== ===========
Pro forma net income per
share...................... $ 0.52 $ 0.61 $ 0.15 $ 0.16
=========== =========== ========== ===========
Weighted average shares
outstanding................ 2,120,044 2,609,765 2,087,175 5,191,371
=========== =========== ========== ===========
</TABLE>

(See accompanying notes)

F-26
<PAGE>

PJ AMERICA, INC. AND SUBSIDIARIES

SUPPLEMENTAL CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK
------------------- ADDITIONAL TOTAL
SHARES PAID-IN RETAINED STOCKHOLDERS'
ISSUED AMOUNT CAPITAL EARNINGS EQUITY
----------- ------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance, December 25,
1994, as previously
stated................. 109.5 $ 2,085 $ 446,260 $ 546,639 $ 994,984
Merger with Ohio Pizza
Delivery............. 100 -- 100 473,540 473,640
----------- ------- ----------- ----------- -----------
Balance, December 25,
1994, as restated...... 209.5 2,085 446,360 1,020,179 1,468,624
Net income............ -- -- -- 1,769,169 1,769,169
S corporation
distributions........ -- -- -- (1,353,485) (1,353,485)
Incorporation of Twice
the Cheese........... 1,000 1,000 -- -- 1,000
----------- ------- ----------- ----------- -----------
Balance, December 31,
1995................... 1,209.5 3,085 446,360 1,435,863 1,885,308
Net income............ -- -- -- 2,270,801 2,270,801
S corporation
distributions........ -- -- -- (4,100,063) (4,100,063)
Stock splits and
changes in par value
and authorized
shares............... 1,768,890.5 14,615 (14,615) -- --
Change in par value
applicable to the
merger with Ohio
Pizza Delivery....... 277,984 2,781 (2,781) -- --
Issuance of common
stock
(net of issuance
costs)............... 1,755,000 17,550 19,224,691 -- 19,242,241
Acquisition of
Virginia group....... 1,230,000 12,300 290,700 1,832,177 2,135,177
Issuance of warrant to
PJI.................. -- -- 84,375 -- 84,375
----------- ------- ----------- ----------- -----------
Balance, December 29,
1996................... 5,033,084 50,331 20,028,730 1,438,778 21,517,839
Unaudited:
Net income............ -- -- -- 921,519 921,519
S corporation
distributions........ -- -- -- (115,000) (115,000)
----------- ------- ----------- ----------- -----------
Balance, March 30, 1997. 5,033,084 $50,331 $20,028,730 $2,245,297 $22,324,358
=========== ======= =========== =========== ===========
</TABLE>

(See accompanying notes)

F-27
<PAGE>

PJ AMERICA, INC. AND SUBSIDIARIES

SUPPLEMENTAL CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED THREE MONTHS ENDED
------------------------- -----------------------
DECEMBER 31, DECEMBER MARCH 29, MARCH 30,
1995 29, 1996 1996 1997
------------ ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income................. $ 1,769,169 $ 2,270,801 $497,169 $ 921,519
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization............ 393,435 627,317 121,811 292,554
Deferred income taxes.... -- (33,023) -- --
Changes in operating
assets and liabilities:
Accounts receivable.... (5,715) 54,776 (8,050) (16,273)
Inventories............ (5,719) (68,886) (21,794) (28,343)
Advances to related
parties............... (132,725) 28,693 (4,036) 22,623
Prepaid expenses and
other................. (12,895) 46,860 (32,094) 71,472
Accounts payable....... 154,202 (143,489) (106,836) (16,239)
Accrued expenses....... (146,231) 878,881 (1,968) 43,029
Income taxes payable... -- -- -- 402,418
Other assets............... -- (5,737) 73,276 (1,700)
Deferred franchise and
development costs......... (119,047) (105,000) (15,000) (45,000)
----------- ----------- -------- ----------
Net cash provided by
operating activities...... 1,894,474 3,551,193 502,478 1,646,060
INVESTING ACTIVITIES:
Purchases of property and
equipment................. (1,078,544) (1,280,012) (164,055) (980,381)
Purchases of investments... -- (12,057,972) -- (228,328)
Purchase of Virginia Group,
net of cash acquired...... -- 985,170 -- --
Other...................... 44,476 82,485 -- --
----------- ----------- -------- ----------
Net cash used in investing
activities................ (1,034,068) (12,270,329) (164,055) (1,208,709)
FINANCING ACTIVITIES:
Proceeds from bank
borrowings................ 450,000 1,065,000 120,000 --
Proceeds from issuance of
common stock.............. -- 19,242,241 -- --
Payments on bank
borrowings................ (126,975) (2,423,025) (35,871) (70,000)
Issuance of (payments on)
stockholder notes......... 253,896 (1,495,846) (10,803) --
Distributions paid......... (1,353,485) (4,100,063) (102,918) (115,000)
Capital contributions...... 1,000 -- -- --
----------- ----------- -------- ----------
Net cash provided (used) by
financing activities...... (775,564) 12,288,307 (29,592) (185,000)
----------- ----------- -------- ----------
Net increase in cash and
cash equivalents.......... 84,842 3,569,171 308,831 252,351
Cash and cash equivalents
at beginning of period.... 421,900 506,742 506,742 4,075,913
----------- ----------- -------- ----------
Cash and cash equivalents
at end of period.......... $ 506,742 $ 4,075,913 $815,573 $4,328,264
=========== =========== ======== ==========
</TABLE>

(See accompanying notes)

F-28
<PAGE>

PJ AMERICA, INC. AND SUBSIDIARIES

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS

1.BASIS OF PRESENTATION, DESCRIPTION OF BUSINESS AND REORGANIZATION

Basis of Presentation

The accompanying supplemental consolidated financial statements include the
accounts of PJ America, Inc. and its wholly-owned subsidiaries, PJ Cheese,
Inc. and Ohio Pizza Delivery Co. (the "Company"). All significant inter-
company transactions between the consolidated companies have been eliminated.
Prior to the Company's initial public offering (the "Offering") and
reorganization, the Company's financial statements represented the combined
financial position, results of operations and cash flows of Extra Cheese, Inc.
(Extra Cheese), Textra Cheese Corp. (Textra) and Twice the Cheese, Inc.
(Twice), collectively referred to herein as the "Alabama Group." Those
financial statements excluded the combined financial position of PJVA, Inc.
and PJV, Inc., collectively referred to as the "Virginia Group" prior to their
acquisition on October 30, 1996 (See Note 6). These supplemental consolidated
financial statements have been restated to give retroactive effect to the
merger with Ohio Pizza Delivery Co. (OPD), on June 5, 1997, in a transaction
accounted for as a pooling of interests as if the merger had occurred at the
beginning of fiscal 1995. (See Note 4). These supplemental consolidated
financial statements will become the historical financial statements of the
Company when financial results for the quarter ended June 29, 1997 are issued.

OPD operated as an S corporation from January 1, 1995 through June 5, 1997,
when its S corporation election was terminated. As a result, OPD was not
subject to federal or state income taxes before June 5, 1997. However, OPD was
subject to local income taxes.

Pro forma information for the years ended December 31, 1995 and December 29,
1996 have been presented as if the Alabama Group and OPD had been treated as C
corporations rather than S corporations, with assumed effective income tax
rates of 36.5% and 41%, respectively.

Results of operations for the year ended December 25, 1994 have not been
restated and have not been included herein. It is not practical to restate
such results since the financial statements of OPD were not required to be
audited under Rule 3-05 of Regulation S-X and because the Company does not
currently have complete access to all prior accounting records of OPD.

Description of Business

The Company operates pizza delivery and carry-out restaurants under the
trademark "Papa John's" in Birmingham, Alabama and the surrounding area;
Norfolk, Richmond, and Virginia Beach, Virginia and surrounding areas; East
Texas, and Akron, Ohio and the surrounding area. At December 29, 1996, the
Company operated 54 restaurants. In addition to the areas the Company
currently has restaurants, the Company also holds franchise and development
rights for Ventura, Kern, San Luis Obispo and Santa Barbara counties in
California; Vancouver, Canada and the surrounding area; and Puerto Rico.

Reorganization

F-29
<PAGE>

PJ AMERICA, INC. AND SUBSIDIARIES

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
in exchange for shares of common stock of Extra Cheese. On October 30, 1996,
concurrent with the completion of the Offering (i) all such corporations
merged into PJ Cheese; (ii) Extra Cheese contributed to PJ Cheese all of the
assets of Extra Cheese relating to its restaurants, with PJ Cheese assuming
all of Extra Cheese's liabilities relating thereto; and (iii) Extra Cheese
merged into the Company with the stockholders of Extra Cheese receiving an
aggregate of 3,000,000 shares of common stock of the Company (the
"Reorganization"). Accordingly, the Company is the parent of PJ Cheese, and PJ
Cheese owns all of the Papa John's restaurants which were owned by Extra
Cheese, Textra, Twice, PJVA, Inc. and PJV, Inc. (collectively, the
"Predecessor Companies").

The Reorganization was an exchange of non-monetary assets by stockholders
and has been accounted for at historical cost.

2. SIGNIFICANT ACCOUNTING POLICIES

Fiscal Year

The Company's fiscal year ends on the last Sunday in December of each year.
The 1996 fiscal year consisted of 52 weeks. The 1995 fiscal year consisted of
53 weeks.

Use of Estimates

Cash Equivalents

Cash equivalents consist of highly liquid investments with a maturity of
three months or less at date of purchase. These investments are carried at
cost, which approximates fair value.

Inventories

Inventories consist of food product, paper goods and supplies and are stated
at the lower of cost, determined under the first-in, first-out (FIFO) method,
or market. Virtually all of the Company's food products and supplies are
purchased from PJI.

Property and Equipment

Investments

Development and Franchise Fees

F-30
<PAGE>

PJ AMERICA, INC. AND SUBSIDIARIES

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
fees are generally paid when each restaurant is opened and are deferred and
amortized. Deferred development and franchise fees are amortized over a 20 year
period using the straight-line method beginning with the opening of each
restaurant.

Advertising and Related Costs

Advertising and related costs include restaurant activities such as mail
coupons, doorhangers, promotional items, and required contributions to PJI's
production fund (0.50% to 0.75% of restaurant sales). Such amounts are expensed
as incurred and were approximately $980,000 in 1995 and $1.5 million in 1996,
and are included in other operating expenses in the consolidated statements of
income.

Stock-Based Compensation

The Company follows the provisions of Accounting Principles Board Opinion
(APB) No. 25 for its stock-based compensation awards (see Note 14).

Income Taxes

On October 29, 1996, the Predecessor Companies of PJ America, Inc. terminated
their status as S corporations and the Company became subject to federal and
state income taxes. Concurrently, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes," and
accordingly, there was no cumulative effect of adopting SFAS No. 109, and prior
year financial statements were not restated. In accordance with the provisions
of SFAS No. 109, deferred income taxes reflect the temporary tax consequences
on future years of differences between the tax and financial statement basis of
assets and liabilities.

On June 5, 1997, OPD terminated its status as an S corporation and became
subject to federal and state income taxes. Temporary differences between the
tax and financial statement basis of assets and liabilities are immaterial. The
supplemental consolidated statements of income include a provision for local
income taxes for 1995 and 1996.

Pre-Opening Costs

Pre-opening costs, which represent certain expenses incurred before a
restaurant opens, are expensed as incurred.

Net Income Per Share

Net income per share information is not presented because such data is not
meaningful (See Notes 5 and 6).

Accounting Changes

3. INITIAL PUBLIC OFFERING

The Company completed the offering of its common stock on October 30, 1996,
pursuant to which the Company sold 1,755,000 shares of its common stock,
including 135,000 shares exercised to cover underwriter over-allotments, at an
initial public offering price of $12.50 per share. Net proceeds from the
Offering (after deducting the underwriting discount of $1.5 million and
expenses of $1.2 million) were $19.2 million. Such proceeds were partially used
to fully retire the outstanding balance owed to banks and shareholders, pay S
corporation distributions, and for general corporate purposes.

F-31
<PAGE>

PJ AMERICA, INC. AND SUBSIDIARIES

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
4. MERGER WITH OHIO PIZZA DELIVERY CO.

On June 5, 1997, a subsidiary of PJ America, Inc. merged with OPD based in
Akron, Ohio. Pursuant to the Agreement and Plan of Merger, dated as of May 30,
1997, PJAM Acquisition Subsidiary was merged into OPD, with OPD surviving the
merger as a wholly owned subsidiary of PJ America, Inc.

Pursuant to a fixed formula price, the OPD shareholders received
approximately 278,000 shares of the Company's common stock in exchange for
100% of the common stock of OPD. The total value of the transaction was
approximately $4.6 million, based upon the conversion value of $16.50 per
common share agreed upon on May 20, 1997. The number of shares of common stock
issued in the merger is subject to adjustment based upon the actual
stockholders' equity of OPD as shown on the closing balance sheet. Any such
adjustment is not expected to be material.

The transaction is intended to be treated for accounting purposes as a
"pooling of interests", and as such, the historical financial statements of PJ
America, Inc. for 1995 and 1996 have been restated to include the results of
operations of OPD.

5. PRO FORMA INFORMATION (UNAUDITED)

The Company terminated its status as an S corporation on October 29, 1996
(June 5, 1997 for OPD). Pro forma income taxes have been presented to reflect
a provision for federal, state, and local income taxes at an assumed effective
rate of 36.5% (41.0% for OPD).

Pro forma net income per share is based on the weighted averaged number of
shares of common stock and common stock equivalents outstanding during the
period. The pro forma net income per share amounts were calculated assuming
issuance of the number of shares of common stock in the Offering necessary to
generate sufficient proceeds to fund the payment of the Company's
undistributed S corporation earnings. A summary of the components of the
weighted average shares of common stock and equivalents outstanding during the
periods indicated is as follows:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------
MARCH 29, MARCH 30,
1995 1996 1996 1997
--------- --------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Total number of common shares
outstanding throughout the
period......................... 2,048,084 2,048,084 2,048,084 5,033,084
Weighted average number of
common shares issued in
connection with the Offering... -- 492,116 -- --
Shares issuable upon net
exercise of outstanding stock
options........................ -- 26,498 -- 126,687
Adjustment to reflect shares
issued to pay S corporation
distributions.................. 71,960 43,067 39,091 31,600
--------- --------- --------- ---------
Total weighted average shares
and equivalents outstanding.... 2,120,044 2,609,765 2,087,175 5,191,371
========= ========= ========= =========
</TABLE>

6. ACQUISITION OF VIRGINIA GROUP--PRO FORMA INFORMATION (UNAUDITED)

F-32
<PAGE>

PJ AMERICA, INC. AND SUBSIDIARIES

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The following represents the unaudited pro forma results of operations for
the years ended December 31, 1995 and December 29, 1996 as if the
Reorganization and OPD merger had occurred at the beginning of the Company's
fiscal year. Pro forma net income reflects an assumed corporate income tax
rate of 36.5% for the Company, and 41.0% for OPD.

<TABLE>
<CAPTION>
1995 1996
----------- -----------
<S> <C> <C>
Restaurant sales................................. $29,386,133 $37,968,295
Restaurant operating expenses:
Cost of sales.................................. 9,946,330 12,643,111
Salaries and benefits.......................... 7,306,171 9,329,512
Other operating expenses....................... 7,169,552 9,379,391
Depreciation and amortization.................. 775,192 1,067,302
----------- -----------
25,197,245 32,419,316
----------- -----------
Restaurant operating income...................... 4,188,888 5,548,979
General and administrative expenses.............. 1,372,980 2,019,839
----------- -----------
Operating income................................. 2,815,908 3,529,140
Other expense, net............................... 233,133 124,520
----------- -----------
Income before income taxes....................... 2,582,775 3,404,620
Pro forma income tax expense..................... 977,342 1,261,549
----------- -----------
Pro forma net income............................. $ 1,605,433 2,143,071
=========== ===========
Pro forma net income per share................... $ 0.47 $ 0.57
=========== ===========
Weighted average shares outstanding.............. 3,435,183 3,749,994
=========== ===========
</TABLE>

7. INVESTMENTS

A summary of the Company's held-to-maturity securities as of December 29,
1996 follows:

<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED
AMORTIZED HOLDING HOLDING ESTIMATED
COST GAINS LOSSES FAIR VALUE
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
U.S. Government
securities............... $ 8,980,113 $ -- $(1,849) $ 8,978,264
Municipal bonds........... 3,077,859 2,686 (665) 3,079,880
----------- ------ ------- -----------
Total................... $12,057,972 $2,686 $(2,514) $12,058,144
=========== ====== ======= ===========
</TABLE>

All investment securities have a contractual maturity of one year or less.

F-33
<PAGE>

PJ AMERICA, INC. AND SUBSIDIARIES

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
8. NET PROPERTY AND EQUIPMENT

Net property and equipment consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 29,
1995 1996
------------ ------------
<S> <C> <C>
Land........................................... $ 114,079 $ 114,079
Building and improvements...................... 567,794 1,235,075
Leasehold improvements......................... 739,122 2,770,004
Restaurant equipment........................... 1,719,158 4,227,958
Other.......................................... 246,138 31,465
---------- -----------
3,386,291 8,378,581
Less accumulated depreciation.................. (804,237) (2,442,195)
---------- -----------
Net property and equipment..................... $2,582,054 $ 5,936,386
========== ===========
</TABLE>

9. ACCRUED EXPENSES

Accrued expenses consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 29,
1995 1996
------------ ------------
<S> <C> <C>
Salaries and wages.............................. $140,347 $ 440,105
Taxes, other than income........................ 93,585 260,503
Advertising and royalties....................... 115,109 265,276
Reserve for relocation.......................... -- 116,002
Accrued Offering expenses....................... -- 276,256
Other........................................... 153,356 407,370
-------- ----------
$502,397 $1,765,512
======== ==========
</TABLE>

10.NOTES PAYABLE TO BANK

Notes payable to bank consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 29,
1995 1996
------------ ------------
<S> <C> <C>
Note payable to bank............................ $ 328,025 $ 70,000
Less current maturities of bank debt............ (153,887) (70,000)
--------- --------
$ 174,138 $ --
========= ========
</TABLE>

Notes payable to bank bears interest at rates between 8.9% and 9.0% in 1995
and 8.0% and 8.75% in 1996, respectively. PJ America, Inc. notes payable were
retired during 1996 with proceeds from the Offering. OPD's note was retired in
January, 1997. The interest payments on the notes payable were approximately
$39,000 and $16,000 in 1995 and 1996, respectively.

11. INCOME TAXES

F-34
<PAGE>

PJ AMERICA, INC. AND SUBSIDIARIES

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
reported amounts of the Company's assets and liabilities in the consolidated
financial statements. These differences consisted primarily of deferred
expenses and accumulated depreciation on property and equipment. At the date of
termination of S corporation status, the net differences equaled approximately
$109,000, resulting in a net deferred tax asset and corresponding credit to
income tax expense of approximately $40,000.

A summary of income tax expense is as follows:

<TABLE>
<CAPTION>
1995 1996
------ --------
<S> <C> <C>
Current
Federal................. $ -- $241,340
State and local......... 9,213 41,987
Deferred (federal and
state)................... -- 6,934
Deferred tax credit
resulting from change in
tax status............... -- (39,957)
------ --------
Income tax expense........ $9,213 $250,304
====== ========
</TABLE>

Concurrent with the acquisition of OPD (See Note 4), OPD terminated their
status as an S corporation on June 5, 1997. OPD was previously only subject to
local income taxes. The differences between OPD's tax basis and financial
reporting basis was immaterial.

Net deferred tax assets are comprised of the following at December 29, 1996:

The reconciliation of income tax computed at the U.S. federal statutory rate
to income tax expense for the year ended December 29, 1996 is as follows:

<TABLE>
<S> <C>
Income tax expense at U.S. federal statutory rate (attributable
to income before income taxes from operations for the period
while taxed October 30, 1996 through December 29, 1996) ...... $264,408
State and local income taxes--net.............................. 35,151
Tax exempt interest income..................................... (9,978)
Deferred tax credit resulting from change in tax status........ (39,957)
Other.......................................................... 680
--------
Income tax expense............................................. $250,304
========
</TABLE>

Income tax payments amounted to $245,000 and $10,000 in 1996 and 1995,
respectively.

12. RELATED PARTY TRANSACTIONS

Franchisor

Under the terms of area development agreements between the Company and PJI,
the Company paid development fees ranging from $350 to $5,000 per restaurant.
Franchise fees ranging from $1,150 to $15,000 have been paid as each new
restaurant was opened. Royalties in the amount of 4% of restaurant sales are
paid

F-35
<PAGE>

PJ AMERICA, INC. AND SUBSIDIARIES

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
monthly to PJI, and a monthly contribution of 0.50% to 0.75% of sales is paid
to the Marketing fund of PJI. The Company is required to buy certain
proprietary food products from PJI's commissary subsidiary and have elected to
buy substantially all other food products, supplies, marketing materials and
equipment from PJI or its subsidiaries.

Affiliate Markets

Stockholders

Notes payable to stockholders were due on demand and carried interest at
7.0%. The notes payable were fully paid at the closing of the Offering.
Interest expense related to these notes was approximately $47,000 in 1995 and
$39,000 in 1996. Interest payments were approximately $4,000 in 1995 and
$98,000 in 1996.

F-36
<PAGE>

PJ AMERICA, INC. AND SUBSIDIARIES

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
In connection with the Company's Offering, certain officers, directors and
former employees received approximately $250,000 for consulting services
provided to the Company with respect to the structuring, organization and
implementation of the Offering.

13. LEASES

<TABLE>
<S> <C>
1997................................... $ 681,224
1998................................... 611,914
1999................................... 443,738
2000................................... 294,537
2001................................... 140,367
Thereafter............................. 53,761
----------
$2,225,541
==========
</TABLE>

Rent expense was approximately $260,000 in 1995 and $413,000 in 1996.

14. STOCK OPTIONS

F-37
<PAGE>

PJ AMERICA, INC. AND SUBSIDIARIES

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
determined based on the fair value at the grant date consistent with the
method prescribed in SFAS No. 123, Accounting for Stock-Based Compensation,
the Company's pro forma net income and pro forma earnings per share (as
adjusted for pro forma income tax expense--see Note 4) would have been reduced
to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
1996
----------
<C> <S> <C>
Pro forma net income As reported........................ $1,580,357
As adjusted for SFAS No. 123....... 1,524,052
Primary earnings per share As reported........................ $ 0.61
As adjusted for SFAS No. 123....... 0.58
</TABLE>

The weighted average fair value of the stock options granted during 1996 was
$5.63. The fair value of each stock option award is estimated on the date of
grant using the Black-Scholes option-pricing model with the following
weighted-average assumptions: expected volatility of 49.1%, risk-free interest
rate of 6.0%, and an expected life of 4 years.

As of December 29, 1996, 333,500 and 88,000 shares were available for future
issuance under the 1996 Plan and Director's Plan, respectively.

In March, 1995, an employee who is the Operations Director of OPD was
granted an option to purchase five shares of OPD at an exercise price of
$16,500 per share. No compensation expense was recorded as the option was
issued at fair market value as determined by an independent appraisal. The
employee has not exercised the option to acquire such stock.

15. SHAREHOLDERS AGREEMENT

In April 1992, the shareholders of OPD entered into an agreement whereby
among other things, the transfer or sale of the OPD's common stock was
required to be first offered to OPD. Upon the death of a shareholder, OPD was
required to purchase the stock at fair market value. As a result of this
requirement, OPD obtained officers life insurance for two of their
shareholders, who owned 80% of the common stock. This agreement and the life
insurance was terminated on June 5, 1997.

F-38
<PAGE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

No dealer, salesperson or other person has been authorized to give any infor-
mation or to make any representations other than those contained in this Pro-
spectus in connection with this offering and, if given or made, such informa-
tion or representation must not be relied upon as having been authorized by the
Company or the Selling Stockholders or any Underwriter. This Prospectus does
not constitute an offer to sell or solicitation of an offer to buy any of the
securities offered hereby in any jurisdiction to any person to whom it is un-
lawful to make such offer in such jurisdiction. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that the information contained herein is correct as of any time
subsequent to the date hereof or that there has been no change in the affairs
of the Company since such date.

-------------------

TABLE OF CONTENTS

-------------------

<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 6
Recent Developments....................................................... 11
Prior S Corporation Status of the Company's Predecessors.................. 11
Use of Proceeds........................................................... 11
Dividend Policy........................................................... 11
Price Range of Common Stock............................................... 12
Capitalization............................................................ 12
Selected Consolidated Financial Data...................................... 13
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 16
Business.................................................................. 23
Management................................................................ 30
Certain Transactions...................................................... 36
Principal and Selling Stockholders........................................ 40
Description of Capital Stock.............................................. 41
Shares Eligible for Future Sale........................................... 43
Underwriting.............................................................. 44
Legal Matters............................................................. 45
Experts................................................................... 45
Available Information..................................................... 45
Index to Financial Statements............................................. F-1
</TABLE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

1,200,000 SHARES

LOGO

PJ AMERICA, INC.

COMMON STOCK

----------------

PROSPECTUS

----------------

MONTGOMERY SECURITIES

ALEX. BROWN & SONS
incorporated

, 1997

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the estimated costs and expenses to be borne
by the Company in connection with the offering described in the Registration
Statement.

<TABLE>
<S> <C>
Registration Fee................................................ $ 7,110
Legal Fees and Expenses......................................... 100,000
Accounting Fees and Expenses.................................... 60,000
Printing and Engraving Expenses................................. 120,000
Blue Sky Registration Fees and Expenses......................... 3,000
Transfer Agent's Fees........................................... 10,000
NASD Filing Fee................................................. 2,846
Miscellaneous Expenses.......................................... 97,044
--------
Total....................................................... $400,000
========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

A. Elimination of Certain Liability. Pursuant to Article IX of the
registrant's Certificate of Incorporation ("Article IX"), a director of the
registrant shall not be personally liable to the registrant or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability: (i) for any breach of the director's duty of loyalty to
the registrant or its stockholders; (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law;
(iii) under Section 174 of the General Corporation Law of the State of
Delaware, or (iv) for any transaction from which the director derived an
improper personal benefit. If the General Corporation Law of the State of
Delaware is hereafter amended to permit further elimination or limitation of
the personal liability of directors, then the liability of a director of the
registrant shall be eliminated or limited to the fullest extent permitted by
the General Corporation Law of the State of Delaware, as so amended. Any
repeal or modification of Section A of Article IX shall not adversely affect
any right or protection of a director of the registrant existing at the time
of such repeal or modification.

B. Right to Indemnification. Subject to Section C of Article XI of the
registrant's Certificate of Incorporation, each person who was or is made a
party or is threatened to be made a party to or is involved in any action,
suit or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that such person, or a
person of whom such person is the legal representative, is or was a director
or officer of the registrant or is or was serving at the request of the
registrant as a director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, whether the basis of such proceeding
is alleged action in an official capacity as a director, officer, employee or
agent or in any other capacity while serving as a director, officer, employee
or agent, shall be indemnified and held harmless by the registrant to the
fullest extent authorized by the General Corporation Law of the State of
Delaware, as the same exists or may hereafter be amended (but, in the case of
any such amendment, only to the extent that such amendment permits the
registrant to provide broader indemnification rights than said law permitted
the registrant to provide prior to such amendment), against all expense,
liability and loss (including attorneys' fees, judgments, fines, excise taxes
under the Employee Retirement Income Security Act of 1974, as in effect from
time to time ("ERISA"), penalties and amounts to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith. The
registrant may, by action of its Board of Directors, provide indemnification
to other employees or agents of the registrant with the same scope and effect
as the indemnification of directors and officers pursuant to Article IX.

II-1
<PAGE>

C. Procedure for Indemnification. Any indemnification under Article IX
(unless ordered by a court) shall be made by the registrant only as authorized
in the specific case upon a determination that indemnification is proper in
the circumstances because the indemnitee has met the applicable standard of
conduct set forth in the General Corporation Law of the State of Delaware, as
the same exists or hereafter may be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the registrant to
provide broader indemnification rights then said law permitted the registrant
to provide prior to such amendment). Such determination shall be made: (i) by
the Board of Directors by a majority vote of a quorum consisting of directors
who are not parties to such action, suit or proceeding (the "Disinterested
Directors"); or (ii) if such a quorum of Disinterested Directors is not
obtainable, or, even if obtainable, a quorum of Disinterested Directors so
directs, by independent legal counsel and a written opinion; or (iii) by the
stockholders. The majority of Disinterested Directors may, as they deem
appropriate, elect to have the registrant indemnify any other employee, agent
or other person acting for or on behalf of the registrant.

D. Advances for Expenses. Costs, charges and expenses (including attorneys'
fees) incurred by a director or officer of the registrant, or such other
person acting on behalf of the registrant as determined in accordance with
Section C of Article IX, in defending a civil or criminal action, suit or
proceeding, shall be paid by the registrant in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking
by or on behalf of the director, officer or other person to repay all amounts
so advanced in the event that it shall ultimately be determined that such
director, officer or other person is not entitled to be indemnified by the
registrant as authorized in Article IX or otherwise.

E. Right of Claimant to Bring Suit. If a claim under Sections B/2 or D/D of
Article IX is not paid in full by the registrant within 30 days after a
written claim has been received by the registrant, the claimant may at any
time thereafter bring suit against the registrant to recover the unpaid amount
of the claim and, if successful in whole or in part, the claimant shall be
entitled to be paid also the expense of prosecuting such claim. It shall be a
defense to any such action (other than an action brought to enforce a claim
for expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the registrant) that the claimant has not met the standard of
conduct which make it permissible under the General Corporation Law of the
State of Delaware for the registrant to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the registrant.
Neither the failure of the registrant (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant
is proper in the circumstances because the claimant has met the applicable
standards of conduct set forth in the General Corporation Law of the State of
Delaware, nor an actual determination by the registrant (including its Board
of Directors, independent legal counsel, or its stockholders) that the
claimant has not met such applicable standard of conduct, shall be a defense
to the action or create a presumption that the claimant has not met the
applicable standard of conduct.

F. Other Rights; Continuation of Right to Indemnification. The
indemnification and advancement of expenses provided by Article IX shall not
be deemed exclusive of any other rights to which a claimant may be entitled
under any law (common or statutory) by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his or her official
capacity and as to any action in another capacity while holding office or
while employed by or acting as agent for the registrant, and shall inure to
the benefit of the estate, heirs, executors and administrators of such person.
All rights to indemnification under Article IX shall be deemed to be a
contract between the registrant and each director and officer of the
registrant who serves or served in such capacity at any time while Article IX
is in effect. Any repeal or modification of Article IX or any repeal or
modification of relevant provisions of the General Corporation Law of the
State of Delaware or any other applicable law shall not in any way diminish
any rights to indemnification of such director, officer or the obligations of
the registrant arising hereunder with respect to any action, suit or
proceeding arising out of, or relating to, any actions, transactions or facts
occurring prior to the final adoption of such modification or repeal. For the
purposes of Article IX, references to "the registrant" include all constituent
corporations absorbed in a consolidation or merger as well as the resulting or
surviving corporation, so that any person who is or was a director or officer
of such a constituent corporation or is or was serving at the request of such
constituent

II-2
<PAGE>

corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise shall stand in the same
position under the provisions of this Article IX of the registrant's Articles
of Incorporation, with respect to the resulting or surviving corporation, as
such person would if such person had served the resulting or surviving
corporation in the same capacity.

G. Insurance. The registrant may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the registrant
or another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the registrant
would have the power to indemnify such person against such expense, liability
or loss under the General Corporation Law of the State of Delaware.

H. Severability. If any provision or provisions of Article IX shall be held
to be invalid, illegal or unenforceable for any reason whatsoever (1) the
validity, legality and enforceability of the remaining provisions of Article
IX (including, without limitation, each portion of any paragraph of Article IX
containing any such provision held to be invalid, illegal or unenforceable,
that is not itself held to be invalid, illegal or unenforceable) shall not in
any way be affected or impaired thereby and (2) to the fullest extent
possible, the provisions of Article IX of the registrant's Articles of
Incorporation (including, without limitation, each such portion of any
paragraph of Article IX containing any such provision held to be invalid,
illegal or unenforceable) shall be construed so as to give effect to the
intent manifested by the provision held invalid, illegal or unenforceable.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

On June 5, 1997, 278,084 shares of the Company were issued to the five
stockholders of Ohio Pizza Delivery Co. in connection with the acquisition of
eight Papa John's restaurants in the Akron, Ohio area. Such shares were not
registered under the Securities Act of 1933, as amended, pursuant to the
exemption afford by Section 4(2) thereof.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Index to and Description of Exhibits

<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<S> <C>
1 Form of Underwriting Agreement.
3.1 Certificate of Incorporation Exhibit 3.1 to the Company's Registration
Statement on Form S-1 (Commission File No. 333-11253) is hereby
incorporated by reference.
3.2 By-laws. Exhibit 3.2 to the Company's Registration Statement on Form S-1
(Commission File No. 333-11253) is hereby incorporated by reference.
</TABLE>

<TABLE>
<S> <C>
4 Specimen Common Stock Certificate. Exhibit 4 to the Company's Registration
Statement on Form S-1 (Commission File No. 333-11253) is hereby
incorporated by reference.
5 Opinion of Greenebaum Doll & McDonald PLLC as to the legality of the
securities being registered.
10.1 Form of Registration Rights Agreement. Exhibit 10.1 to the Company's
Registration Statement on Form S-1 (Commission File No. 333-11253) is
hereby incorporated by reference.
10.2 Form of 1996 Stock Ownership Incentive Plan. Exhibit 10.2 to the Company's
Registration Statement on Form S-1 (Commission File No. 333-11253) is
hereby incorporated by reference.
10.3 Form of Non-Employee Directors 1996 Stock Incentive Plan. Exhibit 10.3 to
the Company's Registration Statement on Form S-1 (Commission File No. 333-
11253) is hereby incorporated by reference.
</TABLE>

II-3
<PAGE>

<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<S> <C>
10.4 Agreement relating to the Reorganization. Exhibit 10.4 to the Company's
Registration Statement on Form S-1 (Commission File No. 333-11253) is
hereby incorporated by reference.
10.5 Plan of Merger. Exhibit 10.5 to the Company's Registration Statement on
Form S-1 (Commission File No. 333-11253) is hereby incorporated by
reference.
10.6 Indemnification Agreement. Exhibit 10.6 to the Company's Registration
Statement on Form S-1 (Commission File No. 333-11253) is hereby
incorporated by reference.
10.7 Escrow Agreement. Exhibit 10.7 to the Company's Registration Statement on
Form S-1 (Commission File No. 333-11253) is hereby incorporated by
reference.
10.8 Warrant issued to PJI. Exhibit 10.8 to the Company's Registration
Statement on Form S-1 (Commission File No. 333-11253) is hereby
incorporated by reference.
10.9 Agreement between PJI and Extra Cheese, Inc. relating to certain Southern
California counties; Puerto Rico; Vancouver, Canada; consent for IPO from
PJI; the issuance of the warrant; and certain other matters. Exhibit 10.9
to the Company's Registration Statement on Form S-1 (Commission File No.
333-11253) is hereby incorporated by reference.
10.10 Development Agreement relating to the Utah territory. Exhibit 10.10 to the
Company's Registration Statement on Form S-1 (Commission File No. 333-
11253) is hereby incorporated by reference.
10.11 Development Agreement relating to the development of an aggregate of ten
restaurants in Birmingham, Tuscaloosa and Auburn, Alabama (the "Alabama
Development Agreement"). Exhibit 10.11 to the Company's Registration
Statement on Form S-1 (Commission File No. 333-11253) is hereby
incorporated by reference.
10.11(a) First Amendment to the Alabama Development Agreement. Exhibit 10.11(a) to
the Company's Registration Statement on Form S-1 (Commission File No. 333-
11253) is hereby incorporated by reference.
10.11(b) Second Amendment to the Alabama Development Agreement. Exhibit 10.11(b) to
the Company's Registration Statement on Form S-1 (Commission File No. 333-
11253) is hereby incorporated by reference.
10.11(c) Third Amendment to the Alabama Development Agreement. Exhibit 10.11(c) to
the Company's Registration Statement on Form S-1 (Commission File No. 333-
11253) is hereby incorporated by reference.
10.12 Form of Franchise Agreement relating to the Birmingham, Tuscaloosa and
Auburn, Alabama restaurants (e.g., Franchise Agreement dated February 18,
1992, by and between Extra Cheese, Inc. and PJI at 2503 McFarland Blvd.
W., Northport, Alabama 35476). Exhibit 10.12 to the Company's Registration
Statement on Form S-1 (Commission File No. 333-11253) is hereby
incorporated by reference.
10.13 Development Agreement relating to the development of an aggregate of four
restaurants in Cullman, Jasper, Sylacauga and Talladega, Alabama. Exhibit
10.13 to the Company's Registration Statement on Form S-1 (Commission File
No. 333-11253) is hereby incorporated by reference.
10.14 Form of Franchise Agreement relating to the Cullman, Jasper, Sylacauga and
Talladega, Alabama restaurants (e.g., Franchise Agreement dated August 14,
1995, by and between Extra Cheese, Inc. and PJI at 680 Highway 78 West,
Jasper, Alabama 35501). Exhibit 10.14 to the Company's Registration
Statement on Form S-1 (Commission File No.
333-11253) is hereby incorporated by reference.
</TABLE>

II-4
<PAGE>

<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<S> <C>
10.15 Development Agreement relating to the development of an aggregate of five
restaurants in Longview, Lufkin and Nacogdoches, Texas. Exhibit 10.15 to
the Company's Registration Statement on Form S-1 (Commission File No. 333-
11253) is hereby incorporated by reference.
10.16 Form of Franchise Agreement relating to the East Texas restaurants (e.g.,
Franchise Agreement dated September 20, 1994, by and between Textra Cheese
Corp. and PJI at 2702 North Street, Nacogdoches, Texas 75961). Exhibit
10.16 to the Company's Registration Statement on Form S-1 (Commission File
No. 333-11253) is hereby incorporated by reference.
10.17 Development Agreement relating to the development of an aggregate of 47
restaurants in Virginia Beach, Richmond and Norfolk, Virginia (the
"Virginia Development Agreement"). Exhibit 10.17 to the Company's
Registration Statement on Form S-1 (Commission File No. 333-11253) is
hereby incorporated by reference.
10.17(a) First Amendment to the Virginia Development Agreement. Exhibit 10.17(a) to
the Company's Registration Statement on Form S-1 (Commission File No. 333-
11253) is hereby incorporated by reference.
10.17(b) Second Amendment to the Virginia Development Agreement. Exhibit 10.17(b)
to the Company's Registration Statement on Form S-1 (Commission File No.
333-11253) is hereby incorporated by reference.
10.17(c) Third Amendment to the Virginia Development Agreement. Exhibit 10.17(c) to
the Company's Registration Statement on Form S-1 (Commission File No. 333-
11253) is hereby incorporated by reference.
10.17(d) Fourth Amendment to the Virginia Development Agreement. Exhibit 10.17(d)
to the Company's Registration Statement on Form S-1 (Commission File No.
333-11253) is hereby incorporated by reference.
10.18 Form of Franchise Agreement relating to the Virginia restaurants (e.g.
Franchise Agreement dated March, 31, 1994, by and between PJVA and PJI at
10054 Robious Road, Richmond, Virginia 23235). Exhibit 10.18 to the
Company's Registration Statement on Form S-1 (Commission File No. 333-
11253) is hereby incorporated by reference.
10.19 PJI's Waiver of Right of First Refusal (certain Utah, Iowa markets and
other markets). Exhibit 10.19 to the Company's Registration Statement on
Form S-1 (Commission File No. 333-11253) is hereby incorporated by
reference.
10.20 The Company's Right of First Refusal relating to certain Iowa territories.
Exhibit 10.20 to the Company's Registration Statement on Form S-1
(Commission File No. 333-11253) is hereby incorporated by reference.
10.21 The Company's Right of First Refusal relating to certain Louisiana
territories. Exhibit 10.21 to the Company's Registration Statement on Form
S-1 (Commission File No.
333-11253) is hereby incorporated by reference.
10.22 Option Agreement relating to the Utah territories. Exhibit 10.22 to the
Company's Registration Statement on Form S-1 (Commission File No. 333-
11253) is hereby incorporated by reference.
10.23 $1,200,000 Commercial Installment Note issued to National City Bank from
PJVA, Inc. and PJV, Inc., and guaranteed by Messrs. Sherman, Laughery,
Hart and Grisanti. Exhibit 10.23 to the Company's Registration Statement
on Form S-1 (Commission File No.
333-11253) is hereby incorporated by reference.
</TABLE>

II-5
<PAGE>

<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<S> <C>
10.24 $1,000,000 Credit Facility with AmSouth Bank of Alabama guaranteed by
Messrs. Stephens, Langford, Sherman, Fleishman and Keener. Exhibit 10.24
to the Company's Registration Statement on Form S-1 (Commission File No.
333-11253) is hereby incorporated by reference.
10.25 Employment Agreement with Mr. Davison. Exhibit 10.25 to the Company's
Registration Statement on Form S-1 (Commission File No. 333-11253) is
hereby incorporated by reference.
10.26 Agreement between PJI and PJ Utah, LLC relating to development rights to
be granted with respect to the Utah territory. Exhibit 10.26 to the
Company's Registration Statement on Form S-1 (Commission File No. 333-
11253) is hereby incorporated by reference.
10.27 Agreement and Plan of Merger among PJ America, Inc., PJAM Acquisition
Subsidiary, Inc., OPD Co., Roger P. Tennyson, Mary Ann Tennyson, Brian J.
Tennyson, Jeanne K. Tennyson, John H. Schnatter, Charles Schnatter and Dan
Holland dated May 30, 1997. Exhibit 2.1 to the Company's Form 8-K dated
June 19, 1997, is hereby incorporated by reference.
10.28 PJ America, Inc. Registration Rights Agreement dated June 5, 1997 relating
to the Agreement and Plan of Merger (OPD transaction). Exhibit 10.1 to the
Company's Form
8-K dated June 19, 1997, is hereby incorporated by reference.
10.29 Letter dated June 18, 1997, from PJI to the Company relating to the
development rights for the Vancouver, Canada area.
10.30 Development Agreement relating to the development of 37 restaurants in the
Ventura, Kern, San Luis Obispo, Santa Barbara and northwestern Los Angeles
counties of California.
10.31 Letter dated June 26, 1997, from PJI to the Company relating to the
development rights for Puerto Rico.
10.32 Asset Purchase Agreement dated June 26, 1997 by and between Northcoast
Pizza, Inc., North Royalton Pizza, Inc., Louis Akhar and Ohio Pizza
Delivery Co.
21 Subsidiaries of the Registrant.
23.1 Consent of Greenebaum Doll & McDonald PLLC (included in Exhibit 5).
23.2 Consent of Ernst & Young LLP.
24 Power of Attorney (included on Signature Page of the Registration
Statement).
27 Financial Data Schedule (included only in filings under the Electronic
Data Gathering, Analysis, and Retrieval System). Exhibit 27 to the
Company's Form 10-Q dated April 17, 1997, is hereby incorporated by
reference.
</TABLE>

ITEM 17. UNDERTAKINGS

The undersigned registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

The undersigned registrant hereby undertakes:

(1) For the purposes of determining liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as a part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(b) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-6
<PAGE>

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.

II-7
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, IN THE CITY OF BIRMINGHAM, STATE OF ALABAMA, ON JUNE 26, 1997.

PJ America, Inc.

/s/ Douglas S. Stephens
By: _________________________________
Douglas S. Stephens
Chief Executive Officer and
President

IN ACCORDANCE WITH THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.

POWER OF ATTORNEY

KNOW ALL MEN AND WOMEN BY THESE PRESENTS, THAT EACH PERSON WHOSE SIGNATURE
APPEARS BELOW CONSTITUTES AND APPOINTS DOUGLAS S. STEPHENS, AND D. ROSS
DAVISON AND EACH OF THEM SUCH INDIVIDUALS TRUE AND LAWFUL ATTORNEYS-IN-FACT
AND AGENTS, WITH FULL POWER OF SUBSTITUTION AND RESUBSTITUTION, FOR SUCH
INDIVIDUAL AND IN HIS OR HER NAME, PLACE AND STEAD, IN ANY AND ALL CAPACITIES,
TO SIGN ALL AMENDMENTS (INCLUDING POST-EFFECTIVE AMENDMENTS) TO THIS
REGISTRATION STATEMENT AND ANY REGISTRATION STATEMENT RELATED TO THE OFFERING
CONTEMPLATED BY THIS REGISTRATION STATEMENT THAT IS TO BE EFFECTIVE UPON
FILING PURSUANT TO RULE 462(B) UNDER THE SECURITIES ACT OF 1933, AND TO FILE
THE SAME, WITH ALL EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION
THEREWITH, WITH THE SECURITIES AND EXCHANGE COMMISSION AND ANY STATE OR OTHER
REGULATORY AUTHORITY, GRANTING UNTO SAID ATTORNEYS-IN-FACT AND AGENTS, AND
EACH OF THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND EVERY ACT
AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE PREMISES AS
FULLY TO ALL INTENTS AND PURPOSES AS HE OR SHE MIGHT OR COULD DO IN PERSON,
HEREBY RATIFYING AND CONFIRMING ALL THAT SAID ATTORNEYS-IN-FACT AND AGENTS, OR
ANY OF THEM, OR THEIR SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO OR CAUSE TO
BE DONE BY VIRTUE HEREOF.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----

<S> <C> <C>
/s/ Richard F. Sherman Chairman of the Board June 26, 1997
____________________________________
Richard F. Sherman

/s/ Douglas S. Stephens Chief Executive Officer, June 26, 1997
____________________________________ President and Director
Douglas S. Stephens

/s/ D. Ross Davison Vice President--Chief June 26, 1997
____________________________________ Financial Officer and
D. Ross Davison Treasurer (Chief Financial
and Accounting Officer)

/s/ Michael M. Fleishman Director June 26, 1997
____________________________________
Michael M. Fleishman

/s/ Martin T. Hart Director June 26, 1997
____________________________________
Martin T. Hart

/s/ Frank O. Keener Director June 26, 1997
____________________________________
Frank O. Keener

/s/ Stephen P. Langford Director June , 1997
____________________________________
Stephen P. Langford

/s/ Charles W. Schnatter Director June 26, 1997
____________________________________
Charles W. Schnatter

</TABLE>

II-8

<PAGE>

EXHIBIT 1

1,200,000 Shares

PJ AMERICA, INC.

Common Stock

UNDERWRITING AGREEMENT
----------------------

July ____, 1997

MONTGOMERY SECURITIES
ALEX. BROWN & SONS INCORPORATED
c/o Montgomery Securities
600 Montgomery Street
San Francisco, California 94111

Dear Sirs:

SECTION 1. Introductory. PJ America, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell 750,000 shares of its authorized but
unissued Common Stock, $.01 par value per share (the "Common Stock"), and
certain stockholders of the Company named in Schedule B annexed hereto (the
"Selling Stockholders") propose to sell an aggregate of 450,000 shares of the
Company's issued and outstanding Common Stock to the underwriters named in
Schedule A annexed hereto (the "Underwriters"). Said shares, aggregating a total
of 1,200,000 shares, are herein referred to as the "Firm Common Shares." In
addition, the Company proposes to grant to the Underwriters an option to
purchase up to 180,000 additional shares of Common Stock (such 180,000 shares
being referred to as the "Optional Common Shares"), as provided in Section 5
hereof. The Firm Common Shares and, to the extent such option is exercised, the
Optional Common Shares are hereinafter collectively referred to as the "Common
Shares."

You have advised the Company and the Selling Stockholders that the
Underwriters propose to make a public offering of the Common Shares on the
effective date of the registration statement hereinafter referred to, or as soon
thereafter as in their judgment is advisable.

The Company and the Selling Stockholders hereby confirm their respective
agreements with respect to the purchase of the Common Shares by the Underwriters
as follows:

SECTION 2. Representations and Warranties of the Company. The Company
hereby represents and warrants to the Underwriters that:

(a) A registration statement on Form S-1 (File No. 333-________) with
respect to the Common Shares has been prepared by the Company in conformity
with the requirements of the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") thereunder, and has
been filed with the Commission. The Company has met all of the eligibility
requirements for the use of a registration statement on Form S-1. There
have been delivered to the Underwriters two signed copies of such
registration statement and amendments, together with two copies of each
exhibit filed therewith. Conformed copies of such registration statement
and amendments (but without exhibits) and of the related preliminary
prospectus have been delivered to each of the Underwriters in such
reasonable quantities as each of them has requested. The Company will next
file with the
<PAGE>

Commission one of the following: (i) prior to effectiveness of such
registration statement, a further amendment thereto, including the form of
final prospectus, or (ii) a final prospectus in accordance with Rules 430A
and 424(b) of the Rules and Regulations. As filed, such amendment and form
of final prospectus, or such final prospectus, shall include all Rule 430A
Information and, except to the extent that the Underwriters shall agree in
writing to a modification, shall be in all substantive respects in the form
furnished to the Underwriters prior to the date and time that this
Agreement was executed and delivered by the parties hereto, or, to the
extent not completed at such date and time, shall contain only such
specific additional information and other changes (beyond that contained in
the latest Preliminary Prospectus) as the Company shall have previously
advised the Underwriters would be included or made therein.

The term "Registration Statement" as used in this Agreement shall mean
such registration statement at the time such registration statement becomes
effective and, in the event any post-effective amendment thereto becomes
effective prior to the First Closing Date (as hereinafter defined), shall
also mean such registration statement as so amended; provided, however,
that such term shall also include all Rule 430A Information deemed to be
included in such registration statement at the time such registration
statement becomes effective as provided by Rule 430A of the Rules and
Regulations. Any registration statement filed by the Company pursuant to
Rule 462(b) under the Securities Act is called the "Rule 462(b)
Registration Statement", and from and after the date and time of filing of
the Rule 462(b) Registration Statement, the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. The term "Preliminary
Prospectus" shall mean any preliminary prospectus referred to in the
preceding paragraph and any preliminary prospectus included in the
Registration Statement at the time it becomes effective that omits Rule
430A Information. The term "Prospectus" as used in this Agreement shall
mean the prospectus relating to the Common Shares in the form in which it
is first filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations or, if no filing pursuant to Rule 424(b) of the Rules and
Regulations is required, shall mean the form of final prospectus included
in the Registration Statement at the time such registration statement
becomes effective. The term "Rule 430A Information" means information with
respect to the Common Shares and the offering thereof permitted to be
omitted from the Registration Statement when it becomes effective pursuant
to Rule 430A of the Rules and Regulations. All references in this Agreement
to the Registration Statement, the Rule 462(b) Registration Statement, a
Preliminary Prospectus, or the Prospectus, or any amendments or supplements
to any of the foregoing, shall include a copy thereof filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval System ("EDGAR").

(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus, and each Preliminary Prospectus has
conformed in all material respects to the requirements of the Act and the
Rules and Regulations and, as of its date, has not included any untrue
statement of a material fact or omitted to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; and at the time the Registration
Statement becomes effective, and at all times subsequent thereto up to and
including each Closing Date hereinafter mentioned, the Registration
Statement and the Prospectus, and any amendments or supplements thereto,
will contain all material statements and information required to be
included therein by the Act and the Rules and Regulations and will in all
material respects conform to the requirements of the Act and the Rules and
Regulations, and neither the Registration Statement nor the Prospectus, nor
any amendment or supplement thereto, will include any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light
of circumstances under which they were made; provided, however, no
representation or warranty contained in this subsection

-2-
<PAGE>

2(b) shall be applicable to information contained in or omitted from any
Preliminary Prospectus, the Registration Statement, the Prospectus or any
such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by or on behalf of either
Underwriter specifically for use in the preparation thereof.

(c) The Company does not own or control, directly or indirectly, any
corporation, association or other entity other than the subsidiaries listed
in Exhibit 21 to the Registration Statement, and any reference herein to
the Company's "subsidiaries" shall mean the subsidiaries listed in such
Exhibit 21. The Company and each of the subsidiaries have been duly
incorporated and are validly existing as corporations in good standing
under the laws of their respective jurisdictions of incorporation, with
full corporate power and authority (corporate and other) to own and lease
their properties and conduct their respective businesses as described in
the Prospectus; on the First Closing Date, the Company will own all of the
outstanding capital stock of its subsidiaries; the Company and its
subsidiaries are in possession of and are operating in compliance with all
authorizations, licenses, permits, consents, certificates and orders
material to the conduct of their respective businesses, except where
noncompliance would not have a material adverse effect on the business or
financial condition of the Company and its subsidiaries, taken as a whole;
the Company and each of its subsidiaries are duly qualified to do business
and are in good standing as foreign corporations in each jurisdiction in
which the ownership or leasing of properties or the conduct of their
respective businesses requires such qualification, except for jurisdictions
in which the failure to so qualify would not have a material adverse effect
upon the Company and its subsidiaries taken as a whole; and no proceeding
has been instituted in any such jurisdiction revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and
authority or qualification.

(d) The Company has an authorized and outstanding capital stock as
set forth under the heading "Capitalization" in the Prospectus; the issued
and outstanding shares of Common Stock have been duly authorized and
validly issued, are fully paid and nonassessable, have been issued in
compliance with all federal and state securities laws, were not issued in
violation of or subject to any preemptive rights or other rights to
subscribe for or purchase securities, and conform to the description
thereof contained under the heading "Description of Capital Stock" in the
Prospectus. As of the Closing Dates (as hereinafter defined), the Company
will have no outstanding shares of preferred stock. All issued and
outstanding shares of capital stock of the Company's subsidiaries have been
duly authorized and validly issued and are fully paid and nonassessable and
are owned by the Company free and clear of any lien, claim, equity or other
encumbrance of any kind or character. Except as disclosed in or
contemplated by the Prospectus and the financial statements of the Company
and its subsidiaries, and the related notes thereto, included in the
Prospectus, neither the Company nor any of its subsidiaries has outstanding
any options to purchase, or any preemptive rights or other rights to
subscribe for or to purchase, any securities or obligations convertible
into, or any contracts or commitments to issue or sell, shares of its
capital stock or any such options, rights, convertible securities or
obligations. The description of the Company's outstanding stock options,
and other stock plans or arrangements, and the options or other rights
granted and exercised thereunder, set forth in the Prospectus, accurately
and fairly presents in all material respects the information required to be
shown with respect to such options, plans, arrangements, and rights.

(e) The Common Shares to be sold by the Company have been duly
authorized and, when issued, delivered and paid for in the manner set forth
in this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, and will conform to the description thereof contained in the
Prospectus; and when duly countersigned by the Company's transfer agent and
registrar, and

-3-
<PAGE>

delivered to the Underwriters in accordance with the provisions of this
Agreement, good and valid title thereto will pass to the Underwriters free
and clear of any liens, claims, equities or other encumbrances of any kind
or character. No preemptive rights or other rights to subscribe for or
purchase exist with respect to the issuance and sale of the Common Shares
by the Company pursuant to this Agreement. There are no persons with
registration or other similar rights to have any equity or debt securities
registered for sale under the Registration Statement or included in the
offering contemplated by this Agreement other than the Selling Stockholders
with respect to the Common Shares included in the Registration Statement
and other persons whose rights have been duly waived.

(f) The Company has full legal right, power and authority to enter
into this Agreement and perform the transactions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by the Company
and constitutes a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except to the extent that
(i) the validity and binding effect and enforcement of this Agreement may
be limited by any applicable bankruptcy, reorganization, moratorium, or
similar laws of general application, (ii) the availability of equitable
remedies may be limited by principles of equity, whether considered in a
proceeding at law or in equity, and (iii) the terms thereof may be limited
by applicable securities laws and the policies embodied therein. The making
and performance of this Agreement by the Company and the consummation of
the transactions herein contemplated by the Company or the performance by
the Company of the transactions contemplated hereby does not (i) require
any consent, approval, authorization or order of or registration or filing
with any court, regulatory body, administrative agency or other
governmental body, agency or official (except such as may be required for
the registration of the Common Shares under the Act and compliance with the
securities or Blue Sky laws and Canadian securities laws, and the clearance
of the public offering of the Common Shares by the National Association of
Securities Dealers, Inc. (the "NASD")), or conflict or will conflict with,
constitute or will constitute a breach of, or a default under, the
Certificate or Articles of Incorporation, or Bylaws or other organizational
documents of the Company or any of its subsidiaries, (ii) conflict or will
conflict or constitute or will constitute a breach of or a default under
any agreement, indenture, lease or other instrument to which the Company or
any of its subsidiaries is a party or by which any of them or any of their
respective properties may be bound (except for such conflicts, breaches or
defaults for which waivers or consents have been obtained), or violate or
will violate any statute, law, regulation or filing or judgment,
injunction, order or decree applicable to the Company or any of its
subsidiaries or any of the their respective properties, or will result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant to
the terms of any agreement or instrument to which any of them is a party or
by which any of the them may be bound or to which any of the property or
assets of any of them is subject, in each case, except for such conflicts,
breaches, defaults, violations, or encumbrances that would not singly or in
the aggregate have a material adverse effect the ability of the Company.

(g) Ernst & Young, who have expressed their opinion with respect to
the financial statements filed with the Commission as a part of the
Registration Statement and included in the Prospectus and in the
Registration Statement, are independent accountants as required by the Act
and the Rules and Regulations.

(h) The Consolidated Financial Statements and the related notes
thereto of PJ America and Subsidiary, the Financial Statements of Ohio
Pizza Delivery Co., and the Supplemental Consolidated PJ America, Inc.
Financial Statements included in the Registration Statement and the
Prospectus present fairly the financial position of the

-4-
<PAGE>

corporations covered by such financial statements, respectively, as of the
respective dates of such financial statements, and the results of
operations and changes in financial position of the corporations covered by
such financial statements, respectively, for the respective periods covered
thereby. Such financial statements and related notes have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis and have been certified by Ernst & Young, the Company's
independent accountants. The unaudited financial data for the fiscal year
ended December 28, 1992, and for the three months ended March 29, 1996 and
March 30, 1997 set forth in the Prospectus under the caption "Selected
Consolidated Financial Data" have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis. The
selected financial data under the caption "PJ America Supplemental for the
fiscal years ended December 31, 1995 and December 29, 1996, and for the
three months ended March 29, 1996 and March 30, 1997 present fairly the
financial position of the corporations covered by such data, respectively,
as of such dates, have been derived from the financial statements of the
corporations covered by such financial statements, respectively, and have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis, subject to normal year end adjustments
consistent with past practice. The pro forma financial information included
in the Prospectus has been prepared in accordance with the applicable
requirements of Rules 11-01 and 11-02 of Regulation S-X under the Act and
the Rules and Regulations and American Institute of Certified Public
Accountant guidelines with respect to pro forma financial information, has
been properly compiled on the pro forma basis described therein, and in the
opinion of the Company, the assumptions used in preparation thereof are
reasonable and the adjustments therein are appropriate. No other financial
statements, schedules or financial information are required to be included
in the Registration Statement. The financial and statistical data set forth
in the Prospectus under the captions "Prospectus Summary," "Prior S
Corporation Status of Predecessor Companies," "Risk Factors," "Use of
Proceeds," "Dividend Policy," "Price Range of Common Stock,"
"Capitalization," "Selected Consolidated Financial Data," "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Business," "Management," "Certain Transactions," "Principal and Selling
Stockholders" and "Shares Eligible for Future Sale" fairly present the
information set forth therein on the basis stated in the Registration
Statement.

(i) The Company is not in violation or default of any provision of
its Restated Certificate of Incorporation; none of the Company's
subsidiaries is in violation or default of its Certificate of
Incorporation; neither the Company nor any of its subsidiaries is in
violation or default of any provision of its Bylaws or is in breach of or
default with respect to any provision of any judgment, decree or order, or
is in breach of or default with respect to any provision of any material
agreement, mortgage, deed of trust, lease, loan agreement, security
agreement, license, indenture, permit or other instrument to which it is a
party or by which it or any of its properties are bound; and there does not
exist any state of facts which constitutes an event of default on the part
of the Company or any of its subsidiaries as defined in such documents or
which, with notice or lapse of time or both, would constitute such an event
of default.

(j) There are no contracts or other documents required to be
described in the Registration Statement or to be filed as exhibits to the
Registration Statement by the Act or by the Rules and Regulations which
have not been described or filed as required. The contracts so described in
the Prospectus are in full force and effect on the date hereof; and neither
the Company nor any of its subsidiaries, nor to the best of the Company's
or any subsidiaries's knowledge any other party, is in breach of or default
under any material provision of any such contract which would have a
material adverse effect on the Company and its subsidiaries, taken as a
whole.

-5-
<PAGE>

(k) There are no legal or governmental actions, suits or proceedings
pending or, to the best of the Company's knowledge, threatened to which the
Company or any of its subsidiaries is or may be a party or with respect to
which property owned or leased by the Company or any of its subsidiaries is
or may be the subject, or related to environmental, employment of aliens or
discrimination matters, which actions, suits or proceedings might,
individually or in the aggregate, prevent or adversely affect the
transactions contemplated by this Agreement or result in a material adverse
change in the condition (financial or otherwise), properties, business,
results of operations or prospects of the Company and its subsidiaries
taken as a whole, and no labor disturbance by the employees of the Company
or its subsidiaries exists or, to the knowledge of the Company or any of
its subsidiaries is imminent which might be expected to result in a
material adverse change in the condition (financial or otherwise),
properties, business, results of operations or prospects of the Company or
any of its subsidiaries taken as a whole. Neither the Company, any of its
subsidiaries is a party to, or subject to the provisions of, any material
injunction, judgment, decree or order of any court, regulatory body,
administrative agency or other governmental body.

(l) The Company and each of its subsidiaries have good and marketable
title to all the properties and assets reflected as owned by them,
respectively, in the financial statements hereinabove described (or as
reflected or described elsewhere in the Prospectus), subject to no lien,
mortgage, pledge, charge or encumbrance of any kind except (i) those, if
any, reflected in such financial statements (or elsewhere in the
Prospectus), or (ii) those which do not materially adversely affect the use
made and proposed to be made of such property by the Company or any of its
subsidiaries. The Company and each of its subsidiaries hold their
respective leased properties under valid and binding leases, with such
exceptions as are not materially significant in relation to the business of
the Company or its subsidiaries. Except as disclosed in the Prospectus,
the Company and each of its subsidiaries own or lease all such properties
as are necessary to their respective operations as now conducted.

(m) Since the respective dates as of which information is given in
the Registration Statement and Prospectus, and except as described in or
specifically contemplated by the Prospectus (i) neither the Company nor any
of its subsidiaries has incurred any liabilities or obligations, direct,
indirect or contingent, or entered into any verbal or written agreement or
other transaction which is not in the ordinary course of business and which
reasonably could be expected to result in a material reduction in the
future earnings of the Company or its subsidiaries taken as a whole; (ii)
the Company and its subsidiaries taken as a whole, have not sustained any
material loss or interference with their respective businesses or
properties from fire, flood, windstorm, accident or other calamity, whether
or not covered by insurance; (iii) the Company has not paid or declared any
dividends or other distributions with respect to its capital stock, and the
Company and its subsidiaries are not in default in the payment of principal
or interest on any outstanding debt obligations; (iv) there has not been
any change in the capital stock (other than upon the sale of the Common
Shares hereunder) or indebtedness material to the Company; and (v) there
has not been any material adverse change in the condition (financial or
otherwise), business, properties, results of operations or prospects of the
Company or its subsidiaries taken as a whole.

(n) The Company and its subsidiaries have sufficient trademarks,
trade names, patent rights, mask works, copyrights, licenses, approvals and
governmental authorizations to conduct their respective businesses as now
conducted; and the Company has no knowledge of any infringement by it or
its subsidiaries of trademarks, trade name rights, trade dress, patent
rights, mask works, copyrights, licenses, trade secret or other similar
rights of others; and except as disclosed in the Prospectus, the Company
has no knowledge of any infringement by others of "Papa John's" as a

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<PAGE>

service mark, "Pizza Papa John's" and design as a trademark, and "Pizza
Papa John's Delivering the Perfect Pizza!" and design as a trademark and as
a servicemark, or of the Company's or its subsidiaries' trademarks, trade
name rights, trade dress, patent rights, mask works, copyrights, licenses,
trade secrets or other similar rights that would be material to the
business or financial condition of the Company and its subsidiaries taken
as a whole; and there is no claim being made against the Company or any of
its subsidiaries regarding trademark, trade name, trade dress, patent
right, mask work, copyright, license, trade secret or other infringement
which could have a material adverse effect on the condition (financial or
otherwise), business, results of operations or prospects of the Company and
its subsidiaries, taken as a whole.

(o) The Company has not been advised, and has no reason to believe,
that either it or any of its subsidiaries is not conducting business in
compliance with all applicable laws, rules and regulations of the
jurisdictions in which it is conducting business, including, without
limitation, all applicable local, state and federal employment, truth-in-
advertising, franchising, immigration and environmental laws and
regulations, except where failure to be so in compliance would not
materially adversely affect the condition (financial or otherwise),
business, results of operations or prospects of the Company and its
subsidiaries taken as a whole.

(p) The Company and each of its subsidiaries have filed all federal,
state and foreign income and franchise tax returns or extensions therefor
required to be filed and have paid all taxes shown as due thereon; and the
Company has no knowledge of any tax deficiency which has been or might be
asserted or threatened against the Company or any of its subsidiaries which
could materially and adversely affect the business, operations or
properties of the Company and its subsidiaries taken as a whole.

(q) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets;
and (iii) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with respect
to any differences.

(r) The Company is not required to make, and following receipt of the
proceeds from the sale of the Common Shares will not be required to make,
any filing or to register under the Investment Company Act of 1940, as
amended.

(s) There is no proceeding pending or threatened (or, to the
knowledge of the Company or any of its subsidiaries or any officer of the
Company or its subsidiaries, any basis therefor) which may lead to the
revocation, suspension, termination or nonrenewal or any certificate,
order, license, permit, easement, consent, waiver, approval, franchise,
grant, authorization or concession required to conduct the business of the
Company or its subsidiaries as now conducted and as proposed to be
conducted and which are material to the Company and its subsidiaries taken
as a whole.

(t) The Company does not sell alcoholic beverages at any of the
Company's restaurants.

(u) There is no proceeding pending or threatened (or to the knowledge
of the Company or any of its officers, any basis therefor) which may lead
to the delisting or suspension from trading of the Common stock on the
Nasdaq National Market.

-7-
<PAGE>

(v) Neither the Company, any subsidiary of the Company nor any of the
Roll-Up Entities conducts business with the Government of Cuba, or in Cuba
or with any Cuban business entity or enterprise.

(w) No transfer taxes are required to be paid under the laws of the
Commonwealth of Kentucky or the States of Alabama or Virginia in connection
with the sale and delivery of the Common Shares to the Underwriters
hereunder.

SECTION 3. Additional Representations, Warranties and Covenants of the
Selling Stockholders.

(a) Each of the Selling Stockholders severally represents and warrants
to, and agrees with, the several Underwriters that:

(i) Such Selling Stockholder has good and valid title to the
Common Shares proposed to be sold by such Selling Stockholder
hereunder and the full right, power and authority to enter into this
Agreement and to sell, assign, transfer and deliver such Common Shares
hereunder, free and clear of all liens, claims, equities or other
encumbrances of any kind or character; and upon delivery of and
payment for such Common Shares hereunder, the Underwriters will
acquire good and valid title thereto, free and clear of all liens,
claims, equities or other encumbrances of any kind or character.

(ii) Such Selling Stockholder has executed and delivered a Power
of Attorney and a Custody Agreement (hereinafter collectively referred
to as the "Stockholders' Agreement") and in connection herewith such
Selling Stockholder further represents, warrants and agrees that such
Selling Stockholder has deposited in custody, under the Stockholders'
Agreement, with the agent named therein (the "Agent") as custodian,
certificates in negotiable form for the Common Shares to be sold
hereunder by such Selling Stockholder for the purpose of further
delivery pursuant to this Agreement. Such Selling Stockholder agrees
that the Common Shares to be sold by such Selling Stockholder on
deposit with the Agent are subject to the interests of the Company and
the Underwriters, that the arrangements made for such custody are in
that extent irrevocable, and that the obligations of such Selling
Stockholder hereunder shall not be terminated, except as provided in
this Agreement or in the Stockholders' Agreement, by any act of such
Selling Stockholder, by operation of law, by the death or incapacity
of such Selling Stockholder or by the occurrence of any other event.
If the Selling Stockholder should die, become incapacitated, or if any
other event should occur before the delivery of the Common Shares
hereunder, the certificates and documents evidencing Common Shares
then on deposit with the Agent shall be delivered by the Agent in
accordance with the terms and conditions of this Agreement as if such
death, incapacity or other event had not occurred, regardless of
whether the Agent shall have received notice thereof. This Agreement
and the Stockholders' Agreement have been duly executed and delivered
by or on behalf of such Selling Stockholder and the form of such
Stockholders' Agreement has been delivered to you.

(iii) The performance of this Agreement and the Stockholders'
Agreement and the consummation of the transactions contemplated hereby
and by the Stockholders' Agreement will not result in a breach or
violation by such Selling Stockholder of any of the terms or
provisions of, or constitute a default by, such Selling Stockholder
under any indenture, mortgage, deed of trust, trust (constructive or
other), loan agreement, lease, franchise, license or other agreement
or instrument to which such Selling Stockholder is a

-8-
<PAGE>

party or by which such Selling Stockholder or any of his properties is
bound, or any statute, judgment, decree, order, rule or regulation of
any court or governmental agency or body applicable to such Selling
Stockholder or any of his properties.

(iv) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action designed to, or which has
constituted or which might reasonably be expected to cause or result
in, stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Common Shares.

(v) Each Preliminary Prospectus and the Prospectus, respectively,
has conformed or conform, as the case may be, in all material respects
to the requirements of the Act and the Rules and Regulations and has
not included any untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein not
misleading in light of the circumstances under which they were made;
and neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto will include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.

(vi) The representations and warranties of the Company set forth
in Section 2 above are true and correct in all material respects.

(vii) Such Selling Stockholder has reviewed and is familiar
with the Registration Statement as originally filed with the
Commission, and as amended through the date hereof, and the
Preliminary Prospectus dated June ____, 1997; to the best knowledge of
such Selling Stockholder, neither the registration Statement nor such
Preliminary Prospectus contains any untrue statement of a material
fact or omits to state any material fact necessary in order to make
the statements therein in light of the circumstances in which
presented not misleading; and such Selling Stockholder is not prompted
to sell the Securities to be sold by such Selling Stockholder
hereunder by any information concerning the Company which is not set
forth in the Prospectus.

(b) Each of the Selling Stockholders agrees with the Company and the
Underwriters not to offer to sell, sell or contract to sell or otherwise
dispose of any shares of Common Stock or securities convertible into or
exchangeable for any shares of Common Stock for a period of 120 days from
the date of the Prospectus without the prior written consent of either
Montgomery Securities or the Underwriters acting jointly (the giving or
withholding of such consent being in the sole discretion of Montgomery
Securities, or the Underwriters acting jointly, as the case may be).

SECTION 4. Representations and Warranties of the Underwriters. The
Underwriters represent and warrant to the Company and the Selling Stockholders
that the information set forth (i) on the cover page of the Prospectus with
respect to price, underwriting discounts and commissions and terms of the
offering and (ii) under "Underwriting" in the Prospectus furnished to the
Company by the Underwriters for use in connection with the preparation of the
Registration Statement and the Prospectus is correct in all material respects.
The Company and the Selling Stockholders acknowledge that this information is
the sole information furnished to the Company by the Underwriters for inclusion
in the Registration Statement, any Preliminary Prospectus, any Prospectus, or
any amendment or supplement thereto.

-9-
<PAGE>

SECTION 5. Purchase, Sale and Delivery of Common Shares. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Company agrees to issue and sell
to the Underwriters 750,000 Firm Common Shares, and the Selling Stockholders
agree to sell to the Underwriters the number of Firm Common Shares set forth
beside such Selling Stockholders' name on Schedule B hereto, aggregating 450,000
Firm Common Shares, and the Underwriters agree, severally and not jointly, to
purchase from the Company and the Selling Stockholders the number of Firm Common
Shares set forth opposite their respective names in Schedule A hereto. The
purchase price per share to be paid by the several Underwriters to the Company
and the Selling Stockholders shall be $_________ per share.

Delivery of certificate(s) for the Firm Common Shares to be purchased by
the Underwriters shall be made by or on behalf of the Company and the Selling
Stockholders to the Underwriters or to the account of Montgomery Securities at
the Depositary Trust Corporation, New York, New York ("DTC"), as the
Representatives may direct, for the respective accounts of Underwriters. In the
event certificates are delivered to the Underwriters other than through DTC,
such delivery shall be made at the offices of Greenebaum Doll & McDonald, 3300
National City Tower, Louisville, Kentucky 40202-3197 (or such other place as
may be agreed upon by the Company, the Selling Stockholders and the
Representatives). Delivery of certificates, whether through DTC or otherwise,
shall be made at such time and date, not later than the third (or, if the Firm
Common Shares are priced, as contemplated by Rule 15cb-1(c) promulgated under
the Securities Exchange Act of 1934, as amended, after 4:30 p.m., Washington,
D.C. time, the fourth) full business day following the first day that any of
Common Shares are released by the Underwriters for sale to the public, as the
Representatives shall designate (the "First Closing Date"); provided, however,
that if the Prospectus is at any time prior to the First Closing Date
recirculated to the public, the First Closing Date shall occur upon the later of
the third or fourth, as the case may be, full business day following the first
date that any of the Common Shares are released by the Underwriters for sale to
public or the date that is 48 hours after the date that the Prospectus has been
so recirculated. The certificates for the Firm Common Shares shall be
registered in such names and denominations as the Representatives shall have
requested at least two full business days prior to the First Closing Date and
shall be made available for checking and packaging on the business day preceding
the First Closing Date at a location in New York, New York, as may be designated
by the Representatives. Time shall be of the essence, and delivery at the time
and place specified in this Agreement is a further condition to the obligations
of the Underwriters. Payment by the Underwriters for the purchase price for the
Firm Common Shares shall be made by wire transfer in immediately available funds
to [AmSouth Bank of Alabama, Birmingham, Alabama, account number 03149854 in the
case of the Company, and to National City Bank, Louisville, Kentucky, account
number 225-7290-3 in the case of the Selling Stockholders.]

In addition, on the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company hereby grants an option to the Underwriters to purchase up to 180,000
Optional Common Shares, at the purchase price per share to be paid for the
Firm Common Shares, for use solely in covering any over-allotments made by the
Underwriters in the sale and distribution of the Firm Common Shares. The
options granted hereunder may be exercised at any time (but not more than once)
within 30 days after the first date that any of the Firm Common Shares are
released by the Underwriters for sale to the public upon notice by the
Underwriters to the Company and the Selling Stockholders setting forth the
aggregate number of Optional Common Shares as to which the Underwriters are
exercising the options, the names and denominations in which the certificates
for such shares are to be registered and the time and place at which such
certificates will be delivered. Such time of delivery (which may not be earlier
than the First Closing Date), being herein referred to as the "Second Closing
Date," shall be determined by the Underwriters, but

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<PAGE>

if at any time other than the First Closing Date shall not be earlier than three
nor later than five full business days after delivery of such notice of
exercise. The number of Optional Common Shares to be purchased by each
Underwriter shall be determined by multiplying the aggregate number of Optional
Common Shares to be sold by the Company and the Selling Stockholders,
respectively, pursuant to such notice of exercise by a fraction, the numerator
of which is the number of Firm Common Shares to be purchased by such Underwriter
as set forth opposite its name in Schedule A and the denominator of which is
_________ (subject to such adjustments to eliminate any fractional share
purchases as the Underwriters in their discretion may make). Certificates for
the Optional Common Shares will be made available for checking and packaging on
the business day preceding the Second Closing Date at a location in New York,
New York, designated by you. The manner of payment for and delivery of the
Optional Common Shares shall be the same as for the Firm Common Shares
purchased, as specified in this Section 5. At any time before lapse of the
option, the Underwriters may cancel such option by giving written notice of such
cancellation to the Company and the Option Selling Stockholder. If the option is
canceled or expires unexercised in whole or in part, the Company will deregister
under the Act the number of Optional Common Shares as to which the option has
not been exercised.

Subject to the terms and conditions hereof, the Underwriters propose to
make a public offering of their respective portions of the Firm Common Shares,
and of the Optional Common Shares if and to the extent that the Underwriters
exercise their option to purchase Optional Common Shares, as soon after the
effective date of the Registration Statement as in the judgment of the
Underwriters is advisable and at the public offering price set forth on the
cover page of and on the terms set forth in the Prospectus.

Not later than 12:00 p.m. on the second business day following the date the
Common Shares are released by the Underwriters for sale to the public, the
Company shall deliver or cause to be delivered copies of the Prospectus in such
quantities and at such places as the Representatives shall request.

SECTION 6. Covenants of the Company. The Company covenants and agrees
------------------------
that:

(a) The Company will use its best efforts to cause the Registration
Statement and any amendment thereof, if not effective at the time and date
that this Agreement is executed and delivered by the parties hereto, to
become effective. If the Registration Statement has become or becomes
effective pursuant to Rule 430A of the Rules and Regulations, or the filing
of the Prospectus is otherwise required under Rule 424(b) of the Rules and
Regulations, the Company will file the Prospectus, properly completed,
pursuant to the applicable paragraph of Rule 424(b) of the Rules and
Regulations within the time period prescribed and will provide evidence
satisfactory to the Underwriters of such timely filing. The Company will
promptly advise the Underwriters in writing (i) of the receipt of any
comments of the Commission, (ii) of any request of the Commission for
amendment of or supplement to the Registration Statement (either before or
after it becomes effective), any Preliminary Prospectus or the Prospectus
or for additional information, (iii) when the Registration Statement shall
have become effective and (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or of
the institution of any proceedings for that purpose. If the Commission
shall enter any such stop order at any time, the Company will use its best
efforts to obtain the lifting of such order at the earliest possible
moment. The Company will not file any amendment or supplement to the
Registration Statement (either before or after it becomes effective), any
Preliminary Prospectus or the Prospectus of which the Underwriters have not
been furnished with a copy a reasonable time prior to such filing or to
which

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<PAGE>

the Underwriters reasonably object in writing or which is not in compliance
with the Act and the Rules and Regulations.

(b) The Company will prepare and file with the Commission, promptly
upon the Underwriters' request, any amendments or supplements to the
Registration Statement or the Prospectus which in the Underwriters'
judgment may be necessary or advisable to enable the several Underwriters
to continue the distribution of the Common Shares and will use its best
efforts to cause the same to become effective as promptly as possible. The
Company will fully and completely comply with the provisions of Rule 430A
of the Rules and Regulations with respect to information omitted from the
Registration Statement in reliance upon such Rule.

(c) If at any time within the nine-month period referred to in
Section 10(a)(3) of the Act during which a prospectus relating to the
Common Shares is required to be delivered under the Act any event occurs,
as a result of which the Prospectus, including any amendments or
supplements, would include an untrue statement of a material fact, or omit
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, or if it is necessary at any
time to amend the Prospectus, including any amendments or supplements, to
comply with the Act or the Rules and Regulations, the Company will promptly
advise the Underwriters thereof and will promptly prepare and file with the
Commission, at its own expense, an amendment or supplement which will
correct such statement or omission or an amendment or supplement which will
effect such compliance and will use its best efforts to cause the same to
become effective as soon as possible; and, in case any Underwriter is
required to deliver a prospectus after such nine-month period, the Company,
upon request, but at the expense of such Underwriter, will promptly prepare
such amendment or amendments to the Registration Statement and such
Prospectus or Prospectuses as may be necessary to permit compliance with
the requirements of Section 10(a)(3) of the Act.

(d) As soon as practicable, but not later than 45 days after the end
of the first quarter ending after one year following the "effective date of
the Registration Statement" (as defined in Rule 158(c) of the Rules and
Regulations), the Company will make generally available to its security
holders an earnings statement (which need not be audited) covering a period
of 12 consecutive months beginning after the effective date of the
Registration Statement which will satisfy the provisions of the last
paragraph of Section 11(a) of the Act.

(e) During such period as a prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer, the
Company, at its expense, but only for the nine-month period referred to in
Section 10(a)(3) of the Act, will furnish to the Underwriters or mail
copies of the Registration Statement, the Prospectus, the Preliminary
Prospectus and all amendments and supplements to any such documents in
each case as soon as available and in such quantities as the Underwriters
may request, for the purposes contemplated by the Act.

(f) The Company shall cooperate with the Underwriters and their
counsel in order to qualify or register the Common Shares for sale under
(or obtain exemptions from the application of) the Blue Sky laws of such
jurisdictions as the Underwriters designate, will comply with such laws and
will continue such qualifications, registrations and exemptions in effect
so long as reasonably required for the distribution of the Common Shares.
The Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any such jurisdiction where
it is not presently qualified or where it would be subject to taxation as a
foreign corporation. The Company will advise the Underwriters promptly of
the suspension of the qualification or registration of (or any such
exemption relating to) the Common Shares for offering, sale or trading

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<PAGE>

in any jurisdiction or any initiation or overt threat of any proceeding for
any such purpose, and in the event of the issuance of any order suspending
such qualification, registration or exemption, the Company, with the
Underwriters' cooperation, will use its best efforts to obtain the
withdrawal thereof.

(g) During the period of five years hereafter, the Company will
furnish to the Underwriters: (i) as soon as practicable after the end of
each fiscal year, copies of the Annual Report to Stockholders of the
Company containing the balance sheet of the Company as of the close of such
fiscal year and statements of income, stockholders' equity and cash flows
for the year then ended and the opinion thereon of the Company's
independent public accountants; (ii) as soon as practicable after the
filing thereof, copies of each proxy statement, Annual Report on Form 10-K,
Quarterly Report on Form 10-Q, Report on Form 8-K or other report filed by
the Company with the Commission, the NASD or any securities exchange; and
(iii) as soon as available, copies of any report or communication of the
Company mailed generally to holders of its Common Stock.

(h) During the period of 120 days from the date of the Prospectus,
without the prior written consent of either Montgomery Securities or the
Underwriters acting jointly (the giving or withholding of such written
consent being in the sole discretion of Montgomery Securities, or the
Underwriters acting jointly, as the case may be), the Company will not
issue, offer, sell, grant options to purchase or otherwise dispose of any
of the Company's equity securities or any other securities convertible into
or exchangeable with its Common Stock or other equity security, except for
(i) the grant of options in the ordinary course of business pursuant to
existing stock option plans described in the Prospectus, or (ii) the
issuance of shares of Common Stock pursuant to the exercise of director,
officer or employee stock options that are disclosed in the Registration
Statement or Prospectus and are outstanding on the date of the Prospectus;
or the issuance of up to a maximum of 350,000 shares of Common Stock for
the acquisition of additional Papa John's franchised restaurants.

(i) The Company will apply the net proceeds of the sale of the Common
Shares sold by it substantially in accordance with its statements under the
caption "Use of Proceeds" in the Prospectus.

(j) The Company will use its best efforts to qualify or register its
Common Stock for sale in non-issuer transactions under (or obtain
exemptions from the application of) the Blue Sky laws of the State of
California (and thereby permit market making transactions and secondary
trading in the Company's Common Stock in California), will comply with such
Blue Sky laws and will use its best efforts to maintain such
qualifications, registrations and exemptions in effect for a period of five
years after the date hereof.

The Representatives may, in their sole discretion and on behalf of the
Underwriters, waive in writing the performance by the Company of any one or more
of the foregoing covenants or extend the time for their performance.

SECTION 7. Payment of Expenses. Whether or not the transactions
contemplated hereunder are consummated or this Agreement becomes effective or is
terminated, the Company agrees to pay all costs, fees and expenses incurred in
connection with the performance of its obligations hereunder, including without
limiting the generality of the foregoing, (i) all expenses incident to the
issuance and delivery of the Common Shares (including all printing and engraving
costs), (ii) all fees and expenses of the registrar and transfer agent of the
Common Stock, (iii) all necessary issue, transfer and other stamp taxes in
connection with the issuance and sale of the Common Shares to the Underwriters,
(iv) all fees and expenses of the Company's counsel, Selling Stockholders'
counsel and the Company's independent accountants, (v) all costs and expenses

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<PAGE>

incurred in connection with the preparation, printing, filing, shipping and
distribution to the Underwriters and dealers of the Registration Statement, each
Preliminary Prospectus and the Prospectus (including all exhibits and financial
statements) and all amendments and supplements provided for herein, this
Agreement, the Agreement Among Underwriters, the Selected Dealers Agreement, the
Underwriters' Questionnaire, the Underwriters' Power of Attorney and the
preliminary Blue Sky memorandum and final Blue Sky memorandum, (vi) all filing
fees, attorneys' fees and expenses incurred by the Company or the Underwriters
in connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Common Shares for offer
and sale under the Blue Sky laws and applicable Canadian securities laws, (vii)
the filing fee of the NASD and attorneys fees and expenses incurred by the
Company or the Underwriters in obtaining a letter of no objection from the NASD,
and (viii) all other fees, costs and expenses referred to in Item 13 of the
Registration Statement. Except as provided in this Section 7, Section 9 and
Section 11 hereof, the Underwriters shall pay all of their own expenses,
including the fees and disbursements of their counsel (excluding those relating
to qualification, registration or exemption under the Blue Sky laws, Canadian
securities laws, the Blue Sky memoranda and relating to obtaining a letter of no
objection from the NASD, referred to above).

SECTION 8. Conditions of the Obligations of the Underwriters. The
obligations of the Underwriters to purchase and pay for the Firm Common Shares
on the First Closing Date and the Optional Common Shares on the Second Closing
Date shall be subject to the accuracy of the representations and warranties on
the part of the Company and the Selling Stockholders herein set forth as of the
date hereof and as of the First Closing Date or the Second Closing Date, as the
case may be, to the accuracy of the statements of Company officers and the
Selling Stockholders made pursuant to the provisions of this Agreement, to the
performance by the Company and the Selling Stockholders of their respective
obligations hereunder, and to the following additional conditions:

(a) The Registration Statement shall have become effective; if the
filing of the Prospectus, or any supplement thereto, is required pursuant
to Rule 424(b) of the Rules and Regulations, the Prospectus shall have been
filed in the manner and within the time period required by Rule 424(b) of
the Rules and Regulations; and prior to such Closing Date, no stop order
suspending the effectiveness of the Registration Statement, any Rule 462(b)
Registration Statement or any post-effective amendment to the Registration
Statement shall have been issued and no proceedings for that purpose shall
have been instituted or shall be pending or, to the knowledge of the
Company, the Selling Stockholders or the Underwriters, shall be
contemplated by the Commission; and any request of the Commission for
inclusion of additional information in the Registration Statement, or
otherwise, shall have been complied with to the Underwriters' satisfaction.

(b) The Underwriters shall be satisfied that since the respective
dates as of which information is given in the Registration Statement and
Prospectus, (i) there shall not have been any change in the capital stock
(other than pursuant to the exercise of director, officer or employee stock
options disclosed in the Registration Statement or Prospectus and
outstanding as of the date of the Prospectus) of the Company or its
subsidiaries or any material change in the indebtedness of the Company or
its subsidiaries, (ii) except as set forth in or contemplated by the
Registration Statement or the Prospectus, no material verbal or written
agreement or other transaction shall have been entered into by the Company
or its subsidiaries which is not in the ordinary course of business and
which reasonably could be expected to result in a material reduction in the
future earnings of the Company or its subsidiaries, taken as a whole, (iii)
no loss or damage (whether or not insured) to the property of the Company
or its subsidiaries shall have been sustained which materially and
adversely affects the condition (financial or otherwise), business, results
of operations or prospects of the Company or its subsidiaries, taken as a
whole, (iv) no legal or governmental action, suit or

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<PAGE>

proceeding affecting the Company or its subsidiaries which could have a
material adverse effect upon the Company and its subsidiaries, taken as a
whole, or which affects or may affect the transactions contemplated by this
Agreement shall have been instituted or threatened and (v) there shall not
have been any material change in the condition (financial or otherwise),
business, management, results of operations or prospects of the Company and
its subsidiaries taken as a whole which makes it impractical or inadvisable
in the judgment of the Underwriters to proceed with the public offering or
purchase of the Common Shares as contemplated hereby.

(c) There shall have been furnished to the Underwriters on each
Closing Date, in form and substance satisfactory to the Underwriters, such
documents and certificates as the Underwriters shall reasonably request,
including the following:

(i) An opinion of Greenebaum Doll & McDonald, counsel for the
Company and the Selling Stockholders, addressed to the Underwriters
and dated the First Closing Date, or the Second Closing Date, as the
case may be, to the effect that:

(1) Each of the Company and its subsidiaries, respectively,
has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction
of incorporation, is duly qualified to do business as a foreign
corporation and is in good standing in all other jurisdictions
where the ownership or leasing of properties or the conduct of
its business requires such qualification, except for
jurisdictions in which the failure to so qualify would not have a
material adverse effect on the Company or its subsidiaries, as
the case may be, and each has full corporate power and authority
to own its properties and conduct its business as described in
the Registration Statement;

(2) The authorized capital stock of the Company is as set
forth under the caption "Capitalization" in the Prospectus, and
the number of shares of Common Stock that will be issued and
outstanding after consummation of the transactions contemplated
hereby is as set forth under the caption "Prospectus Summary -
The Offering" (assuming the Underwriters do not elect to purchase
any of the Optional Common Shares); all necessary and proper
corporate proceedings have been taken in order to validly
authorize such authorized Common Stock and to validly issue such
issued and outstanding Common Stock; all outstanding shares of
Common Stock (including the Firm Common Shares and Optional
Common Shares, if any) have been duly and validly authorized and
issued, are fully paid and nonassessable, were not issued in
violation of any preemptive rights or other rights to subscribe
for or purchase any securities and conform to the description
thereof contained in the Prospectus; without limiting the
foregoing, there are no preemptive or other rights to subscribe
for or purchase any of the Common Shares to be sold by the
Company hereunder; neither the Restated Certificate of
Incorporation nor Bylaws of the Company, nor does any contract,
contain any restriction upon the voting or transfer of any of the
shares of capital stock of the Company (including the Firm Common
Shares and the Optional Common Shares), except such restrictions
as may be imposed by federal and state securities laws or as may
be expressly described in the Prospectus;

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<PAGE>

(3) All of the issued and outstanding shares of capital
stock of the Company's subsidiaries have been duly and validly
authorized and issued, are fully paid and nonassessable, and good
and valid title thereto is held by the Company free and clear of
all liens, claims, equities or other encumbrances of any kind or
character;

(4) The certificate(s) evidencing the Common Shares to be
delivered hereunder are in due and proper form under Delaware
law, and when duly countersigned by the Company's transfer agent
and registrar, and delivered to the Underwriters or to the order
of the Underwriters against payment of the agreed consideration
therefor in accordance with the provisions of this Agreement,
good and valid title to the Common Shares (including the Firm
Common Shares to be sold by the Company and the Optional Common
Shares to be sold by the Company to the extent that the over-
allotment option is exercised) will pass to the Underwriters free
and clear of any liens, claims, equities or other encumbrances of
any kind or character, and the Common Shares represented by such
certificate(s) will be duly authorized and validly issued, fully
paid and nonassessable, will not have been issued in violation of
or subject to any preemptive rights or other rights to subscribe
for or purchase securities, and will conform to the description
thereof contained in the Prospectus;

(5) Except as disclosed in the Prospectus, there are no
outstanding options, warrants or other rights calling for the
issuance of, and no commitments or obligations to issue, any
shares of capital stock of the Company or any security
convertible into or exchangeable for capital stock of the
Company;

(6) (a) The Registration Statement has become effective
under the Act, and, to such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement or
preventing the use of the Prospectus has been issued and no
proceedings for that purpose have been instituted or are pending
or overtly threatened by the Commission; any required filing of
the Prospectus and any supplement thereto pursuant to Rule 424(b)
of the Rules and Regulations has been made in the manner and
within the time period required by such Rule 424(b);

(b) The Registration Statement, the Prospectus and
each amendment or supplement thereto (except for the financial
statements and schedules and other statistical financial data and
schedules included therein, as to which such counsel need express
no opinion) comply as to form in all material respects with the
requirements of the Act and the Rules and Regulations; and

(c) To such counsel's knowledge, there are no
franchises, leases, contracts, agreements or documents of a
character required to be disclosed in the Registration Statement
or Prospectus or to be filed as exhibits to the Registration
Statement which are not disclosed or filed, as required;

(7) The Company has full right, corporate power and
authority to enter into this Agreement and to sell and deliver
the Common Shares to be sold by it to the Underwriters; this
Agreement has been duly and validly authorized by all

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<PAGE>

necessary corporate action by the Company, has been duly and
validly executed and delivered by and on behalf of the Company,
and is a valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, except to the
extent that (i) the validity and binding effect and enforcement
of this Agreement may be limited by any applicable bankruptcy,
reorganization, moratorium, or similar laws of general
application, (ii) the availability of equitable remedies may be
limited by principles of equity, whether considered in a
proceeding at law or in equity, and (iii) the terms hereof may be
limited by applicable securities laws and the policies embodied
therein; and no approval, authorization, order, consent,
registration, filing, qualification, license or permit of or with
any court, regulatory, administrative or other governmental body
is required for the execution and delivery of this Agreement by
the Company or the consummation of the transactions contemplated
by this Agreement, except such as have been obtained and are in
full force and effect under the Act and such as may be required
under applicable Blue Sky laws and applicable Canadian securities
laws in connection with the purchase and distribution of the
Common Shares by the Underwriters and the obtaining of a letter
of no objection from the NASD with respect to such offering;

(8) The execution and performance of this Agreement, the
sale of the Common Shares and the consummation of the
transactions herein contemplated will not violate any of the
provisions of the Certificate of Incorporation or Bylaws of the
Company or the Certificate of Incorporation or Bylaws of any of
its subsidiaries or, to such counsel's knowledge, conflict with,
result in the breach of, or constitute, either by itself or upon
notice or the passage of time or both, a default under any
agreement, mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument to which the Company or its
subsidiaries is a party or by which the Company or its
subsidiaries or any of its or their property may be bound or
affected, or violate any statute, judgment, decree, order, rule
or regulation of any court or government body having jurisdiction
over the Company or its subsidiaries or any of its or their
property (other than state securities or Blue Sky laws and
regulations as to which counsel need not express any opinion);

(9) The Company is not in violation of its Certificate of
Incorporation or Bylaws and the Company's subsidiaries are not in
violation of their Certificates of Incorporation or Bylaws, and,
to such counsel's knowledge neither the Company nor its
subsidiaries is in breach of or default with respect to any
provision of any agreement, mortgage, deed of trust, lease, loan
agreement, security agreement, license, indenture, permit or
other instrument to which the Company or its subsidiaries is a
party or by which the Company or any of its properties or the
Company's subsidiaries or any of their properties may be bound
or affected, except where such default would not materially
adversely affect the Company or its subsidiaries, taken as a
whole; and, to such counsel's knowledge, the Company and its
subsidiaries are in compliance with all laws, rules, regulations,
judgments, decrees, orders and statutes of any court or
jurisdiction to which they are subject, except where
noncompliance would not materially adversely affect the Company
or its subsidiaries, taken as a whole;

-17-
<PAGE>

(10) To such counsel's knowledge, there are no legal
actions, suits or governmental proceedings pending or threatened
before any court or governmental agency, authority or body which,
if determined adversely to the Company or its subsidiaries, would
individually or in the aggregate have a material adverse effect
on the financial position, stockholders' equity or results of
operations of the Company or its subsidiaries, taken as a whole;

(11) To such counsel's knowledge, no holders of securities
of the Company have rights to the registration of shares of
Common Stock or other securities which would be required to be
included in the Registration Statement filed by the Company or
included in the offering contemplated thereby;

(12) No transfer taxes are required to be paid under the
laws of the Commonwealth of Kentucky in connection with the sale
and delivery of the Common Shares to the Underwriters hereunder;

(13) To such counsel's knowledge, this Agreement and the
Stockholders' Agreement have been duly authorized, executed and
delivered by each of the Selling Stockholders; and to the best of
such counsel's knowledge, the performance of this Agreement and
the Stockholders' Agreement and the consummation of the
transactions herein contemplated by the respective Selling
Stockholders will not result in a breach of, or constitute a
default under, any indenture, mortgage, deeds of trust, trust
(constructive or other), loan agreement, lease, franchise,
license or other agreement or instrument to which the respective
Selling Stockholder is a party or by which the respective Selling
Stockholder or any of his properties may be bound, or violate any
statute, judgment, decree, order, rule or regulation known to
such counsel of any court or governmental body having
jurisdiction over the Selling Stockholders, respectively, or any
of the properties of the respective Selling Stockholders; and to
such counsel's knowledge, no approval, authorization, order or
consent of any court, regulatory body, administrative agency or
other governmental body is required for the execution and
delivery of this Agreement or the Stockholders' Agreement or the
consummation by the respective Selling Stockholders of the
transactions contemplated by this Agreement and the Stockholders'
Agreement, except such as have been obtained and are in full
force and effect under the Act and such as may be required under
the rules of NASD, applicable Blue Sky laws and Canadian
securities laws;

(14) To the best knowledge of such counsel, each of the
Selling Stockholders has the full right, power and authority to
enter into this Agreement and the Stockholders' Agreement and to
sell, transfer and deliver the Common Shares to be sold by each
Selling Stockholder on the Closing Date, and good and valid title
to such Common Shares so sold, free and clear of all liens,
claims, equities or other encumbrances of any kind or character,
will be transferred to the Underwriters who have purchased such
Common Shares hereunder; and

(15) To the best knowledge of such counsel, this Agreement
and the Stockholders' Agreement are valid and binding agreements
of the respective Selling Stockholders in accordance with their
respective terms except to the extent that (i) the validity and
binding effect and enforcement of this Agreement and the

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<PAGE>

Stockholders' Agreement may be limited by any applicable
bankruptcy, reorganization, moratorium, or similar laws of
general application, (ii) the availability of equitable remedies
may be limited by principles of equity, whether considered in a
proceeding at law or in equity, and (iii) the indemnification
provisions contained in this Agreement may be limited by
applicable securities laws and the policies embodied therein.

(16) To the best knowledge of such counsel, neither
issuance, sale or delivery of the Common Shares, nor the
execution, delivery or performance of this Agreement, or
compliance by the Company with the transactions contemplated
hereby or thereby conflicts or will conflict or constitutes or
will constitute a breach of, or a default under, the Certificate
or Articles of Incorporation or Bylaws or other organizational
documents of the Company or any agreement, indenture, lease, or
other instrument to which the Company is a party, or will result
in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of its
subsidiaries under any such agreement, indenture, lease or other
instrument, nor will any such action result in any violation of
any existing law, regulation, ruling, (assuming compliance with
all applicable state securities and Blue Sky laws and Canadian
securities laws), judgment, injunction, order or decree known to
such counsel, and applicable to the Company, any of its
subsidiaries or any of their respective properties, in each case
except for such conflicts, breaches, defaults, violation, or
encumbrances that would not singly or in the aggregate have a
material adverse effect on the ability of the Company to fulfill
its obligations under this Agreement.

In rendering such opinion, such counsel may rely, as to matters
of fact, on certificates of the Selling Stockholders and of officers
of the Company and of governmental officials, in which case their
opinion shall state that they are so doing and that the Underwriters
are justified in relying on such certificates and copies of such
certificates are to be attached to the opinion.

In addition, such counsel shall state that they have participated
in conferences with officers, employees and other representatives of
the Company, counsel for the Underwriters, representatives of the
independent public accountants for the Company and representatives of
the Underwriters at which the contents of the Registration Statement
and Prospectus and related matters were discussed and, although such
counsel is not passing upon and does not assume any responsibility
for, the accuracy, completeness or fairness of the statements
contained in the Registration Statement and Prospectus and has not
made any independent check or verification thereof, on the basis of
the foregoing (relying as to materiality to a large extent upon the
statements of officers, employees and other representatives of the
Company), no facts have come to such counsel's attention that lead
them to believe that either the Registration Statement at the time
such Registration Statement became effective contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein in light of the circumstances in which they were made, not
misleading, or the Prospectus as of its date contained an untrue
statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that
such counsel need express no opinion with respect to the financial

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<PAGE>

statements, schedules and other statistical financial data included in
the Registration Statement or Prospectus.

(ii) Such opinion or opinions of Locke Purnell Rain Harrell (A
Professional Corporation), counsel for the Underwriters, dated the
First Closing Date or the Second Closing Date, as the case may be,
with respect to the incorporation of the Company and its subsidiaries,
the sufficiency of all corporate proceedings and other legal matters
relating to this Agreement, the validity of the Common Shares, the
Registration Statement and the Prospectus and other related matters as
the Underwriters may reasonably require, and the Company and the
Selling Stockholders shall have furnished to such counsel such
documents and shall have exhibited to them such papers and records as
they reasonably may request for the purpose of enabling them to pass
upon such matters. In connection with such opinions, such counsel may
rely on representations or certificates of the Selling Stockholders
and of officers of the Company and governmental officials.

(iii) A certificate of the Company executed by the President and
Chief Executive Officer and the Chief Financial or Accounting Officer
of the Company, dated the First Closing Date or the Second Closing
Date, as the case may be, to the effect that:

(1) The representations and warranties of the Company set
forth in Section 2 of this Agreement are true and correct as of
the date of this Agreement and as of the First Closing Date or
the Second Closing Date, as the case may be, and the Company has
complied with all the agreements and satisfied all the conditions
on its part to be performed or satisfied on or prior to such
Dates, respectively;

(2) The Commission has not issued any order preventing or
suspending the use of the Prospectus or any Preliminary
Prospectus filed as a part of the Registration Statement or any
amendment thereto; no stop order suspending the effectiveness of
the Registration Statement has been issued; and to the best of
the knowledge of the respective signers, no proceedings for that
purpose have been instituted or are pending or overtly threatened
under the Act;

(3) Each of the respective signers of the certificate has
carefully examined the Registration Statement and the Prospectus;
in his opinion and to the best of his knowledge, the Registration
Statement and the Prospectus and any amendments or supplements
thereto contain all statements required to be stated therein
regarding the Company and its subsidiaries, and neither the
Registration Statement nor the Prospectus nor any amendment or
supplement thereto includes any untrue statement of a material
fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading;

(4) Since the initial date on which the Registration
Statement was filed, no agreement, written or oral, transaction
or event has occurred which should have been set forth in an
amendment to the Registration Statement or in a supplement to or
amendment of any Prospectus which has not been disclosed in such
a supplement or amendment;

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<PAGE>

(5) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, and
except as disclosed in or contemplated by the Prospectus, there
has not been any material adverse change or a development
involving a material adverse change in the condition (financial
or otherwise), business, properties, results of operations,
management or prospects of the Company and its subsidiaries,
taken as a whole; and no legal or governmental action, suit or
proceeding is pending or threatened against the Company or its
subsidiaries which is material to the Company or its
subsidiaries, whether or not arising from transactions in the
ordinary course of business, or which may adversely affect the
transactions contemplated by this Agreement; neither the Company
nor its subsidiaries has entered into any verbal or written
agreement or other transaction which is not in the ordinary
course of business or which reasonably could be expected to
result in a material reduction in the future earnings of the
Company or its subsidiaries, or incurred any material liability
or obligation, direct, contingent or indirect, made any change in
its capital stock, made any material change in its short-term
debt or long-term debt or repurchased or otherwise acquired any
of the Company's capital stock; and the Company has not declared
or paid any dividend, or declared or made any other distribution,
with respect to its outstanding capital stock payable to
stockholders of record, except as disclosed in the Prospectus, on
a date prior to the First Closing Date or Second Closing Date, as
the case may be;

(6) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus and except
as disclosed in or contemplated by the Prospectus, neither the
Company nor its subsidiaries has sustained a material loss or
damage by strike, fire, flood, windstorm, accident or other
calamity (whether or not insured).

(iv) On the First Closing Date, a certificate, dated such
Closing Date and addressed to the Underwriters, signed by or on behalf
of the Selling Stockholders, and on the Second Closing Date a
certificate, dated the Second Closing Date and addressed to the
Underwriters, signed by the Selling Stockholders, to the effect that
the representatives and warranties of such Selling Stockholders are
true and correct as if made at and as of such Closing Date, and such
Selling Stockholder have complied with all the agreements and
satisfied all the conditions to be performed or satisfied prior to the
First Closing Date or the Second Closing Date, as the case may be.

(v) On the date before this Agreement is executed and also on
the First Closing Date and the Second Closing Date, a letter addressed
to the Underwriters from Ernst & Young, independent accountants, the
first one to be dated the day before the date of this Agreement, the
second one to be dated the First Closing Date and the third one (in
the event of a Second Closing) to be dated the Second Closing Date, in
form and substance satisfactory to you.

(vi) On or before the First Closing Date, letters from each
director and officer of the Company and from each person or entity
named under the caption "Principal and Selling Stockholders" in the
Prospectus, in form and substance satisfactory to you, confirming that
for a period of 120 days from the date of the Prospectus such person
or entity will not directly or indirectly sell or offer to sell or
otherwise dispose of any shares of Common Stock

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<PAGE>

or any right to acquire such shares without the prior written consent
of either Montgomery Securities or the Underwriters acting jointly,
which consent may be withheld at the sole discretion of Montgomery
Securities, or the Underwriters acting jointly, as the case may be.

All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are reasonably
satisfactory to the Underwriters and to Locke Purnell Rain Harrell (A
Professional Corporation), counsel for the Underwriters. The Company and
the Selling Stockholders shall furnish the Underwriters with such manually
signed or conformed copies of such opinions, certificates, letters and
documents as the Underwriters request. Any certificate signed by any
officer of the Company and delivered to the Underwriters shall be deemed to
be a representation and warranty by the Company to the Underwriters as to
the statements made therein.

If any condition to the Underwriters' obligations hereunder to be
satisfied prior to or at the First Closing Date is not so satisfied, this
Agreement at the election of the Underwriters will terminate upon
notification by the Underwriters to the Company without liability on the
part of any Underwriter or the Company, except for the expenses to be paid
or reimbursed by the Company pursuant to Sections 7 and 9 hereof and except
to the extent provided in Section 12 hereof.

SECTION 9. Reimbursement of Underwriters' Expenses. If this Agreement
shall be terminated by the Underwriters pursuant to Section 8, or if the sale to
the Underwriters of the Common Shares at the First Closing Date is not
consummated because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or to comply with any provision hereof,
the Company agrees to reimburse the Underwriters upon demand for all out-of-
pocket expenses that shall have been reasonably incurred by the Underwriters in
connection with the proposed purchase and the sale of the Common Shares,
including but not limited to fees and disbursements of Underwriters' counsel,
printing expenses, travel expenses, postage, telecopy charges and telephone
charges relating directly to the offering contemplated by the Prospectus. Any
such termination shall be without liability of any party to any other party,
except that the provisions of this Section, Section 7 and Section 11 shall at
all times be effective and shall apply.

SECTION 10. Effectiveness of Registration Statement. The Underwriters and
the Company will use their respective best efforts to cause the Registration
Statement to become effective, to prevent the issuance of any stop order
suspending the effectiveness of the Registration Statement and, if such stop
order be issued, to obtain as soon as possible the lifting thereof.

SECTION 11. Indemnification.

(a) The Company and the Selling Stockholders jointly and severally,
agree to indemnify and hold harmless each Underwriter and each person, if
any, who controls any Underwriter within the meaning of the Act against any
losses, claims, damages, liabilities or expenses, joint or several, to
which such Underwriter or such controlling person may become subject, under
the Act, the Exchange Act, or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Company and the Selling Stockholders), insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state in any of them a material fact required to be
stated therein or necessary to make the statements in any of them not
misleading, or arise out of or are based in whole or in part on any
inaccuracy in the representations and warranties of the

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<PAGE>

Company or the Selling Stockholders contained herein or any failure of the
Company or the Selling Stockholders to perform their respective obligations
hereunder or under law; and will reimburse each Underwriter and each such
controlling person for any legal and other expenses as such expenses are
reasonably incurred by such Underwriter or such controlling person in
connection with investigating, defending, settling, compromising or paying
any such loss, claim, damage, liability, expense or action; provided, that
the Company and the Selling Stockholders will not be liable in any such
case to the extent that any such loss, claim, damage, liability or expense
arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto in reliance upon and in conformity with the information
furnished to the Company by the Underwriters pursuant to Section 4 hereof;
and provided further, that with respect to any untrue statement or omission
or alleged untrue statement or omission made in any Preliminary Prospectus,
the indemnity agreement contained in this paragraph shall not inure to the
benefit of any Underwriter from whom the person asserting any such losses,
claims, damages, liabilities or expenses purchased the Common Shares
concerned (or to the benefit of any person controlling such Underwriter) to
the extent that any such loss, claim, damage, liability or expense of such
Underwriter or controlling person results from the fact that a copy of the
Prospectus was not sent or given to such person at or prior to the written
confirmation of sale of such Common Shares to such person as required by
the Act, and if the untrue statement or omission has been corrected in the
Prospectus, unless such failure to deliver the Prospectus was a result of
noncompliance by the Company with its obligations under Section 6(e)
hereof; and, provided further, that the aforesaid joint and several
liability of each Selling Stockholder under this Section 11(a) shall not
exceed the sum of the net proceeds received by such Selling Stockholder
from the Common Shares sold by such Selling Stockholder pursuant hereto.
The Company and the Selling Stockholders may agree, as among themselves and
without limiting the rights of the Underwriters under this Agreement, as to
their respective amounts of such liability for which they each shall be
responsible, and this Agreement shall not modify or supersede any
agreements now in effect between the Company and the Selling Stockholders
with respect thereto.

(b) In addition to their other obligations under this Section 11 the
Company and the Selling Stockholders jointly and severally agree that, as
an interim measure during the pendency of any claim, action, investigation,
inquiry or other proceeding arising out of or based upon any statement or
omission, or any alleged statement or omission, or any inaccuracy in the
representations and warranties of the Company or the Selling Stockholders
herein or failure to perform the respective obligations of the Company and
the Selling Stockholders hereunder, all as described in Section 11(a), the
Company and the Selling Stockholders will reimburse each Underwriter on a
quarterly basis for all reasonable legal or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of
a judicial determination as to the propriety and enforceability of the
Company's or the Selling Stockholders' obligations to reimburse each
Underwriter for such expenses and the possibility that such payments might
later be held to have been improper by a court of competent jurisdiction.
To the extent that any such interim reimbursement payment is so held to
have been improper, each Underwriter shall promptly return such payment to
the Company and the Selling Stockholders, pro rata, together with interest,
compounded daily, determined on the basis of the prime rate (or other
commercial lending rate for borrowers of the highest credit standing)
announced from time to time by Bank of America NT&SA, San Francisco,
California (the "Prime Rate"). Any such interim reimbursement payments
which are not made to an Underwriter within 30 days of a request for
reimbursement shall bear interest at the Prime Rate from the date of such
request. This indemnity agreement will be in addition to any liability
which the Company and the Selling Stockholders may otherwise have.

-23-

<PAGE>

(c) Each Underwriter will severally indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the
Registration Statement, Selling Stockholders and each person, if any, who
controls the Company within the meaning of the Act, against any losses,
claims, damages, liabilities or expenses to which the Company, or any such
director, officer, or controlling person may become subject under the Act,
the Exchange Act, or other federal or state statutory law or regulation, or
at common law or otherwise (including in settlement of any litigation, if
such settlement is effected with the written consent of such Underwriter),
insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof as contemplated below) arise out of or are based
upon any untrue or alleged untrue statement of any material fact contained
in the Registration Statement, any Preliminary Prospectus, the Prospectus,
or any amendment or supplement thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, in
reliance upon and in conformity with the information furnished to the
Company pursuant to Section 4 hereof (which information is the sole
information furnished to the Company by the Underwriters for inclusion in
the Registration Statement, any Preliminary Prospectus, any Prospectus, or
any amendment or supplement thereto); and will reimburse the Company, or
any such director, officer, Selling Stockholder, or controlling person for
any legal and other expense reasonably incurred by the Company, or any such
director, officer, Selling Stockholder or controlling person in connection
with investigating, defending, settling, compromising or paying any such
loss, claim, damage, liability, expense or action. In addition to its other
obligations under this Section 11(c), each Underwriter severally agrees
that, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
statement or omission, or any alleged statement or omission, described in
this Section 11(c) which relates to information furnished to the Company
pursuant to Section 4 hereof, it will reimburse the Company (and, to the
extent applicable, each officer, director, Selling Stockholder or
controlling person) on a quarterly basis for all reasonable legal or other
expenses incurred in connection with investigating or defending any such
claim, action, investigation, inquiry or other proceeding, notwithstanding
the absence of a judicial determination as to the propriety and
enforceability of the Underwriters' obligation to reimburse the Company
(and, to the extent applicable, each officer, director, Selling Stockholder
or controlling person) for such expenses and the possibility that such
payments might later be held to have been improper by a court of competent
jurisdiction. To the extent that any such interim reimbursement payment is
so held to have been improper, the Company (and, to the extent applicable,
each officer, director, Selling Stockholder or controlling person) shall
promptly return such payment to the Underwriters, together with interest,
compounded daily, determined on the basis of the Prime Rate. Any such
interim reimbursement payments which are not made within 30 days of a
request for reimbursement, shall bear interest at the Prime Rate from the
date of such request. This indemnity agreement will be in addition to any
liability which such Underwriter may otherwise have.

(d) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against an indemnifying party
under this Section, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party for contribution or otherwise hereunder to the extent it is not
materially prejudiced as a proximate result of such failure. In case any
such action is brought against any indemnified party and such indemnified
party seeks or intends to seek indemnity from an indemnifying party, the
indemnifying party will be entitled to participate in, and,

-24-
<PAGE>

to the extent that it may wish, jointly with all other indemnifying parties
similarly notified, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably
concluded that there may be a conflict between the positions of the
indemnifying party and the indemnified party in conducting the defense of
any such action or that there may be legal defenses available to it and/or
other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall
have the right to select separate counsel to assume such legal defenses and
to otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of its election so to assume the defense of
such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal expenses subsequently incurred by such indemnified
party in connection with the defense thereof unless (i) the indemnified
party shall have employed such counsel in connection with the assumption of
legal defenses in accordance with the proviso to the next preceding
sentence (it being understood, however, that the indemnifying party shall
not be liable for the expenses of more than one separate counsel, approved
by the Underwriters in the case of Section 11(a), representing the
indemnified parties who are parties to such action) or (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory
to the indemnified party to represent the indemnified party within a
reasonable time after notice of commencement of the action, in each of
which cases the fees and expenses of counsel shall be at the expense of the
indemnifying party.

(e) If the indemnification provided for in this Section 11 is
required by its terms, but for any reason is held to be unavailable to or
otherwise insufficient to hold harmless any indemnified party under
paragraphs (a), (b), (c) or (d) in respect of any losses, claims, damages,
liabilities or expenses as referred to herein, then each applicable
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of any losses, claims, damages, liabilities
or expenses referred to herein (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company, the Selling
Stockholders and the Underwriters from the offering of the Common Shares or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, then such proportion as is appropriate to reflect not only
the relative benefits referred to in clause (i) above but also the relative
fault of the Company, the Selling Stockholders and the Underwriters in
connection with the statements or omissions or inaccuracies in their
representations and warranties herein which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The respective relative benefits received by the
Company, the Selling Stockholders and the Underwriters shall be deemed to
be in the same proportion, in the case of the Company and the Selling
Stockholders as the total price paid to the Company and the Selling
Stockholders, respectively for the Common Shares sold by them to the
Underwriters (before deducting expenses), and in the case of Underwriters
as the underwriting commissions received by them, bears to the total of
such amounts paid to the Company and the Selling Stockholders and the
amounts received by the Underwriters as underwriting commissions. The
relative fault of the Company, the Selling Stockholders and the
Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to stating material fact or the inaccurate or
the alleged inaccurate representations and/or warranty relates to the
information supplied by the Company, the Selling Stockholders or the
Underwriters and the parties relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed
to include, subject to the limitations set forth in subsection (d) of this
Section 11, any legal or other fees or expenses

-25-
<PAGE>

reasonably incurred by such party in connection with investigating or
defending any action or claim. The provisions set forth in subsection (d)
of this Section 11 with respect to notice of commencement of any action
shall apply if a claim for contribution is to be made under this subsection
(e); provided, however, that no additional notice shall be required with
respect to any action for which notice has been given under subsection (d)
for the purposes of indemnification. The Company, the Selling
Stockholders, and the Underwriters agree that it would not be just
inequitable if contribution pursuant to this Section 11 were determined
solely by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does
not take into account the equitable considerations referred to in this
subsection (e). Notwithstanding the provisions of this Section 11, no
Underwriter shall be required to contribute any amount in excess of the
amount of the total underwriting commissions received by such Underwriter
in connection with the Common Shares underwritten by it and distributed to
the public. No person guilty of fraudulent misrepresentation (within a
meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute pursuant to this Section 11 are
several in proportion to their respective underwriting commitments and not
joint.

(f) It is agreed that any controversy arising out of the operation of
the interim reimbursement arrangements set forth in this Section 11,
including the amounts of any requested reimbursement payments and the
method of determining such amounts, shall be settled by arbitration
conducted under the provisions of the Constitution and Rules of the Board
of Governors of the New York Stock Exchange, Inc. or pursuant to the Code
of Arbitration Procedure of the NASD. Any such arbitration must be
commenced by service of a written demand for arbitration or written notice
of intention to arbitrate, therein electing the arbitration tribunal. In
the event the party demanding arbitration does not make such designation of
an arbitration tribunal in such demand or notice, then the party responding
to said demand or notice is authorized to do so. Such an arbitration would
be limited to the operation of the interim reimbursement provisions
contained in this Section 11 and would not resolve the ultimate propriety
or enforceability of the obligation to reimburse expenses which is created
by the provisions of this Section 11.

SECTION 12. Default of Underwriters. It shall be a condition to this
Agreement and the obligation of the Company and the Selling Stockholders to sell
and deliver the Common Shares hereunder, and of each Underwriter to purchase the
Common Shares in the manner described herein, that, except as hereinafter in
this paragraph provided, each of the Underwriters shall purchase and pay for all
the Common Shares agreed to be purchased by such Underwriter hereunder upon
tender to the Underwriters of all such shares in accordance with the terms
hereof. If either Underwriter defaults in its obligation to purchase Common
Shares hereunder on either the First or Second Closing Date and the aggregate
number of Common Shares that such defaulting Underwriter agreed but failed to
purchase on such Closing Date does not exceed 10% of the total number of Common
Shares which the Underwriters are obligated severally, in proportion to their
respective commitments hereunder, to purchase on such Closing Date, the non-
defaulting Underwriters shall be obligated to purchase the Common Shares that
such defaulting Underwriter agreed but failed to purchase on such Closing Date.
If any Underwriter so defaults and the aggregate number of Common Shares with
respect to which such default occurs is more than the above percentage and
arrangements satisfactory to the Underwriters and the sellers of such Common
Shares for the purchase of such Common Shares by other persons are not made
within 48 hours after such default, this Agreement will terminate without
liability on the part of the non-defaulting Underwriters or the Company (except
for the expenses to be paid by the Company pursuant to Section 7 hereof and
except to the extent provided in Section 11 hereof).

-26-
<PAGE>

In the event that Common Shares to which a default relates are to be
purchased by the non-defaulting Underwriters or by another party or parties, the
Underwriters or the sellers of such Common Shares shall have the right to
postpone the First or Second Closing Date, as the case may be, for not more than
five business days in order that the necessary changes in the Registration
Statement, Prospectus and any other documents, as well as any other
arrangements, may be effected. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability
for its default.

SECTION 13. Effective Date. This Agreement shall become effective at such
time as the Registration Statement has become effective and you shall have
released the Firm Common Shares for sale to the public; provided, however, that
the provisions of Sections 7, 9, 11, 14 and 15 hereof shall at all times be
effective. For the purposes of this Section 13, the Firm Common Shares shall be
deemed to have been so released upon the release by the Underwriters for
publication, at any time after the Registration Statement has become effective,
of any newspaper advertisement relating to any of the Common Shares, or upon the
release by the Underwriters of any of the Common Shares for sale to the public,
whichever may occur first.

SECTION 14. Termination. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof:

(a) This Agreement may be terminated by the Company and the Selling
Stockholders by notice to the Underwriters or by the Underwriters by notice
to the Company and the Selling Stockholders at any time prior to the time
this Agreement shall become effective as to all its provisions, and any
such termination shall be without liability on the part of the Company or
the Selling Stockholders to the Underwriters (except for the expenses to be
paid or reimbursed by the Company pursuant to Sections 7 and 9 hereof and
except to the extent provided in Sections 11 and 15 hereof) or of any
Underwriter to the Company (except to the extent provided in Sections 11
and 15 hereof).

(b) This Agreement may also be terminated by the Underwriters prior
to the First Closing Date or prior to the Second Closing Date, as the case
may be, by notice to the Company and the Selling Stockholders (i) if
additional material governmental restrictions not in force and effect on
the date hereof shall have been imposed upon trading in securities
generally or minimum or maximum prices shall have been generally
established on the New York Stock Exchange or on the American Stock
Exchange or in the NASDAQ National Market System or in the over the counter
market by the NASD, or trading in securities generally shall have been
suspended on either such Exchange or in the NASDAQ National Market System
or in the over the counter market by the NASD or the Commission, or a
general banking moratorium shall have been established by federal, New
York, Kentucky or California authorities, (ii) if an outbreak of
hostilities or other national or international calamity or any material
change in political, financial or economic conditions shall have occurred
or shall have accelerated to such an extent that the effect on the
financial markets shall, in the judgment of the Underwriters, affect
adversely the marketability of the Common Shares, (iii) if any adverse
event shall have occurred or shall exist which makes untrue or incorrect in
any material respect any statement or information contained in the
Registration Statement or Prospectus or which is not reflected in the
Registration Statement or Prospectus but should be reflected therein in
order to make the statements or information contained therein not
misleading in any material respect, or (iv) if there shall be any action,
suit or proceeding pending or threatened, or there shall have been any
development involving particularly the business or properties or securities
of the Company or its subsidiaries or the transactions contemplated by this
Agreement, which, in the judgment of the Underwriters, may materially and
adversely affect the business or earnings of the Company and its

-27-
<PAGE>

subsidiaries taken as a whole or makes it impracticable to offer or sell
the Common Shares. Any termination pursuant to this subsection (b) shall be
without liability on the part of the Underwriters to the Company or the
Selling Stockholders or on the part of the Company or the Selling
Stockholders to the Underwriters (except for expenses to be paid or
reimbursed by the Company or the Selling Stockholders pursuant to Sections
7 or 11 hereof and except to the extent provided in Sections 11 and 15).

SECTION 15. Failure of the Selling Stockholders to Sell and Deliver. If
any Selling Stockholder fails to sell and deliver to the Underwriters the Common
Shares to be sold and delivered by such Selling Stockholder at the First Closing
Date or the Second Closing Date under the terms of this Agreement, then the
Underwriters may at their option, by written notice to the Company and the
Selling Stockholders, either (i) terminate this Agreement without any liability
on the part of any Underwriter or, except as provided in Sections 7, 9, 11 and
16 hereof, the Company or the Selling Stockholders, or (ii) purchase the shares
which the Company and the Selling Stockholders who have sold and delivered the
Common Shares to be sold and delivered by them to the Underwriters in accordance
with the terms hereof. In the event of a failure by a Selling Stockholder to
sell and deliver as referred to in this Section, either the Underwriters or the
Company and the Selling Stockholders who have sold and delivered their shares to
the Underwriters shall have the right to postpone the Closing Date for a period
not exceeding seven (7) business days in order that the necessary changes in the
Registration Statement, Prospectus and any other documents, as well as any other
arrangements, may be effective.

SECTION 16. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company and its officers, the Selling Stockholders and of the
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation made by or on behalf of the
Underwriters or the Company, or the Selling Stockholders, or any of their
partners, officers or directors or any controlling person, as the case may be,
and will survive delivery of and payment for the Common Shares sold hereunder
and any termination of this Agreement.

SECTION 17. Notices. All communications hereunder shall be in writing
and, if sent to the Underwriters, shall be mailed, delivered or telecopied or
telegraphed and confirmed to the Underwriters at Montgomery Securities, 600
Montgomery Street, San Francisco, California 94111, Attention: General Counsel,
and Alex. Brown & Sons Incorporated, 135 East Baltimore Street, Baltimore,
Maryland 21202, Attention: Mark Goodman, with a copy to Locke Purnell Rain
Harrell (A Professional Corporation), 2200 Ross Avenue, Suite 2200, Dallas,
Texas 75201, Attention: Dan Busbee; and if sent to the Company or the Selling
Stockholders shall be mailed, delivered or telecopied or telegraphed and
confirmed to the Company at 9109 Parkway East, Birmingham, Alabama 35206,
Attention: Douglas S. Stephens, President, with a copy to Greenebaum Doll &
McDonald, 3300 National City Tower, Louisville, Kentucky, 40202, Attention: Ivan
Diamond. The Company, the Selling Stockholders or the Underwriters may change
the address for receipt of communications hereunder by giving notice to the
others.

SECTION 18. Successors. This Agreement will inure to the benefit of and
be binding upon the parties hereto, including any substitute Underwriters
pursuant to Section 12 hereof, and to the benefit of the officers and directors
and controlling persons referred to in Section 11, and in each case their
respective successors, personal Underwriters and assigns, and no other person
will have any right or obligation hereunder. No such assignment shall relieve
any party of its obligations hereunder. The term "successors" shall not
include any purchaser of the Common Shares as such from any of the Underwriters
merely by reason of such purchase.

-28-
<PAGE>

SECTION 19. Partial Unenforceability. The invalidity or unenforceability
of any Section, subsection, paragraph or provision of this Agreement shall not
affect the validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, subsection, paragraph or provision of this
Agreement is for any reason determined to be invalid or unenforceable, there
shall be deemed to be made such minor changes (and only such minor changes) as
are necessary to make it valid and enforceable.

SECTION 20. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the laws pertaining to
conflicts of laws) of the State of Kentucky.

SECTION 21. General. This Agreement constitutes the entire agreement of
the parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof. This Agreement may be executed in several
counterparts, each one of which shall be an original, and all of which shall
constitute one and the same document.

In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company, the Selling Stockholders and the
Underwriters.

If the foregoing is in accordance with the Underwriters' understanding of
our agreement, kindly sign and return to us the enclosed copies hereof,
whereupon it will become a binding agreement among the Company, the Selling
Stockholders and the Underwriters, all in accordance with its terms.

Very truly yours,

PJ AMERICA, INC.

By:
------------------------------
Name:
----------------------------
Title:
---------------------------

SELLING STOCKHOLDERS

*
----------------------------------

-29-
<PAGE>
*
--------------------------------

*
--------------------------------

*By:
-------------------------------------
(Attorney-In-Fact)
--------------------

The foregoing Underwriting Agreement
is hereby confirmed and accepted
as of the date first above written
by the undersigned Underwriters.

MONTGOMERY SECURITIES
ALEX. BROWN & SONS INCORPORATED

By: MONTGOMERY SECURITIES

By:
-------------------------------
Its: Managing Director

-30-
<PAGE>

SCHEDULE A

Number of Firm Common
Name of Underwriter Shares to be Purchased
- --------------------------------------------------------------------------------

-31-
<PAGE>

SCHEDULE B

Number of Firm Common Shares
Name of Selling Stockholder to be Sold by Selling Stockholder
- --------------------------- ---------------------------------

-32-

<PAGE>

EXHIBIT 5

June 26, 1997

PJ America, Inc.
9109 Parkway East
Birmingham, Alabama 35206

Ladies and Gentlemen:

We have acted as legal counsel in connection with the preparation of a
Registration Statement on Form S-1 under the Securities Act of 1933, as
amended (the "Registration Statement"), covering an aggregate of 1,380,000
shares (including 180,000 shares subject to an over-allotment option granted
by PJ America, Inc., a Delaware corporation (the "Company"), to the
Underwriters) of common stock, par value $.01 per share (the "Common Stock"),
of the Company of which 750,000 shares (180,000 shares subject to the
Underwriters over-allotment option) are being offered by the Company (the
"Company Shares"), and 450,000 shares are being offered by the Selling
Stockholders (the "Selling Stockholders Shares").

We have examined and are familiar with the Certificate of Incorporation and
By-Laws of the Company, and the various corporate records and proceedings
relating to the organization of the Company and the proposed issuance of the
Common Stock. We have also examined such other documents and proceedings as we
have considered necessary for the purpose of this opinion.

Based on the foregoing, it is our opinion that the (i) Common Shares have
been duly authorized and, when issued and paid for in accordance with the
terms of the Registration Statement, will be validly issued, fully paid and
non-assessable, and (ii) the Selling Stockholders Shares have been duly
authorized and, when issued and paid for in accordance with the terms of the
Registration Statement, will be validly issued, fully paid and non-assessable.

We hereby consent to the filing of this Opinion as an exhibit to the
Registration Statement, and with such state securities administrators as may
require such opinion of counsel for the registration of the Common Stock, and
to the reference to this firm under the heading "Legal Matters" in the
Prospectus. In giving this consent, we do not thereby admit that we are within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the Rules and Regulations of the
Securities and Exchange Commission thereunder.

Very truly yours,

/s/ GREENEBAUM DOLL & MCDONALD PLLC

<PAGE>

EXHIBIT 10.29

[LETTERHEAD OF PAPA JOHN'S]

June 18, 1997

Mr. Douglas S. Stephens
PJ AMERICA, INC.
P.O. Box 611165
Birmingham, Alabama 35261-11965

RE: Canadian Development

Dear Doug:

At Chuck Schnatter's request, I am writing to confirm our agreements and
understandings with respect to the rights of PJ America, Inc. ("PJAM") to
develop the City of Vancouver, Canada and surrounding territory.

By Letter Agreement dated May 20, 1996 (the "Letter"), we granted PJAM
development rights to the City of Vancouver, Canada and its surrounding
territory (the "Vancouver Territory"). Under the terms of the Letter, we were to
give written notice to PJAM promptly after we acquired rights to use the name
"Papa John's" in Canada. PJAM would then have 60 days following receipt of such
written notice to notify us whether PJAM intended to enter into a Development
Agreement for the Vancouver Territory.

On February 11, 1997, we notified PJAM that we had acquired the Canadian
trademark registration for the name "Papa John's." Thus, the 60-day exercise
period began to run. By letter dated March 26, 1997, we agreed to extend the
date by which PJAM must notify us if it intends to develop the Vancouver
Territory to December 31, 1997.

In short, PJAM still has the option to develop the Vancouver Territory.
That option extends through December 31, 1997. If you have any questions or
comments concerning PJAM's development rights in Canada, or if we may otherwise
be of further assistance, please don't hesitate to give me a call. Best regards.

Very truly yours,

PAPA JOHN'S INTERNATIONAL, INC.

/s/ Richard J. Emmett
-----------------------------------
Richard J. Emmett
Vice President and Senior Counsel

RJE:kw

cc: Michael M. Fleishman
bcc: Ivan M. Diamond

<PAGE>

Exhibit 10.30

PAPA JOHN'S

DEVELOPMENT AGREEMENT

Developer: PJ America, Inc.
Address: P.O. Box 611165
Birmingham, AL 35261-1165

Number of Restaurants: Thirty-seven (37)
Development Area: Kern, Ventura, San Luis Obispo,
Santa Barbara and Northern
Los Angeles Counties in California
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
<S> <C> <C>
1. Grant.................................................................. 2

2. Development Fee........................................................ 3

3. Development of Restaurants; Schedule for Completion.................... 3

4. Term................................................................... 7

5. Construction or Remodeling............................................. 7

6. Your Organization, Operation and Ownership............................. 7

7. Your Covenants......................................................... 8

8. Principal Operator..................................................... 10

9. Default and Termination................................................ 11

10. Assignment or Transfer................................................. 13

11. No Grant of Franchise or Franchise Rights.............................. 14

12. Notices................................................................ 14

13. Independent Contractor; Indemnification................................ 15

14. Enforcement............................................................ 16

15. Acknowledgements....................................................... 20

16. Miscellaneous.......................................................... 22

</TABLE>

(i)
<PAGE>

DEVELOPMENT AGREEMENT
---------------------

THIS DEVELOPMENT AGREEMENT ("Agreement") is made and entered into this
_____ day of June, 1997, by and between PAPA JOHN'S INTERNATIONAL, INC., a
Delaware corporation ("we", "us" or "Papa John's"), and PJ AMERICA, INC., a
Delaware corporation ("you"). If you are a corporation, limited liability
company or partnership, certain provisions of the Agreement also apply to your
owners and will be noted.

RECITALS:
--------

A. We and our Affiliates (defined below) have expended time, money and
effort to develop a unique system for operating retail restaurants devoted
primarily to carry-out and delivery of pizza and other food items. The chain of
current and future Papa John's restaurants are referred to herein as the "Papa
John's Chain" or the "Chain".

B. The Chain is characterized by a unique system which includes special
recipes and menu items; distinctive design, decor, color scheme and furnishings;
software and programs; standards, specifications and procedures for operations;
procedures for quality control; training assistance; and advertising and
promotional programs all of which we may improve, amend and further develop from
time to time (the "System").

C. We identify our goods and services with certain service marks, trade
names and trademarks, including but not limited to, "Papa John's", "Papa John's
Pizza," "Pizza Papa John's Delivering the Perfect Pizza!" and "Better
Ingredients. Better Pizza." as well as certain other trademarks, service marks,
slogans, logos and emblems that have been and may be designated for use in
connection with the System from time to time (the "Marks").

<PAGE>

D. You desire to obtain certain rights to develop one or multiple Papa
John's Pizza restaurant(s) in the "Development Area" (as defined below) in
accordance with the terms of this Agreement.

E. We have agreed to grant you such rights;

NOW, THEREFORE, the parties agree as follows:

1. Grant.
-----

(a) Subject to the terms and conditions of this Agreement and your
continuing faithful performance, we hereby grant to you the right and obligation
to establish 37 Papa John's restaurant(s) (at specific locations we approve) in
the areas specified on attached Exhibit A. (The Papa John's restaurants that
you develop pursuant to this Agreement are collectively referred to as the
"Restaurants" and individually as a "Restaurant"; the areas specified on Exhibit
A are collectively referred to as the "Development Area"). Notwithstanding the
foregoing, enclosed malls, institutions (such as hospitals or schools),
airports, parks (including theme parks), and sports arenas shall be excluded
from the Development Area unless otherwise agreed by us in writing, and absent
such agreement, we may open Papa John's restaurants, or franchise the right to
open Papa John's restaurants to other persons at any of these locations,
regardless of where they are located.

(b) Each Restaurant shall be established and operated pursuant to a
separate "Franchise Agreement" to be entered into between you and us. As used
herein, the term "Franchise Agreement" shall mean the form of Papa John's
Franchise Agreement (for the initial Restaurant) or Short Form Franchise
Agreement (for each subsequent Restaurant) to be executed for each Restaurant
developed under this Agreement and all attachments and exhibits thereto.

-2-
<PAGE>

(c) Except as may be otherwise provided herein or in the Franchise
Agreements, we shall not locate, nor license another to locate, a Papa John's
restaurant in the Development Area during the "Term" (as defined in Section 4).

(d) This Agreement is not a franchise agreement and we do not grant
you any franchise rights or other rights to use the Marks or System under this
Agreement.

(e) You have no right to license or subfranchise others to use the
Marks or the System, or to enter into any agreement with respect to the Marks or
System.

2. Development Fee. You have paid to us a development fee of One Hundred
Eighty-five Thousand Dollars ($185,000) ("Development Fee") (i.e. Five Thousand
Dollars ($5,000) for each Restaurant to be developed), receipt of which we
acknowledge. The Development Fee was fully earned by us when paid, is non-
refundable and is not contingent upon our rendering any further performance. The
Development Fee is in consideration of, among other things, the development
rights granted to you, the reservation of the Development Area, the development
opportunities lost or deferred as a result of the rights granted to you in this
Agreement and the administrative and other expenses that we have incurred.
However, $5,000 of the Development Fee will be credited against each Initial
Franchise Fee at the time it is paid, as provided in Section 3.(f).

3. Development of Restaurants; Schedule for Completion.
---------------------------------------------------

(a) You shall have the number of Restaurants open and operating within
the time frame set forth in subsection 3.(e). below, and you shall exercise each
such development right only at locations that we have approved within the
Development Area.

(b) With respect to each proposed location, you shall submit a
completed site evaluation form, together with such other information and
materials as we may reasonably request. We shall have 30 days after receipt of
such information to accept or reject each proposed

-3-
<PAGE>

location. If we fail to respond within such 30 day period, the location
submitted by you shall be deemed to be approved. We will not unreasonably
withhold our approval of a location. In approving or disapproving any proposed
site, we will consider such matters as we deem material, including, without
limitation, demographic characteristics of the proposed site, traffic patterns,
parking, the predominant character of the neighborhood, competition from other
businesses providing similar services within the area (including other Papa
John's Restaurants), the proximity to other businesses, the rights granted to
our other franchisees, the nature of other businesses in proximity to the site,
and other commercial characteristics (including the purchase price or rental
obligations and other lease terms for the proposed site) and the size of the
premises, appearance, and other physical characteristics of the proposed site.
Approval of a site by us does not constitute an assurance, representation or
warranty of any kind, expressed or implied, as to the successful operation of a
Papa John's Restaurant, or for any other purpose. Our approval of a site
indicates only that we believe the site complies with an acceptable minimum
criteria that we establish solely for our purposes as of the time period
encompassing the evaluation. You acknowledge that application of criteria that
have been effective with respect to other sites and premises may not be
predictive of potential for all sites. Further, demographic and/or economic
factors included in our criteria could change and other relevant factors that
might alter the potential of a site may be excluded from our criteria. The
uncertainty and instability of such criteria are beyond our control. We are not
responsible if a site that we approve fails to meet your expectations as to
potential revenue or operational criteria or for your failure to locate the
required number of suitable sites in the Development Area. You further
acknowledge and agree that your acceptance of a Franchise for the operation of a
Papa John's Restaurant at a site is based on your own independent investigation
of the suitability of a site. Any proposed lease shall include an addendum in
the form of Exhibit A to the Franchise Agreement, or shall contain terms and
conditions substantially similar to those contained in Exhibit A to the
Franchise Agreement. Any changes in the language set forth in Exhibit A must be
approved by us in advance in writing.

(c) We shall deliver the Franchise Agreement to you within 20 days
after you provide the address and telephone number for an approved location that
you have leased or

-4-
<PAGE>

purchased. The Franchise Agreement for such location must be signed by you and
submitted to us along with payment of the initial franchise fee within 10 days
after it is delivered to you.

(d) The approval of a location and the delivery of a Franchise
Agreement by us shall be conditioned upon a determination by us, in our
reasonable judgment, that:

(i) You have the financial and operational capacity to develop
and operate the Restaurant;

(ii) the site that you propose for the Restaurant is within the
Development Area and is a suitable site based upon criteria that we establish
from time to time; and

(iii) You and your owners are in compliance with this Agreement
and all Franchise Agreements executed pursuant to this Agreement.

(e) Notwithstanding any provision of any Franchise Agreement entered
into between us and you, you shall exercise each development right as follows:

<TABLE>
<CAPTION>
DEVELOPMENT SCHEDULE
--------------------

Dates on Which Each Cumulative Number of Restaurants
Restaurant Shall be Open to be Open and Operating*
------------------------ ------------------------
<S> <C>
April 1, 1998 1
August 1, 1998 2
November 1, 1998 3
February 1, 1999 4
June 1, 1999 5
August 1, 1999 6
October 1, 1999 7
December 1, 1999 8
February 1, 2000 9
June 1, 2000 10
August 1, 2000 11

</TABLE>

-5-
<PAGE>

<TABLE>

DEVELOPMENT SCHEDULE (cont.)
--------------------

Dates on Which Each Cumulative Number of Restaurants
Restaurant Shall be Open to be Open and Operating*
------------------------ ------------------------
<S> <C>
October 1, 2000 12
December 1, 2000 13
February 1, 2001 14
June 1, 2001 15
August 1, 2001 16
October 1, 2001 17
December 1, 2001 18
February 1, 2002 19
June 1, 2002 20
August 1, 2002 21
October 1, 2002 22
December 1, 2002 23
February 1, 2003 24
June 1, 2003 25
August 1, 2003 26
October 1, 2003 27
December 1, 2003 28
February 1, 2004 29
June 1, 2004 30
August 1, 2004 31
October 1, 2004 32
December 1, 2004 33
February 1, 2005 34
June 1, 2005 35
August 1, 2005 36
October 1, 2005 37
</TABLE>

[* - Includes only those Restaurants to be developed pursuant to this
Development Agreement.]

(f) The Initial Franchise Fee to be paid by you for each Restaurant
shall be $20,000; provided that $5,000 of the Development Fee shall be credited
against the Initial Franchise Fee. The net amount of the Initial Franchise Fee
($15,000) shall be paid at the time each Franchise Agreement is executed.

-6-
<PAGE>

(g) It shall be your responsibility to ensure that each Restaurant is
constructed or remodeled, and equipped and operated in compliance with all laws,
ordinances and governmental rules and regulations and the Franchise Agreement,
and you shall obtain all necessary permits and licenses relating thereto.

4. Term. Unless sooner terminated as provided in this Agreement, this
Agreement shall expire on the earlier to occur of: (a) the date on which all
the Restaurants have been developed, or (b) 12:00 midnight on the last date set
forth on the Development Schedule (the "Term"). Upon the termination or
expiration of this Agreement, all unexercised development rights shall expire.

5. Construction or Remodeling. You shall, at your own expense, construct
or remodel the Restaurant at each location in accordance with the then-current
specifications and standards established for the System and the terms of the
Franchise Agreement. You shall allow us and our agents and employees access to
all areas of the premises of each Restaurant at such times as we or they may
reasonably request and you shall cooperate fully with us and our agents and
employees in preparing specifications applicable to the location of each
Restaurant to be developed hereunder. However, it shall be your obligation to
have plans drawn showing the layout of all equipment, signs and leasehold
improvements, and such plans shall be subject to our approval, which approval
shall not be unreasonably withheld. You shall not begin construction or
remodeling on any Restaurant until the Franchise Agreement has been fully signed
and we have approved the plans for such Restaurant.

6. Your Organization, Operation and Ownership. If you are a corporation,
partnership, limited liability company or other entity:

(a) If we request from time to time, you shall furnish us with your
Articles of Incorporation, Articles of Organization, Operating Agreement, By-
Laws and other governing documents (and any amendments or modifications
thereof), minutes and resolutions and all

-7-
<PAGE>

agreements or other documents, records and information pertaining to your
existence and operation.

(b) You shall confine your business activities exclusively to the
establishment, management and operation of Papa John's restaurants pursuant to
agreements with us.

(c) You shall, at the same time you execute this Agreement, and at
such other times as we may request, disclose the name and address of each person
or entity owning a beneficial interest in you, and you shall not issue any
additional securities, nor allow the "transfer" (as defined in Section ) of any
of your outstanding securities, except as provided in Section .

(d) You shall at all times comply with all applicable laws,
ordinances, rules and regulations of governmental bodies.

(e) You shall cause all persons or entities owning any interest in
you to sign the Owner Agreement in the form we provide.

7. Your Covenants.

(a) Covenant Not-to-Compete. You covenant and agree that during the
Term and for a period of two years after the expiration or termination of this
Agreement, regardless of the cause for such expiration or termination (the
"Restricted Period"), you shall not, anywhere within either (1) the boundaries
of the Development Area including, for purposes of this Section YOUR COVENANTS7
only, any locations excluded from the Development Area by the operation of
Section ; or (2) a 10-mile radius of any business location at which you, we or
our Affiliate or our franchisee then conducts a Papa John's business, engage in
any of the following activities:

(i) directly or indirectly enter into the employ of, render any
service to or act in concert with any person, partnership, limited liability
company, corporation or other

-8-
<PAGE>

entity that owns, operates, manages, franchises or licenses any business that
(A) sells pizza or other non-pizza products (excluding soft drinks) that are the
same as those sold by Papa John's restaurants on a delivery or carry-out basis,
including, without limitation, business formats such as Domino's, Pizza Hut, Mr.
Gatti's, Sbarro and Little Caesars, or (B) derives 20% or more of its gross
revenues, at the retail level, from the sale of pre-cooked, ready-to-eat food
products on a delivery basis (a "Competitive Business"); or

(ii) directly or indirectly engage in any such Competitive
Business on your own account; or

(iii) become interested in any such Competitive Business directly
or indirectly as a partner, member, shareholder, principal, agent, consultant or
in any other rela tionship or capacity; provided, that the purchase of a
publicly traded security of a corporation engaged in such business or service
shall not in itself be deemed violative of this Agreement so long as you do not
own, directly or indirectly, more than 1% of the securities of such corporation.

To the extent required by the laws of the state in which the Restaurants are to
be developed, the duration or the geographic areas included within the foregoing
covenants, or both, shall be deemed amended in accordance with Section .

(b) Appropriation and Disclosure of Information. Except as permitted
by the Franchise Agreement, you will not at any time use, copy or duplicate the
System or any aspect thereof, or any of our trade secrets, recipes, methods of
operation, processes, formulas, advertising, marketing, designs, trade dress,
plans, know-how or other proprietary ideas or information, nor will you convey,
divulge, make available or communicate such information to any third party or
assist others in using, copying or duplicating any of the foregoing.

(c) Infringement. You will not at any time commit any act that would
infringe upon or impair the value of the System or the Marks, nor will you
engage in any business or

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<PAGE>

market any product or service under a trade-name, trademark, service mark, logo
or design that is confusingly or deceptively similar to any of the Marks.

(d) Solicitation of Employees. You agree that from and after the date
of this Agreement, you will not solicit, entice or induce, directly or
indirectly, any employee of us or an Affiliate or our franchisees to leave their
employment to work with you or with any person or entity with whom you are or
become affiliated.

(e) Reasonableness of Scope and Duration. You agree that the covenants
and agreements contained herein are, taken as a whole, reasonable with respect
to the activities covered and their geographic scope and duration, and you shall
not raise any issue of the reasona bleness of the areas, activities or duration
of any such covenants in any proceeding to enforce any such covenants. You
acknowledge and agree that you have other skills and resources and that the
restrictions contained in this Section will not hinder your activities or
ability to make a living either under this Agreement or in general.

(f) Enforceability. You agree that we may not be adequately
compensated by damages for a breach by you of any of the covenants and
agreements contained in this Section, and that we shall, in addition to all
other remedies, be entitled to injunctive relief and specific per formance. The
covenants and agreements contained in this Section shall be construed as
separate covenants and agreements, and if any court shall finally determine that
the restraints provided for in any such covenants and agreements are too broad
as to the area, activity or time covered, said area, activity or time covered
may be reduced to whatever extent the court deems reasonable, and such covenants
and agreements shall be enforced as to such reduced area, activity or time.

8. Principal Operator. You shall designate an individual to serve as your
"Principal Operator." The Principal Operator shall meet the following
qualifications:

(a) The Principal Operator shall own at least a 5% equity interest in
you; provided that you shall not be in default of this requirement if the
Principal Operator is entitled

-10-
<PAGE>

to a bonus of not less than 5% of the net profits of the Restaurant, payable
after the end of each Period (as defined in the Franchise Agreement), and also
has the right to acquire not less than 5% equity interest in you within 12
months of his or her hire date, which rights shall be evidenced by a written
agreement between the Principal Operator and you. You shall provide us with a
copy of any such agreement upon request. Once the Principal Operator has
acquired an equity interest in you, he or she must continue to own that interest
(or a greater interest) during the entire period he or she serves as the
Principal Operator and must comply with Section of this Agreement.

(b) The Principal Operator shall devote full time and best efforts to
the supervision and conduct of the development and operation of the Restaurants
contemplated under this Agreement and shall agree to be bound by the
confidentiality and non-competition provisions of the Owner Agreement. At such
time as the Principal Operator becomes an owner of an interest in you, he or she
must agree to be bound by all provisions of the Owner Agreement.

(c) The Principal Operator shall be a person we reasonably approve who
shall successfully complete our initial training requirements and who shall
participate in and successfully complete all additional training as we may
reasonably designate.

If, at any time or for any reason, the Principal Operator no longer
qualifies to act as such, you shall promptly designate another Principal
Operator subject to the same qualifications listed above. You shall immediately
notify us of the termination of the Principal Operator's employment with you,
whether voluntary or involuntary.

9. Default and Termination.

(a) Automatic Termination. You shall be in default under this
Agreement, and this Agreement and all rights granted in it shall automatically
terminate without notice to you, (i) if you make a general assignment for the
benefit of creditors or if a petition in bankruptcy is filed by you; or (ii)
such a petition is filed against and not opposed by you; or (iii) if you are
adjudicated as bankrupt or insolvent; or (iv)if a bill in equity or other
proceeding is filed for the

-11-
<PAGE>

appointment of a receiver or other custodian for your business or assets is
filed and consented to by you; or (v) if a receiver or other custodian
(permanent or temporary) of your assets or property, or any part thereof, is
appointed by any court of competent jurisdiction; or (vi) if proceedings for a
composition with creditors under any state or federal law are instituted by or
against you; or (vii) if a final judgment remains unsatisfied or of record for
thirty (30) days or longer (unless supersedeas bond is filed); or (viii) if you
are dissolved; or (ix) if any portion of your interest in any Papa John's
franchise becomes subject to an attachment, garnishment, levy or seizure by any
creditor or any other person claiming against or in your rights; or (x) if
execution is levied against your business or property; or (xi) if the real or
personal property of any Restaurant shall be sold after levy thereupon by any
sheriff, marshal, or constable.

(b) Without Notice. You shall be in default under this Agreement, and
we may, at our option, terminate this Agreement and all rights granted under it
without affording you any opportunity to cure such default, effective upon the
earlier of (1) receipt of the notice of termination by you, or (2) five days
after mailing of such notice by us, upon the occurrence of any of the following
events:

(i) if you fail to strictly comply with the development
schedule set forth in Section 3;

(ii) if any Franchise Agreement entered into pursuant to this
Agreement or otherwise is terminated as a result of your breach or default;

(iii) if you make or attempt to make any transfer, whether
voluntary or involuntary, of this Agreement or any interest herein, or of any
rights or obligations arising under this Agreement, or of any interest in you,
or of any material portion of your assets, without our prior written consent,
except as otherwise provided under the Franchise Agreement; or

(iv) if you fail to comply with any of your covenants set forth
in Section of this Agreement.

-12-
<PAGE>

(c) With Notice. For any other breach or default under this
Agreement, we will provide you with written notice of default and 15 days to
cure or, if a default cannot be reasonably be cured within 15 days, to initiate
within that time substantial and continuing action to cure such default and to
provide us with evidence of such actions. If the defaults specified in such
notice are not cured within the 15 day period, or if substantial and continuing
action to cure has not been initiated, we may, at our option, terminate this
Development Agreement and all rights granted to you under it by giving written
notice of such termination to you. The notice of termination shall be effective
on the earlier of (i) the date of receipt of the notice by you or (ii) five days
after the mailing of such notice by us.

(d) Effect of Termination. Upon termination of this Agreement, all
your rights under it shall terminate and you shall have no further right to
establish any Restaurants. In addition, upon termination of this Agreement, we
shall have the right to open and operate, or to franchise others to open and
operate, Papa John's restaurants anywhere within the Development Area, except
that we may not locate or franchise another to locate a Papa John's restaurant
within the "Territory" provided for in any Franchise Agreement that remains in
effect after the date of termination.

10. Assignment or Transfer.

(a) Transfer by Us. We may transfer this Agreement or any portion of
it, or any or all of our rights, obligations or interests under it, without
restriction. Upon any transfer or assignment of this Agreement by us, we shall
be released from all obligations and liabilities arising or accruing in
connection with this Agreement after the date of such transfer or assignment.

(b) Transfer by You. This Agreement, and your rights and obligations
under it, are and shall remain personal to you. Any proposed transfer by you or
any of your owners (regardless of the form of transfer) shall be subject to the
same terms and conditions contained in the Franchise Agreement. As used herein,
the term "transfer" shall mean any sale, assignment,

-13-
<PAGE>

gift, pledge, mortgage or any other encumbrance, transfer by bankruptcy,
transfer by judicial order, merger, consolidation, share exchange, transfer by
operation of law or otherwise, whether direct or indirect, voluntary or
involuntary, of this Agreement or any interest in it, or any rights or
obligations arising under it, or of any material portion of your assets, or of
any interest in you.

11. No Grant of Franchise or Franchise Rights. This Agreement does not
grant you a franchise or any rights of a Papa John's franchisee. To the fullest
extent permissible by law, you waive the applicability of any law that would
constitute this Agreement or any rights granted under it as a franchise
agreement or as granting any franchise rights.

12. Notices. All notices, requests, demands and other communications
required or permitted to be given or made under this Agreement shall be in
writing and shall be given (a) by personal delivery or (b) provided such notice,
request, demand or communication is actually received by the party to which it
is addressed in the ordinary course of delivery, by deposit in the United States
mail, postage prepaid, or (c) by registered or certified mail, return receipt
requested, postage prepaid, or by delivery to a nationally-recognized overnight
courier service, in each case, addressed as follows, or to such other person or
entity as either party shall designate by notice to the other in accordance
herewith:

Us: If by Mail:
P.O. Box 99900
Louisville, Kentucky 40269-9990
ATTN: General Counsel

If by Courier or Personal Delivery:
10801 Electron Drive, Suite 100
Louisville, Kentucky 40299-3880
ATTN: General Counsel

You: P.O. Box 611165
Birmingham, Alabama 35261-1165
ATTN: Douglas Stephens

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<PAGE>

Except as otherwise provided herein, a notice shall be deemed to have been
given on the date of personal delivery to a party or the date deposited in the
United States mail or with a nationally-recognized overnight courier.

13. Independent Contractor; Indemnification.

(a) Independent Contractor. It is understood and agreed by the
parties that this Agreement creates only a contractual relationship between the
parties subject to the normal rule of contract law. This Agreement does not
create a fiduciary relationship between us and you and you are and shall remain
an independent contractor. Nothing in this Agreement is intended to constitute
either party an agent, legal representative, subsidiary, joint venturer,
partner, employee, or servant of the other for any purpose whatsoever. You agree
to hold yourself out to the public as an independent contractor, separate and
apart from us. You agree that you shall not make any contract, agreement,
warranty, or representation on our behalf without our prior written consent, and
you agree that you shall not incur any debt or other obligation in our name.
This Agreement shall not be deemed to confer any rights or benefits to any
person or entity not expressly named herein.

(b) Business Management. You agree and acknowledge that: (i) we will
have no responsibility for the day-to-day operations of any Restaurant developed
under this Agreement or the management of your business; and (ii) you shall
independently control the operation of your business and the results of your
operations will depend almost exclusively on your business acumen and
promotional and managerial efforts.

(c) Indemnification. We shall not be liable by reason of any act or
omission of you in your development, construction or conduct of the Restaurants
or for any claim, cause of action or judgement arising therefrom against you or
us. You agree to hold harmless, defend and indemnify us and our affiliates,
officers, directors, agents, and employees, from and against any and all losses,
expenses, judgments, claims, attorney fees and damages arising out of or in
connection with any claim or cause of action in which we shall be a named
defendant and that

-15-
<PAGE>

arises, directly or indirectly, out of the operation of, or in connection with,
your Restaurants, other than a claim resulting directly from our negligence.

14. Enforcement.

(a) ARBITRATION. EXCEPT FOR CONTROVERSIES, DISPUTES OR CLAIMS RELATED
TO OR BASED ON (1) YOUR USE OF THE MARKS AFTER THE EXPIRATION OR TERMINATION OF
THIS AGREEMENT OR, AT OUR OPTION, YOUR VIOLATION OF ANY PROVISION OF SECTION
HEREOF; OR (2) ANY ACTION ARISING OUT OF OR RELATING TO ANY FINANCING PROVIDED
TO YOU BY US OR OUR AFFILIATES AND THE AGREEMENTS, NOTES, LIENS AND SECURITY
INTERESTS RELATED THERETO AND THE ENFORCEMENT, INTERPRETATION OR COLLECTION
THEREOF, ALL CONTROVERSIES, DISPUTES OR CLAIMS BETWEEN US (INCLUDING OUR
AFFILIATES, SHAREHOLDERS, OFFICERS, DIRECTORS, AGENTS OR EMPLOYEES) AND YOU
(INCLUDING YOUR OWNERS, GUARANTORS, AFFILIATES AND EMPLOYEES, IF APPLICABLE)
ARISING OUT OF OR RELATED TO:

(i) THIS AGREEMENT OR ANY OTHER AGREEMENT BETWEEN YOU AND US OR
ANY PROVISION OF ANY SUCH AGREEMENT;

(ii) OUR RELATIONSHIP WITH YOU, INCLUDING ISSUES RELATING TO OUR
DECISION TO TERMINATE THAT RELATIONSHIP;

(iii) THE VALIDITY OF THIS AGREEMENT OR ANY OTHER AGREEMENT
BETWEEN YOU AND US OR ANY PROVISION OF ANY SUCH AGREEMENT; OR

-16-
<PAGE>

(iv) ANY STANDARD, SPECIFICATION OR OPERATING PROCEDURE RELATING
TO THE DEVELOPMENT, ESTABLISHMENT OR OPERATION OF THE RESTAURANTS

WILL BE SUBMITTED FOR BINDING ARBITRATION TO THE LOUISVILLE, KENTUCKY
OFFICE OF THE AMERICAN ARBITRATION ASSOCIATION ON DEMAND OF EITHER PARTY. SUCH
ARBITRATION PROCEEDING WILL BE CONDUCTED IN LOUISVILLE, KENTUCKY AND, EXCEPT AS
OTHERWISE PROVIDED IN THIS AGREEMENT, WILL BE HEARD BY ONE ARBITRATOR IN
ACCORDANCE WITH THE THEN CURRENT FRANCHISING ARBITRATION RULES, IF ANY,
OTHERWISE THE THEN CURRENT COMMERCIAL ARBITRATION RULES OF THE AMERICAN
ARBITRATION ASSOCIATION. ALL MATTERS RELATING TO ARBITRATION WILL BE GOVERNED BY
THE FEDERAL ARBITRATION ACT (9 U.S.C. (S)(S) 1 ET SEQ.) AND NOT BY ANY STATE
ARBITRATION LAW.

THE ARBITRATOR WILL HAVE THE RIGHT TO AWARD OR INCLUDE IN THE AWARD ANY
RELIEF THAT THE ARBITRATOR DEEMS PROPER IN THE CIRCUMSTANCES, INCLUDING, WITHOUT
LIMITATION, MONEY DAMAGES (WITH INTEREST ON UNPAID AMOUNTS FROM THE DATE DUE),
SPECIFIC PERFORMANCE, INJUNCTIVE RELIEF AND ATTORNEYS' FEES AND COSTS, PROVIDED
THAT THE ARBITRATOR WILL NOT HAVE THE RIGHT TO DECLARE ANY MARK GENERIC OR
OTHERWISE INVALID OR, EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, TO AWARD
EXEMPLARY OR PUNITIVE DAMAGES. THE AWARD AND DECISION OF THE ARBITRATOR WILL BE
CONCLUSIVE AND BINDING UPON ALL PARTIES HERETO, AND JUDGMENT UPON THE AWARD MAY
BE ENTERED IN ANY COURT OF COMPETENT JURISDICTION.

WE AND YOU AGREE TO BE BOUND BY THE PROVISIONS OF ANY LIMITATION ON THE
PERIOD OF TIME IN WHICH CLAIMS MUST BE BROUGHT UNDER APPLICABLE LAW OR THIS
AGREEMENT, WHICHEVER EXPIRES

-17-
<PAGE>

EARLIER. WE AND YOU FURTHER AGREE THAT, IN CONNECTION WITH ANY SUCH ARBITRATION
PROCEEDING, EACH PARTY MUST SUBMIT OR FILE ANY CLAIM THAT WOULD CONSTITUTE A
COMPULSORY COUNTERCLAIM (AS DEFINED BY RULE 13 OF THE FEDERAL RULES OF CIVIL
PROCEDURE) WITHIN THE SAME PROCEEDING AS THE CLAIM TO WHICH IT RELATES. ANY SUCH
CLAIM THAT IS NOT SUBMITTED OR FILED AS DESCRIBED ABOVE WILL BE FOREVER BARRED.

WE AND YOU AGREE THAT ARBITRATION WILL BE CONDUCTED ON AN INDIVIDUAL, NOT A
CLASS-WIDE, BASIS, AND THAT AN ARBITRATION PROCEEDING BETWEEN US (INCLUDING OUR
AFFILIATES, SHAREHOLDERS, OFFICERS, DIRECTORS, AGENTS OR EMPLOYEES) AND YOU
(INCLUDING YOUR OWNERS, GUARANTORS, AFFILIATES AND EMPLOYEES, IF APPLICABLE) MAY
NOT BE CONSOLIDATED WITH ANY OTHER ARBITRATION PROCEEDING BETWEEN US AND ANY
OTHER PERSON, CORPORATION, LIMITED LIABILITY COMPANY OR PARTNERSHIP.

NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS SECTION, WE AND
YOU EACH HAVE THE RIGHT IN A PROPER CASE TO OBTAIN TEMPORARY RESTRAINING ORDERS
AND TEMPORARY OR PRELIMINARY INJUNCTIVE RELIEF FROM A COURT OF COMPETENT
JURISDICTION; PRO VIDED, HOWEVER, THAT WE AND YOU MUST CONTEMPORANEOUSLY SUBMIT
OUR DISPUTE FOR ARBITRATION ON THE MERITS AS PROVIDED HEREIN EXCEPT AS OTHERWISE
PROVIDED IN THE FIRST PARAGRAPH OF THIS SECTION.

THE PROVISIONS OF THIS SECTION ARE INTENDED TO BENEFIT AND BIND CERTAIN
THIRD PARTY NON-SIGNATORIES AND WILL CONTINUE IN FULL FORCE AND EFFECT
SUBSEQUENT TO AND NOTWITHSTANDING THE EXPIRA TION OR TERMINATION OF THIS
AGREEMENT.

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<PAGE>

(b) GOVERNING LAW. ALL MATTERS RELATING TO ARBITRATION WILL BE
GOVERNED BY THE FEDERAL ARBITRATION ACT (9 U.S.C. (S)(S)1 ET SEQ). EXCEPT TO THE
EXTENT GOVERNED BY THE FEDERAL ARBITRATION ACT, THE UNITED STATES TRADEMARK ACT
OF 1946 (LANHAM ACT, 15 U.S.C. SECTIONS 1051 ET SEQ.) OR OTHER FEDERAL LAW, THIS
AGREEMENT AND ALL CLAIMS ARISING FROM THE RELATIONSHIP BETWEEN US AND YOU WILL
BE GOVERNED BY THE LAWS OF THE STATE OF KENTUCKY WITHOUT REGARD TO ITS CONFLICT
OF LAWS PRINCIPLES.

(c) CONSENT TO JURISDICTION AND VENUE. YOU AND YOUR OWNERS AGREE THAT
ALL JUDICIAL ACTIONS BROUGHT BY US AGAINST YOU OR YOUR OWNERS OR BY YOU OR YOUR
OWNERS AGAINST US OR OUR SUBSIDIARIES, SHAREHOLDERS, OFFICERS, DIRECTORS, AGENTS
OR EMPLOYEES MUST BE BROUGHT IN A COURT OF COMPETENT JURISDICTION IN JEFFERSON
COUNTY, KENTUCKY OR FEDERAL DISTRICT COURT FOR THE WESTERN DISTRICT OF KENTUCKY
AND YOU (AND EACH OWNER) IRREVOCABLY SUBMIT TO THE JURISDICTION OF SUCH COURTS
AND WAIVE ANY OBJECTION YOU, HE OR SHE MAY HAVE TO EITHER THE JURISDICTION OF OR
VENUE IN SUCH COURTS. NOTWITHSTANDING THE FOREGOING, WE MAY BRING AN ACTION TO
OBTAIN A RESTRAINING ORDER OR TEMPORARY OR PRELIMINARY INJUNCTION, OR ENFORCE AN
ARBITRATION AWARD, IN ANY FEDERAL OR STATE COURT OF GENERAL JURISDICTION IN THE
STATE IN WHICH YOU RESIDE OR IN WHICH THE RESTAURANTS ARE LOCATED.

(d) WAIVER OF PUNITIVE DAMAGES. EXCEPT WITH RESPECT TO YOUR
OBLIGATION TO INDEMNIFY US PURSUANT TO SECTION AND CLAIMS WE BRING AGAINST YOU
FOR YOUR UNAUTHORIZED USE OR DISCLOSURE OF ANY CONFIDENTIAL INFORMATION, WE AND
YOU AND YOUR OWNERS WAIVE TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHT TO OR
CLAIM FOR ANY PUNITIVE OR EXEMPLARY DAMAGES AGAINST THE OTHER AND AGREE

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<PAGE>

THAT, IN THE EVENT OF A DISPUTE BETWEEN US, THE PARTY MAKING A CLAIM WILL BE
LIMITED TO EQUITABLE RELIEF AND TO RECOVERY OF ANY ACTUAL DAMAGES IT SUSTAINS.

(e) WAIVER OF JURY TRIAL. WE AND YOU IRREVOCABLY WAIVE TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER AT LAW OR IN EQUITY, BROUGHT
BY EITHER OF US.

(f) LIMITATIONS OF CLAIMS. EXCEPT FOR CLAIMS BROUGHT BY US WITH
REGARD TO YOUR OBLIGATIONS UNDER SECTIONS , AND , AND TO INDEMNIFY US PURSUANT
TO SECTION , ANY AND ALL CLAIMS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE RELATIONSHIP OF YOU AND US PURSUANT TO THIS AGREEMENT WILL BE BARRED UNLESS
AN ACTION IS COMMENCED WITHIN ONE (1) YEAR FROM THE DATE ON WHICH THE ACT OR
EVENT GIVING RISE TO THE CLAIM OCCURRED, OR ONE (1) YEAR FROM THE DATE ON WHICH
YOU OR WE KNEW OR SHOULD HAVE KNOWN, IN THE EXERCISE OF REASONABLE DILIGENCE, OF
THE FACTS GIVING RISE TO SUCH CLAIMS, WHICHEVER OCCURS FIRST.

(g) Costs, Expenses and Attorneys' Fees. Except as provided in
Section each party shall pay its own costs, expenses and attorneys' fees in any
action, claim, suit or proceeding arising out of this Agreement or the franchise
relationship of the parties.

15. Acknowledgements.

Your Representations. You hereby acknowledge and represent that:

(a) all information submitted to us by you or those owning an
interest in you, including all applications, financial statements and other
documents and information, is true and

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<PAGE>

correct in all respects and that it does not omit any statement or item of
material fact necessary to make the statements made therein not false or
misleading;

(b) We have not represented (i) that you will earn, can earn, or are
likely to earn a gross or net profit, (ii) that we have knowledge of the
relevant market, or (iii) that the market demand will enable you to earn a
profit from the Franchise;

(c) You have read and understood this Agreement and the disclosure
document entitled "Papa John's Franchise Offering Circular" (the "Offering
Circular") required by the Federal Trade Commission or the state in which the
Development Area will be located. You understand that we make no representation
or warranty regarding your relevant market or the profitability of business
operations under the System and that no representations have been made by us, or
by any of our Affiliates or our or their officers, directors, shareholders,
employees or agents, that are contrary to or inconsistent with the terms of this
Agreement or with the statements made in the Offering Circular that accompanied
a copy of this Agreement;

(d) You accept the terms, conditions and covenants contained in this
Agreement as being reasonable and necessary to maintain our standards of
quality, service and uniformity and in order to protect and preserve the
goodwill of the Marks. You acknowledge that other franchisees of ours have been
or will be granted franchises at different times and in different situations.
You further acknowledge that the provisions of the franchise agreements pursuant
to which such franchises were granted may vary materially from those contained
in this Agreement and that your obligation arising hereunder may differ
substantially from other franchisees; and

(e) You recognize that the System may evolve and change over time and
that the Franchise involves an investment of substantial risk and its success is
dependent primarily upon your business acumen and efforts and other factors
beyond our control. You have conducted an independent investigation of the
Franchise and have had ample time and opportunity to consult with independent
professional advisors (lawyers, accountants, etc.), and have not received or

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<PAGE>

relied upon any express or implied guarantee as to potential volumes, revenues,
profits or success of the business venture contemplated by the Franchise.

16. Miscellaneous.

(a) Severability. You agree to be bound to the maximum extent
permitted by law that is subsumed within the terms of any provision hereof, as
though it were separately articulated in and made a part of this Agreement, that
may result from the striking of any provision hereof by a court, or that a court
holds to be unenforceable in a final decision to which we are a party, or that
may result from reducing the scope of any provision to the extent required to
comply with a court order or with any state or federal law, whether currently in
effect or subsequently enacted.

(b) Construction. All references herein to the masculine, neuter, or
singular shall be construed to include the masculine, feminine, neuter, or
plural, as the case may require. All acknowledgements, warranties,
representations, covenants, agreements, and obligations herein made or
undertaken by you shall be deemed jointly and severally undertaken by all those
executing this Agreement as you. During any period in which any of the covenants
in Section 7 is being breached or violated, including any period in which either
of the parties seeks judicial enforcement, interpretation or modification of any
such covenant, and all appeals thereof, the restricted period set forth therein
shall toll and be suspended.

(c) Entire Agreement. This Agreement, the documents incorporated
herein by reference and the Exhibit attached hereto, constitute the entire
agreement between the parties, and all prior understandings or agreements
concerning the subject matter hereof are canceled and superseded by this
Agreement. The Exhibit to this Agreement is incorporated herein by reference and
made a part hereof as if set out in full herein.

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<PAGE>

(d) Affiliate. As used in this Agreement, the term "Affiliate" shall
mean any person or entity that is owned or controlled by us or which owns or
controls us or is under common control with us, either directly or through one
or more intermediaries.

(e) Amendments. Except for those permitted to be made unilaterally by
us, no supplement, amendment or variation of the terms of this Agreement shall
be valid unless made in writing and signed by the parties hereto.

(f) Waivers. No failure by us to exercise any right given to us
hereunder, or to insist upon strict compliance by you with any obligation,
agreement or undertaking hereunder, and no custom or practice of the parties at
variance with the terms hereof shall constitute a waiver of our right to demand
full and exact compliance by you with the terms hereof. Waiver by us of any
particular default by you shall not affect or impair our rights with respect to
any subsequent default of the same or of a different nature, nor shall any delay
or omission of us to exercise any right arising from such default affect or
impair our rights as to such default or any subsequent default.

(g) Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.

(h) Headings. The headings used in this Agreement are for convenience
only, and the paragraphs shall be interpreted as if such headings were omitted.

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<PAGE>

(i) Time of Essence. You agree and acknowledge that time is of the
essence with regard to your obligations hereunder, and that all of your
obligations are material to us and this Agreement.

IN WITNESS WHEREOF, the parties have signed this Development Agreement as
of the date written above.

PAPA JOHN'S INTERNATIONAL, INC.

By: /s/ RICHARD J. EMMETT
-------------------------------------
Richard J. Emmett, Vice President

PJ AMERICA, INC.

By: /s/ DOUGLAS S. STEPHENS
-------------------------------------
Douglas S. Stephens, President

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<PAGE>

Exhibit 10.31

June 26, 1997

Mr. Douglas S. Stephens
PJ AMERICA, INC.
P.O. Box 611165
Birmingham, Alabama 35261-11965

RE: Puerto Rico Development

Dear Doug:

I am writing to confirm our agreements and understandings with respect to
the rights of PJ America, Inc. ("PJAM") to develop the Island of Puerto Rico
(the "Territory"). By Letter Agreement dated May 20, 1996 (the "Letter"), we
granted PJAM an option to acquire development rights to the Territory.

We are currently working on final plans for commissary equipment and
supply, and expect to be in a position to sign the Development Agreement on or
before August 1, 1997. However, this letter confirms PJAM still has the option
to develop the Territory. If you have any questions or comments concerning
PJAM's development rights in Puerto Rico, or if we may otherwise be of further
assistance, please don't hesitate to give me a call.

Very truly yours,

PAPA JOHN'S INTERNATIONAL, INC.

Richard J. Emmett
Vice President and Senior Counsel
RJE:kw

cc: Michael M. Fleishman

<PAGE>

EXHIBIT 10.32

----------------------------------------------------------------

ASSET PURCHASE AGREEMENT
BY AND BETWEEN
NORTHCOAST PIZZA, INC.,
NORTH ROYALTON PIZZA, INC.
LOUIS ACKHAR
AND
OHIO PIZZA DELIVERY CO.

----------------------------------------------------------------

June 26, 1997
<PAGE>

TABLE OF CONTENTS

Section Page

1. Purchase and Sale of Assets..................................... 1
1.1 Lease...................................................... 1
1.2 Equipment; Fixtures; Tangible Personal Property............ 2
1.3 Licenses, Permits.......................................... 2
1.4 Executory Contracts........................................ 2
1.5 Inventories................................................ 2
1.6 Other Intangible Assets.................................... 2
1.7 Personnel and Payroll Records.............................. 2
1.8 Franchise Agreement........................................ 2

2. Assumption of Liabilities....................................... 2
2.1 Lease and Contracts........................................ 2
2.2 No Other Liabilities....................................... 2

3. Purchase Price; Allocation of Purchase Price.................... 3
3.1 Purchase Price............................................. 3
3.2 Payment of Purchase Price.................................. 3
3.3 Purchase Price Allocation.................................. 3
3.4 Determination of Inventory Value........................... 3

4. Representations and Warranties of NPI, Seller and Shareholder... 3

5. Representations and Warranties of Seller and Shareholder........ 3
5.1 Organization and Power..................................... 3
5.2 Authority, Approval; No Violations, Consents............... 4
5.3 Books and Records.......................................... 4
5.4 Assets Necessary to Operate the Business................... 4
5.5 Claims; Litigation......................................... 5
5.6 Compliance with Laws....................................... 5
5.7 Employee Benefits.......................................... 5
5.8 Employees and Compensation................................. 5
5.9 Executory Contracts........................................ 5
5.10 Inventory................................................. 5
5.11 Labor Matters............................................. 5
5.12 Licenses, Permits......................................... 6
5.13 No Agent or Broker........................................ 6
5.14 Taxes; Tax Returns; Withholdings.......................... 6
5.15 Title to Properties; Condition of Properties.............. 6
5.16 Lease; Real Property...................................... 7
5.17 Insurance................................................. 7
5.18 Completeness of Statements................................ 7

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<PAGE>

TABLE OF CONTENTS

Section Page

6. Representations and Warranties of Buyer........................ 7
6.1 Corporate Status.......................................... 7
6.2 Authority; Consents; Enforcement.......................... 7
6.3 No Agent or Broker........................................ 8

7. Survival of Representations and Warranties..................... 8

8. Additional Covenants of the Parties............................ 8
8.1 Operation of the Business Pending Closing................. 8
8.2 Cooperation............................................... 9
8.3 Further Assurances........................................ 9
8.4 Seller's Employees........................................ 9
8.5 Taxes..................................................... 9
8.6 Expenses; Prorations...................................... 9
8.7 Non-Competition Agreement................................. 10
8.8 Assignment of Development Agreement....................... 10

9. Closing........................................................ 10

10. Conditions To the Obligations of Buyer......................... 11
10.1 Representations, Warranties and Covenants................ 11
10.2 Compliance with Covenants................................ 11
10.3 Consents................................................. 11
10.4 No Material Adverse Change............................... 11
10.5 PJI Consent.............................................. 11

11. Conditions to the Obligations of Seller........................ 11
11.1 Representations, Warranties and Covenants................ 11
11.2 PJI Consent.............................................. 11

12. Deliveries and Actions To Be Taken At The Closing.............. 11
12.1 Deliveries by Seller..................................... 11
12.2 Deliveries by Buyer...................................... 12
12.3 Agreements of Parties.................................... 12

13. Indemnification................................................ 12
13.1 Indemnification by Seller................................ 12
13.2 Indemnification by Buyer................................. 13

14. Miscellaneous Provisions....................................... 13
14.1 Entire Agreement; Waiver................................. 13

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<PAGE>

TABLE OF CONTENTS

Section Page

14.2 Exhibits and Schedules.................................... 13
14.3 Headings.................................................. 13
14.4 No Third Party Beneficiaries.............................. 14
14.5 Notices................................................... 14
14.6 Parties Affected.......................................... 14

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<PAGE>

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement is made as of the 26th day of June, 1997 by
and between (i) Northcoast Pizza, Inc., an Ohio corporation ("NPI"), North
Royalton Pizza, Inc., an Ohio Corporation ("Seller"), and Louis Ackhar, an Ohio
resident and sole shareholder of NPI and Seller ("Shareholder"), and (ii) Ohio
Pizza Delivery Co., an Ohio corporation ("Buyer").

Recitals:

A. Seller presently owns and operates a Papa John's Restaurant business
(the "Business") located at 12781 State Road, North Royalton, Ohio 44133 (the
"Restaurant"), pursuant to the provisions of a certain Franchise Agreement,
dated February 12, 1996 (the "Franchise Agreement") between Seller (as assignee
of NPI) and Papa John's International, Inc. ("PJI").

B. Buyer desires to purchase and acquire from Seller, and Seller desires
to sell and convey to Buyer, the Business and assets of Seller used in the
operation of the Business, upon the terms and subject to the conditions set
forth herein.

C. Shareholder is the sole shareholder of NPI and Seller and joins in
this Agreement for purposes of making the representations, warranties, and
covenants set forth herein.

D. NPI owns development rights for additional Papa John's restaurants,
pursuant to the provisions of that certain Papa John's Development Agreement,
dated December 23, 1996, between NPI and PJI (the "Development Agreement"); and
joins in this Agreement for purposes of making certain representations,
warranties and covenants.

Agreement:

Now, Therefore, the parties hereto do hereby agree as follows:

1. Purchase and Sale of Assets. At the "Closing" on the "Closing Date"
(as defined in Section ), Seller agrees to sell, transfer, convey, assign and
deliver to Buyer, free and clear of all liens, claims, restrictions and
encumbrances of any nature whatsoever, and Buyer agrees to purchase and acquire
from Seller, all of Seller's right, title and interest as of the opening of
business on the Closing Date under, in and to the assets of the Business, both
tangible and intangible, wherever situated, including, without limitation, the
following (the "Acquired Assets"):

1.1 Lease. Seller's rights under that certain Lease Agreement
("Lease"), dated December 6, 1996, by and between Seller and Pierre Zanin and
Gabriella Zanin (collectively, the
<PAGE>

"Landlord"), including that certain Addendum to Lease, dated December 6, 1996,
between Seller and the Landlord, pursuant to which Seller leases the real
property (the "Real Property") on which the Restaurant is located;

1.2 Equipment; Fixtures; Tangible Personal Property. All of Seller's
furniture, fixtures, equipment, computer hardware and software, fixtures, signs,
uniforms, menus, dishes, glassware, utensils and other small wares, business
machines and all other tangible personal property used in or necessary for the
operation of the Business, including, without limitation, the items listed on
Exhibit A attached hereto ("Equipment");

1.3 Licenses, Permits. All of the Seller's licenses and permits
owned in the operation of the Business, to the extent the same are assignable;

1.4 Executory Contracts. Seller's executory contracts and agreements
described on Exhibit B ("Contracts");

1.5 Inventories. Seller's usable food and beverage ingredients,
packaging materials, paper products, miscellaneous consumable inventories and
stores and supplies ("Inventory");

1.6 Other Intangible Assets. Seller's rights under any warranties
relating to the Acquired Assets; Seller's telephone numbers; all operating data
and the books and records of Seller which pertain to any of the Acquired Assets
or to sales to customers and from suppliers pertaining to the Acquired Assets;
and any other books, records or accounts which may be reasonably needed by or
reasonably helpful to Buyer in connection with the Acquired Assets, including,
but not limited to, service parts records, warranty records and maintenance
records; provided, that Seller may retain all tax records and shall deliver
copies thereof to Buyer, as requested by Buyer;

1.7 Personnel and Payroll Records. All personnel records, payroll
records and INS records for all employees of the Business ("Employees"); and

1.8 Franchise Agreement. Seller's rights, title and interest in,
under and to the Franchise Agreement.

2. Assumption of Liabilities.

2.1 Lease and Contracts. Effective as of the Closing, Buyer hereby
agrees to assume Seller's executory obligations under the Lease and the
Contracts arising on and after the Closing Date, but only to the extent that
such obligations are not inconsistent with Seller's representations and
warranties contained herein.

2.2 Except as set forth in Section , Buyer shall not assume, nor
shall Buyer have any obligation or liability for, and Seller shall retain, pay
and discharge, all other debts, obligations and liabilities of Seller, whether
known, unknown, fixed, contingent,

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<PAGE>

executory or otherwise, and whether or not incurred directly by Seller or for
which Seller or the Business is obligated by operation of law.

3. Purchase Price; Allocation of Purchase Price.

3.1 Purchase Price. The purchase price ("Purchase Price") for the
Acquired Assets shall be $160,000 plus the value of the Inventory.

3.2 Payment of Purchase Price. The Purchase Price shall be paid as
follows:

(a) At the Closing, Buyer shall pay to Commerce Exchange Bank,
Beechwood, Ohio, an amount equal to the outstanding amount of Seller's loan from
such Bank (the "Loan");

(b) At the Closing, Buyer shall pay to Seller $160,000 minus the
amount of the Loan by delivery of immediately available funds to an account
designated by Seller; and

3.3 Purchase Price Allocation. The Purchase Price shall be allocated
among the Acquired Assets as mutually agreed by the parties.

3.4 Determination of Inventory Value. On the close of business on
the date immediately preceding the Closing Date, Seller and Buyer shall conduct
a physical count of the Inventory. The Inventory shall be valued at Seller's
actual cost therefor, or if lower, market value as reasonably determined by
Buyer and Seller.

4. Representations and Warranties of NPI, Seller and Shareholder. NPI,
Seller and Shareholder, jointly and severally, represent and warrant to Buyer
that Seller is the successor in interest to NPI's rights and title under, in and
to the Franchise Agreement, and that NPI has no interest whatsoever remaining
thereunder.

5. Representations and Warranties of Seller and Shareholder. Seller and
Shareholder, jointly and severally, represent and warrant to Buyer as follows:

5.1 Organization and Power. Seller is a corporation duly organized,
validly existing and in good standing in the laws of the State of Ohio. Seller
has, and at all times has had, all requisite power and authority to own its
property and conduct its business as presently conducted. Neither the nature of
Seller's business, nor the location of any of the Acquired Assets makes
qualification of Seller as a foreign corporation necessary under the laws of any
state other than Arkansas.

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<PAGE>

5.2 Authority, Approval; No Violations, Consents.

(a) Seller has the absolute and unrestricted right, power,
authority and capacity to enter into and deliver this Agreement and perform the
transactions contemplated herein. This Agreement has been duly executed and
delivered by Seller and constitutes Seller's legal, valid and binding
obligation, enforceable against Seller in accordance with its terms.

(b) Except for the consent of the Landlord to assignment of the
Lease to Buyer and except for the "PJI Consent" (as hereafter defined), the
execution, delivery and performance of, and the consummation of the transactions
contemplated in, this Agreement do not:

(1) require the approval, consent or authorization of any
federal, state or local court, governmental authority or regulatory body,
or of any creditor of Seller or of any other person or entity;

(2) give any party with rights under any instrument,
agreement, contract, mortgage, judgment, order, writ, award, decree or
other restriction the right to terminate, modify or otherwise change the
rights or obligations of Seller thereunder; or

(3) conflict with or result in a violation or breach of any
of the terms, conditions or provisions of, or constitute a default under,
(i) Seller's Articles of Incorporation or by-laws, (ii) any instrument,
agreement, contract, mortgage, judgment, order, writ, award, decree or
other restriction to which Seller is a party by which Seller is bound or
which is applicable to the Business or any of the Acquired Assets, or (iii)
any of Seller's properties is subject or by which Seller is bound or any
statute or regulatory provision affecting them.

(d) Seller has complied, and is in compliance, with all laws,
regulations, rules and orders applicable to the operation of the Business and
its ownership or use of the Acquired Assets, and Seller has no knowledge of any
facts or circumstances which may constitute or result in any noncompliance.

5.3 Books and Records. The books of account and records of Seller
are true and complete in all respects, and all monies due or to become due from
or to or owing by, and all liabilities (actual, contingent or accrued) of,
Seller by reason of any transaction, matter or cause whatsoever have been duly,
correctly and completely entered therein.

5.4 Assets Necessary to Operate the Business. Seller owns or leases
and is transferring to Buyer hereunder all properties and assets, whether real
or personal, tangible or intangible, including but not limited to all required
permits and licenses and all contracts and agreements necessary or appropriate
to permit Seller to conduct its business at the Business as presently conducted.

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<PAGE>

5.5 Claims; Litigation. There are no disputes, claims, actions,
suits, orders, arbitrations, proceedings or investigations, either
administrative or judicial, pending or threatened or contemplated, against or
affecting Seller or the Business, or its properties, employees, or rights, at
law or in equity, or before any arbitrator, court, or before or by any other
governmental agency or instrumentality, domestic or foreign. No event or
condition of any nature which might materially and adversely affect the
business, financial condition, results of operations or prospects of the
Business has occurred, exists or to the knowledge of Seller or Shareholder is
anticipated.

5.6 Compliance with Laws. Seller is not in violation of, or in
default under, any law, regulation, rule, ordinance, order, judgment, writ,
injunction or decree, of any federal, state or local government or
instrumentality or agency thereof, or any court (collectively, "Laws"),
including, without limitation, Laws relating to the public health, safety or
protection of the environment (collectively, "Environmental Laws"), and neither
Seller nor Shareholder is aware of any facts or circumstances which may
constitute or result in any such violation. No party is currently asserting that
Seller has violated any Laws or that Seller is a "responsible party" pursuant to
42 USC (S)9607 for the release of "Hazardous Materials" (as defined in
Environmental Laws).

5.7 Employee Benefits. Seller is not presently required to contribute
to, nor has Seller, during the five-year period ending on the date hereof, been
required to contribute to any employee benefit plan described in section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended.

5.8 Employees and Compensation. All of Seller's employees are
employed "at will" and may be terminated at any time, for any or no reason
without notice and without liability to Seller.

5.9 Executory Contracts. Seller has delivered to Buyer a complete
copy of each Contract referred to on Exhibit B. Seller has performed in all
material respects all obligations to be performed by it under the terms of the
Contracts through the date of this Agreement, and is not in default or breach
under any Contract.

5.10 Inventory. The Inventory consists of items of a quality and
quantity useable or saleable in the ordinary course of the Business as presently
heretofore conducted. No items included in the inventories are pledged as
collateral or held by Seller on consignment from another.

5.11 Labor Matters. Seller is not a party to, nor negotiating, any
collective bargaining agreement. To Seller's knowledge, there are no union
organizational or representation efforts underway or threatened, nor are there
any existing or threatened labor strikes, slow downs, disputes, grievances or
disturbances which might affect operations at, or deliveries from or into the
Business. Seller has complied with the National Labor Relations Act, as amended,
Title VII of the Civil Rights Act of 1964, as amended, the Occupational Safety
and Health Act, Executive Order 11246 and all other federal, state or local laws
relating to wages, hours, employees and collective bargaining.

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<PAGE>

5.12 Licenses, Permits. Seller has delivered to Buyer copies of all
notifications from or to any government agency, permits, licenses, engineering
studies and environmental impact reports or assessments that are material to the
operation of the Business.

5.13 No Agent or Broker. No agent or broker or other person acting
pursuant to authority given by Seller is entitled to any commission, finder's
fee or other like payment in connection with the transactions contemplated by
this Agreement.

5.14 Taxes; Tax Returns; Withholdings.

(a) Taxes. All taxes, including, without limitation, income,
property, sales, use, excise, unemployment, franchise, employees income
withholding, social security tax imposed by the United States or by any state,
municipality or instrumentality thereof, or by any other taxing authority, which
are due or payable or which are attributable to periods prior to the date
hereof, by Seller, and all interest and penalties thereon, whether disputed or
not, have been paid in full. There are in effect no agreements, waivers or other
arrangements providing for an extension of time with regard to the assessment of
any tax, or any deficiency with respect thereto, against Seller, other than
routine extensions in filing deadlines. There are no actions, suits,
proceedings, investigations or claims now pending, nor, to the knowledge of
Seller and Shareholder, proposed, against Seller, nor are there any matters
under discussion with the Internal Revenue Service, or other governmental
authority, relating to any taxes or assessments, or any claims or deficiencies
with respect thereto.

(b) Tax Returns. Seller has prepared, signed and filed all
federal, state and other tax returns and reports required to be filed by all
applicable laws and regulations which are attributable to periods prior to the
date hereof, and such returns and reports have been accurately prepared and duly
and timely filed and all deposits required by law to be made by Seller have been
duly made.

(c) Withholdings. Seller has withheld proper and accurate
amounts from its employees in full and complete compliance with the tax
withholding provisions of the Internal Revenue Code and other applicable
federal, foreign, state or local laws, and has filed proper and accurate
federal, foreign, state and local returns and reports for all years and periods
(and portions thereof) for which any such returns and reports were due with
respect to employee income, income tax withholding, withholding taxes, social
security taxes and unemployment taxes. All payments due from Seller on account
of employee income tax withholding, withholding taxes, social security taxes or
unemployment taxes in respect of years and periods (and portions thereof) ended
on or prior to the date hereof have been paid.

5.15 Title to Properties; Condition of Properties. Seller has good
and marketable title to all of the Acquired Assets (excluding leased properties)
and the Business, and will convey the Acquired Assets to Buyer free and clear of
all charges, claims, restrictions, community property interests, equitable
interests, mortgages, liens, pledges, security interests or encumbrances of any
nature whatsoever. The Acquired Assets constitute all the assets used in or
necessary for the operation of the Business as heretofore conducted.

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<PAGE>

5.16 Lease; Real Property. Seller's operation of the Business at and
from the Real Property and the Buildings conforms to all planning, zoning and
other similar regulations and ordinances. The Lease is in full force and effect
in accordance with its terms, and Seller is not in default under the Lease and
no event has occurred which, upon the passage of time or otherwise, would
constitute such a default, and the Landlord is not in default in any manner
thereunder.

5.17 Insurance. Seller maintains, and has at all times prior to the
date hereof, maintained policies of fire and casualty, product and other
liability and other forms of insurance in such amounts and against such risks
and losses as are reasonable and adequate for the conduct of the Business.

5.18 Completeness of Statements. Seller and Shareholder have
disclosed to Buyer in writing all adverse facts known to them relating to the
representations and warranties made by Seller and Shareholder in this Agreement.
The representations and warranties of Seller and Shareholder in this Agreement
are true and complete in all respects. No representation or warranty of Seller
or Shareholder in this Agreement or in any certificate, Exhibit, Schedule or
other document furnished pursuant hereto, (i) contains any untrue statement of a
fact, (ii) omits any material fact necessary to make such representation or
warranty, under the circumstances which it was made, not misleading, or (iii)
contains any misstatement of a fact. All of the representations and warranties
made by Seller and Shareholder are made with the knowledge, expectation,
understanding and desire that Buyer place complete reliance thereon. The
representations and warranties shall not be affected or deemed waived by
reason of the fact that Buyer knew or should have known that any such
representation and warranty is or might be inaccurate in any respect.

6. Representations and Warranties of Buyer. Buyer represent and warrant
to Seller as follows:

6.1 Corporate Status. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.

6.2 Authority; Consents; Enforcement.

(a) This Agreement has been duly executed and delivered by Buyer
and constitutes its legal, valid and binding obligation, enforceable in
accordance with the terms of this Agreement. Buyer has full power and authority,
corporate and otherwise, to enter into and to deliver this Agreement and perform
the transactions described herein.

(b) All consents, approvals, resolutions, authorizations, actions
or orders, including those which must be obtained from governmental agencies or
authorities, required of Buyer for the authorization, execution and delivery of,
and for the consummation of the transactions described in, this Agreement have
been obtained.

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(c) The execution and delivery of this Agreement, the
consummation of the transactions described in this Agreement, and the
fulfillment of and compliance with its terms and provisions do not (i) conflict
with or violate (A) any judicial or administrative order, award, judgment or
decree applicable to Buyer or (B) any term, condition or provision of Buyer's
Certificate of Incorporation or By-Laws or any agreement, instrument, mortgage,
contract, or restriction to which it is a party, or by which it is bound or
which is applicable to its properties, or (ii) require the approval, consent or
authorization of any Federal, state, or local court, or any creditor of Buyer,
or any other person or entity.

6.3 No Agent or Broker. No agent or broker or other person acting
pursuant to authority given by Buyer is entitled to any commission, finders' fee
or other like payment in connection with the transactions contemplated by this
Agreement.

7. Survival of Representations and Warranties. All statements contained
in this Agreement shall be deemed representations and warranties of the parties
to whom such statements are attributable. All of the representations,
warranties, covenants and agreements contained in this Agreement or in any
document furnished pursuant hereto, shall survive the execution of this
Agreement, and the consummation of the transactions described herein and any
investigation made by Buyer, Seller or NPI.

8. Additional Covenants of the Parties.

8.1 Operation of the Business Pending Closing. From the date hereof
through the Closing Date Seller shall continue the Business and operations
substantially in the same manner as heretofore, not undertake any transactions
or enter into any contracts, commitments or arrangements other than in the
ordinary course of business consistent with its past practices, and use its best
efforts to preserve the Business' present business and organization.

8.2 Cooperation. Seller covenants to cooperate with Buyer in
providing all information required hereunder and access thereto and whatever is
required to carry out the purposes and intent of the transactions contemplated
by this Agreement.

8.3 Further Assurances. Each of the parties hereto agrees that it
will, at any time, and from time to time, after the date hereof, upon the
request of the appropriate party, do, execute, acknowledge and deliver, or will
cause to be done, executed, acknowledged and delivered, all such further acts,
deeds, assignments, transfers, conveyances, powers of attorney and assurances as
may be required to complete the transactions described in this Agreement.

8.4 Seller's Employees.

(a) Notification; Benefits Payment. Seller shall retain any and
all liability and obligations for, and shall pay pursuant to Seller's policies,
any termination pay, severance pay, sick pay or vacation pay, any unemployment
benefits and any other benefits to which Seller's past or current employees,
their spouses and dependent children may be entitled by virtue of their
employment or termination of their employment with Seller.

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<PAGE>

(b) No Obligation of Buyer. Buyer shall have no obligation to
employ any employees of Seller subsequent to the date hereof. To the extent any
of such employees are employed by Buyer following the date hereof, such
employment shall be on terms and conditions determined by Buyer, and Buyer shall
have no obligation to offer such employee the same or similar wages, salaries or
benefits as are paid or provided by Seller prior to the date hereof.

8.5 Taxes. Seller shall be liable and responsible for, and will duly
and timely pay, any and all tax liabilities which may arise out of or result
from the transactions herein contemplated, including, without limitation,
applicable state and local sales, use or transfer taxes.

8.6 Expenses; Prorations. The parties agree that each will pay all
of its or his own expenses incurred in connection with the negotiation and
preparation of this Agreement and the performance of the obligations of such
party under and the consummation of the transactions contemplated by this
Agreement. Utility charges, rental charges, any real and personal property taxes
shall be prorated between Buyer and Seller as of the Closing Date; provided,
however, that if any such charges are not ascertainable as of the Closing Date,
then the parties agree to prorate (and pay pursuant to such proration) such
amount as soon as practicable following the Closing Date.

8.7 Non-Competition Agreement.

(a) Covenant Not-To-Compete. As additional consideration for the
transactions described herein, each of NPI, Seller and Shareholder hereby
covenants and agrees that for a period of two years from the date hereof, none
of them will, within the Cleveland, Ohio Dominant Market Area,

(1) directly or indirectly enter into the employ of, render
any service to, or act in concert with, or on behalf of, any person or
other entity that owns, operates, manages, franchises or licenses any
"Competitive Business" (as defined hereafter); or

(2) directly or indirectly engage in any such Competitive
Business on its or his own account; or

(3) become interested in any such Competitive Business,
directly or indirectly, as an individual, partner, joint venturer,
shareholder, director, officer, principal, agent, employee, consultant,
investor, representative, creditor, licensor or transferor of any
trademark, trade name, process, product or marketing or other intangible,
or in any other relationship or capacity; provided, that the purchase of
securities in Papa John's International, Inc. or a publicly traded security
of any other corporation engaged in such business or service shall not in
itself be deemed violative of this Agreement so long as Shareholder does
not own, directly or indirectly, more than 2% of the securities of such
other corporation.

(b) Competitive Business. As used herein, the term "Competitive
Business" means any business that manufactures or sells pizza, whether on a
delivery, carry-out, dine-in, retain or wholesale basis.

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<PAGE>

8.8 Assignment of Development Agreement. At the Closing, NPI and
Buyer shall enter into an agreement, in the form of Exhibit C attached hereto,
whereby NPI shall assign to Buyer all of NPI's rights under the Development
Agreement (the "Development Assignment").

9. Closing. The closing of the transactions described in this Agreement
(the "Closing") shall take place at 10:00 a.m., local time, on July 29, 1997, or
such other date as the parties may mutually agree (the "Closing Date"). The
Closing shall take place at the offices of Greenebaum Doll & McDonald pllc,
Louisville, Kentucky, or at such other place as the parties may agree.

10. Conditions To the Obligations of Buyer. The obligations of Buyer to
consummate the transactions contemplated in this Agreement shall be subject to
the fulfillment, on or prior to the Closing Date, of all of the following
conditions precedent, any one or more of which may be waived in writing at the
option of Buyer:

10.1 Representations, Warranties and Covenants. All representations
and warranties of Seller, Shareholder and NPI contained in this Agreement shall
be true and correct as of the Closing Date as though made on such date.

10.2 Compliance with Covenants. Seller, Shareholder and NPI shall
have performed and complied with all the covenants, agreements and conditions
required by this Agreement to be performed or complied with by them prior to or
at the Closing.

10.3 Consents. Seller shall have received the consent of the
Landlord to the assignment of the Lease to Buyer (the "Landlord Consent").

10.4 No Material Adverse Change. No event shall have occurred which
would have a material adverse affect on any of the Acquired Assets or the
conduct of the Business by Buyer following the Closing.

10.5 PJI Consent. PJI shall have consented to the transactions
contemplated hereby (the "PJI Consent").

11. Conditions to the Obligations of Seller. The obligations of Seller to
consummate the transactions contemplated hereby shall be subject to the
fulfillment on or prior to the Closing Date of all the following condition,
which may be waived at the option of Seller:

11.1 Representations, Warranties and Covenants. The representations
and warranties of Buyer contained in this Agreement shall be true and correct as
of the Closing Date as though made on such date, and Buyer shall have performed
all of its agreements contained herein to be performed on or prior to the
Closing Date.

11.2 PJI Consent. Seller shall have obtained the PJI Consent.

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<PAGE>

12. Deliveries and Actions To Be Taken At The Closing.

12.1 Deliveries by Seller. At the Closing, Seller shall deliver (duly
executed where appropriate) the following to Buyer:

(a) Possession of the Acquired Assets, free of the possession of
all third parties;

(b) Assignments of all licenses and permits which can be
assigned and which are material to the operation of the Business;

(c) All consents required for the assignment and transfer by
Seller to Buyer of the Acquired Assets, including the Lease Consent and the PJI
Consent;

(d) A certificate signed the President of Seller certifying as
to the fulfillment of the conditions set forth in Sections 10.1 through 10.5;

(e) Copies of the resolutions of the Board of Directors of and
Shareholder of Seller and NPI authorizing the execution, delivery and
performance of this Agreement; and

(f) Such other documents and instruments as may be reasonably
necessary to effect the closing of the transactions contemplated hereby as they
are contemplated in this Agreement.

12.2 Deliveries by Buyer. At the Closing, Buyer shall deliver to
Seller the following:

(a) Immediately available funds in the amount provided for in
Sections 3.2(a) and (b);

(b) A certificate signed by an officer of Buyer certifying as to
the fulfillment of the conditions set forth in Sections 11.1 and 11.2; and

12.3 Agreements of Parties. At the Closing, NPI, Seller and Buyer (as
applicable) shall execute and deliver (i) Assignment and Assumption Agreements
with respect to the Leases, the Contracts and Acquired Assets and (ii) the
Development Assignment.

13. Indemnification.

13.1 Indemnification by Seller. Seller and Shareholder, jointly
and severally, shall indemnify and hold Buyer and its directors, officers,
agents, successors and assigns ("Buyer Indemnitees") harmless from and against
any and all debts, obligations, losses, claims, damages, liabilities,
deficiencies, actions, suits, proceedings, demands, assessments, orders,
judgments, writs, decrees, costs and other expenses (including, but without
limitation, reasonable attorneys' fees), of any nature and of any kind
whatsoever ("Buyer Losses"), which may be made against

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<PAGE>

or incurred by Buyer Indemnitees resulting from or arising out of or in any
manner connected with (i) any misrepresentation or breach or failure of any
warranty of Seller contained herein, (ii) the nonfulfillment of any agreement or
obligation of Seller set forth herein, (iii) the ownership, use or conduct of
the Business or the Acquired Assets on or prior to the Closing Date, or (iv) or
any liabilities of Seller whether known or unknown to Seller not specifically
assumed by Buyer under this Agreement and which are asserted against Buyer by
reason of Buyer's acquisition, ownership or use of any of the Acquired Assets,
or otherwise, including, without limitation, any tax, penalty or interest for
periods or transactions prior to the date hereof, regardless of when assessed.

13.2 Indemnification by Buyer. Buyer shall indemnify and hold Seller
and its directors, officers, agents, successors and assigns ("Seller
Indemnitees") harmless from and against any and all debts, obligations, losses,
claims, damages, liabilities, deficiencies, actions, suits, proceedings,
demands, assessments, orders, judgments, writs, decrees, costs and other
expenses (including, without limitation, reasonably attorneys' fees), of any
nature and of any kind whatsoever ("Seller Losses") which may be made against or
incurred by Seller Indemnitees resulting from or arising out of or in any manner
connected with any misrepresentation or breach or failure of any warranty of
Buyer, or the nonfulfillment of any agreement or obligations of Buyer.

14. Miscellaneous Provisions.

14.1 Entire Agreement; Waiver. As used herein, the term "Agreement"
shall mean this Asset Purchase Agreement, the Exhibits hereto, including those
which will be executed and delivered by one or more of the parties hereto at or
prior to the date hereof, and the Schedules delivered in connection herewith,
all written statements and all certificates, documents and instruments which are
identified herein as having been or to be furnished to Buyer. This Agreement
embodies the entire agreement and understanding of the parties hereto with
respect to the subject matter herein contained, and supersedes all prior
agreements, correspondence, arrangements and understandings relating to the
subject matter hereof. No representation, promise, inducement or statement of
intention has been made by any party which has not been embodied in this
Agreement, and no party shall be bound by or be liable for any alleged
representation, promise, inducement or statement of intention not so set forth.
This Agreement may be amended, modified, superseded, or canceled only by a
written instrument signed by all of the parties hereto, and any of the terms,
provisions, and conditions hereof may be waived, only by a written instrument
signed by the waiving party. Failure of any party at any time or times to
require performance of any provision hereof shall not be considered to be a
waiver of any succeeding breach of such provision by any party.

14.2 Exhibits and Schedules. All Exhibits to this Agreement and the
Schedules hereto shall constitute part of this Agreement and shall be deemed to
be incorporated herein by reference, in their entirety and made a part hereof,
as if set out in full at the point where they first are mentioned. References
in this Agreement to a specific Schedule shall refer solely to such Schedule and
shall not be deemed to include material included in any other Schedule, unless
the Schedule specifically states that the material is to be included in another
specified Schedule.

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<PAGE>

14.3 Headings. The headings in this Agreement are included for
purposes of convenience only and shall not be considered a part of this
Agreement in construing or interpreting any provision hereof.

14.4 No Third Party Beneficiaries. This Agreement is not intended to,
and does not, benefit or confer rights upon and is not enforceable by any third
person, and shall only be enforceable by the parties hereto, and their
respective successors, assigns, heirs and personal representatives.

14.5 Notices.

(a) Giving of Notices. All notices, requests, approvals,
demands and other communications hereunder (collectively, "Notices") shall
be deemed to have been given if in writing and (I) personally delivered against
a written receipt, or (ii) sent by confirmed telephonic facsimile, or (iii) sent
by United States mail, certified or registered, return receipt requested and
postage prepaid, or (iv) delivered to a reputable express messenger service
(such as Federal Express, DHL Courier or United Parcel Service) for overnight
delivery, addressed as follows (or to such other address as a party shall have
given Notice to the other):

To Seller, NPI
or Shareholder: Mr. Louis Ackhar
19206 Laurel Drive
Walton Hills, Ohio 44146
Fax: _______________________

To Buyer: Ohio Pizza Delivery Co.
9109 Parkway East
Birmingham, AL 35206
Attn: D. Ross Davison,
Chief Financial Officer
FAX: (205) 836-0376

(b) Time Notices Deemed Given. All Notices shall be effective
upon being properly personally delivered, or upon confirmation of a telephonic
facsimile, or upon correct deposit with the United States mail, or upon the
delivery to a reputable express messenger service. The period in which a
response to any Notice must be given, shall commence to run from the date on the
receipt of a personally delivered Notice, or the date of confirmation of a
telephonic facsimile, or the date of confirmed delivery by the United States
Postal Service, or two days following the proper delivery of the Notice to a
reputable express messenger service, as the case may be.

14.6 Parties Affected. All of the terms, provisions and conditions
of this Agreement shall be binding upon and shall inure to the benefit of and be
enforceable by the parties hereto, and their respective heirs, personal
representatives, successors and assigns.

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<PAGE>

In Witness Whereof, the parties have duly executed this Agreement as of the
date first written above.

Northcoast Pizza, Inc.

By: /s/ Louis Ackhar
--------------------------
Title: President
-----------------------
("NPI")

North Royalton Pizza, Inc.

By: /s/ Louis Ackhar
--------------------------
Title: President
-----------------------
("Seller")

/s/ Louis Ackhar
-----------------------------
Louis Ackhar

("Shareholder")

Ohio Pizza Delivery Co.

By: /s/ Douglas S. Stephens
--------------------------
Title: President
-----------------------
("Buyer")

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<PAGE>

EXHIBIT 21

SUBSIDIARY LIST

PJ Cheese, Inc.
Ohio Pizza Delivery Co.

<PAGE>

EXHIBIT 23.2

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the captions "Selected
Financial Data" and "Experts" and to the use of our reports dated February 4,
1997, with respect to the consolidated financial statements of PJ America,
Inc., our report dated April 4, 1997 with respect to the financial statements
of Ohio Pizza Delivery Co. and our report dated June 17, 1997 with respect to
the supplemental consolidated financial statements of PJ America, Inc. and
Subsidiaries included in the Registration Statement (Form S-1) and related
Prospectus of PJ America, Inc. for the registration of 1,380,000 shares of its
common stock.

/s/ Ernst & Young LLP

Birmingham, Alabama
June 20, 1997