Sonic 2003 Annual Report Download - page 45

p.43
Notes to Consolidated Financial Statements
August 31, 2003, 2002 and 2001 (In thousands, except share data)
A summary of the company’s options was as follows as of August 31, 2003:
Options Outstanding Options Exercisable
Weighted
Average Weighted Weighted
Remaining Average Average
Number of Contractual Exercise Number of Exercise
Range of Exercise Prices Options Life (Yrs.) Price Options Price
$ 4.35 to $ 5.70 945,458 2.65 $ 5.22 945,458 $ 5.22
$ 6.52 to $12.85 967,458 5.40 10.54 967,458 10.54
$12.89 to $16.57 884,453 6.84 15.04 713,585 14.70
$20.46 to $27.20 843,979 9.18 25.04 126,815 22.11
$29.31 to $29.31 324,708 8.67 29.31 108,480 29.31
$ 4.35 to $29.31 3,966,056 6.14 $ 14.90 2,861,796 $ 11.04
Stockholder Rights Plan
The company has a stockholder rights plan which is designed to deter coercive takeover tactics and to prevent a
potential acquirer from gaining control of the company without offering a fair price to all of the company’s stockholders.
The plan provided for the issuance of one common stock purchase right for each outstanding share of the company’s
common stock. Each right initially entitles stockholders to buy one unit of a share of preferred stock for $85. The rights
will be exercisable only if a person or group acquires beneficial ownership of 15% or more of the company’s common
stock or commences a tender or exchange offer upon consummation of which such person or group would beneficially
own 15% or more of the company’s common stock. At August 31, 2003, 50,000 shares of preferred stock have been
reserved for issuance upon exercise of these rights.
If any person becomes the beneficial owner of 15% or more of the company’s common stock, other than pursuant to
a tender or exchange offer for all outstanding shares of the company approved by a majority of the independent directors
not affiliated with a 15%-or-more stockholder, then each right not owned by a 15%-or-more stockholder or related parties
will then entitle its holder to purchase, at the right’s then current exercise price, shares of the company’s common stock
having a value of twice the right’s then current exercise price. In addition, if, after any person has become a 15%-or-more
stockholder, the company is involved in a merger or other business combination transaction with another person in which
the company does not survive or in which its common stock is changed or exchanged, or sells 50% or more of its assets or
earning power to another person, each right will entitle its holder to purchase, at the right’s then current exercise price,
shares of common stock of such other person having a value of twice the right’s then current exercise price. Unless a
triggering event occurs, the rights will not trade separately from the common stock.
The company will generally be entitled to redeem the rights at $0.01 per right at any time until 10 days (subject to
extension) following a public announcement that a 15% position has been acquired. The rights expire on June 16, 2007.
13. Net Revenue Incentive Plan
The company has a Net Revenue Incentive Plan (the “Incentive Plan”), as amended, which applies to certain members
of management and is at all times discretionary with the company’s board of directors. If certain predetermined earnings
goals are met, the Incentive Plan provides that a predetermined percentage of the employee’s salary may be paid in the
form of a bonus. The company recognized as expense incentive bonuses of $2,038, $2,264, and $1,876 during fiscal
years 2003, 2002 and 2001, respectively.
14. Employment Agreements
The company has employment contracts with its Chairman and Chief Executive Officer and several members of its
senior management. These contracts provide for use of company automobiles or related allowances, medical, life and
disability insurance, annual base salaries, as well as an incentive bonus. These contracts also contain provisions for
payments in the event of the termination of employment and provide for payments aggregating $6,614 at August 31, 2003
due to loss of employment in the event of a change in control (as defined in the contracts).