In September 2001, the Board of Directors approved a Discretionary Stock Repur- chase Plan to repurchase and retire 2,000,000 shares of common stock. As of October 11, 2001, all 2,000,000 shares had been repurchased and retired under the plan at an aver- age price of $22.56 per share. In November 2001, the Board of Directors expanded the Company’s Discretionary Stock Repurchase Plan to allow for the repurchase of such shares as may be necessary to reduce the issued and outstanding stock to 100,000,000 shares of common stock. As of December 31, 2002, no further shares had been repur- chased under the amended discretionary plan. The Company has two stock option plans (the “1985 Plan” and the “1997 Plan”) for employees under which the Board of Directors may grant officers and key employees options to purchase common stock at prices equal to or greater than market value on the date of grant. The 1985 Plan provides for non-qualified grants at exercise prices equal to or greater than the market value on the date of grant. Outstanding options generally vest and become exercisable over periods up to five years from the date of grant and expire no more than 10 years from the date of grant. The 1997 Plan provides for qualified and non-qualified grants of options to purchase shares, limited to not more than 200,000 per person per year. Grants less than or equal to 40,000 shares in any fiscal year, are granted at or above common stock prices on the date of grant. Any 1997 Plan grants in excess of the initial 40,000 shares granted per person per year (“Excess Grants”) require an exercise price of not less than 120% of the common stock price on the date of grant. Excess Grants under the 1997 Plan vest completely in 3 years, and expire no later than 5 years, from the date of grant. The Company also has a stock option plan (“Directors’ Plan”) under which non- employee directors elected at each annual meeting are granted non-qualified options to purchase 16,000 shares of common stock on the first business day of the month following the meeting. Upon the exercise of non-qualified stock options, the Company derives a tax deduc- tion measured by the excess of the market value over the option price at the date of exercise. The related tax benefit is credited to additional paid-in capital. 57 expd 02 Note 5 C. Stock Option Plans