The Company's amended and Restated Stock Option Plan (the "Stock Option Plan") was approved by the shareholders of the Company in April 1992, and has subsequently been amended as deemed appropriate by the Company's Board of Directors or shareholders. There are currently 22,500,000 shares of the Company's Common Stock which may be issued and sold upon exercise of stock options ("Options"). The term of Options granted is determined by the Board of Directors and optionees generally vest in the Options over a five year period.

   The purpose of the Stock Option Plan is to attract competent personnel, to provide long-term incentives to Directors and key employees, and to discourage employees from competing with the Company.

   Options under the Stock Option Plan may be Options which qualify under Section 422 of the Internal Revenue Code ("Incentive Stock Options") or Options which do not qualify under Section 422 ("Nonqualified Options"). To date, the Company has only issued Nonqualified Options. The term of Options granted is generally five years and the price generally cannot be less than the fair market value of the shares covered by the Option.

   To provide long term incentives to its restaurant managers, the Company periodically grants them options to purchase its common stock. The Stock Option Committee estimates the fair market value of the grants by using a three month weighted average stock price to eliminate the daily trading increases and decreases in the stock price. This averaging method may result in option grants that are above or below the closing price as of the exact grant date. The Company believes that the averaging of the price is a more fair method of determining fair market value for long term incentives. Compensation expense results if the exercise price of these options is less than the market price on the date of grant.

   As of December 31, 2000, the Company had granted to employees of the Company a cumulative total of approximately 19,769,000 options to purchase the Company's Common Stock at prices ranging from $0.19 to $38.33 per share which was the estimated fair market value at the time of each grant. As of December 31, 2000, Options for approximately 1,845,000 shares were exercisable.

   Options to purchase 3,076,855, 3,619,385 and 1,433,013 of the Company's Common Stock were issued to employees during 2000, 1999, and 1998 with exercise prices ranging from $23.69 to $32.06, $20.05 to $37.94 and $19.28 to $26.71 for each respective period.

   The remaining contractual life for options granted was approximately four to ten years, three to nine years and two to eight years for the options granted during 2000, 1999 and 1998, respectively.

   Activity in the Company's Stock option Plan was:

                                                                        Weighted
                                                                         Average
Outstanding at                                         Shares         Exercise Price
December 31, 1997                                    8,766,282          $ 15.11
Granted                                              1,433,013            23.03
Exercised                                           (1,407,063)           11.77
Forfeited                                              (75,969)           19.41     
Outstanding at December 31, 1998                     8,716,263            16.96
Granted                                              3,619,385            26.60
Exercised                                           (1,192,550)           12.85
Forfeited                                              (80,323)           19.00     
Outstanding at December 31, 1999                    11,062,775            20.59
Granted                                              3,076,855            26.73
Exercised                                             (807,888)           14.03
Forfeited                                             (141,790)           24.57     
Outstanding at December 31, 2000                    13,189,952          $ 22.93     

   Had the compensation cost for the Company's Stock Option Plan been determined based on the fair value at the grant dates for awards under the plan consistent with SFAS No. 123, the Company's net income and earnings per share on a pro forma basis would have been (in thousands, except per share data):

                                                       December 31,
                                                2000       1999       1998  
Net income                                   $ 135,838  $ 119,294  $ 87,184 
Basic earnings per common share              $    1.75  $    1.55  $   1.15 
Diluted earnings per common share            $    1.71  $    1.51  $   1.13 

   The preceding pro forma results were calculated with the use of the Black Scholes option-pricing model. The following assumptions were used for the years ended December 31, 2000, 1999, 1998, respectively: (1) risk-free interest rates of 5.03%, 6.36%, and 5.30%,; (2) dividend yield of 0.0% in all three periods presented; (3) expected lives of 3.5 years in all three periods presented; and (4) volatility of 35%, 36%, and 40%. Results may vary depending on the assumptions applied within the model. Compensation expense recognized in providing pro forma disclosures may not be representative of the effects on net income for future years.

   Tax benefits resulting from the exercise of non-qualified stock options reduced taxes currently payable by $3,290,000 and $9,153,000 in 2000 and 1999, respectively. The tax benefits are credited to additional paid in capital.

   The Company has a qualified defined contribution 401(K) plan covering substantially all full-time employees, except officers and certain highly compensated employees. Assets of this plan are held in trust for the sole benefit of the employees.