10-Q

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

For the Quarterly Period Ended March 31, 2002

Commission file number 0-19924

RARE Hospitality International, Inc.
(Exact name of registrant as specified in its charter)

Internal Revenue Service - Employer Identification No. 58-1498312

8215 Roswell Rd; Bldg. 600; Atlanta, GA 30350
(770) 399-9595

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

XX Yes           No

As of May 9, 2002, there were 21,878,220 shares of common stock of the Registrant outstanding.

RARE Hospitality International, Inc. and Subsidiaries

Index

Part I - Financial Information                                                                         Page
                                                                                                       ----
      Item 1. Consolidated Financial Statements:

                      Consolidated Balance Sheets as of
                         March 31, 2002 and December 30, 2001                                           1

                      Consolidated Statements of Earnings
                         for the quarters ended March 31, 2002
                         and April 1, 2001                                                              2

                      Consolidated Statement of Shareholders' Equity
                         and Comprehensive Income for the quarter ended
                         March 31, 2002                                                                 3

                      Condensed Consolidated Statements of Cash Flows
                        for the quarters ended March 31, 2002
                        and April 1, 2001                                                               4

                      Notes to the Consolidated Financial Statements                                   5-9

      Item 2. Management's Discussion and Analysis of
                      Financial Condition and Results of Operations                                    9-13

      Item 3. Quantitative and Qualitative Disclosures About
                      Market Risk                                                                      13-14

Part II - Other Information

      Item 1. Legal Proceedings                                                                         14

      Item 2. Changes in Securities and Use of Proceeds                                                 14

      Item 3. Defaults Upon Senior Securities                                                           14

      Item 4. Submission of Matters to a Vote of Securities
                      Holders                                                                           14

      Item 5. Other Information                                                                         14

      Item 6. Exhibits and Reports on Form 8-K                                                          14

      Signatures                                                                                        15

Part I. Financial Information
Item 1. Financial Statements

RARE Hospitality International, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share amounts)
(Unaudited)

                                                                            March 31,                     December 30,
Assets                                                                        2002                           2001
                                                                              ----                           ----
Current assets:
     Cash and cash equivalents                                              $ 27,715                      $  25,979
     Accounts receivable                                                       7,630                          6,710
     Inventories                                                              13,800                         13,437
     Prepaid expenses                                                          4,827                          3,069
     Refundable income taxes                                                     887                          3,902
     Deferred income taxes                                                     6,792                          6,643
                                                                            --------                       --------
         Total current assets                                                 61,651                         59,740

Property & equipment, less accumulated
   depreciation                                                              272,678                        269,323
Goodwill, net                                                                 19,187                         19,187
Deferred income taxes                                                            637                          2,276
Other                                                                          2,824                          2,871
                                                                            --------                       --------
         Total assets                                                       $356,977                       $353,397
                                                                            ========                       ========
Liabilities and Shareholders' Equity
Current liabilities:
     Accounts payable                                                       $ 21,541                       $ 27,189
     Accrued expenses                                                         33,630                         37,424
     Current installments of obligations under
         capital leases                                                           15                             58
                                                                            --------                       --------
         Total current liabilities                                            55,186                         64,671

Debt, net of current installments                                             10,000                         10,000
Obligations under capital leases, net
  of current installments                                                     20,852                         20,867
                                                                            --------                       --------
         Total liabilities                                                    86,038                         95,538

Minority interest                                                              1,352                          1,329

Shareholders' equity:
     Preferred stock                                                               -                              -
     Common stock                                                            182,172                        178,787
     Unearned compensation-restricted stock                                     (665)                          (522)
     Retained earnings                                                        88,742                         79,007
     Accumulated other comprehensive loss                                       (503)                          (583)
     Treasury stock at cost; 10,000 shares in
       2002 and 2001                                                            (159)                          (159)
                                                                            --------                       --------
         Total shareholders' equity                                          269,587                        256,530
         Total liabilities and shareholders'                                --------                       --------
           equity                                                           $356,977                       $353,397
                                                                            ========                       ========

See accompanying notes to consolidated financial statements

RARE Hospitality International, Inc. and Subsidiaries
Consolidated Statements of Earnings
(In thousands, except per share data) (Unaudited)

                                                                                          13 Weeks Ended
                                                                                   ----------------------------
                                                                                March 31,                 April 1,
                                                                                  2002                      2001
Revenues:                                                                        ------                    ------
Restaurant sales:
    LongHorn Steakhouse                                                        $ 104,385                    $94,354
    The Capital Grille                                                            21,854                     18,992
    Bugaboo Creek Steak House                                                     17,246                     16,890
    Specialty concepts                                                             1,728                      1,634
                                                                                --------                   --------
      Total restaurant sales                                                     145,213                    131,870
    Franchise revenues                                                                85                         90
                                                                                --------                   --------
      Total revenues                                                             145,298                    131,960
Costs and expenses:                                                             --------                   --------
  Cost of restaurant sales                                                        52,812                     47,888
  Operating expenses - restaurants                                                62,280                     54,991
  Depreciation and amortization - restaurants                                      5,760                      4,928
  Pre-opening expense - restaurants                                                  914                      1,771
  General and administrative expenses                                              8,373                      7,678
                                                                                --------                   --------
      Total costs and expenses                                                   130,139                    117,256
                                                                                --------                   --------
  Operating income                                                                15,159                     14,704
Interest expense, net                                                                449                        673
Early termination of interest rate
    swap agreement                                                                   --                       1,100
Minority interest                                                                    180                        245
                                                                                --------                   --------
Earnings before income taxes                                                      14,530                     12,686
Income tax expense                                                                 4,795                      4,135
                                                                                --------                   --------
      Net earnings                                                              $  9,735                   $  8,551
                                                                                ========                   ========
Weighted average common shares outstanding:

    Basic                                                                         21,477                     20,042
                                                                                ========                   ========
    Diluted                                                                       22,758                     21,616
                                                                                ========                   ========
Basic earnings per common share                                                 $   0.45                   $   0.43
                                                                                ========                   ========
Diluted earnings per common share                                               $   0.43                   $   0.40
                                                                                ========                   ========

See accompanying notes to consolidated financial statements

RARE Hospitality International, Inc. and Subsidiaries
Consolidated Statement of Shareholders' Equity
and Comprehensive Income
For the quarter ended March 31, 2002
(In thousands, unaudited)

                                                                                                          Accumulated
                                            Common Stock                                                     Other           Total
                                          ----------------      Restricted      Retained     Treasury    Comprehensive    Shareholders'
                                       Shares        Amount         Stock       Earnings       Stock     Income (Loss)      Equity
                                       ------        ------         -----       --------       -----       --------        --------
Balance, December 30, 2001             21,522       $178,787        $(522)      $79,007      $  (159)      $ (583)         $256,530

Comprehensive income:

Net earnings                               --             --           --         9,735           --           --             9,735
Change in unrealized loss
  from interest rate swaps                 --             --           --            --           --           80                80
                                                                                                                            -------
Total comprehensive income                                                                                                    9,815
                                                                                                                            -------
Amortization of restricted
  stock                                    --             --          134            --           --           --               134
Issuance of shares to
  retirement plans                         11            219           --            --           --           --               219
Issuance of shares pursuant
   to restricted stock award               14            277         (277)           --           --           --                --
Issuance of shares pursuant
   to exercise of stock
   options                                187          2,137           --            --           --           --             2,137
Tax benefit of stock options
   exercised                               --            752           --            --           --           --               752
                                       ------       --------        ------      -------     --------       -------         --------
Balance, March 31, 2002                21,734       $182,172        $(665)      $88,742      $  (159)      $ (503)         $269,587
                                       ======       ========        ======      =======      ========      =======         ========

See accompanying notes to consolidated financial statements

RARE Hospitality International, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands, unaudited)

                                                                                                    13 Weeks Ended
                                                                                             -----------------------------
                                                                                         March 31,                    April 1,
                                                                                           2002                         2001
                                                                                          -------                      ------
Cash flows from operating activities:
   Net earnings                                                                           $ 9,735                        $ 8,551
   Adjustments to reconcile net earnings to
     net cash provided by operating activities:
       Depreciation and amortization                                                        6,256                          5,600
       Changes in working capital accounts                                                 (6,132)                        (7,781)
       Minority interest                                                                      180                            245
       Deferred tax(benefit) expense                                                       (1,488)                          (170)
       Issuance of common stock to employee
         retirement plans                                                                     219                             --
                                                                                         --------                       --------
   Net cash provided by operating activities                                                8,770                          6,445
                                                                                         --------                       --------
Cash flows from investing activities:
   Purchase of property and equipment                                                      (9,429)                       (12,265)
                                                                                         --------                       --------
   Net cash used by investing activities                                                   (9,429)                       (12,265)
                                                                                         --------                       --------
Cash flows from financing activities:
   Proceeds from exercise of stock options                                                  2,137                          2,098
   Proceeds from (repayments of) credit facilities                                             --                        (46,000)
   Proceeds from issuance of common stock                                                      --                         57,623
   Distributions to minority partners                                                        (157)                          (228)
   Increase in bank overdraft included in accounts
     payable and accrued liabilities                                                          473                            398
   Principal payments on capital leases                                                       (58)                            (8)
                                                                                         --------                       --------
   Net cash provided by financing activities                                                2,395                         13,883
                                                                                         --------                       --------
Net increase in cash and cash equivalents                                                   1,736                          8,063
Cash and cash equivalents, beginning of period                                             25,979                          3,771
                                                                                         --------                       --------
Cash and cash equivalents, end of period                                                 $ 27,715                      $  11,834
                                                                                         ========                       ========

See accompanying notes to consolidated financial statements

RARE Hospitality International, Inc.
Notes to Consolidated Financial Statements
(Unaudited)

1. Basis of Presentation

The consolidated financial statements of RARE Hospitality International, Inc. and subsidiaries (the “Company”) as of March 31, 2002 and December 30, 2001 and for the quarters ended March 31, 2002 and April 1, 2001 have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments), which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally presented in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 30, 2001.

The Company operates on a 52 or 53 week fiscal year ending on the last Sunday in December. The fiscal quarters ended March 31, 2002 and April 1, 2001 each contained 13 weeks and are referred to hereafter as the first quarter of 2002 and the first quarter of 2001, respectively.

2. New Accounting Pronouncements

In November 2001, the Emerging Issues Task Force (“EITF”) of the Financial Accounting Standards Board (“FASB”) reached a consensus on EITF Issue 01-9, “Accounting for Consideration Given by a Vendor to a Customer”. EITF 01-9 addresses the recognition, measurement and income statement classification for sales incentives offered to customers. Sales incentives include discounts, coupons, free products or services and generally any other offers that entitle a customer to receive a reduction in the price of a product. Under EITF 01-9, the reduction in the selling price of the product resulting from any sales incentives should be classified as a reduction of revenue. Historically, the Company recognized certain sales incentives as restaurant operating and general and administrative expenses. Although this pronouncement does not have any impact on the Company’s consolidated results of operations or financial position, the presentation prescribed has the effect of reducing sales, restaurant operating expense, and general and administrative expenses. Due to the adoption of EITF 01-9 as of the beginning of fiscal 2002, sales, restaurant operating expense, and general and administrative expenses have been restated for the first quarter of 2001 to conform to the new presentation requirement. Same store sales comparisons for each of the Company’s restaurant concepts for the first quarter of 2002, consist of sales at restaurants opened prior to July 2, 2000 and consistent with prior years are calculated using sales prior to being reduced for discounts, coupons, free products or services.

The Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets”, effective as of the beginning of fiscal year 2002. SFAS No. 142 requires that an intangible asset that is acquired shall be initially recognized and measured based on its fair value. This Statement also provides that goodwill should not be amortized, but shall be tested for impairment annually, or more frequently if circumstances indicate potential impairment, through a comparison of fair value to its carrying amount. In the first quarter of fiscal 2002, the Company ceased amortization of goodwill and performed the required goodwill impairment testing. The impairment test requires the Company to compare the fair value of each reporting unit to its carrying value to determine whether there is an indication that an impairment may exist. If an impairment of goodwill is determined to exist, it is measured as the excess of its carrying value over its fair value. Upon performing the initial test of the carrying value of the Company’s goodwill, it was concluded that there was no current indication of impairment to goodwill. Accordingly, no impairment losses were recorded upon the initial adoption of SFAS No. 142.

As of the date of adoption, the Company had unamortized goodwill in the amount of approximately $19.2 million. Amortization expense related to goodwill was $272,000 and approximately $1.1 million for the first quarter of 2001 and fiscal year 2001, respectively. In accordance with SFAS No. 142, no goodwill amortization expense was recorded in the Company’s financial statements for the first quarter of 2002. For the foreseeable future, management believes the only impact on the Company’s consolidated financial statements from the adoption of SFAS 142 will be the elimination of goodwill amortization expense.

The pro forma effects of the adoption of SFAS No. 142 on net earnings and basic and diluted earnings per share is as follows (in thousands, except per share amounts):

                                                                       13 Weeks Ended
                                                                       --------------
                                                              March 31,                  April 1,
                                                                2002                       2001
                                                              ---------                  --------
Net earnings, as reported                                     $   9,735                 $   8,551
Goodwill amortization, net of
      tax benefit                                                     -                       169
                                                              ---------                 ---------
Net earnings, pro forma                                       $   9,735                 $   8,720
                                                              =========                 =========
Basic earnings per common share:
Net earnings, as reported                                     $    0.45                 $    0.43
Goodwill amortization, net of
      tax benefit                                                     -                      0.01
                                                              ---------                 ---------
Net Earnings, pro forma                                       $    0.45                 $    0.44
                                                              =========                 =========
Diluted earnings per common share:
Net earnings, as reported                                     $    0.43                 $    0.40
Goodwill amortization, net of
      tax benefit                                                     -                      0.01
                                                              ---------                 ---------
Net Earnings, pro forma *                                     $    0.43                 $    0.40
                                                              =========                 =========

* Due to rounding of diluted earnings per share, both net earnings and pro forma net earnings for the period ended April 1, 2001 are $0.40 per share.

In October 2001, the Financial Accounting Standards Board issued SFAS No. 144, "Accounting for the Impairment of Long-Lived Assets", which supercedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of", and the accounting and reporting provisions of APB No. 30, "Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions", for the disposal of a segment of a business. SFAS No. 144 retains many of the provisions of SFAS No. 121, but addresses certain implementation issues associated with that statement. The Company adopted SFAS No. 144 effective as of the beginning of fiscal 2002. The adoption of SFAS No. 144 did not have a material impact on the Company's consolidated financial statements.

3. Long-Term Debt

At March 31, 2002, $10 million was outstanding under the Company’s $100 million revolving credit agreement at a weighted average interest rate of 7.77% after considering the effect of the Company’s interest rate swap agreement.

4. Income Taxes

Income tax expense for the first quarter of 2002 has been provided for based on an estimated 33% effective tax rate expected to be applicable for the full 2002 fiscal year. The effective income tax rate differs from applying the statutory federal income tax rate of 35% to pre-tax earnings primarily due to employee FICA tip tax credits (a reduction in income tax expense) and work opportunity tax credits partially offset by state income taxes.

5. Earnings Per Share

Basic earnings per common share equals net earnings divided by the weighted average number of common shares outstanding and does not include the dilutive effect of stock options or restricted stock. Diluted earnings per common share equals net earnings divided by the weighted average number of common shares outstanding, after giving effect to dilutive stock options and restricted stock. A reconciliation between basic and diluted weighted average shares outstanding and the related earnings per share calculation is presented below (in thousands, except per share amounts):

                                                                               13 Weeks Ended
                                                                          -------------------------
                                                                     March 31,                 April 1,
                                                                       2002                      2001
                                                                      ------                    ------

Net earnings                                                           $9,735                    $8,551
                                                                      =======                   =======
Basic weighted average shares outstanding                              21,477                    20,042
Dilutive effect of stock options                                        1,196                     1,505
Dilutive effect of restricted stock                                        85                        69
                                                                      -------                   -------
Diluted weighted average shares outstanding                            22,758                    21,616
                                                                      =======                   =======
Basic earnings per common share                                       $  0.45                   $  0.43
                                                                      =======                   =======
Diluted earnings per common share                                     $  0.43                   $  0.40
                                                                      =======                   =======

6. Derivative Instruments and Comprehensive Income

The Company uses an interest rate swap agreement to effectively fix the interest rate on variable rate borrowings under the Company’s $100 million revolving credit facility. This interest rate swap agreement is classified as a hedge of a cash flow exposure and accordingly, the initial fair value and subsequent changes therein was reported as a component of other comprehensive loss and subsequently reclassified into earnings when the forecasted cash flows affect earnings. The estimated fair value of the Company’s interest rate swap agreement at March 31, 2002 was a payable of $812,000 ($503,000 net of tax benefit). $317,000 of the net payable was classified as current on March 31, 2002. A reconciliation of net earnings and total comprehensive income is as follows (in thousands):

                                                                    13 Weeks Ended
                                                               -------------------------
                                                          March 31,                 April 1,
                                                            2002                      2001
                                                           ------                    ------

Net earnings                                                $9,735                    $8,551
Cumulative effect of change in
  accounting principle                                          --                      (624)
Change in unrealized loss from interest
  rate swap agreement                                           80                        91
                                                           -------                   -------
Total comprehensive income                                  $9,815                    $8,018
                                                           =======                   =======

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

First quarter 2002 compared to first quarter 2001

Revenues

The Company currently derives all of its revenues from restaurant sales and franchise revenues. Total revenues increased 10.1% to approximately $145.3 million for the first quarter of 2002 compared to approximately $132.0 million for the first quarter of 2001.

Same store sales comparisons for each of the Company's restaurant concepts for the first quarter of 2002, consist of sales at restaurants opened prior to July 2, 2000 and are calculated using sales prior to being reduced for discounts, coupons, free products or services.

LongHorn Steakhouse:

Sales in the LongHorn Steakhouse restaurants increased 8.3% to approximately $104.4 million for the first quarter of 2002 compared to approximately $96.4 million for the first quarter of 2001. The increase reflects an 11.8% increase in restaurant operating weeks in the first quarter of 2002 as compared to the prior year, resulting from an increase in the restaurant base from 146 LongHorn Steakhouse restaurants at the end of the first quarter of 2001 to 160 at the end of the first quarter of 2002. Average weekly sales for all LongHorn Steakhouse restaurants in the first quarter of 2002 was $51,120, a 1.0% decrease as compared to the first quarter of 2001. Same store sales for the comparable LongHorn Steakhouse restaurants increased 0.5% in the first quarter of 2002 as compared to the same period in 2001, due to small increases in both guest counts and average check. Same store sales increased during a period in which average weekly sales decreased due to lower than average weekly sales rates for some small market LongHorn Steakhouse restaurants that are not yet in the comparable sales base.

The Capital Grille:

Sales in The Capital Grille restaurants increased 15.1% to approximately $21.9 million for the first quarter of 2002, compared to approximately $19.0 million for the same period in 2001. The increase reflects a 16.8% increase in restaurant weeks in the first quarter of 2002, as compared to the first quarter of 2001. Same store sales during the first quarter of 2002 at The Capital Grille restaurants were level with the same period of the prior year. Average weekly sales for all The Capital Grille restaurants in the first quarter of 2002 were $112,068, a 1.5% decrease from the comparable period in 2001. This decrease in average weekly sales volume is due to the opening of three new The Capital Grille restaurants in fiscal 2001. The Capital Grille restaurants have historically opened at lower sales volumes and, correspondingly, have not experienced the higher honeymoon sales period followed by a sales decline that is commonly characteristic in the restaurant industry.

Bugaboo Creek Steak House:

Sales in the Bugaboo Creek Steak House restaurants increased 2.1% to approximately $17.2 million for the first quarter of 2002, compared to approximately $16.9 million for the same period in 2001. The increase reflects a 2.1% increase in average weekly sales for all Bugaboo Creek Steak House restaurants in the first quarter of 2002 to $69,824 from average weekly sales of $68,379 for the comparable period of 2001. Same store sales for the comparable Bugaboo Creek Steak House restaurants in the first quarter of 2002 increased 3.0% as compared to the same period in 2001, primarily due to an increase in guest counts and average check.

Franchise Revenue:

Franchise revenues decreased to $85,000 for the first quarter of 2002, from $90,000 for the same period in 2001.

Costs and Expenses

Cost of restaurant sales as a percentage of restaurant sales increased to 36.4% for the first quarter of 2002 from 36.3% for the same period of 2001. Favorable contract pricing on red-meat products offset most of the significantly higher produce costs, particularly with respect to lettuce, experienced during the first quarter of 2002. The Company is currently under fixed price contracts with respect to over 90% of its beef and pork products for the remainder of 2002 and into early 2003. Many of the food products, other than beef and pork products, purchased by the Company are affected by commodity pricing and are, therefore, subject to price volatility caused by weather, production problems, delivery difficulties and other factors, which are outside the control of the Company.

Restaurant operating expense as a percentage of restaurant sales increased to 42.9% for the first quarter of 2002 as compared to 41.7% for the same period of 2001. This increase as a percentage of restaurant sales was due to increases in restaurant labor costs and, to a lesser extent, to higher marketing and insurance costs. Restaurant depreciation increased to approximately $5.8 million from approximately $4.9 million in the corresponding period of the prior year primarily due to the depreciation associated with capital lease accounting for the three new The Capital Grille restaurants opened during the first half of 2001 and the cost of remodeling 19 existing LongHorn Steakhouse restaurants during 2001.

Pre-opening expense for the first quarter of 2002 was $914,000, a decrease from approximately $1.8 million in the same period of the prior year. This decrease related to the six restaurants opened during the first quarter of 2002 as compared to thirteen restaurants opened in the same period of the prior year.

General and administrative expenses as a percentage of total revenues decreased slightly for the first quarter of 2002 as compared to the corresponding period of the prior year. This decrease was principally due to the elimination of goodwill amortization in accordance with SFAS No. 142.

As a result of the relationships between revenues and expenses discussed above, the Company’s operating income increased to approximately $15.2 million for the first quarter of 2002 from approximately $14.7 million for the corresponding period of the prior year.

Interest expense, net decreased to $449,000 in the first quarter of 2002 from $673,000 in the same period of the prior year. The decrease in interest expense is due to the timing of the Company’s common stock offering in February 2001.

Minority interest expense decreased to $180,000 for the first quarter of 2002 from $245,000 for the same period of the prior year primarily due to the effect of the Company’s acquisition of the joint venture partner’s interest in three restaurants subsequent to the first quarter of 2001.

Income tax expense for the first quarter of 2002 was 33.0% of earnings before income taxes, based on a 33% effective tax rate expected to be applicable for the full 2002 fiscal year. This compares to 32.6% of earnings before income taxes for the first quarter of 2001. The lower effective income tax rate in the first quarter of 2001 as compared to the first quarter of 2002 is due to the tax benefit realized in 2001 from the early termination of an interest rate swap agreement. The Company’s effective income tax rate differs from applying the statutory federal income tax rate of 35% to pre-tax income, primarily due to employee FICA tip tax credits and work opportunity tax credits partially offset by state income taxes.

Net earnings increased to $9.7 million for the first quarter of 2002 from net earnings of $8.6 million for the first quarter of 2001, reflecting the net effect of the items discussed above.

Liquidity and Capital Resources:

The Company requires capital primarily for the development of new restaurants, selected acquisitions and the remodeling of existing restaurants. During the first quarter of 2002 the Company’s principal sources of working capital were cash provided by operating activities ($8.8 million) and proceeds from the exercise of employee stock options ($2.1 million). For the first quarter of 2002 the principal use of working capital was capital expenditures ($9.4 million) for new and improved facilities. As of March 31, 2002 the Company had $10.0 million outstanding under the Company’s $100 million revolving credit facility. The Company is currently in compliance with the provisions of the revolving credit facility.

The Company intends to open 17 to 20 Company-owned LongHorn Steakhouse restaurants, one The Capital Grille restaurant and two or three Bugaboo Creek Steak House restaurants in fiscal year 2002. The Company estimates that its capital expenditures for fiscal year 2002 will be approximately $65-70 million. During the first quarter of 2002, the Company opened six LongHorn Steakhouse restaurants. Management believes that available cash, cash provided by operations, and available borrowings under the Company’s $100 million revolving credit facility will provide sufficient funds to finance the Company’s expansion plans through the year 2005.

Since substantially all sales in the Company’s restaurants are for cash, and accounts payable are generally due in seven to 30 days, the Company operates with little or negative working capital.

Forward-Looking Statements

Statements contained in this Report concerning future results, performance or expectations are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. All forward-looking statements in this Report are based upon information available to the Company on the date of this Report. All forward-looking statements involve risks and uncertainties that could cause actual results, performance or developments to differ materially from those expressed or implied by those forward-looking statements, such as: the Company’s ability to open the anticipated number of new restaurants on time and within budget; the Company’s ability to continue to increase same-store sales at anticipated rates, a recession or other negative effect on business dining patterns, or some other negative effect on the economy in general, unexpected increases in cost of sales or other expenses, and the impact of any negative publicity or public attitudes related to the consumption of beef. Other risks and uncertainties include fluctuations in quarterly operating results, seasonality, guest trends, competition and risks associated with the development and management of new restaurant sites. More information about factors that potentially may affect the Company’s results, performance or development is included in the Company’s other filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 30, 2001, and the Company’s press releases and other communications.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

As of May 1, 2002, $10.0 million was outstanding under the Company’s $100 million revolving credit facility. Amounts outstanding under such credit facility bear interest at LIBOR plus a margin of 1.25% to 2.0% (depending on the Company’s leverage ratio), or the administrative agent’s prime rate of interest plus a margin of 0% to 0.75% (depending on the Company’s leverage ratio) at the Company’s option. Accordingly, the Company is exposed to the impact of interest rate fluctuations. To achieve the Company’s objective of managing its exposure to interest rate changes, the Company from time to time uses interest rate swaps.

The Company has an interest rate swap agreement with a commercial bank, which effectively fixes the interest rate at 6.52%, plus the margin on $10.0 million from July 2001 through June 2002; on $15.0 million from July 2002 through March 2003; and on $17.5 million from April 2003 through August 2004. The Company is exposed to credit losses on this interest rate swap in the event of counterparty non-performance, but does not anticipate any such losses.

While changes in LIBOR and the administrative agent’s prime rate of interest could affect the cost of borrowings under the credit facility in excess of amounts covered by the interest rate swap agreement in the future, the Company does not consider its current exposure to changes in such rates to be material, and the Company believes that the effect, if any, of reasonably possible near-term changes in interest rates on the Company’s financial condition, results of operations or cash flows would not be material.

Investment Portfolio

The Company invests portions of its excess cash, if any, in highly liquid investments. At March 31, 2002, the Company had $25.0 million invested in high-grade overnight repurchase agreements.

Part II - Other Information

Item 1. Legal Proceedings

None

Item 2. Changes in Securities and Use of Proceeds

None

Item 3. Defaults Upon Senior Securities

None

Item 4. Submission of Matters to a Vote of Securities Holders

None

Item 5. Other Information

None

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits Filed.

3.1 Amended and Restated Articles of Incorporation of the Company, as amended
3.2 Bylaws of the Company, as amended

(b) Reports filed on Form 8-K.

None

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date:      May 14, 2002                                          /s/ W. Douglas Benn
           ---------------                                       ------------------------
                                                                 W. Douglas Benn
                                                                 Executive Vice President, Finance
                                                                 and Chief Financial Officer
                                                                 (Principal Financial and
                                                                 Accounting Officer)

EX-3.(I)

ARTICLES OF CORRECTION
OF
RARE HOSPITALITY INTERNATIONAL, INC.

        In accordance with Section 14-2-124 of the Georgia Business Corporation Code, these Articles of Correction are being filed to correct, as of January 31, 2002, the Articles of Amendment to the Amended and Restated Articles of Incorporation of RARE Hospitality International, Inc., that were filed with the Secretary of State on July 13, 2001.

ONE

         The name of the corporation is RARE Hospitality International, Inc.

TWO

        As a result of typographical error, the number of authorized shares of common stock, no par value, as set forth in the first sentence of Article Four of the Amended and Restated Articles of Incorporation of RARE Hospitality International, Inc., is incorrect.

THREE

         The first sentence of Article Four of the Amended and Restated Articles of Incorporation of RARE Hospitality International, Inc., is hereby corrected to read as follows:

         The corporation shall have authority to be exercised by the Board of Directors to issue not more than 60,000,000 shares of common stock, no par value, and not more than 10,000,000 shares of preferred stock, no par value.

        IN WITNESS WHEREOF, the undersigned duly authorized officer of RARE Hospitality International, Inc. has caused these Articles of Correction to be duly executed this 30th day of January, 2002.

                                                     RARE Hospitality International, Inc.


                                                     By:      /s/ Joia M. Johnson
                                                     Name:    Joia M. Johnson
                                                     Title:   Executive Vice President, General
                                                              Counsel and Secretary

ARTICLES OF AMENDMENT
TO THE AMENDED AND RESTATED ARTICLES OF
INCORPORATION OF
RARE HOSPITALITY INTERNATIONAL, INC.

1.

         The name of the corporation is "RARE Hospitality International, Inc."

2.

        Article Four of the Amended and Restated Articles of Incorporation of Rare Hospitality International, Inc. is hereby amended by deleting the first sentence of such section and substituting in lieu thereof the following sentence.

         The corporation shall have authority to be exercised by the Board of Directors to issue not more than 65,000,000 shares of common stock, no par value, and not more than 10,000,000 shares of preferred stock, no par value.

3.

         The amendment was adopted on May 14, 2001.

4.

        The amendment was duly adopted by the shareholders of Rare Hospitality International, Inc. in accordance with the provisions of Georgia Business Corporation Code Section 14-2-1003.

        IN WITNESS WHEREOF, Rare Hospitality International, Inc. has caused these Articles of Amendment to be executed as of May 15, 2001.

                                                     RARE HOSPITALITY
                                                     INTERNATIONAL, INC.

                                                     By:   /s/Joia M Johnson
                                                     Name: Joia M. Johnson
                                                     Title: Executive Vice President and Secretary

ARTICLES OF AMENDMENT
TO THE AMENDED AND RESTATED ARTICLES OF
INCORPORATION OF
RARE HOSPITALITY INTERNATIONAL, INC.

1.

         The name of the corporation is "Rare Hospitality International, Inc."

2.

        The articles of incorporation of Rare Hospitality International, Inc. are amended by adding the attached Exhibit A as Exhibit A to the Company’s Amended and Restated Articles of Incorporation and by adding the following sentence at the end of Article Four of the Company’s Amended and Restated Articles of Incorporation:

         A designation of the preferences, limitations and relative rights of the corporation’s Series A Junior Participating Preferred Stock is attached as Exhibit A to these Amended and Restated Articles of Incorporation.

3.

         The amendment was adopted on November 4, 1997.

4.

         The amendment was duly adopted by the board of directors of Rare Hospitality International, Inc.

         IN WITNESS WHEREOF, Rare Hospitality International, Inc. has caused these Articles of Amendment to be executed as of November 17, 1997.

                                            RARE HOSPITALITY
                                            INTERNATIONAL, INC.

                                            By:      /s/  G.W. McKerrow, Jr.
                                            Name:    George W. McKerrow, Jr.
                                            Title:   Chairman/CEO

EXHIBIT A
TO THE AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF RARE HOSPITALITY INTERNATIONAL, INC.

DESIGNATING THE PREFERENCES, LIMITATIONS AND RELATIVE
RIGHTS OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

        There is hereby designated, of the authorized but unissued shares of Preferred Stock of the corporation, a series thereof, and the number of shares, voting powers, designation, preferences, and relative, participating, optional, and other special rights, and the qualifications, limitations, and restrictions thereof, of the shares of such series (in addition to those set forth in the Amended and Restated Articles of Incorporation, which are applicable to the Preferred Stock of all series), shall be as follows:

        (1)         Designation and Number of Shares.          The designation of this series of Preferred Stock shall be “Series A Junior Participating Preferred Stock” (hereinafter called “this Series”), to initially consist of 500,000 shares, which number may from time to time be increased or decreased (but not below the number then outstanding) by the Board of Directors by filing additional articles of amendment to the corporation’s amended and restated articles of incorporation. The shares of this Series are sometimes hereinafter referred to as the “Shares.” Shares of this Series may be issued in fractional shares, which fractional shares shall entitle the holder, in proportion to such holder’s fractional share, to all rights of a holder of a whole share of this Series.

         (2)        Distributions.

        (a)         Distribution Rights. The holders of whole or fractional Shares shall be entitled to receive, when, as, and if declared by the Board of Directors, subject to restrictions imposed by the Georgia Business Corporation Code or the Amended and Restated Articles of Incorporation on distributions to shareholders, and subject to the rights of the holders of any shares of any series of Preferred Stock ranking prior and superior to this series with respect to dividends, (i) on each date that dividends or other distributions (other than dividends or distributions payable in Common Stock of the corporation) are payable on or in respect of Common Stock comprising part of the Reference Package (as defined below), in an amount per whole share of this Series equal to the aggregate amount of dividends or other distributions (other than dividends or distributions payable in Common Stock of the corporation) that would be payable on such date to a holder of the Reference Package and (ii) on the last day of March, June, September and December in each year, in an amount per whole share of this Series equal to the excess (if any) of $1.00 over the aggregate dividends paid per whole share of this Series during the three-month period ending on such last day. Each such dividend shall be paid to the holders of record of shares of this Series on the date, not exceeding sixty days preceding such dividend or distribution payment date, fixed for that purpose by the Board of Directors in advance of payment of each particular dividend or distribution. Dividends on each full and each fractional share of this Series shall be cumulative from the date such full or fractional share is originally issued; provided that any such full or fractional share originally issued after a dividend record date and on or prior to the dividend payment date to which such record date relates shall not be entitled to receive the dividend payable on such dividend payment date or any amount in respect of the period from such original issuance to such dividend payment date. The term “Reference Package” shall initially mean 100 shares of Common Stock, no par value (“Common Stock”), of the corporation. In the event the corporation shall at any time (i) declare or pay a dividend on any Common Stock payable in Common Stock, (ii) subdivide any Common Stock or (iii) combine any Common Stock into a smaller number of shares, then and in each such case the Reference Package after such event shall be the Common Stock that a holder of the Reference Package immediately prior to such event would hold thereafter as a result thereof. Holders of shares of this Series shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of full cumulative dividends, as herein provided on this Series.

        So long as any shares of this Series are outstanding, no dividend (other than a dividend in Common Stock or in any other stock ranking junior to this Series as to dividends and upon liquidation) shall be declared or paid or set aside for payment or other distribution declared or made upon the Common Stock or upon any other stock ranking junior to this Series as to dividends or upon liquidation, nor shall any Common Stock nor any other stock of the corporation ranking junior to or on a parity with this Series as to dividends or upon liquidation be redeemed, purchased or otherwise acquired for any consideration (or any moneys to be paid to or made available for a sinking fund for the redemption of any shares of any such stock) by the corporation (except by conversion into or exchange for stock of the corporation ranking junior to this Series as to dividends and upon liquidation), unless, in each case, the full cumulative dividends (including the dividend to be due upon payment of such dividend, distribution, redemption, purchase or other acquisition) on all outstanding shares of this Series shall have been, or shall contemporaneously be, paid.

        (b)         Shares Purchased by Corporation. Shares of this Series purchased by the corporation shall be canceled and shall revert to authorized but unissued shares of Preferred Stock undesignated as to series, which shares may thereafter be provided for and designated by the Board of Directors pursuant to Article Four of the Amended and Restated Articles of Incorporation as part of a series of Preferred Stock to the same extent as if such shares had not previously been provided for and designated as part of a series of Preferred Stock; but such shares shall not be reissued as shares of this Series.

         (3)        Rights of Redemption.         The shares of this Series shall not be redeemable.

         (4)        Rights on Liquidation, Dissolution, or Winding Up.

        (a)         In the event of any liquidation, dissolution or winding up of the affairs of the corporation, whether voluntary or involuntary, the holders of full and fractional shares of this Series shall be entitled, before any distribution or payment is made on any date to the holders of the Common Stock or any other stock of the corporation ranking junior to this Series upon liquidation, to be paid in full an amount per whole share of this Series equal to the greater of (A) $1.00 or (B) the aggregate amount distributed or to be distributed prior to such date in connection with such liquidation, dissolution or winding up to a holder of the Reference Package (such greater amount being hereinafter referred to as the “Liquidation Preference”), together with accrued dividends to such distribution or payment date, whether or not earned or declared. If such payment shall have been made in full to all holders of shares of this Series, the holders of shares of this Series as such shall have no right or claim to any of the remaining assets of the corporation.

        (b)         In the event the assets of the corporation available for distribution to the holders of shares of this Series upon any liquidation, dissolution or winding up of the corporation, whether voluntary or involuntary, shall be insufficient to pay in full all amounts to which such holders are entitled pursuant to paragraph (a) above, no such distribution shall be made on account of any shares of any other class or series of Preferred Stock ranking on a parity with the shares of this Series upon such liquidation, dissolution or winding up unless proportionate distributive amounts shall be paid on account of the shares of this Series, ratably in proportion to the full distributable amounts for which holders of all such parity shares are respectively entitled upon such liquidation, dissolution or winding up.

        (c)         Upon the liquidation, dissolution or winding up of the corporation, the holders of shares of this Series then outstanding shall be entitled to be paid out of assets of the corporation available for distribution to its shareholders all amounts to which such holders are entitled pursuant to paragraph (a) above before any payment shall be made to the holders of Common Stock or any other stock of the corporation ranking junior upon liquidation to this Series.

        (d)         For purposes of this Section (4), the consolidation or merger of, or binding share exchange by, the corporation with any other corporation shall not be deemed to constitute a liquidation, dissolution or winding up of the corporation.

        (5)         Merger, Consolidation, Share Exchange.         In the event of any merger, consolidation, reclassification or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of this Series shall at the same time be similarly exchanged or changed in an amount per whole share equal to the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, that a holder of the Reference Package would be entitled to receive as a result of such transaction.

        (6)         Voting Rights.         In addition to any other vote or consent of shareholders required by law or by the Amended and Restated Articles of Incorporation, as amended, of the corporation, each whole share of this Series shall, on any matter, vote as a class with any other capital stock comprising part of the Reference Package and voting on such matter and shall have the number of votes thereon that a holder of the Reference Package would have.

ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF
LONGHORN STEAKS, INC.

        The undersigned corporation, for the purposes of amending its Articles of Incorporation, and in accordance with the provisions of the Georgia Business Corporation Code hereby sets forth:

I.

         The name of the corporation is Longhorn Steaks, Inc.

II.

         The following amendment to the Articles of Incorporation was approved and adopted by the board of directors of the corporation on December 21, 1996:

         The Articles of Incorporation of the corporation are amended by striking therefrom Article One thereof and by substituting therefor a new Article One to read as follows:

         The name of the corporation is Rare Hospitality International, Inc.

III.

         This amendment to the Articles of Incorporation was adopted by the board of directors without shareholder action. Shareholder action was not required.

         IN WITNESS WHEREOF, the corporation has caused this document to be executed in its name by its Chief Financial Officer this 8th day of January, 1997.

                                                     Longhorn Steaks, Inc.

                                                     By: /s/ Anne D. Huemme
                                                             Anne D. Huemme
                                                             Chief Financial Officer

ARTICLES OF RESTATEMENT
OF
CONTEMPORARY RESTAURANT CONCEPTS, LTD.

ONE

         The name of the corporation is Contemporary Restaurant Concepts, Ltd.

TWO

        The original Articles of Incorporation and all amendments thereto are hereby amended and restated in their entirety.

THREE

         The Amended and Restated Articles of Incorporation attached hereto as Exhibit "A" are hereby inserted as the new Articles of Incorporation.

FOUR

         The Amended and Restated Articles of Incorporation supersede the original Articles of Incorporation and all amendments to them.

         IN WITNESS WHEREOF, Contemporary Restaurant Concepts, Ltd. has caused these Articles of Restatement to be executed by its duly authorized officer, on this 13th day of February, 1992.

                                            CONTEMPORARY RESTAURANT
                                            CONCEPTS, LTD.

                                            By: /s/  G.W. McKerrow, Jr.
                                            George W. McKerrow, Jr.
                                            President

AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
LONGHORN STEAKS, INC.

ARTICLE ONE

Name

         The name of the corporation is Longhorn Steaks, Inc.

ARTICLE TWO

Perpetual Duration

         The corporation shall have perpetual duration.

ARTICLE THREE

Purpose

         The corporation is organized for the purpose of engaging in any lawful business.

ARTICLE FOUR

Authorized Shares

        The corporation shall have authority to be exercised by the Board of Directors to issue not more than 25,000,000 shares of common stock, no par value, and not more than 10,000,000 shares of preferred stock, no par value. The shares of common stock shall have unlimited voting rights and shall be entitled to receive the net assets of the corporation upon dissolution. Subject to the provisions of these Amended and Restated Articles of Incorporation and to the provisions of the Georgia Business Corporation Code, the Board of Directors may determine (a) the preferences, limitations, and relative rights of any class of shares prior to the issuance of any shares of that class and (b) the preferences, limitations, and relative rights of one or more series within a class and may designate the number of shares within that series prior to the issuance of any shares of that series.

ARTICLE FIVE

Preemptive Right

        The holders of the corporation’s shares do not have a preemptive right to acquire the corporation’s unissued or treasury shares.

ARTICLE SIX

Limitation of Director Liability

        6.1. A director of the corporation shall not be personally liable to the corporation or its shareholders for monetary damages for breach of duty of care or other duty as a director, except for liability (i) for any appropriation, in violation of his duties, of any business opportunity of the corporation, (ii) for acts or omissions which involve intentional misconduct or a knowing violation of law, (iii) of the types set forth in Section 14-2-832 of the Georgia Business Corporation Code, or (iv) for any transaction from which the director derived an improper personal benefit.

        6.2. Any repeal or modification of the provisions of this Article by the shareholders of the corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of the corporation with respect to any act or omission occurring prior to the effective date of such repeal or modification.

        6.3. If the Georgia Business Corporation Code is hereafter amended to authorize the further elimination or limitation of the liability of directors, then the liability of a director of the corporation, in addition to the limitation on personal liability provided herein, shall be limited to the fullest extent permitted by the amended Georgia Business Corporation Code.

        6.4. In the event that any of the provisions of this Article (including any provision within a single sentence) is held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, the remaining provisions are severable and shall remain enforceable to the fullest extent permitted by law.

ARTICLE SEVEN

Constituency Considerations

        In discharging the duties of their respective positions and in determining what is believed to be in the best interests of the corporation, the Board of Directors, committees of the Board of Directors, and individual directors, in addition to considering the effects of any action on the corporation or its shareholders, may consider the interests of the employees, customers, suppliers, and creditors of the corporation and its subsidiaries, the communities in which offices or other establishments of the corporation and its subsidiaries are located, and all other factors such directors consider pertinent; provided, however, that this Article shall be deemed solely to grant discretionary authority to the directors and shall not be deemed to provide to any constituency any right to be considered.

ARTICLE EIGHT

Directors

        8.1. The number of directors of the corporation shall not be less than three (3) nor more than eleven (11), the precise number to be fixed by resolution of the Board of Directors from time to time. The directors shall be divided into three classes, each consisting, as nearly equal in number as possible, of one-third of the total number of directors constituting the entire Board of Directors. At the first election of directors occurring following the date of approval of these Amended and Restated Articles of Incorporation by the shareholders of the corporation, the first class of directors (Class 1) shall be elected for a term expiring upon the next following annual meeting of shareholders and upon the election and qualification of their respective successors, the second class of directors (Class 2) shall be elected for a term expiring upon the second next annual meeting of shareholders and upon the election and qualification of their respective successors, and the third class of directors (Class 3) shall be elected for a term expiring upon the third next annual meeting of shareholders and upon the election and qualification of their respective successors. At each succeeding annual meeting of shareholders, successors to the class of directors whose term expires at the annual meeting of shareholders shall be elected for a three-year term. Except as provided in paragraph 8.4 of this Article Eight, a director shall be elected by the affirmative vote of a majority of the shares represented at the meeting of shareholders at which the director stands for election and entitled to elect such director.

        8.2. The number of directors may be increased or decreased from time to time as provided by the bylaws of the corporation and in the Amended and Restated Articles of Incorporation; provided, however, that the total number of directors at any time shall not be less than three (3); and provided further, that no decrease in the number of directors shall have the effect of shortening the term of an incumbent director. In the event that preferred stock of the corporation is issued and authorizes the election of one or more directors by the holders of such preferred stock, the number of directors may be increased in accordance with the terms of the preferred stock. In the event of any increase or decrease in the authorized number of directors, each director then serving shall continue as a director of the class of which he is a member until the expiration of his current term, or his earlier resignation, removal from office or death, and the newly created or eliminated directorships resulting from such increase or decrease shall be apportioned by the Board of Directors among the three classes of directors so as to maintain such classes as nearly equal as possible; provided, however, that there shall be no classification of additional directors elected by the Board until the next meeting of the shareholders called for the purpose of electing directors. Each director shall serve until his successor is elected and qualified or until his earlier resignation, retirement, disqualification, removal from office, or death.

        8.3. The entire Board of Directors or any individual director may be removed from the office but only for cause and only by the affirmative vote of at least 75% of all classes of stock of the corporation entitled to vote in the election of such director or directors, considered for purposes of this Section as one class. Notwithstanding the foregoing, in the event that preferred stock of the corporation is issued and authorizes the election of one or more directors by the holders of such preferred stock, any individual director elected by the preferred shareholders may be removed only by the holders of the outstanding shares of the preferred stock in accordance with the terms of the preferred stock as provided therein. Removal action may be taken at any shareholders’ meeting with respect to which notice of such purpose has been given, and a removed director’s successor may be elected at the same meeting to serve the unexpired term.

        8.4. A vacancy occurring on the Board of Directors, other than by reason of removal of a director by the shareholders but including vacancies arising from resignation, death or through an increase in the number of directors, may be filled, until the next election of directors by the shareholders, by the affirmative vote of at least two thirds (2/3) of the total number of directors then remaining in office, though they constitute less than a quorum of the Board of Directors.

ARTICLE NINE

Special Meetings and Actions Without a Meeting

        9.1. The shareholders of the corporation shall not have the right to call a special meeting of shareholders, including but not limited to, a special meeting in lieu of the annual meeting of shareholders.

        9.2. Action required or permitted to be taken at a meeting of shareholders may be taken without a meeting if the action is taken by all shareholders entitled to vote on the action. The action must be evidenced by one or more written consents describing the action taken, signed by all shareholders and delivered to the corporation for inclusion in the minutes or filing with the corporate records.

ARTICLE TEN

Certain ByLaw Amendments

        10.1. Subject to the other provisions of this Article, the Board of Directors of the corporation shall have the power to alter, amend or repeal the bylaws of the corporation or to adopt new bylaws, but any bylaws adopted by the Board of Directors may be altered, amended or repealed or new bylaws may be adopted by the shareholders of the corporation. The shareholders may prescribe, by so expressing in the action that they take in adopting or amending, that any bylaws so adopted or amended by them shall not be altered, amended or repealed by the Board of Directors.

        10.2. Notwithstanding the foregoing and anything contained in these Amended and Restated Articles of Incorporation or the bylaws of the corporation to the contrary, any alteration, amendment or repeal of any provision of the bylaws of the corporation, or adoption of new bylaws, as applicable, containing any provision inconsistent in any manner with the provisions contained in Articles SIX, SEVEN, EIGHT, NINE AND TEN of these Amended and Restated Articles of Incorporation or Sections 2.3, 2.12, 3.2, 3.3, 3.4, 9.1 through 9.18 and 12.1 of the bylaws of the corporation, shall be effected only by that procedure required under Georgia law for amendment of articles of incorporation.

        IN WITNESS WHEREOF, Longhorn Steaks, Inc. executes these Amended and Restated Articles of Incorporation by its duly authorized officer on this 13th day of February, 1992.

                                                     /s/  G.W. McKerrow, Jr.
                                                          George W. McKerrow, Jr.
                                                          President

EX-3.(II)

RARE HOSPITALITY INTERNATIONAL, INC.

BYLAWS, AS AMENDED

RARE HOSPITALITY INTERNATIONAL, INC.

BYLAWS

TABLE OF CONTENTS

                                                                                      Page
                                                                                     ------

ARTICLE ONE - OFFICES AND AGENT

         Section 1.1       Registered Office and Agent                                  1
         Section 1.2       Other Offices                                                1

ARTICLE TWO - SHAREHOLDERS' MEETINGS

         Section 2.1       Place of Meetings                                            1
         Section 2.2       Annual Meetings                                              1
         Section 2.3       Special Meetings                                             1
         Section 2.4       Notice of Meetings                                           1
         Section 2.5       Voting Group                                                 2
         Section 2.6       Quorum                                                       2
         Section 2.7       Vote Required for Action                                     2
         Section 2.8       Voting of Shares                                             2
         Section 2.9       Proxies                                                      2
         Section 2.10      Presiding Officer                                            3
         Section 2.11      Adjournments                                                 3
         Section 2.12      Action of Shareholders                                       3
                           Without a Meeting

ARTICLE THREE - THE BOARD OF DIRECTORS

         Section 3.1       General Powers                                               3
         Section 3.2       Number of Directors and Term of Office                       4
         Section 3.3       Removal                                                      4
         Section 3.4       Vacancies                                                    5
         Section 3.5       Compensation                                                 5

ARTICLE FOUR - MEETINGS OF THE BOARD OF DIRECTORS

         Section 4.1       Regular Meetings                                             5
         Section 4.2       Special Meetings                                             5
         Section 4.3       Place of Meetings                                            5
         Section 4.4       Notice of Meetings                                           5
         Section 4.5       Quorum                                                       6
         Section 4.6       Vote Required for Action                                     6
         Section 4.7       Participation by Conference Telephone                        6
         Section 4.8       Action by Directors Without a Meeting                        6
         Section 4.9       Adjournments                                                 6
         Section 4.10      Committees of the Board of Directors                         7

ARTICLE FIVE - MANNER OF NOTICE AND WAIVER AS TO SHAREHOLDERS AND DIRECTORS

         Section 5.1       Procedure                                                    7
         Section 5.2       Waiver                                                       8

ARTICLE SIX - OFFICERS

         Section 6.1       Number                                                       8
         Section 6.2       Election and Term                                            8
         Section 6.3       Compensation                                                 9
         Section 6.4       Chairman; Vice Chairman                                      9
         Section 6.5       Chief Executive Officer                                      9
         Section 6.6       President                                                    9
         Section 6.7       Vice Presidents                                              9
         Section 6.8       Secretary                                                    9
         Section 6.9       Treasurer                                                    10
         Section 6.10      Bonds                                                        10

ARTICLE SEVEN - DISTRIBUTIONS AND SHARE DIVIDENDS

         Section 7.1       Authorization or Declaration                                 10
         Section 7.2       Record Date with Regard to Distributions
                           and Share Dividends                                          10

ARTICLE EIGHT - SHARES

         Section 8.1       Authorization and Issuance of Shares                         10
         Section 8.2       Share Certificates                                           10
         Section 8.3       Rights of Corporation with Respect
                           to Registered Owners                                         11
         Section 8.4       Transfers of Shares                                          11
         Section 8.5       Duty of Corporation to Register Transfer                     11
         Section 8.6       Lost, Stolen or Destroyed Certificates                       11
         Section 8.7       Fixing of Record Date with regard to
                           Shareholder Action                                           12

ARTICLE NINE - INDEMNIFICATION

         Section 9.1       Certain Definitions                                          12
         Section 9.2       Basic Indemnification Arrangement                            13
         Section 9.3       Advances for Expenses                                        14
         Section 9.4       Authorization of and Determination of
                           Entitlement to Indemnification                               15
         Section 9.5       Court-Ordered Indemnification and
                           Advances for Expenses                                        16
         Section 9.6       Indemnification of Employees and Agents                      17
         Section 9.7       Limitations on Indemnification                               17
         Section 9.8       Liability Insurance                                          18
         Section 9.9       Witness Fees                                                 18
         Section 9.10      Report to Shareholders                                       18
         Section 9.11      Security for Indemnification
                           Obligations                                                  18
         Section 9.12      No Duplication of Payments                                   18
         Section 9.13      Subrogation                                                  18
         Section 9.14      Contract Rights                                              19
         Section 9.15      Specific Performance                                         19
         Section 9.16      Non-exclusivity, Etc.                                        19
         Section 9.17      Amendments                                                   19
         Section 9.18      Severability                                                 19

ARTICLE TEN - MISCELLANEOUS

         Section 10.1      Inspection of Books and Records                              20
         Section 10.2      Fiscal Year                                                  20
         Section 10.3      Corporate Seal                                               20
         Section 10.4      Annual Financial Statements                                  20
         Section 10.5      Conflict with Articles of Incorporation                      20

ARTICLE ELEVEN - AMENDMENTS

         Section 11.1      Power to Amend Bylaws                                        20

ARTICLE TWELVE - RESTRICTIONS ON CERTAIN BUSINESS
                                    COMBINATIONS WITH INTERESTED
                                    SHAREHOLDERS

         Section 12.1      Business Combinations                                        21

ARTICLE ONE

Offices and Agent

        Section 1.1. Registered Office and Agent. The corporation shall maintain a registered office in the State of Georgia and shall have a registered agent whose business office is identical to the registered office.

        Section 1.2. Other Offices. In addition to its registered office, the corporation may have offices at any other place or places, within or without the State of Georgia, as the Board of Directors may from time to time select or as the business of the corporation may require or make desirable.

ARTICLE TWO

Shareholders' Meetings

        Section 2.1. Place of Meetings. Meetings of shareholders may be held at any place within or without the State of Georgia as set forth in the notice thereof or in the event of a meeting held pursuant to waiver of notice, as set forth in the waiver, or if no place is so specified, at the principal office of the corporation.

        Section 2.2. Annual Meetings. The annual meeting of shareholders shall be held during the month of April or May on a date determined by the Board of Directors, for the purpose of electing directors and transacting any and all business that may properly come before the meeting. If the annual meeting of shareholders is not held on the day designated as provided in this Section 2.2, any business, including the election of directors, that might properly have been acted upon at that meeting may be acted upon at a special meeting in lieu of the annual meeting held pursuant to these bylaws or held pursuant to a court order.

        Section 2.3. Special Meetings. Special meetings of shareholders or a special meeting in lieu of the annual meeting of shareholders may be called at any time by the Board of Directors, the Chairman, or the President. The shareholders of the Corporation shall not have the right to call a special meeting of shareholders, including but not limited to, a special meeting in lieu of the annual meeting of shareholders.

        Section 2.4. Notice of Meetings. Unless waived as contemplated in Section 5.2, a notice of each meeting of shareholders stating the date, time and place of the meeting shall be given not less than ten (10) days nor more than sixty (60) days before the date thereof, by or at the direction of the President, the Secretary, or the officer or persons calling the meeting, to each shareholder entitled to vote at that meeting. In the case of an annual meeting, the notice need not state the purpose or purposes of the meeting unless the articles of incorporation or the Georgia Business Corporation Code (the “Code”) requires the purpose or purposes to be stated in the notice of the meeting. In the case of a special meeting, including a special meeting in lieu of an annual meeting, the notice of meeting shall state the purpose or purposes for which the meeting is called.

        Section 2.5 Voting Group. Voting group means all shares of one or more classes or series that are entitled to vote and be counted together collectively on a matter at a meeting of shareholders. All shares entitled to vote generally on the matter are for that purpose a single voting group.

        Section 2.6 Quorum. With respect to shares entitled to vote as a separate voting group on a matter at a meeting of shareholders, the presence, in person or by proxy, of a majority of the votes entitled to be cast on the matter by the voting group shall constitute a quorum of that voting group for action on that matter unless the articles of incorporation or the Code provides otherwise. Once a share is represented for any purpose at a meeting, other than solely to object to holding the meeting or to transacting business at the meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of the meeting unless a new record date is or must be set for the adjourned meeting pursuant to Section 8.7 of these bylaws.

        Section 2.7 Vote Required for Action. If a quorum exists, action on a matter (other than the election of directors) by a voting group is approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless the articles of incorporation, provisions of these bylaws validly adopted by the shareholders, or the Code requires a greater number of affirmative votes. If the articles of incorporation or the Code provide for voting by two or more voting groups on a matter, action on that matter is taken only when voted upon by each of those voting groups counted separately. Action may be taken by one voting group on a matter even though no action is taken by another voting group entitled to vote on the matter. With regard to the election of directors, unless otherwise provided in the articles of incorporation, if a quorum exists, action on the election of directors is taken by a plurality of the votes cast by the shares entitled to vote in the election.

        Section 2.8 Voting of Shares. Unless the articles of incorporation or the Code provides otherwise, each outstanding share having voting rights shall be entitled to one vote on each matter submitted to a vote at a meeting of shareholders. Voting on all matters shall be by voice vote or by show of hands unless any qualified voter, prior to the voting on any matter, demands vote by ballot, in which case each ballot shall state the name of the shareholder voting and the number of shares voted by him, and if the ballot be cast by proxy, it shall also state the name of the proxy.

        Section 2.9 Proxies. A shareholder entitled to vote pursuant to Section 2.8 may vote in person or by proxy pursuant to an appointment of proxy executed in writing by the shareholder or by his attorney in fact. An appointment of proxy shall be valid for only one meeting to be specified therein, and any adjournments of such meeting, but shall not be valid for more than eleven months unless expressly provided therein. Appointments of proxy shall be dated and filed with the records of the meeting to which they relate. If the validity of any appointment of proxy is questioned, it must be submitted to the secretary of the meeting of shareholders for examination or to a proxy officer or committee appointed by the person presiding at the meeting. The secretary of the meeting or, if appointed, the proxy officer or committee, shall determine the validity or invalidity of any appointment of proxy submitted and reference by the secretary in the minutes of the meeting to the regularity of an appointment of proxy shall be received as prima facie evidence of the facts stated for the purpose of establishing the presence of a quorum at the meeting and for all other purposes.

        Section 2.10 Presiding Officer. The Chairman shall serve as the chairman of every meeting of shareholders unless another person is elected by shareholders to serve as chairman at the meeting. The chairman shall appoint any persons he deems required to assist with the meeting.

        Section 2.11 Adjournments. Whether or not a quorum is present to organize a meeting, any meeting of shareholders (including an adjourned meeting) may be adjourned by the holders of a majority of the voting shares represented at the meeting to reconvene at a specific time and place, but no later than 120 days after the date fixed for the original meeting unless the requirements of the Code concerning the selection of a new record date have been met. At any reconvened meeting within that time period, any business may be transacted that could have been transacted at the meeting that was adjourned. If notice of the adjourned meeting was properly given, it shall not be necessary to give any notice of the reconvened meeting or of the business to be transacted, if the date, time and place of the reconvened meeting are announced at the meeting that was adjourned and before adjournment; provided, however, that if a new record date is or must be fixed, notice of the reconvened meeting must be given to persons who are shareholders as of the new record date.

        Section 2.12 Action of Shareholders Without a Meeting. Action required or permitted to be taken at a meeting of shareholders may be taken without a meeting if the action is taken by all shareholders entitled to vote on the action. The action must be evidenced by one or more written consents describing the action taken, signed by all shareholders and delivered to the corporation for inclusion in the minutes or filing with the corporate records.

        Section 2.13 Advance Notice of Shareholder Proposed Business at Annual Meeting. At an annual meeting of the shareholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (c) otherwise properly brought before the meeting by a shareholder. In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a shareholder, the shareholder must have given timely notice thereof in writing to the Secretary of the corporation. To be timely, a shareholder’s notice must be delivered to or mailed and received at the principal executive offices of the corporation, not less than 60 days nor more than 90 days prior to the first anniversary of the date of the immediately preceding annual meeting of shareholders; provided, that if no annual meeting was held in the previous year or the date of the annual meeting has been changed to be more than 30 calendar days earlier than or 30 calendar days after the anniversary of the previous year’s annual meeting, notice by the shareholder, to be timely, must be so received not later than the later of (i) 60 days prior to the annual meeting or (ii) the close of business on the 10th day following the day on which such notice of the date of the annual meeting was mailed or public disclosure of such date was made, whichever first occurs. A shareholder’s notice to the Secretary shall set forth as to each matter the shareholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of the shareholder proposing such business, (iii) the class and number of shares of the corporation which are beneficially owned by the shareholder, and (iv) any material interest of the shareholder in such business.

        Notwithstanding anything in the Bylaws to the contrary, no business shall be conducted at the annual meeting except in accordance with the procedures set forth in this Section 2.13; provided, however, that nothing in this Section 2.13 shall be deemed to preclude discussion by any shareholder of any business properly brought before the annual meeting in accordance with said procedure.

        The chairman of an annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 2.13, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.

ARTICLE THREE

The Board of Directors

        Section 3.1 General Powers. All corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation shall be managed under the direction of the Board of Directors. In addition to the powers and authority expressly conferred upon it by these bylaws, the Board of Directions may exercise all such lawful acts and things as are not by law, by the articles of incorporation or by these bylaws directed or required to be exercised or done by the shareholders.

        Section 3.2 Number of Directors and Term of Office. The number of directors of the corporation shall not be less than three (3) nor more than eleven (11), the precise number to be fixed by resolution of the Board of Directors from time to time. The directors shall be divided into three classes, each consisting, as nearly equal in number as possible, of one-third of the total number of directors constituting the entire Board of Directors. At the first election of directors occurring following the date of approval of amended and restated articles of incorporation of the corporation containing a provision comparable to this Section 3.2 by the shareholders of the corporation, the first class of directors (Class I) shall be elected for a term expiring upon the next following annual meeting of shareholders and upon the election and qualification of their respective successors, the second class of directors (Class II) shall be elected for a term expiring upon the second next annual meeting of shareholders and upon the election and qualification of their respective successors, and the third class of directors (Class III) shall be elected for a term expiring upon the third next annual meeting of shareholders and upon the election and qualification of their respective successors. At each succeeding annual meeting of shareholders, successors to the class of directors whose term expires at the annual meeting of shareholders shall be elected for a three-year term. Except as provided in Section 3.4, a director shall be elected by the affirmative vote of a plurality of the votes cast by the shares entitle to vote in the election.

        The number of directors may be increased or decreased from time to time as provided herein or by amendment to these bylaws and the articles of incorporation; provided, however, that the total number of directors at any time shall not be less than three (3); and provided further, that no decrease in the number of directors shall have the effect of shortening the term of an incumbent director. In the event that preferred stock of the corporation is issued and authorizes the election of one or more directors by the holders of such preferred stock, the number of directors may be increased in accordance with the terms of the preferred stock. In the event of any increase or decrease in the authorized number of directors, each director then serving shall continue as a director of the class of which he is a member until the expiration of his current term, or his earlier resignation, removal from office or death, and the newly created or eliminated directorships resulting from such increase or decrease shall be apportioned by the Board of Directors among the three classes of directors so as to maintain such classes as nearly equal as possible; provided, however, that there shall be no classification of additional directors elected by the Board until the next meeting of the shareholders called for the purpose of electing directors. Each director shall serve until his successor is elected and qualified or until his earlier resignation, retirement, disqualification, removal from office, or death.

        Section 3.3 Removal. The entire Board of Directors or any individual director may be removed from the office but only for cause and only by the affirmative vote of at least 75% of all classes of stock of the corporation entitled to vote in the election of such director or directors, considered for purposes of this Section as one class. Notwithstanding the foregoing, in the event that preferred stock of the corporation is issued and authorizes the election of one or more directors by the holders of such preferred stock, any individual director elected by the preferred shareholders may be removed only by the holders of the outstanding shares of the preferred stock in accordance with the terms of the preferred stock as provided therein. Removal action may be taken at any shareholders’ meeting with respect to which notice of such purpose has been given, and a removed director’s successor may be elected at the same meeting to serve the unexpired term.

        Section 3.4 Vacancies. A vacancy occurring on the Board of Directors, other than by reason of removal of a director by the shareholders but including vacancies arising from resignation, death or through an increase in the number of directors, may be filled, until the next election of directors by the shareholders, by the affirmative vote of at least two thirds (2/3) of the total number of directors then remaining in office, though they constitute less than a quorum of the Board of Directors.

        Section 3.5 Compensation. Unless the articles of incorporation provide otherwise, the Board of Directors may determine from time to time the compensation, if any, directors may receive for their services as directors. A director may also serve the corporation in a capacity other than that of director and receive compensation, as determined by the Board of Directors, for services rendered in any other capacity.

ARTICLE FOUR

Meetings of the Board of Directors

        Section 4.1 Regular Meetings. Regular meetings of the Board of Directors shall be held immediately after the annual meeting of shareholders or a special meeting in lieu of the annual meeting. In addition, the Board of Directors may schedule other meetings to occur at regular intervals throughout the year.

        Section 4.2 Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the Chairman, the President or by any two directors in office at that time.

        Section 4.3 Place of Meetings. Directors may hold their meetings at any place within or without the State of Georgia as the Board of Directors may from time to time establish for regular meetings or as set forth in the notice of special meetings or, in the event of a meeting held pursuant to waiver of notice, as set forth in the waiver.

        Section 4.4 Notice of Meetings. No notice shall be required for any regularly scheduled meeting of the directors. Unless waived as contemplated in Section 5.2, each director shall be given at least one day’s notice (as set forth in Section 5.1) of each special meeting stating the date, time, and place of the meeting.

        Section 4.5 Quorum. Unless a greater number is required by the articles of incorporation, these bylaws, or the Code, a quorum of the Board of Directors consists of a majority of the total number of directors that has been prescribed by resolution of shareholders or of the Board of Directors pursuant to Section 3.2.

        Section 4.6 Vote Required for Action. (a) If a quorum is present when a vote is taken, the affirmative vote of a majority of directors present is the act of the Board of Directors unless the Code, the articles of incorporation, or these bylaws require the vote of a greater number of directors.

        (b) A director who is present at a meeting of the Board of Directors or a committee of the Board of Directors when corporate action is taken is deemed to have assented to the action taken unless:

                   (1) He objects at the beginning of the meeting (or promptly upon his arrival) to holding it or transacting business at the meeting;

                   (2) His dissent or abstention from the action taken is entered in the minutes of the meeting; or

                   (3) He delivers written notice of his dissent or abstention to the presiding officer of the meeting before its adjournment or to the corporation immediately after adjournment of the meeting. The right of dissent or abstention is not available to a director who votes in favor of the action taken.

        Section 4.7 Participation by Conference Telephone. Any or all directors may participate in a meeting of the Board of Directors or of a committee of the Board of Directors through the use of any means of communication by which all directors participating may simultaneously hear each other during the meeting.

        Section 4.8 Action by Directors Without a Meeting. Unless the articles of incorporation or these bylaws provide otherwise, any action required or permitted to be taken at any meeting of the Board of Directors or any action that may be taken at a meeting of a committee of Board of Directors may be taken without a meeting if the action is taken by all the members of the Board of Directors (or of the committee as the case may be). The action must be evidenced by one or more written consents describing the action taken, signed by each director (or each director serving on the committee, as the case may be), and delivered to the corporation for inclusion in the minutes or filing with the corporate records.

        Section 4.9 Adjournments. Whether or not a quorum is present to organize a meeting, any meeting of directors (including an adjourned meeting) may be adjourned by a majority of the directors present, to reconvene at a specific time and place. At any reconvened meeting any business may be transacted that could have been transacted at the meeting that was adjourned. If notice of the adjourned meeting was properly given, it shall not be necessary to give any notice of the reconvened meeting or of the business to be transacted, if the date, time and place of the reconvened meeting are announced at the meeting that was adjourned.

        Section 4.10 Committees of the Board of Directors. The Board of Directors by resolution may designate from among its members an executive committee and one or more other committees, each consisting of one or more directors all of whom serve at the pleasure of the Board of Directors. Except as limited by the Code, each committee shall have the authority set forth in the resolution establishing the committee. The provisions of this Article Four as to the Board of Directors and its deliberations shall be applicable to any committee of the Board of Directors.

ARTICLE FIVE

Manner of Notice and Waiver as to Shareholders and Directors

        Section 5.1 Procedure. Whenever these bylaws require notice to be given to any shareholder or director, the notice shall be given in accordance with this Section 5.1. Notice under these bylaws shall be in writing unless oral notice is reasonable under the circumstances. Any notice to directors may be written or oral. Notice may be communicated in person; by telephone, telegraph, teletype, or other form of wire or wireless communication; or by mail or private carrier. If these forms of personal notice are impracticable, notice may be communicated by a newspaper of general circulation in the area where published, or by radio, television, or other form of public broadcast communication. Written notice to the shareholders, if in a comprehensible form, is effective when mailed, if mailed with first-class postage prepaid and correctly addressed to the shareholder’s address shown in the corporation’s current record of shareholders. Except as provided above, written notice, if in a comprehensible form, is effective at the earliest of the following:

(1) When received or when delivered, properly addressed, to the addressee's last known principal place of business or residence;

(2) Five days after its deposit in the mail, as evidenced by the postmark, if mailed with first-class postage prepaid and correctly addressed; or

(3) On the date shown on the return receipt, if sent by registered or certified mail, return receipt requested, and the receipt is signed by or on behalf of the addressee.

Oral notice is effective when communicated if communicated in a comprehensible manner.

In calculating time periods for notice, when a period of time measured in days, weeks, months, years, or other measurement of time is prescribed for the exercise of any privilege or the discharge of any duty, the first day shall not be counted but the last day shall be counted.

        Section 5.2 Waiver.

        (a) A shareholder may waive any notice before or after the date and time stated in the notice. Except as provided below in (b), the waiver must be in writing, be signed by the shareholder entitled to the notice, and be delivered to the corporation for inclusion in the minutes or filing with the corporate records.

        (b) A shareholder’s attendance at a meeting (i) waives objection to lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting; and (ii) waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the shareholder objects to considering the matter when it is presented.

        (c) Unless required by the Code, neither the business transacted nor the purpose of the meeting need be specified in the waiver.

        (d) A director may waive any notice before or after the date and time stated in the notice. Except as provided below in (e), the waiver must be in writing, signed by the director entitled to the notice, and delivered to the corporation for inclusion in the minutes or filing with the corporate records.

        (e) A director’s attendance at or participation in a meeting waives any required notice to him of the meeting unless the director at the beginning of the meeting (or promptly upon his arrival) objects to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting.

ARTICLE SIX

Officers

        Section 6.1 Number. The officers of the corporation shall consist of a Chairman, a President, a Secretary and a Treasurer and any other officers as may be appointed by the Board of Directors or appointed by a duly appointed officer pursuant to this Article Six. The Board of Directors shall from time to time create and establish the duties of the other officers. Any two or more offices may be held by the same person.

        Section 6.2 Election and Term. All officers shall be appointed by the Board of Directors or by a duly appointed officer pursuant to this Article Six and shall serve at the pleasure of the Board of Directors or the appointing officers as the case may be. All officers, however appointed, may be removed with or without cause by the Board of Directors and any officer appointed by another officer may also be removed by the appointing officer with or without cause.

        Section 6.3 Compensation. The compensation of all officers of the corporation appointed by the Board of Directors shall be fixed by the Board of Directors.

        Section 6.4 Chairman; Vice Chairman. The Chairman shall preside at all meetings of the Board of Directors. The Chairman shall perform such other duties and have such other authority and powers as the Board of Directors may from time to time prescribe. If the Board of Directors shall designate one or more of its members as a Vice Chairman, in the absence or disability of the Chairman, or at the direction of the Chairman, the Vice Chairman shall perform the duties and exercise the powers of the Chairman.

        Section 6.5 Chief Executive Officer. The Chief Executive Officer shall be the chief executive officer of the corporation and shall have general supervision of the business of the corporation. He shall see that all orders and resolutions of the Board of Directors are carried into effect. the Chief Executive Officer shall perform such other duties as may from time to time be delegated to him by the Board of Directors.

        Section 6.6 President. The President shall be the chief operating officer of the corporation and shall have general supervision of the day-to-day operations of the corporation. The President shall perform such other duties as may from time to time be delegated to him by the Board of Directors or the Chief Executive Officer.

        Section 6.7 Vice Presidents. In the absence or disability of the President, or at the direction of the President, the Vice President, if any, shall perform the duties and exercise the powers of the President. If the corporation has more than one Vice President the one designated by the Board of Directors shall act in lieu of the President. Vice Presidents shall perform whatever duties and have whatever powers the Board of Directors may from time to time assign.

        Section 6.8 Secretary. The Secretary shall be responsible for preparing minutes of the acts and proceedings of all meetings of shareholders and of the Board of Directors and any committees thereof. He shall have authority to give all notices required by law or these bylaws. He shall be responsible for the custody of the corporate books, records, contracts and other documents. The Secretary may affix the corporate seal to any lawfully executed documents and shall sign any instruments as may require his signature. The Secretary shall authenticate records of the corporation. The Secretary shall perform whatever additional duties and have whatever additional powers the Board of Directors may from time to time assign him. In the absence or disability of the Secretary or at the direction of the President, any assistant secretary may perform the duties and exercise the powers of the Secretary.

        Section 6.9 Treasurer. The Treasurer shall be responsible for the custody of all funds and securities belonging to the corporation and for the receipt, deposit or disbursement of funds and securities under the direction of the Board of Directors. The Treasurer shall cause to be maintained full and true accounts of all receipts and disbursements and shall make reports of the same to the Board of Directors and the President upon request. The Treasurer shall perform all duties as may be assigned to him from time to time by the Board of Directors.

        Section 6.10 Bonds. The Board of Directors by resolution may require any or all of the officers, agents or employees of the corporation to give bonds to the corporation, with sufficient surety or sureties, conditioned on the faithful performance of the duties of their respective offices or positions, and to comply with any other conditions as from time to time may be required by the Board of Directors.

ARTICLE SEVEN

Distributions and Share Dividends

        Section 7.1 Authorization or Declaration. Unless the articles of incorporation provide otherwise, the Board of Directors from time to time in its discretion may authorize or declare distributions or share dividends in accordance with the Code.

        Section 7.2 Record Date With Regard to Distributions and Share Dividends. For the purpose of determining shareholders entitled to a distribution (other than one involving a purchase, redemption, or other reacquisition of the corporation’s shares) or a share dividend the Board of Directors may fix a date as the record date. If no record date is fixed by the Board of Directors, the record date shall be determined in accordance with the provisions of the Code.

ARTICLE EIGHT

Shares

        Section 8.1 Authorization and Issuance of Shares. In accordance with the Code, the Board of Directors may authorize shares of any class or series provided for in the articles of incorporation to be issued for any consideration valid under the provisions of the Code. To the extent provided in the articles of incorporation, the Board of Directors shall determine the preferences, limitations, and relative rights of the shares.

        Section 8.2 Share Certificates. The interest of each shareholder in the corporation shall be evidenced by a certificate or certificates representing shares of the corporation which shall be in such form as the Board of Directors from time to time may adopt. Share certificates shall be numbered consecutively, shall be in registered form, shall indicate the date of issuance, the name of the corporation and that it is organized under the laws of the State of Georgia, the name of the shareholder, and the number and class of shares and the designation of the series, if any, represented by the certificate. Each certificate shall be signed by any one of the President, a Vice President, the Secretary, or the Treasurer. The corporate seal need not be affixed.

        Section 8.3 Rights of Corporation with Respect to Registered Owners. Prior to due presentation for transfer of registration of its shares, the corporation may treat the registered owner of the shares as the person exclusively entitled to vote the shares, to receive any share dividend or distribution with respect to the shares, and for all other purposes; and the corporation shall not be bound to recognize any equitable or other claim to or interest in the shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law.

        Section 8.4 Transfers of Shares. Transfers of shares shall be made upon the transfer books of the corporation, kept at the office of the transfer agent designated to transfer the shares, only upon direction of the person named in the certificate, or by an attorney lawfully constituted in writing; and before a new certificate is issued, the old certificate shall be surrendered for cancellation or, in the case of a certificate alleged to have been lost, stolen, or destroyed, the requirements of Section 8.6 of these bylaws shall have been met.

        Section 8.5 Duty of Corporation to Register Transfer. Notwithstanding any of the provisions of Section 8.4 of these bylaws, the corporation is under a duty to register the transfer of its shares only if:

(a)     the certificate is endorsed by the appropriate person or persons; and

(b)     reasonable assurance is given that the endorsement or affidavit is genuine and effective; and

(c)     the corporation either has no duty to inquire into adverse claims or has discharged that duty; and

(d)     the requirements of any applicable law relating to the collection of taxes have been met; and

(e)     the transfer in fact is rightful or is to a bona fide purchaser.

        Section 8.6 Lost, Stolen or Destroyed Certificates. Any person claiming a share certificate to be lost, stolen or destroyed shall make an affidavit or affirmation of the fact in the manner required by the Board of Directors and, if the Board of Directors requires, shall give the corporation a bond of indemnity in form and amount, and with one or more sureties satisfactory to the Board of Directors, as the Board of Directors may require, whereupon an appropriate new certificate may be issued in lieu of the one alleged to have been lost, stolen or destroyed.

        Section 8.7 Fixing of Record Date with regard to Shareholder Action. For the purpose of determining shareholders entitled to notice of a shareholders’ meeting, to demand a special meeting, to vote, or to take any other action, the Board of Directors may fix a future date as the record date, which date shall be not more than seventy (70) days prior to the date on which the particular action, requiring a determination of shareholders, is to be taken. A determination of shareholders entitled to notice of or to vote at a shareholders’ meeting is effective for any adjournment of the meeting unless the Board of Directors fixes a new record date, which it must do if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting. If no record date is fixed by the Board of Directors, the record date shall be determined in accordance with the provisions of the Code.

ARTICLE NINE

Indemnification

        Section 9.1 Certain Definitions. As used in this Article, the term:

(a) “Corporation” includes any domestic or foreign predecessor entity of this corporation in a merger or other transaction in which the predecessor’s existence ceased upon consummation of the transaction.

(b) “Director” means an individual who is or was a director of the corporation or an individual who, while a director of the corporation, is or was serving at the corporation’s request as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise. A director is considered to be serving an employee benefit plan at the corporation’s request if his duties to the corporation also impose duties on, or otherwise involve services by, him to the plan or to participants in or beneficiaries of the plan. “Director” includes, unless the context requires otherwise, the estate or personal representative of a director.

(c) “Expenses” includes attorneys' fees.

(d) “Liability” means the obligation to pay a judgment, settlement, penalty, fine (including an excise tax assessed with respect to an employee benefit plan), or reasonable expenses incurred with respect to a proceeding.

(e) “Officer” means an individual who is or was an officer of the corporation or an individual who, while an officer of the corporation, is or was serving at the corporation’s request as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise. An officer is considered to be serving an employee benefit plan at the corporation’s request if his duties to the corporation also impose duties on, or otherwise involve services by, him to the plan or to participants in or beneficiaries of the plan. “Officer” includes, unless the context requires otherwise, the estate or personal representative of an officer.

(f) “Party” includes an individual who was, is, or is threatened to be made a named defendant or respondent in a proceeding.

(g) “Proceeding” means any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative and whether formal or informal.

(h) “Reviewing Party” shall mean the person or persons making the entitlement determination pursuant to Section 9.4 of this Article, and shall not include a court making any determination under this Article or otherwise.

        Section 9.2 Basic Indemnification Arrangement.

(a) Except as provided in Section 9.7 and subsections 9.2(d) and 9.2(e) below, the corporation shall indemnify an individual who is made a party to a proceeding because he is or was a director or officer against liability incurred by him in the proceeding if he acted in a manner he believed in good faith to be in or not opposed to the best interests of the corporation and, in the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful.

(b) A person’s conduct with respect to an employee benefit plan for a purpose he believed in good faith to be in the interests of the participants in and beneficiaries of the plan is conduct that satisfies the requirement of subsection 9.2(a).

(c) The termination of a proceeding by judgment, order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent shall not, of itself, be determinative that the proposed indemnitee did not meet the standard of conduct set forth in subsection 9.2(a).

(d) The corporation shall not indemnify a person under this Article in connection with (i) a proceeding by or in the right of the corporation in which such person was adjudged liable to the corporation, unless, and then only to the extent that, the Reviewing Party, or a court of competent jurisdiction acting pursuant to Section 9.5 of this Article or Section 14-2-854 of the Georgia Business Corporation Code, determines that, in view of the circumstances of the case, the indemnitee is fairly and reasonably entitled to indemnification, or (ii) any proceeding in which such person was adjudged liable on the basis that he improperly received a personal benefit, unless, and then only to the extent that, a court of competent jurisdiction acting pursuant to Section 9.5 of this Article or Section 14-2-854 of the Georgia Business Corporation Code determines that, in view of the circumstances of the case, such person is fairly and reasonably entitled to indemnification.

(e) Indemnification permitted under this Article in connection with a proceeding by or in the right of the corporation shall include reasonable expenses, penalties, fines (including an excise tax assessed with respect to an employee benefit plan) and amounts paid in settlement in connection with the proceeding, but, unless ordered by a court, shall not include judgments.

        Section 9.3 Advances for Expenses.

(a) The corporation shall pay for or reimburse the reasonable expenses incurred by a director or officer as a party to a proceeding in advance of final disposition of the proceeding if:

(i) Such person furnishes the corporation a written affirmation of his good faith belief that he has met the standard of conduct set forth in subsection 9.2(a) above and that his conduct does not constitute behavior of the kind described in subsections 9.7 (i)-(iv) below; and

(ii) Such person furnishes the corporation a written undertaking (meeting the qualifications set forth below in subsection 9.3(b)), executed personally or on his behalf, to repay any advances if it is ultimately determined that he is not entitled to indemnification under this Article or otherwise.

(b) The undertaking required by subsection 9.3(a)(ii) above must be an unlimited general obligation of the proposed indemnitee but need not be secured and shall be accepted without reference to financial ability to make repayment.

        Section 9.4 Authorization of and Determination of Entitlement to Indemnification.

(a) The corporation acknowledges that indemnification of a director or officer under Section 9.2 has been pre-authorized by the corporation in the manner described in subsection 9.4(b) below. Nevertheless, except as set forth in subsection 9.4(d) below, the corporation shall not indemnify a director or officer under Section 9.2 unless a separate determination has been made in the specific case that indemnification of such person is permissible in the circumstances because he has met the standard of conduct set forth in subsection 9.2(a); provided, however, that regardless of the result or absence of any such determination, and unless limited by the articles of incorporation of this corporation, to the extent that a director or officer has been successful, on the merits or otherwise, in the defense of any proceeding to which he was a party, or in defense of any claim, issue or matter therein, because he is or was a director or officer, the corporation shall indemnify such person against reasonable expenses incurred by him in connection therewith.

(b) The determination referred to in subsection 9.4(a) above shall be made, at the election of the board of directors:

(i) by the board of directors of the corporation by majority vote of a quorum consisting of directors not at the time parties to the proceeding;

(ii) if a quorum cannot be obtained under subdivision (i), by majority vote of a committee duly designated by the board of directors (in which designation directors who are parties may participate), consisting solely of two or more directors not at the time parties to the proceeding;

(iii) by special legal counsel:

(1) selected by the board of directors or its committee in the manner prescribed in subdivision (i) or (ii); or

(2) if a quorum of the board of directors cannot be obtained under subdivision (i) and a committee cannot be designated under subdivision (ii), selected by a majority vote of the full board of directors (in which selection directors who are parties may participate); or

(iv) by the shareholders; provided that shares owned by or voted under the control of directors or officers who are at the time parties to the proceeding may not be voted on the determination.

(c) As acknowledged above, the corporation has pre-authorized the indemnification of directors and officers hereunder, subject to a case-by-case determination that the proposed indemnitee met the applicable standard of conduct under subsection 9.2(a). Consequently, no further decision need or shall be made on a case-by-case basis as to the authorization of the corporation’s indemnification of directors and officers hereunder. Nevertheless, except as set forth in subsection 9.4(d) below, evaluation as to reasonableness of expenses of a director or officer in the specific case shall be made in the same manner as the determination that indemnification is permissible, as described in subsection 9.4(b) above, except that if the determination is made by special legal counsel, evaluation as to reasonableness of expenses shall be made by those entitled under subsection 9.4(b)(iii) to select counsel.

(d) Notwithstanding the requirement under subsection 9.4(a) that the Reviewing Party make a determination as to the proposed indemnitee’s entitlement to indemnification, the proposed indemnitee shall be deemed to have met the standard of conduct set forth in subsection 9.2(a) if the Reviewing Party fails to make such a determination within thirty (30) days following the proposed indemnitee’s written request for indemnification. Likewise, notwithstanding the requirement under subsection 9.4(c) that the Reviewing Party evaluate the reasonableness of expenses claimed by the proposed indemnitee, any expenses claimed by the proposed indemnitee shall be deemed reasonable if the Reviewing Party fails to make the evaluation required by subsection 9.4(c) within thirty (30) days following the proposed indemnitee’s written request for indemnification for, or advancement of, expenses.

        Section 9.5 Court-Ordered Indemnification and Advances for Expenses. Unless this corporation’s articles of incorporation provide otherwise, a director or officer who is a party to a proceeding may apply for indemnification or advances for expenses to the court conducting the proceeding or to another court of competent jurisdiction. For purposes of this Article, the corporation hereby consents to personal jurisdiction and venue in any court in which is pending a proceeding to which a director or officer is a party. Regardless of any determination by the Reviewing Party that the proposed indemnitee is not entitled to indemnification or advancement of expenses or as to the reasonableness of expenses, and regardless of any failure by the Reviewing Party to make a determination as to such entitlement or the reasonableness of expenses, such court’s review shall be a de novo review, and its determination shall be binding, on the questions of whether:

(i) The applicant is entitled to mandatory indemnification under the final clause of subsection 9.4(a) above (in which case the corporation shall pay the indemnitee’s reasonable expenses incurred to obtain court-ordered indemnification);

(ii) The applicant is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not he met the standard of conduct set forth in subsection 9.2(a) above or was adjudged liable as described in subsection 9.2(d) above (in which case any court-ordered indemnification need not be limited to reasonable expenses incurred by the indemnitee but may include expenses, penalties, fines, judgments, amounts paid in settlement and any other amounts ordered by the court to be indemnified, and, whether or not so ordered, the corporation shall pay the applicant’s reasonable expenses incurred to obtain court-ordered indemnification); or

(iii) In the case of advances for expenses, the applicant is entitled pursuant to the articles of incorporation, bylaws or applicable resolution or agreement to payment for or reimbursement of his reasonable expenses incurred as a party to a proceeding in advance of final disposition of the proceeding (in which case the corporation shall pay the applicant’s reasonable expenses incurred to obtain court-ordered advancement of expenses).

        Section 9.6 Indemnification of Employees and Agents. Unless this corporation’s articles of incorporation provide otherwise, the corporation may indemnify and advance expenses under this Article to an employee or agent of the corporation who is not a director or officer to the same extent as to a director or officer, or to any lesser extent (or greater extent if permitted by law) determined by the board of directors.

        Section 9.7 Limitations on Indemnification. Regardless of whether a proposed indemnitee has met the applicable standard of conduct set forth in subsection 9.2(a), the corporation shall not indemnify a person under this Article for any liability incurred in a proceeding in which the person is adjudged liable to the corporation or is subjected to injunctive relief in favor of the corporation:

(i) for any appropriation, in violation of his duties, of any business opportunity of the corporation;

(ii) for acts or omissions which involve intentional misconduct or a knowing violation of law;

(iii) for the types of liability set forth in Section 14-2-832 of the Georgia Business Corporation Code; or

(iv) for any transaction from which he received an improper personal benefit.

        Section 9.8 Liability Insurance. The corporation may purchase and maintain insurance on behalf of a director or officer or an individual who is or was an employee or agent of the corporation or who, while an employee or agent of the corporation, is or was serving at the request of the corporation as a director, officer, partner, trustee, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise against liability asserted against or incurred by him in that capacity or arising from his status as a director, officer, employee, or agent, whether or not the corporation would have power to indemnify him against the same liability under Section 9.2, Section 9.3 or Section 9.4 above.

        Section 9.9 Witness Fees. Nothing in this Article shall limit the corporation’s power to pay or reimburse expenses incurred by a person in connection with his appearance as a witness in a proceeding at a time when he has not been made a named defendant or respondent in the proceeding.

        Section 9.10 Report to Shareholders. If the corporation indemnifies or advances expenses to a director in connection with a proceeding by or in the right of the corporation, the corporation shall report the indemnification or advance, in writing, to the shareholders with or before the notice of the next shareholders’ meeting.

         Section 9.11 Security for Indemnification Obligations. The corporation may at any time and in any manner, at the discretion of the board of directors, secure the corporation's obligations to indemnify or advance expenses to a person pursuant to this Article.

        Section 9.12 No Duplication of Payments. The corporation shall not be liable under this Article to make any payment to a person hereunder to the extent such person has otherwise actually received payment (under any insurance policy, agreement or otherwise) of the amounts otherwise payable hereunder.

        Section 9.13 Subrogation. In the event of payment under this Article, the corporation shall be subrogated to the extent of such payment to all of the rights of recovery of the indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the corporation effectively to bring suit to enforce such rights.

        Section 9.14 Contract Rights. The right to indemnification and advancement of expenses conferred hereunder to directors and officers shall be a contract right and shall not be affected adversely to any director or officer by any amendment of these bylaws with respect to any action or inaction occurring prior to such amendment; provided, however, that this provision shall not confer upon any indemnitee or potential indemnitee (in his capacity as such) the right to consent or object to any subsequent amendment of these bylaws.

        Section 9.15 Specific Performance. In any proceeding brought by or on behalf of an officer or director to specifically enforce the provisions of this Article, the corporation hereby waives the claim or defense therein that the plaintiff or claimant has an adequate remedy at law, and the corporation shall not urge in any such proceeding the claim or defense that such remedy at law exists. The provisions of this Section 9.15, however, shall not prevent the officer or director from seeking a remedy at law in connection with any breach of the provisions of this Article.

        Section 9.16 Non-exclusivity, Etc. The rights of a director or officer hereunder shall be in addition to any other rights with respect to indemnification, advancement of expenses or otherwise that he may have under contract or the Georgia Business Corporation Code or otherwise.

        Section 9.17 Amendments. It is the intent of the Corporation to indemnify and advance expenses to its directors and officers to the full extent permitted by the Georgia Business Corporation Code, as amended from time to time. To the extent that the Georgia Business Corporation Code is hereafter amended to permit a Georgia business corporation to provide to its directors greater rights to indemnification or advancement of expenses than those specifically set forth hereinabove, this Article shall be deemed amended to require such greater indemnification or more liberal advancement of expenses to its directors and officers, in each case consistent with the Georgia Business Corporation Code as so amended from time to time. No amendment, modification or rescission of this Article, or any provision hereof, the effect of which would diminish the rights to indemnification or advancement of expenses as set forth herein shall be effective as to any person with respect to any action taken or omitted by such person prior to such amendment, modification or rescission.

        Section 9.18 Severability. To the extent that the provisions of this Article are held to be inconsistent with the provisions of Part 5 of Article 8 of the Georgia Business Corporation Code, such provisions of such Code shall govern. In the event that any of the provisions of this Article (including any provision within a single section, subsection, division or sentence) is held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, the remaining provisions of this Article shall remain enforceable to the fullest extent permitted bylaw.

ARTICLE TEN

Miscellaneous

        Section 10.1 Inspection of Books and Records. The Board of Directors shall have power to determine which accounts, books and records of the corporation shall be opened to the inspection of shareholders, except those as may by law specifically be made open to inspection, and shall have power to fix reasonable rules and regulations not in conflict with the applicable law for the inspection of accounts, books and records which by law or by determination of the Board of Directors shall be open to inspection. Without the prior approval of the Board of Directors in their discretion, the right of inspection set forth in Section 14-2-1602(c) of the Code shall not be available to any shareholder owning two (2%) percent or less of the shares outstanding.

         Section 10.2 Fiscal Year. The Board of Directors is authorized to fix the fiscal year of the corporation and to change the same from time to time as it deems appropriate.

        Section 10.3 Corporate Seal. If the Board of Directors determines that there should be a corporate seal for the corporation, it shall be in the form as the Board of Directors may from time to time determine.

        Section 10.4 Annual Financial Statements. In accordance with the Code, the corporation shall prepare and provide to shareholders such financial statements as may be required by the Code.

        Section 10.5 Conflict with Articles of Incorporation. In the event that any provision of these bylaws conflicts with any provision of the articles of incorporation, the articles of incorporation shall govern.

ARTICLE ELEVEN

Amendments

        Section 11.1 Power to Amend Bylaws. The Board of Directors shall have power to alter, amend or repeal these bylaws or adopt new bylaws, but any bylaws adopted by the Board of Directors may be altered, amended or repealed, and new bylaws adopted, by the shareholders. The shareholders may prescribe by so expressing in the action they take in adopting or amending any bylaw or bylaws that the bylaw or bylaws so adopted or amended shall not be altered, amended or repealed by the Board of Directors. Notwithstanding the foregoing, the provisions of Sections 2.3, 2.12, 3.2, 3.3, 3.4, Article Nine, this Article Eleven or Article Twelve of these bylaws may be amended only by the procedure provided in the Code for the amendment of articles of incorporation.

ARTICLE TWELVE

Restrictions on Certain Business Combinations
with Interested Shareholders

        Section 12.1 Business Combinations. All of the requirements of Article 11, Part 3, of the Code, included in Sections 14-2-1131 through 1133 (and any successor provisions thereto), shall be applicable to the corporation in connection with any business combination, as defined therein, with any interested shareholder, as defined therein.