RARE HOSPITALITY INTERNATIONAL INC, DEF 14A, 2000-04-14

RARE HOSPITALITY INTERNATIONAL INC
DEF 14A, 2000-04-14
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<PAGE> 1

SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>

RARE HOSPITALITY INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

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

(2) Aggregate number of securities to which transaction applies:

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

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):

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

(4) Proposed maximum aggregate value of transaction:

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

(5) Total fee paid:

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

[ ] Fee paid previously with preliminary materials:

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

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

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

(2) Form, Schedule or Registration Statement No.:

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

(3) Filing Party:

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

(4) Date Filed:

------------------------------------------------------------------------
<PAGE> 2

(RARE HOSPITALITY INTERNATIONAL, INC. LOGO)

8215 ROSWELL ROAD
BUILDING 600
ATLANTA, GEORGIA 30350

April 12, 2000

Dear Shareholder:

You are cordially invited to attend the Annual Meeting of Shareholders of
RARE Hospitality International, Inc., which will be held at the Crowne Plaza
Ravinia, 4355 Ashford-Dunwoody Road, Atlanta, Georgia, on Monday, May 15, 2000
at 2:00 p.m. local time.

I hope you are planning to attend the meeting so that you can become
acquainted with the members of our Board of Directors and our management team.
The items of business that will be considered and voted upon this year are
explained in the accompanying Proxy Statement. Even if you are planning to
attend in person, please complete the enclosed proxy card and return it to us.

If you have any questions about the Proxy Statement or the 1999 Annual
Report to Shareholders, please contact Ms. Joia M. Johnson at (770) 399-9595.

We look forward to seeing you on May 15, 2000.

Sincerely,

/s/ George W. McKerrow, Jr.
GEORGE W. McKERROW, JR.
Chairman of the Board of Directors
<PAGE> 3

RARE HOSPITALITY INTERNATIONAL, INC.
8215 ROSWELL ROAD
BUILDING 600
ATLANTA, GEORGIA 30350
---------------------

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 15, 2000
---------------------

Notice is hereby given that the Annual Meeting of Shareholders (the
"Meeting") of RARE Hospitality International, Inc. (the "Company"), will be held
at the Crowne Plaza Ravinia, 4355 Ashford-Dunwoody Road, Atlanta, Georgia, on
Monday, May 15, 2000, at 2:00 p.m. local time, for the following purposes:

1. To elect two directors in Class II to serve until the 2003 Annual
Meeting of Shareholders.

2. To approve the amendment of the Company's 1997 Long-Term Incentive
Plan to increase the number of shares of Common Stock available for award
by 575,000 shares, to grant the committee administering the plan the
authority to delegate to one or more directors who are also officers of the
corporation the ability to grant certain options under the Plan, to provide
certain limitations on the exercise price and term of options granted under
the Plan and to prohibit the extension of the original term or reduction of
the exercise price of options granted under the Plan, and other amendments
described in the Proxy Statement.

3. To ratify the selection of KPMG LLP as the Company's independent
auditors to serve for the fiscal year ending December 31, 2000.

4. To transact such other business as may properly come before the
Meeting or any adjournments thereof.

Only those shareholders of record at the close of business on March 20,
2000, are entitled to notice of and to vote at the Meeting and any adjournments
thereof. The transfer books will not be closed. A complete list of shareholders
entitled to vote at the Meeting will be available at the Meeting.

By Order of the Board of Directors,

/s/ Joia M. Johnson
JOIA M. JOHNSON
Secretary

Atlanta, Georgia
April 12, 2000

WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING IN PERSON, PLEASE
VOTE, SIGN, DATE, AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENCLOSED
BUSINESS REPLY ENVELOPE. IF YOU DO ATTEND THE MEETING YOU MAY, IF YOU WISH,
WITHDRAW YOUR PROXY AND VOTE IN PERSON.
<PAGE> 4

RARE HOSPITALITY INTERNATIONAL, INC.
8215 ROSWELL ROAD
BUILDING 600
ATLANTA, GEORGIA 30350
APRIL 12, 2000
---------------------

PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 15, 2000
---------------------

INTRODUCTION

This Proxy Statement is furnished to shareholders of RARE Hospitality
International, Inc., a Georgia corporation (herein, unless the context otherwise
requires, the "Company"), in connection with the solicitation of proxies by the
Company's Board of Directors from holders of the outstanding shares of common
stock of the Company ("Common Stock") for use at the Annual Meeting of
Shareholders to be held at the Crowne Plaza Ravinia, 4355 Ashford-Dunwoody Road,
Atlanta, Georgia, on Monday, May 15, 2000, at 2:00 p.m. local time, and at any
adjournments thereof (the "Meeting").

The Meeting will be held for the following purposes: (i) to elect two
directors in Class II to serve until the 2003 Annual Meeting of Shareholders;
(ii) to approve amendment of the Company's 1997 Long-Term Incentive Plan; (iii)
to ratify the selection of KPMG LLP as the Company's independent auditors for
the fiscal year ending December 31, 2000; and (iv) to transact such other
business as may properly come before the Meeting.

The Company's mailing address and the location of its principal executive
offices is 8215 Roswell Road, Building 600, Atlanta, Georgia 30350. This Proxy
Statement and the accompanying Proxy are first being mailed to shareholders of
the Company on or about April 12, 2000.

SHAREHOLDERS ENTITLED TO VOTE

Only shareholders of record of the Company at the close of business on
March 20, 2000 (the "Record Date"), will be entitled to notice of, and to vote
at, the Meeting. On the Record Date, there were 11,841,100 shares of Common
Stock issued and outstanding held by approximately 324 shareholders of record.
Notwithstanding the Record Date specified above, the Company's stock transfer
books will not be closed and shares may be transferred subsequent to the Record
Date. However, all votes must be cast in the names of shareholders of record on
the Record Date.

QUORUM AND VOTING REQUIREMENTS

The presence, in person or by proxy, of the holders of a majority of the
votes entitled to be cast on a matter at the Meeting will constitute a quorum to
conduct business at the Meeting. Pursuant to the Bylaws of the Company, holders
of Common Stock will be entitled to one vote for each share held.

The election of directors will require the affirmative vote of a majority
of the shares represented at the Meeting and entitled to vote, provided a quorum
is present. With respect to the election of directors, shareholders may: (1)
vote "for" all of the director nominees; (2) "withhold" authority to vote for
all of the nominees; or (3) withhold authority to vote for any individual
nominee or nominees but vote for all other nominees. In the election of
directors, votes to withhold authority and broker nonvotes (which occur when
shares held by brokers or nominees for beneficial owners are voted on some
matters but not on others), both of which are considered present at the Meeting
and counted for purposes of establishing a quorum, will have the same effect as
a vote "against" the nominee.

The amendment of the Company's 1997 Long-Term Incentive Plan will require
that votes cast in favor of the proposal exceed the votes cast against the
proposal, provided a quorum is present. With respect to the
<PAGE> 5

amendment of the Company's 1997 Long-Term Incentive Plan, shareholders may: (1)
vote "for" approval; (2) vote "against" approval; or (3) "abstain" from voting
on the proposal. Abstentions and broker nonvotes will have no effect on the
approval of the amendment of the Company's 1997 Long-Term Incentive Plan.

The ratification of the appointment of KPMG LLP as independent auditors
will require that votes cast in favor of the proposal exceed the votes cast
against the proposal, provided a quorum is present. With respect to the approval
of the auditors, shareholders may: (1) vote "for" approval; (2) vote "against"
approval; or (3) "abstain" from voting on the proposal. Abstentions and broker
nonvotes will have no effect on the ratification of the auditors.

PROXIES

If the enclosed Proxy is executed, returned in time and not revoked, the
shares represented thereby will be voted in accordance with the instructions
indicated in such Proxy. IF NO INSTRUCTIONS ARE INDICATED, SUCH PROXIES WILL BE
VOTED (I) FOR THE ELECTION OF THE NOMINEES FOR DIRECTOR OF THE COMPANY, (II) FOR
APPROVAL OF THE AMENDMENT OF THE COMPANY'S 1997 LONG-TERM INCENTIVE PLAN, (III)
FOR RATIFICATION OF THE SELECTION OF KPMG LLP AS THE COMPANY'S INDEPENDENT
AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2000, AND (IV) IF THE COMPANY
DID NOT HAVE NOTICE ON OR BEFORE FEBRUARY 21, 2000 OF ANY MATTERS PROPERLY
BROUGHT BEFORE THE MEETING, IN THE SOLE DISCRETION OF THE PROXIES AS TO SUCH
MATTERS.

A shareholder who has given a Proxy may revoke it at any time prior to its
exercise at the Meeting by (i) giving written notice of revocation to the
Secretary of the Company, (ii) properly submitting to the Company a duly
executed Proxy bearing a later date, or (iii) appearing at the Meeting and
voting in person. All written notices of revocation of Proxies should be
addressed as follows: RARE Hospitality International, Inc., 8215 Roswell Road,
Building 600, Atlanta, Georgia 30350, Attention: Ms. Joia M. Johnson, Secretary.

2
<PAGE> 6

PROPOSAL I

ELECTION OF DIRECTORS

The Company's Board of Directors has nominated Messrs. Philip J. Hickey,
Jr. and George W. McKerrow, Jr. for election as Class II directors to hold
office until the 2003 Annual Meeting of Shareholders of the Company and until
their successors shall have been elected and qualified.

It is believed that all of the nominees will be available and able to serve
as directors. It is anticipated that management shareholders of the Company will
grant authority to vote for the election of the two nominees.

The Company's Board of Directors currently consists of seven directors
divided into three classes, with three directors currently in Class I and two
directors in each of Classes II and III. The term of the Class II directors,
composed of Messrs. Hickey Jr. and McKerrow Jr. expires at the Meeting. The
terms of the Class I and Class III directors expire at the Annual Meetings of
Shareholders in 2002 and 2001, respectively. Directors hold office until the
Annual Meeting of Shareholders of the Company in the year in which the term of
their Class expires and until their successors have been duly elected and
qualified.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE TWO NOMINEES FOR ELECTION
AS DIRECTORS. THE AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES REPRESENTED AND
ENTITLED TO VOTE AT THE MEETING AT WHICH A QUORUM IS PRESENT IS REQUIRED FOR THE
ELECTION OF THE NOMINEES.

CERTAIN INFORMATION CONCERNING NOMINEES AND DIRECTORS

The following table sets forth the names of the nominees and of the
directors continuing in office, their ages, the year in which each was first
elected a director, their position(s) with the Company, their principal
occupations and employers for at least the last five years, and any other
directorships held by them in certain other companies. For information
concerning membership on committees of the Board of Directors, see "Meetings of
the Board of Directors and Committees" below. For information concerning
directors' ownership of Common Stock, see "Beneficial Owners of More Than Five
Percent of the Company's Common Stock; Shares Held by Directors and Executive
Officers" below.

NOMINEES TO THE BOARD OF DIRECTORS

CLASS II -- TERM EXPIRING ANNUAL MEETING 2003

3
<PAGE> 7

MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE

CLASS I -- TERM EXPIRING ANNUAL MEETING 2002

<TABLE>
<CAPTION>
POSITIONS WITH THE COMPANY, PRINCIPAL
NAME AND YEAR FIRST OCCUPATIONS DURING AT LEAST THE PAST
ELECTED A DIRECTOR AGE FIVE YEARS, AND OTHER DIRECTORSHIPS
- ------------------- --- -------------------------------------
<S> <C> <C>
George W. McKerrow, Sr., 1982............. 74 Mr. McKerrow, Sr. was Chairman of the Board of Directors of the
Company from its organization in 1982 until February 1994 and
continues as a director and employee of the Company. Before
joining the Company, Mr. McKerrow, Sr. was the Vice President
and General Manager of the Dairypak Division of Champion
International Corporation. Mr. McKerrow's son, George W.
McKerrow, Jr., is the Chairman of the Board of Directors of the
Company.
Don L. Chapman, 1992...................... 60 Mr. Chapman has been Chairman of the Investment Committee of
Legacy Securities Corporation since March 2000. Mr. Chapman was
Chief Executive Officer of S&S Tug LLC, the successor to Tug
Manufacturing Corporation, a manufacturer of aircraft towing
equipment until March 2000. Mr. Chapman was President and Chief
Executive Officer of Tug Manufacturing for more than five years
prior to its acquisition in December 1998. Mr. Chapman is also
a director of AirTran Holdings, Inc. and serves on the
compensation committee of that board. Mr. Chapman served as the
Chief Executive Officer of Opti-World, Inc. from June 1983
until February 1995.
Lewis H. Jordan, 1998..................... 55 Mr. Jordan is the founder and principal officer of Wingspread
Enterprises LLC, an investment and consulting firm, since
August 1997. Mr. Jordan currently serves and has served as a
director of AirTran Holdings, Inc. since June 1993. Mr. Jordan
was also President and Chief Operating Officer of ValuJet, Inc.
from June 1993 until November 1997. Prior to 1993, Mr. Jordan
held various executive officer positions in the airline
industry.
</TABLE>

4
<PAGE> 8

CLASS III -- TERM EXPIRING ANNUAL MEETING 2001

<TABLE>
<CAPTION>
POSITIONS WITH THE COMPANY, PRINCIPAL
NAME AND YEAR FIRST OCCUPATIONS DURING AT LEAST THE PAST
ELECTED A DIRECTOR AGE FIVE YEARS, AND OTHER DIRECTORSHIPS
------------------- --- -------------------------------------
<S> <C> <C>
Ronald W. San Martin, 1985................ 52 Mr. San Martin serves as President of 490
East Paces Ferry, Inc., Chief Financial
Officer of Fishbone LLC, and has held the
position of Chief Financial Officer (since
June 1995) and Secretary (since January
1996) of We're Cookin' Inc., all of which
are restaurant development and operating
companies. Mr. San Martin was the Chief
Financial Officer and the Secretary of the
Company from May 1985 until June 1995 and
was Chief Operating Officer from August
1997 until December 1997. Prior to joining
the Company, Mr. San Martin was a tax
manager at Evans, Snyder & Co., Certified
Public Accountants.
John G. Pawly, 1993....................... 71 Mr. Pawly has retired as a senior
consultant for Attwood Corporation, a
manufacturer of boating accessories and
general hardware, a position he held
following its merger in January 1994 with
Pawly Industries Corporation, a privately
held manufacturer of boating accessories.
Mr. Pawly served as President and
principal shareholder of Pawly Industries
Corporation and Chairman and Chief
Executive Officer of L.S. Brown Co., a
division of Pawly Industries Corporation,
for more than five years prior to January
1994.
</TABLE>

MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES

Board of Directors. The property, affairs and business of the Company are
under the general management of its Board of Directors as provided by the laws
of Georgia and the Bylaws of the Company. The Company has standing Audit,
Compensation and Stock Option Committees of the Board of Directors and does not
have a Nominating Committee.

Audit Committee. The members of the Audit Committee are Ronald W. San
Martin and Lewis H. Jordan. The Audit Committee recommends to the Board of
Directors for their approval the independent accountants to audit the financial
statements of the Company, which includes an inspection of the books and
accounts of the Company, and reviews with such accountants the scope of their
audit and their report thereon, including any questions and recommendations that
may arise relating to such audit and report or the Company's internal accounting
procedures. The Audit Committee held three meetings during the 1999 fiscal year.

Stock Option Committee. The members of the Stock Option Committee are
Lewis H. Jordan and John G. Pawly. The Stock Option Committee establishes
targets and then recommends incentive awards under the incentive compensation
plans of the Company for executive officers and other key personnel of the
Company. The Stock Option Committee held one meeting during the 1999 fiscal
year.

Compensation Committee. The members of the Compensation Committee are Don
L. Chapman, John G. Pawly and Ronald W. San Martin. The function of the
Compensation Committee is to review and approve the compensation of executive
officers including salary, bonus and other annual compensation awards. The
Compensation Committee reports to the Board of Directors. The Compensation
Committee held one meeting during the 1999 fiscal year.

5
<PAGE> 9

During the 1999 fiscal year, the Company's Board of Directors met five
times. Each director, during the period he was a director, attended at least 75%
of the aggregate number of meetings of the Board of Directors and the committees
of the Board of Directors of which he was a member.

EXECUTIVE OFFICERS OF THE COMPANY

Except for Messrs. McKerrow, Jr., and Hickey, discussed above, the
following table sets forth the names of the executive officers of the Company,
their ages, their position(s) with the Company, their principal occupations and
employers for at least the last five years, and any other directorships held by
them in certain other companies. For information concerning ownership of Common
Stock, see "Beneficial Owners of More Than Five Percent of the Company's Common
Stock; Shares Held by Directors and Executive Officers" below.

<TABLE>
<CAPTION>
POSITIONS WITH THE COMPANY, PRINCIPAL
OCCUPATIONS DURING AT LEAST THE PAST
NAME AGE FIVE YEARS, AND OTHER DIRECTORSHIPS
---- --- -------------------------------------
<S> <C> <C>
Eugene I. Lee, Jr......................... 38 Mr. Lee became the Company's Chief
Operating Officer in January 1999. Prior
to that, he was Executive Vice President,
Operations -- LongHorn Steakhouse Division
from October 1997 until January 1999, and
was the Company's Executive Vice
President, Operations -- Bugaboo Creek
Steak House Division from January 1997
until October 1997. For more than five
years prior to joining the Company, he
occupied various positions with Uno
Restaurant Corporation, an operator of
restaurants, including Senior Vice
President -- Operations.
Thomas W. Gathers......................... 44 Mr. Gathers became the Company's Executive
Vice President of Human Resources in
December 1998. For more than five years
prior to joining the Company, he was
Senior Vice President -- Human Resources
with Uno Restaurant Corporation.
W. Douglas Benn........................... 45 Mr. Benn became the Company's Executive
Vice President, Finance, Chief Financial
Officer and Secretary in March 1998.
Before joining the Company, Mr. Benn was
an independent financial consultant
providing consulting services primarily to
companies in the restaurant industry,
including the Company, from February 1997
until March 1998. From April 1987 until
February 1997, Mr. Benn was the Chief
Financial Officer of Innovative Restaurant
Concepts, Inc., an operator and franchisor
of casual dining restaurants that was
acquired by Applebee's International, Inc.
in March 1995.
</TABLE>

6
<PAGE> 10

<TABLE>
<CAPTION>
POSITIONS WITH THE COMPANY, PRINCIPAL
OCCUPATIONS DURING AT LEAST THE PAST
NAME AGE FIVE YEARS, AND OTHER DIRECTORSHIPS
---- --- -------------------------------------
<S> <C> <C>
Joia M. Johnson........................... 40 Ms. Johnson became the Company's Vice
President and General Counsel in May 1999
and became the Company's Secretary in July
1999. Before joining the Company, Ms.
Johnson served as Vice President, General
Counsel and Secretary of H.J. Russell &
Company, a real estate development,
construction and property management firm,
where she held that position from January
1989 to May 1999. For six years during her
employment with H.J. Russell & Company,
Ms. Johnson served as Corporate Counsel
for Concessions International, Inc., an
airport food and beverage concessionaire
and affiliate of H.J. Russell & Company.
</TABLE>

7
<PAGE> 11

BENEFICIAL OWNERS OF MORE THAN FIVE PERCENT OF THE COMPANY'S COMMON
STOCK; SHARES HELD BY DIRECTORS AND EXECUTIVE OFFICERS

Based solely on information made available to the Company, the following
table sets forth certain information with respect to the beneficial ownership of
the Company's Common Stock as of March 15, 2000, by (i) each person who is known
by the Company to beneficially own more than 5% of the outstanding shares of
Common Stock of the Company, (ii) each director and nominee for director of the
Company, (iii) the Named Executive Officers of the Company (as defined under
"Executive Compensation" below), and (iv) all of the Company's executive
officers and directors as a group.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED
---------------------
NAME(1) SHARES PERCENT
- ------- --------- -------
<S> <C> <C>
George W. McKerrow, Jr. .................................... 379,993(2) 3.2%
Philip J. Hickey, Jr. ...................................... 311,350(3) 2.6%
George W. McKerrow, Sr. .................................... 294,500(4) 2.5%
Ronald W. San Martin........................................ 275,000(5) 2.3%
Don L. Chapman.............................................. 30,000(6) *
John G. Pawly............................................... 25,000(7) *
Lewis H. Jordan............................................. 12,500(8) *
Eugene I. Lee, Jr. ......................................... 120,000(9) 1.0%
W. Douglas Benn............................................. 94,600(10) *
Thomas W. Gathers........................................... 11,000(11) *
T. Rowe Price Associates, Inc............................... 729,900(12) 6.2%
Dimentional Fund Advisors, Inc.............................. 674,565(13) 5.7%
All executive officers and directors as a group (eleven
persons).................................................. 1,553,943(14) 12.5%
</TABLE>

T. Rowe Price Associates, Inc. and Dimentional Fund Advisors, Inc. are the only
shareholders known by the Company to be the beneficial owners of more than 5% of
the Company's common stock.
- ---------------

* Less than one percent.
(1) The named shareholders have sole voting and investment power with respect
to all shares shown as being beneficially owned by them, except as
otherwise indicated. Shares underlying stock options that are exercisable
within 60 days are deemed to be outstanding for the purpose of computing
the outstanding shares owned by the particular person and by the group, but
are not deemed outstanding for any other purpose.
(2) Includes 5,265 shares held as custodian for one of his daughters and 95,000
shares that are subject to stock options exercisable within 60 days.
(3) Includes 12,000 shares held in an irrevocable trust for his daughter,
12,000 shares held in an irrevocable trust for his son, 2,100 shares owned
jointly with his wife and 200,000 shares that are subject to stock options
exercisable within 60 days.
(4) Consists of 294,500 shares held by the George W. McKerrow, Sr. Revocable
Trust. Mr. McKerrow Sr. is the sole trustee of such trust and has sole
voting and investment power over all 294,500 shares held by the trust.
(5) Includes 100,000 shares pledged to secure a loan to Mr. San Martin over
which he has sole voting and shared investment power, and 40,000 shares
that are subject to stock options exercisable within 60 days.
(6) Includes 11,000 shares that are subject to stock options exercisable within
60 days.
(7) Includes 19,000 shares that are subject to stock options exercisable within
60 days.
(8) Includes 5,000 shares that are subject to stock options exercisable within
60 days.
(9) Includes 115,500 shares that are subject to stock options exercisable
within 60 days.
(10) Includes 1,000 shares held as custodian for his children and 88,750 shares
that are subject to stock options exercisable within 60 days.
(11) Includes 9,000 shares that are subject to stock options exercisable within
60 days.

8
<PAGE> 12

(12) Based on a Schedule 13G dated February 14, 2000, filed by T. Rowe Price
Associates, Inc.. The address of T. Rowe Price Associates, Inc. is 100 E.
Pratt Street, Baltimore, MD 21202.
(13) Based on a Schedule 13G dated February 4, 2000, filed by Dimentional Fund
Advisors, Inc. The address of Dimentional Fund Advisors, Inc. is 1299 Ocean
Avenue, 11th Floor, Santa Monica, CA 90401.
(14) Includes 583,250 shares that are subject to stock options exercisable
within 60 days.

9
<PAGE> 13

EXECUTIVE COMPENSATION

The following table presents certain summary information concerning
compensation paid or accrued by the Company for services rendered in all
capacities during the fiscal years ended December 28, 1997, December 27, 1998,
and December 26, 1999, for (i) all individuals serving as the registrant's chief
executive officer or acting in a similar capacity during the last completed
fiscal year; and (ii) each of the four most highly compensated executive
officers of the Company who earned in excess of $100,000 during 1999
(collectively, the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
-------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
- --------------------------- ---- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
George W. McKerrow, Jr. ................... 1999 $200,000 $ 80,000 -- $ --
Chairman of the Board of Directors(1) 1998 229,533 82,733 100,000 5,000(2)
1997 190,694 -- -- 4,603(2)
Philip J. Hickey, Jr. ..................... 1999 272,115 272,115 -- --
President and Chief Executive 1998 251,923 183,076 -- --
Officer(3) 1997 41,209 50,000 300,000 --
Eugene I. Lee, Jr. ........................ 1999 212,981 106,490 -- --
Executive Vice President and 1998 190,340 72,359 -- --
Chief Operating Officer 1997 142,634 30,000 180,000 2,536(4)
W. Douglas Benn............................ 1999 189,615 95,165 -- --
Executive Vice President, Finance and 1998 132,933 61,220 113,750 --
Chief Financial Officer(5)
Thomas W. Gathers.......................... 1999 185,385 74,154 -- --
Executive Vice President of 1998 10,165 -- 30,000 --
Human Resources(6)
</TABLE>

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

(1) Mr. McKerrow Jr. was Chief Executive Officer from July 31, 1997 through July
30, 1998.
(2) Consists of discretionary and matching contributions to the Company's 401(k)
Plan. The matching contributions are based on pre-tax elective contributions
(included under salary and bonus) made to such plan.
(3) Mr. Hickey Jr. was employed by the Company as President effective October
30, 1997 and became Chief Executive Officer effective July 30, 1998.
(4) Consists of automobile allowance.
(5) Mr. Benn was employed by the Company effective March 23, 1998 and was
Secretary through July 21, 1999.
(6) Mr. Gathers was employed by the Company effective December 7, 1998.

10
<PAGE> 14

AGGREGATED OPTION EXERCISES IN 1999
AND YEAR-END OPTION VALUES

The following table presents information with respect to options exercised
by the Named Executive Officers during 1999 and the fiscal year end values of
unexercised options to purchase the Company's Common Stock held by the Named
Executive Officers as of December 26, 1999.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)(2)
SHARES ACQUIRED VALUE ------------------------------ ---------------------------
NAME ON EXERCISE (#) REALIZED ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- --------------- ------------ -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
George W. McKerrow, Jr........ 5,000 50,625 45,000 50,000 405,000 450,000
Philip J. Hickey, Jr.......... -- -- 200,000 100,000 1,637,000 375,000
Eugene I. Lee, Jr............. -- -- 112,000 68,000 805,500 214,500
W. Douglas Benn............... -- -- 63,750 49,800 469,838 286,550
Thomas W. Gathers............. -- -- 10,000 20,000 66,250 92,500
</TABLE>

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

(1) "Value Realized" represents the amount equal to the excess of the fair
market value of the shares at the time of exercise over the exercise price.
(2) Represents the fair market value as of December 23, 1999, the last trading
day before the Company's fiscal year-end ($18.75), of the shares underlying
the options less the exercise price of the options.

Compensation of Directors. Directors of the Company who are not also
employees receive an annual retainer of $4,000, director fees of $1,000 per
meeting attended and $500 per committee meeting attended, plus reimbursement of
travel and other expenses incurred in connection with the performance of their
duties. Directors who are also employees of the Company are not paid any
compensation for their services as directors. In addition, non-employee
Directors are also eligible to receive formula plan stock options under the
Company's 1996 Stock Plan for Outside Directors ("Directors Plan"). In 1999,
Messrs. San Martin, Chapman, Pawly and Jordan each received options to purchase
2,500 shares of Common Stock at an exercise price of $14.188 per share under the
Directors Plan.

Employment Contracts. Effective January 1, 1992, the Company entered into
an employment agreement with Mr. McKerrow, Jr. For 1998, Mr. McKerrow Jr.'s
annual salary was $250,000 until August 1, 1998, at which date it was reduced to
$200,000. This agreement also provides for the employment of Mr. McKerrow, Jr.
for an indefinite period in the position he currently occupies, which employment
may be terminated by either party at will. In addition, Mr. McKerrow, Jr. agrees
that for a period of one year following the termination of his employment with
the Company, without the consent of the Company he will not engage, in a general
management capacity, in the operation of a steak restaurant within the Company's
then current market areas.

On September 30, 1997, the Company entered into an employment agreement
(the "Hickey Employment Agreement") with Mr. Philip J. Hickey, Jr., who began
serving as the Company's President and Chief Operating Officer effective October
30, 1997. Under the Hickey Employment Agreement, which has an initial term
ending December 31, 2000 and renews annually thereafter unless terminated by
either party, Mr. Hickey currently receives an annual salary of $325,000 plus
such additional amounts as may be approved by the Company's Board of Directors,
and an annual bonus of up to 100% of his annual salary as determined and paid in
accordance with a bonus program for the executive officers of the Company. In
addition, Mr. Hickey received an initial, one-time only bonus of $50,000 for
entering into the Hickey Employment Agreement with the Company. The Hickey
Employment Agreement also provided for the granting of options to purchase an
aggregate of 300,000 shares of the Company's Common Stock to Mr. Hickey. The
exercisability of these options may accelerate upon the termination of Mr.
Hickey's employment under certain conditions.

The Hickey Employment Agreement provides certain death and disability
benefits as well as certain additional payments in the event that the Company
terminates Mr. Hickey's employment without cause or Mr. Hickey terminates his
employment "for reason." In addition, the exercisability of options granted
under

11
<PAGE> 15

the Hickey Employment Agreement will accelerate as provided in the agreements
governing such options in the event of the termination of Mr. Hickey's
employment for death or disability or if the Company terminates his employment
without cause or Mr. Hickey terminates "for reason."

The Hickey Employment Agreement also contains certain provisions relating
to unauthorized disclosure of confidential information, recognition of
proprietary rights and non-competition provisions which provide that without the
consent of the Company Mr. Hickey will not compete with the Company during his
employment nor for a period of 12 months following his termination.

On October 16, 1997, the Company entered into an employment agreement (the
"Lee Employment Agreement") with Mr. Eugene I. Lee, Jr., who began serving as
the Company's Executive Vice President, Operations effective as of such date.
Under the Lee Employment Agreement, which is terminable at will by either the
Company or Mr. Lee at any time, Mr. Lee currently receives an annual salary of
$250,000 plus such additional amounts as may be approved by the Company's Board
of Directors, and an annual bonus as determined and paid in accordance with the
bonus program for the executive officers of the Company as approved by the
Company's Board of Directors from time to time. The Lee Employment Agreement
also provided for the granting of options to purchase an aggregate of 150,000
shares of the Company's Common Stock to Mr. Lee. The Lee Employment Agreement
also provides certain death and disability benefits as well as certain
additional payments in the event that the Company terminates Mr. Lee's
employment without cause.

The Lee Employment Agreement also contains certain provisions relating to
unauthorized disclosure of confidential information, recognition of proprietary
rights and non-competition provisions which provide that without the consent of
the Company Mr. Lee will not compete with the Company during his employment nor
for a period of 12 months following his termination.

On March 23, 1998, the Company entered into an employment agreement (the
"Benn Employment Agreement") with Mr. W. Douglas Benn, who began serving as the
Company's Executive Vice President, Finance and Chief Financial Officer
effective as of that date. Under the Benn Employment Agreement, which is
terminable at will by either the Company or Mr. Benn at any time, Mr. Benn
currently receives an annual salary of $195,000 plus such additional amounts as
may be approved by the Company's Board of Directors, and an annual bonus as
determined and paid in accordance with the bonus program for the executive
officers of the Company as approved by the Company's Board of Directors from
time to time. During the term of the Benn Employment Agreement, Mr. Benn's
maximum bonus potential under such bonus program shall not be less than 50% of
Mr. Benn's base compensation for the fiscal year. The Benn Employment Agreement
also provided for the granting of options to purchase an aggregate of 113,750
shares of the Company's Common Stock to Mr. Benn. The Benn Employment Agreement
also provides certain death and disability benefits as well as certain
additional payments in the event that the Company terminates Mr. Benn's
employment without cause.

The Benn Employment Agreement also contains certain provisions relating to
unauthorized disclosure of confidential information, recognition of proprietary
rights and non-competition provisions which provide that without the consent of
the Company Mr. Benn will not compete with the Company during his employment nor
for a period of 12 months following his termination.

On November, 30 1998, the Company entered into an employment agreement (the
"Gathers Employment Agreement") with Thomas W. Gathers, who began serving as the
Company's Executive Vice President, Human Resources, effective as of December 7,
1998. Under the Gathers Employment Agreement, which is terminable at will by
either the Company or Mr. Gathers at any time, Mr. Gathers currently receives an
annual salary of $195,000 plus such additional amounts as may be approved by the
Company's Board of Directors, and an annual bonus as determined and paid in
accordance with the bonus program for the executive officers of the Company as
approved by the Company's Board of Directors from time to time. During the term
of the Gathers Employment Agreement, Mr. Gathers' maximum bonus potential under
such bonus program shall not be less than 40% of Mr. Gathers' base compensation
for the fiscal year. In addition, Mr. Gathers received a loan from the Company
in the amount of $40,000, payable on demand at any time following the
termination of Mr. Gathers' employment by Mr. Gathers or by the Company for
cause prior to
12
<PAGE> 16

November 30, 2000. If Mr. Gathers remains employed by the Company on November
30, 2000, this loan will be forgiven as additional compensation to Mr. Gathers.
The Gathers Employment Agreement also provided for the granting of options to
purchase an aggregate of 30,000 shares of the Company's common stock. The
exercisability of these options will accelerate in the event of a change in
control of the Company occurring within two years following the date of the
Employment Agreement. The Gathers Employment Agreement provides certain death
and disability benefits as well as certain additional payments in the event that
the Company terminates Mr. Gather's employment without cause.

The Gathers Employment Agreement also contains certain provisions relating
to unauthorized disclosure of confidential information, recognition of
proprietary rights and non-competition provisions which provide that without
consent of the Company, Mr. Gathers will not compete with the Company during his
employment nor for a period of twelve (12) months following his termination.

13
<PAGE> 17

SHAREHOLDER RETURN ANALYSIS

The following line-graph presentation compares cumulative shareholder
returns of the Company with the Nasdaq Stock Market (U.S. Companies) and a Peer
Index for the period beginning on December 31, 1994 (assuming the investment of
$100 in the Company's Common Stock, the Nasdaq Stock Market (U.S. Companies),
and the Peer Index on December 31, 1994 and reinvestment of all dividends).

COMPARISON OF CUMULATIVE TOTAL RETURNS
RARE HOSPITALITY INTERNATIONAL, INC.

<TABLE>
<CAPTION>
RARE HOSPITALITY
INTERNATIONAL, INC. NASDAQ STOCK MARKET PEER INDEX
------------------- ------------------- ----------
<S> <C> <C> <C>
1994 100.00 100.00 100.00
1995 208.80 141.30 114.30
1996 223.50 174.10 110.30
1997 110.30 205.10 127.20
1998 160.30 296.40 129.80
1999 220.60 542.30 102.90
</TABLE>

Total return calculations for the Nasdaq Stock Market (U.S. Companies) and
the Peer Index were prepared by the Center for Research in Security Prices, The
University of Chicago. The Peer Index is composed of 34 active companies,
including the Company, offering a wide variety of restaurant services and
franchising found primarily in the Standard Industrial Classification ("SIC")
Code groups 5810 and 5812. Information with regard to SIC classifications in
general can be found in the Standard Industrial Classification Manual published
by the Executive Office of the President, Office of Management and Budget.
Specific information regarding the companies comprising the Peer Index will be
provided to any shareholder upon request to the Secretary of the Company.

COMPENSATION AND STOCK OPTION COMMITTEES' REPORT
ON EXECUTIVE COMPENSATION

The compensation of the Company's executive officers, including those with
employment agreements, is subject to annual review and approval by the
Compensation Committee. Compensation of executives generally consists of base
salary, cash bonuses, participation in various benefit plans on the same basis
as other employees of the Company, and the award of stock options. In
establishing compensation policies and levels, the Compensation Committee seeks
to attract and retain an outstanding group of executives and to align the
interests of those executives with the Company's overall business strategies and
goals.

14
<PAGE> 18

In January 1999, the Compensation Committee reviewed the compensation of
the Company's executives and determined salaries in light of the level of
responsibility of the executives, prior experience and achievements and the
importance of each executive's contribution to the Company. The Compensation
Committee's determinations of the level of compensation for the Named Executive
Officers described in "Executive Compensation" above was also based upon a
review of compensation levels at comparable companies in the Peer Index and the
prior level of the executive's base compensation.

The Compensation Committee increased the base compensation of Philip J.
Hickey, Jr. by 23.8% to $325,000 on November 1, 1999 in recognition of his
services during the previous 12 months.

The Company's executives are entitled to receive bonuses under a plan that
bases bonuses on the Company's earnings or a combination of the Company's
earnings and the performance of the concept in which the executive was employed.
The bonus compensation of the Chief Executive Officer under this plan is
entirely based on the Company's earnings. For 1999, cash bonuses were paid to
each Named Executive Officer under this plan.

The Stock Option Committee determines from time to time the key employees
of the Company who are entitled to receive options or other stock-based
incentive awards under the Company's 1997 Long-Term Incentive Plan, which was
adopted in October 1997 and from time to time grants to such key employees
options under the Incentive Plan to provide greater incentive to such employees
to increase the long-term value of the Company and its stock. The Compensation
Committee granted options to purchase 30,000 shares of the Company's stock to
Joia M. Johnson, Vice President, General Counsel and Secretary, in 1999 in
connection with her commencement of employment with the Company.

Section 162(m) of the Internal Revenue Code (the "Code") adopted as part of
the Revenue Reconciliation Act of 1993, generally limits to $1 million the
deduction that can be claimed by any publicly-held corporation for compensation
paid to any "covered employee" in any taxable year beginning after December 31,
1993. The term "covered employee" for this purpose is defined generally as the
Chief Executive Officer and the four other highest paid employees of the
Company. Performance-based compensation is outside the scope of the $1 million
limitation and, hence, generally can be deducted by a publicly-held corporation
without regard to amount, provided that, among other requirements, such
compensation is approved by the shareholders. Because of the current levels of
compensation of the Company's highest paid employees, the Compensation Committee
has not yet developed a formal policy on this matter. Generally speaking, the
Compensation Committee's executive compensation policies are performance-based,
as described above.

<TABLE>
<S> <C>
COMPENSATION COMMITTEE STOCK OPTION COMMITTEE
Don L. Chapman Lewis H. Jordan
John G. Pawly John G. Pawly
Ronald San Martin
</TABLE>

CERTAIN TRANSACTIONS

Through August 31, 1999, the Company leased the land and buildings in which
it operates its Tucker, Georgia LongHorn Steakhouse from a partnership that is
owned 15% by Mr. McKerrow, Sr., 15% by Mr. McKerrow, Jr., 10% by Mr. San Martin
and 60% by three unrelated individuals. This lease was entered into for a term
of five years beginning on July 1, 1986, renewable for two additional five year
periods, and provides for monthly rent equal to the greater of $3,700 ($4,200
and $4,700, respectively, in the two subsequent five-year periods) or 5% of the
restaurant's adjusted gross revenues. The lease was renewed for an additional
five-year period beginning on July 1, 1996. Under the terms of the lease, the
Company paid all taxes, utilities, and maintenance of the leased premises. This
lease was on substantially the same terms as other leases the Company has
entered into with unrelated parties with respect to other Company-owned
restaurants. The Company paid the partnership rent of $71,800 in 1999. In August
1999, the Company purchased the land and buildings for $911,000 and terminated
the underlying lease. The Company's Chief

15
<PAGE> 19

Financial Officer determined the purchase price paid, which he believes to be
fair market value, based upon comparable sales and rental rates in the area.

On November 22, 1999, Eugene I. Lee, Jr., Executive Vice President and
Chief Operating Officer, received loans from the Company aggregating $130,000.
These loans bear interest at 8% and are payable on demand at any time following
the termination of Mr. Lee's employment by Mr. Lee or by the Company for cause.
However, if Mr. Lee remains employed by the Company, the loans will be forgiven
in certain installments resulting in a reduction in the principal amount of the
loans to $97,500 on November 15, 2001; $65,000 on November 15, 2002; and $0 on
November 15, 2003. Any reduction in the principal amount of the loans and
accrued interest thereon resulting from Mr. Lee's continued employment will be
treated as additional compensation to Mr. Lee in the year of such reduction.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During 1999, Messrs. Chapman, Jordan, Pawly and San Martin served on the
Compensation or Stock Option Committees. None of them were an officer or
employee of the Company or any of its subsidiaries in 1999.

PROPOSAL II

AMENDMENT OF THE COMPANY'S 1997 LONG-TERM INCENTIVE PLAN TO INCREASE THE NUMBER
OF SHARES OF COMMON STOCK AVAILABLE FOR AWARDS BY 575,000 SHARES, TO GRANT THE
COMMITTEE ADMINISTERING THE PLAN THE AUTHORITY TO DELEGATE TO ONE OR MORE
DIRECTORS WHO ARE ALSO OFFICERS OF THE CORPORATION THE ABILITY TO GRANT CERTAIN
OPTIONS UNDER THE PLAN, TO PROVIDE CERTAIN LIMITATIONS ON THE EXERCISE PRICE AND
TERM OF OPTIONS GRANTED UNDER THE PLAN AND TO PROHIBIT THE EXTENSION OF THE
ORIGINAL TERM OR REDUCTION OF THE EXERCISE PRICE OF OPTIONS GRANTED UNDER THE
PLAN, AND OTHER AMENDMENTS AS DESCRIBED HEREIN.

Recently, the Company reviewed its compensation programs and determined
that, while the existing RARE Hospitality International, Inc. 1997 Long-Term
Incentive Plan (the "Incentive Plan") provides significant flexibility in the
types of equity-related compensation programs available, the number of shares
remaining for Awards under the Incentive Plan will not be sufficient for the
Company's intended compensation programs over the next two years.

We believe the Company needs to provide for additional shares to be
available for Awards under the Incentive Plan to enable us to fulfill the
purpose of the Incentive Plan, which is to attract and retain highly qualified
employees and others who perform services that enhance the value of
shareholders' equity. We believe stock ownership ensures that the interests of
these people are aligned with the interests of the Company's other shareholders.
The amendment will also provide the Company greater flexibility to adapt to
changing economic and competitive conditions and to provide compensation
incentives that are competitive with those provided by other companies. In
addition, the Company believes that the possibility of granting options at
prices below the fair market value of the Company's Common Stock on the date of
grant, granting options for terms longer than ten years, extending the original
term of options after they have been granted, or reducing the exercise price of
options after they have been granted (except to reflect stock splits or similar
dilutive events) could potentially eliminate the performance orientation of
options, destroy alignment between shareholders and option holders, and diminish
the view that options are a long-term investment. Accordingly, the Board of
Directors of the Company on February 10, 2000, adopted Amendment No. 3 to the
Incentive Plan. The Board of Directors has reserved an additional 575,000 shares
of the Company's Common Stock for issuance in connection with awards under the
Incentive Plan and directed that Amendment No. 3 be submitted to the
shareholders of the Company for their approval. Amendment No. 3 to the Incentive
Plan will be effective as of the date of adoption by the Board of Directors;
however, if the shareholders do not approve Amendment No. 3 to the Incentive
Plan, any incentive stock options previously granted to purchase any of the

16
<PAGE> 20

additional 575,000 shares of Common Stock added to the Incentive Plan will be
automatically converted to non-qualified stock options. The changes in the
Incentive Plan described below are included in Amendment No. 3, which is
included in Appendix A attached to this Proxy Statement.

SHARES SUBJECT TO THE INCENTIVE PLAN; EFFECTIVE DATE

The number of shares of the Company's Common Stock available for awards
under the Incentive Plan are increased by 575,000 shares, from 750,000 to
1,325,000. The Incentive Plan shall be effective on February 10, 2000, the date
of adoption by the Board of Directors.

AUTHORITY OF COMMITTEE

The Incentive Plan has been amended to provide that the Committee charged
with administering the Incentive Plan may expressly delegate to a special
committee consisting of one or more directors who are also officers of the
Company and one of which is the Chief Executive Officer some or all of the
Committee's authority to grant awards under the Incentive Plan with respect to
eligible participants who at the time of grant are not and are not anticipated
to become either the Chief Executive Officer, one of the four most highly
compensated executive officers or any other officer of the Company subject to
insider trading restrictions under Section 16 of the Securities Exchange Act of
1934, as amended.

EXERCISE PRICE AND TERM OF OPTIONS

Amendment No. 3 provides that the Committee may not grant options at an
exercise price less than the fair market value of the Company's Common Stock on
the date of grant of the option or grant an option with a term of more than ten
years from the date of its grant.

FORM OF PAYMENT FOR EXERCISE OF OPTIONS

Amendment No. 3 adds a requirement that in the event that the terms of any
option permit its exercise through payment by surrender of shares of the
Company's Common Stock owned by the option holder, such shares must have been
owned by the option holder for at least six months, and deletes a provision
permitting the Committee to allow an option holder to pay the option price by
directing the Company to withhold shares of stock that would otherwise be issued
upon exercise of the option.

TERMINATION OF EMPLOYMENT OR SERVICE

Amendment No. 3 adds a provision that in the discretion of the Committee
specified at or prior to any spin-off of a participant's employer from the
Company, such spin-off will not constitute a termination of the participant's
employment. To the extent that Incentive Stock Options extend beyond three
months from the date a participant is last deemed to be an employee of the
Company for purposes of Section 424(f) of the Internal Revenue Code, as a result
of the provisions of the Incentive Plan, such options shall be deemed non-
qualified stock options.

EFFECT OF CHANGES IN CAPITAL STRUCTURE

Amendment No. 3 amends the provisions of the Incentive Plan relating to
future changes in the Company's capital structure and the effect of such changes
on the total number of shares available for awards under the Incentive Plan and
the limitations on awards contained in the Incentive Plan and grants to the
Committee the authority to adjust awards under the Incentive Plan to preserve
the benefits or potential benefits of such awards in the event of such future
changes.

MODIFICATION OF OPTION PRICE OR TERM OF OUTSTANDING OPTIONS

Amendment No. 3 prohibits the Committee from reducing the exercise price of
any outstanding option, except to reflect the anti-dilution provisions of the
Incentive Plan, or extending the original term of any option after the option
has been granted.

17
<PAGE> 21

A summary of the Incentive Plan as amended is set forth below. The summary
is qualified in its entirety by reference to the full text of the Incentive Plan
and the three amendments thereto, which are attached to this Proxy Statement as
Appendix A.

GENERAL

The purpose of the Incentive Plan is to promote the success, and enhance
the value, of the Company by linking the personal interests of employees,
officers, directors, consultants and advisors to those of the shareholders, and
by providing such employees, officers, directors, consultants and advisors with
an incentive for outstanding performance. As of March 31, 2000, there were
approximately 9,300 persons eligible to participate in the Incentive Plan.

The Incentive Plan authorizes the granting of awards ("Awards") to
employees, officers, directors, consultants and advisors of the Company or its
subsidiaries in the following forms: (i) options to purchase shares of Common
Stock ("Options"), which may be incentive stock options or non-qualified stock
options, (ii) stock appreciation rights ("SARs"); (iii) performance shares
("Performance Units"); (iv) restricted stock ("Restricted Stock"); (v) dividend
equivalents ("Dividend Equivalents"); and (vi) other stock-based awards.

Pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), the Company may not deduct compensation in excess of $1 million
paid to the Chief Executive Officer and the four next most highly compensated
executive officers of the Company. The Incentive Plan is designed to comply with
Code Section 162(m) so that the grant of Options and SARs under the plan, and
other Awards, such as Performance Units, that are conditioned on the performance
goals described in Section 13.11 of the Incentive Plan, will be excluded from
the calculation of annual compensation for purposes of Code Section 162(m) and
will be fully deductible by the Company. The Board has approved Amendment No. 3
to the Incentive Plan for submission to the shareholders in order to permit the
grant of Awards thereunder that will constitute deductible performance-based
compensation for purposes of Code Section 162(m).

Subject to adjustment as provided in the Incentive Plan, the aggregate
number of shares of Common Stock reserved and available for Awards or which may
be used to provide a basis of measurement for or to determine the value of an
Award (such as with a SAR or Performance Unit) is 1,325,000. The maximum number
of shares of Common Stock with respect to one or more Options and/or SARs that
may be granted during any one calendar year under the Incentive Plan to any one
participant is 250,000. The maximum fair market value of any Awards (other than
Options and SARs) that may be received by a participant (less any consideration
paid by the participant for such Award) during any one calendar year under the
Incentive Plan is $1,000,000.

ADMINISTRATION

The Incentive Plan will be administered by a committee of the Board of
Directors of the Company (the "Committee"). The Committee has the power,
authority and discretion to designate participants; determine the type or types
of Awards to be granted to each participant and the terms and conditions
thereof; establish, adopt or revise any rules and regulations as it may deem
necessary or advisable to administer the Incentive Plan; and make all other
decisions and determinations that may be required under, or as the Committee
deems necessary or advisable to administer, the Incentive Plan. The Committee
has the authority to delegate to a special committee consisting of one or more
directors who are also officers of the Company and one of which is the Chief
Executive Officer of the Company some or all of the Committee's authority with
respect to Awards to eligible participants who are not the Chief Executive
Officer or the next four most highly compensated executive officers of the
Company or other executive officers subject to the insider trading restrictions
of Section 16 of the Securities Exchange Act of 1934, as amended.

AWARDS

Stock Options. The Committee is authorized to grant Options, which may be
incentive stock options ("ISOs") or nonqualified stock options ("NSOs"), to
participants. All Options will be evidenced by a written
18
<PAGE> 22

Award Agreement between the Company and the participant, which will include such
provisions as may be specified by the Committee. The terms of any ISO must meet
the requirements of Section 422 of the Code.

Stock Appreciation Rights. The Committee may grant SARs to participants.
Upon the exercise of a SAR, the participant has the right to receive the excess,
if any, of: the fair market value of one share of Common Stock on the date of
exercise, over the grant price of the SAR as determined by the Committee, which
will not be less than the fair market value of one share of Common Stock on the
date of grant in the case of any SAR related to an ISO. All awards of SARs will
be evidenced by an Award Agreement, reflecting the terms, methods of exercise,
methods of settlement, form of consideration payable in settlement, and any
other terms and conditions of the SAR, as determined by the Committee at the
time of grant.

Performance Units. The Committee may grant Performance Units to
participants on such terms and conditions as may be selected by the Committee.
The Committee will have the complete discretion to determine the number of
Performance Units granted to each participant and to set performance goals and
other terms or conditions to payment of the Performance Units in its discretion
which, depending on the extent to which they are met, will determine the number
and value of Performance Units that will be paid to the participant.

Restricted Stock Awards. The Committee may make awards of Restricted Stock
to participants, which will be subject to such restrictions on transferability
and other restrictions as the Committee may impose (including, without
limitation, limitations on the right to vote Restricted Stock or the right to
receive dividends, if any, on the Restricted Stock).

Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents to participants subject to such terms and conditions as may be
selected by the Committee. Dividend Equivalents entitle the participant to
receive payments equal to dividends with respect to all or a portion of the
number of shares of Common Stock subject to an Option Award or SAR Award, as
determined by the Committee. The Committee may provide that Dividend Equivalents
be paid or distributed when accrued or be deemed to have been reinvested in
additional shares of Common Stock, or otherwise reinvested.

Other Stock-Based Awards. The Committee may, subject to limitations under
applicable law, grant to participants such other Awards that are payable in,
valued in whole or in part by reference to, or otherwise based on or related to
shares of Common Stock, as deemed by the Committee to be consistent with the
purposes of the Incentive Plan, including without limitation shares of Common
Stock awarded purely as a "bonus" and not subject to any restrictions or
conditions, convertible or exchangeable debt securities, other rights
convertible or exchangeable into shares of Common Stock, and Awards valued by
reference to book value of shares of Common Stock or the value of securities of
or the performance of specified subsidiaries of the Company. The Committee will
determine the terms and conditions of any such Awards.

Performance Goals. The Committee may determine that any Award will be
determined solely on the basis of (a) the achievement by the Company or a
subsidiary of a specified target, or target growth in return, on equity or
assets, (b) the Company's or subsidiary's stock price, (c) the achievement by a
business unit of the Company or subsidiary of a specified target, or target
growth in, net income or earnings per share, or (d) any combination of the goals
set forth in (a) through (c) above. Furthermore, the Committee reserves the
right for any reason to reduce (but not increase) any Award, notwithstanding the
achievement of a specified goal. If an Award is made on such basis, the
Committee must establish goals prior to the beginning of the period for which
such performance goal relates (or such later date as may be permitted under Code
Section 162(m) or the regulations thereunder). Any payment of an Award granted
with performance goals will be conditioned on the written certification of the
Committee in each case that the performance goals and any other material
conditions were satisfied.

Limitations on Transfer; Beneficiaries. No Award will be assignable or
transferable by a participant other than by will or the laws of descent and
distribution or, except in the case of an ISO, pursuant to a qualified domestic
relations order. However, a participant may, in the manner determined by the
Committee, designate a beneficiary to exercise the rights of the participant and
to receive any distribution with respect to any Award upon the participant's
death.

19
<PAGE> 23

Acceleration Upon Certain Events. In the event of a Change in Control of
the Company (as defined in the Incentive Plan), the Committee may, in its
discretion, declare all outstanding Options, SARs, and other Awards in the
nature of rights that may be exercised to be fully vested and all restrictions
on all outstanding Awards to have lapsed. Whether or not a Change in Control has
occurred, the Committee may in its sole discretion determine that all or a
portion of a participant's Options, SARs and other Awards in the nature of
rights that may be exercised shall become fully vested and/or all or a part of
the restrictions on all or a portion of the outstanding Awards shall lapse, in
each case as of such date as the Committee may, in its sole discretion, declare.
The Committee may discriminate among participants in exercising this discretion.

TERMINATION AND AMENDMENT

With the approval of the Board, at any time and from time to time, the
Committee may terminate, amend or modify the Incentive Plan without shareholder
approval; provided, however, that the Committee may condition any amendment on
the approval of shareholders of the Company if such approval is necessary or
deemed advisable with respect to tax, securities or other applicable laws,
policies or regulations. No termination, amendment, or modification of the
Incentive Plan may adversely affect any Award previously granted under the
Incentive Plan, without the written consent of the participant.

CERTAIN FEDERAL INCOME TAX EFFECTS

Nonqualified Stock Options. Under present federal income tax regulations,
there will be no federal income tax consequences to either the Company or the
participant upon the grant of a non-discounted NSO. However, the participant
will realize ordinary income on the exercise of the NSO in an amount equal to
the excess of the fair market value of the Common Stock acquired upon the
exercise of such option over the exercise price, and the Company will receive a
corresponding deduction. The gain, if any, realized upon the subsequent
disposition by the participant of the Common Stock will constitute short- or
long-term capital gain, depending on the participant's holding period.

Incentive Stock Options. Under present federal income tax regulations,
there will be no federal income tax consequences to either the Company or the
participant upon the grant of a non-discounted ISO or the exercise thereof by
the participant. If the participant holds the shares of Common Stock for the
greater of two years after the date the Option was granted or one year after the
acquisition of such shares of Common Stock (the "required holding period"), the
difference between the aggregate option price and the amount realized upon
disposition of the shares of Common Stock will constitute a long-term capital
gain or loss, and the Company will not be entitled to a federal income tax
deduction. If the shares of Common Stock are disposed of in a sale, exchange or
other "disqualifying disposition" during the required holding period, the
participant will realize taxable ordinary income in an amount equal to the
excess of the fair market value of the Common Stock purchased at the time of
exercise over the aggregate option price, and the Company will be entitled to a
federal income tax deduction equal to such amount.

SARs. Under present federal income tax regulations, a participant
receiving a non-discounted SAR will not recognize income, and the Company will
not be allowed a tax deduction, at the time the Award is granted. When a
participant exercises the SAR, the amount of cash and the fair market value of
any shares of Common Stock received will be ordinary income to the participant
and will be allowed as a deduction for federal income tax purposes to the
Company.

Performance Units. Under present federal income tax regulations, a
participant receiving Performance Units will not recognize income and the
Company will not be allowed a tax deduction at the time the Award is granted.
When a participant receives payment of Performance Units, the amount of cash and
the fair market value of any shares of Common Stock received will be ordinary
income to the participant and will be allowed as a deduction for federal income
tax purposes to the Company.

Restricted Stock. Under present federal income tax regulations, and unless
the participant makes an election to accelerate recognition of the income to the
date of grant, a participant receiving a Restricted Stock Award will not
recognize income, and the Company will not be allowed a tax deduction, at the
time the Award

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<PAGE> 24

is granted. When the restrictions lapse, the participant will recognize ordinary
income equal to the fair market value of the Common Stock, and the Company will
be entitled to a corresponding tax deduction at that time.

BENEFITS TO NAMED EXECUTIVE OFFICERS AND OTHERS

As of March 20, 2000, options to purchase an aggregate 791,952 shares of
Common Stock had been granted, options to purchase 36,750 shares of Common Stock
had been exercised, options to purchase 86,282 shares of Common Stock had been
cancelled and 619,325 shares remain available for future grant under the
Incentive Plan. As of March 20, 2000, the market value of all shares of Common
Stock subject to outstanding options granted pursuant to the Incentive Plan was
$12,709,480 (based upon the closing sale price of the Company's Common Stock, as
reported by the Nasdaq National Market on such date). As of March 20, 2000,
George W. McKerrow, Jr.; Phillip J. Hickey, Jr.; Eugene I. Lee, Jr.; W. Douglas
Benn; and Thomas W. Gathers had been granted options covering an aggregate
49,052; 300,000; 0; 113,500; and 30,000 shares of Common Stock pursuant to the
Incentive Plan, respectively. All current executive officers, as a group, have
been granted 492,602 options covering shares of Common Stock pursuant to the
Incentive Plan.

ADDITIONAL INFORMATION

The closing price of the Common Stock, as reported by the Nasdaq National
Market on March 20, 2000, was $19.00.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO
THE LONG-TERM INCENTIVE PLAN. APPROVAL OF THE AMENDMENT TO THE LONG-TERM
INCENTIVE PLAN REQUIRES THAT THE VOTES CAST IN FAVOR OF APPROVAL EXCEED THE
VOTES CAST AGAINST APPROVAL AT THE MEETING AT WHICH A QUORUM IS PRESENT.

PROPOSAL III

RATIFICATION OF SELECTION OF AUDITORS

The Company's Board of Directors has selected KPMG LLP to conduct the
annual audit of the financial statements of the Company for the fiscal year
ending December 31, 2000. The ratification by the shareholders of the selection
of KPMG LLP as independent auditors is not required by law or by the Bylaws of
the Company. The Board of Directors, consistent with the practice of most
publicly held corporations, is nevertheless submitting this selection to the
shareholders. If this selection is not ratified at the Meeting, the Board of
Directors intends to reconsider its selection of independent auditors for the
fiscal year ending December 31, 2000.

Representatives of KPMG LLP will be present at the Meeting with an
opportunity to make statements, if they so desire, and to respond to appropriate
questions with respect to that firm's audit of the Company's financial
statements for the fiscal year ended December 31, 2000.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE SELECTION
OF KPMG LLP AS INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31,
2000. RATIFICATION OF KPMG LLP REQUIRES THAT THE VOTES CAST IN FAVOR OF
RATIFICATION EXCEED THE VOTES CAST AGAINST RATIFICATION AT THE MEETING AT WHICH
A QUORUM IS PRESENT.

SHAREHOLDER PROPOSALS

ANY PROPOSAL WHICH A COMPANY SHAREHOLDER INTENDS TO PRESENT IN ACCORDANCE
WITH RULE 14A-8 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE
"EXCHANGE ACT") AT THE NEXT ANNUAL MEETING OF SHAREHOLDERS TO BE HELD IN 2001
MUST BE RECEIVED BY THE COMPANY ON OR BEFORE DECEMBER 15, 2000. NOTICE OF
SHAREHOLDER PROPOSALS SUBMITTED OUTSIDE OF RULE 14A-8 OF THE
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<PAGE> 25

EXCHANGE ACT WILL BE CONSIDERED UNTIMELY IF RECEIVED BY THE COMPANY AFTER
FEBRUARY 26, 2001. ONLY PROPER PROPOSALS UNDER RULE 14A-8 OF THE EXCHANGE ACT,
WHICH ARE TIMELY RECEIVED WILL BE INCLUDED IN THE PROXY STATEMENT AND PROXY.

OTHER MATTERS

EXPENSES OF SOLICITATION

The cost of soliciting proxies in the accompanying form will be borne by
the Company. In addition to the use of the mails, proxies may be solicited by
directors, officers or other employees of the Company, personally, or by
telephone. The Company does not expect to pay any compensation for the
solicitation of proxies, but may reimburse brokers, custodians or other persons
holding stock in their names or in the names of nominees for their expenses in
sending proxy materials to principals and obtaining their instructions.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Based solely on a review of the copies of reports furnished to the Company,
or written representations that no annual forms (Form 5) were required, the
Company believes that, during the 1999 fiscal year, all filing requirements of
its officers, directors and 10% shareholders for reporting to the Securities and
Exchange Commission their ownership and changes in ownership of Common Stock (as
required pursuant to Section 16(a) of the Securities Exchange Act of 1934) were
complied with.

MISCELLANEOUS

Management does not know of any matters to be brought before the Meeting
other than as described in this Proxy Statement. Should any other matters
properly come before the Meeting of which the Company did not receive notice on
or before February 21, 2000, the persons designated as proxies will vote in
their sole discretion on such matters.

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APPENDIX A

RARE HOSPITALITY INTERNATIONAL, INC.

1997 LONG-TERM INCENTIVE PLAN

ARTICLE I

PURPOSE

1.1 General. The purpose of the RARE Hospitality International, Inc. 1997
Long-Term Incentive Plan (the "Plan") is to promote the success, and enhance the
value, of RARE Hospitality International, Inc. (the "Corporation"), by linking
the personal interests of its employees, officers, directors, consultants and
advisors to those of Corporation shareholders and by providing its employees,
officers, directors, consultants and advisors with an incentive for outstanding
performance. The Plan is further intended to provide flexibility to the
Corporation in its ability to motivate, attract, and retain the services of
employees, officers, directors, consultants and advisors upon whose judgment,
interest, and special effort the successful conduct of the Corporation's
operation is largely dependent. Accordingly, the Plan permits the grant of
incentive awards from time to time to selected employees, officers, directors,
consultants and advisors.

ARTICLE 2

EFFECTIVE DATE

2.1 Effective Date. The Plan shall be effective as of the date upon which
it shall be approved by the Board. However, the Plan shall be submitted to the
shareholders of the Corporation for approval within 12 months of the Board's
approval thereof. No Incentive Stock Options granted under the Plan may be
exercised prior to approval of the Plan by the shareholders and if the
shareholders fail to approve the Plan within 12 months of the Board's approval
thereof, any Incentive Stock Options previously granted hereunder shall be
automatically converted to Non-Qualified Stock Options without any further act.
In the discretion of the Committee, Awards may be made to Covered Employees
which are intended to constitute qualified performance-based compensation under
Code Section 162(m). Any such Awards shall be contingent upon the shareholders
having approved the Plan.

ARTICLE 3

DEFINITIONS

3.1 Definitions. When a word or phrase appears in this Plan with the
initial letter capitalized, and the word or phrase does not commence a sentence,
the word or phrase shall generally be given the meaning ascribed to it in this
Section or in Section 1.1 unless a clearly different meaning is required by the
context. The following words and phrases shall have the following meanings:

(a) "Award" means any Option, Stock Appreciation Right, Restricted
Stock Award, Performance Share Award, Dividend Equivalent Award, or Other
Stock-Based Award, or any other right or interest relating to Stock or
cash, granted to a Participant under the Plan.

(b) "Award Agreement" means any written agreement, contract, or other
instrument or document evidencing an Award.

(d) "Change in Control" means and includes each of the following:

(1) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act) (a "Person") of
beneficial ownership (within the

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meaning of Rule 13d-3 promulgated under the 1934 Act) of 25% or more of
the combined voting power of the then outstanding voting securities of
the Corporation entitled to vote generally in the election of directors
(the "Outstanding Corporation Voting Securities"); provided, however,
that for purposes of this subsection (1), the following acquisitions
shall not constitute a Change of Control: (i) any acquisition by a
Person who is on the Effective Date the beneficial owner of 25% or more
of the Outstanding Corporation Voting Securities, (ii) any acquisition
by the Corporation, (iii) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Corporation or any
corporation controlled by the Corporation, or (iv) any acquisition by
any corporation pursuant to a transaction which complies with clauses
(i), (ii) and (iii) of subsection (3) of this definition;

(2) Individuals who, as of the Effective Date, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the Effective Date whose election, or nomination
for election by the Corporation's shareholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or

(3) Consummation of a reorganization, merger, share exchange or
consolidation or sale or other disposition of all or substantially all
of the assets of the Corporation (a "Business Combination"), in each
case, unless, following such Business Combination, (i) all or
substantially all of the individuals and entities who were the
beneficial owners of the Outstanding Corporation Voting Securities
immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of the combined voting power of
the then outstanding voting securities entitled to vote generally in the
election of directors of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a
result of such transaction owns the Corporation or all or substantially
all of the Corporation's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding
Corporation Voting Securities, and (ii) no Person (excluding any
corporation resulting from such Business Combination or any employee
benefit plan (or related trust) of the Corporation or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 25% or more of the combined voting power of the then
outstanding voting securities of such corporation except to the extent
that such ownership existed prior to the Business Combination, and (iii)
at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement,
or of the action of the Board, providing for such Business Combination;
or

(4) approval by the shareholders of the Corporation of a complete
liquidation or dissolution of the Corporation.

(e) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.

(f) "Committee" means the committee of the Board described in Article
4.

(g) "Corporation" means RARE Hospitality International, Inc., a
Delaware corporation.

(h) "Covered Employee" means a covered employee as defined in Code
Section 162(m)(3).

(i) "Disability" shall mean any illness or other physical or mental
condition of a Participant that renders the Participant incapable of
performing his customary and usual duties for the Corporation, or any
medically determinable illness or other physical or mental condition
resulting from a bodily injury, disease or mental disorder which, in the
judgment of the Committee, is permanent and continuous in

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nature. The Committee may require such medical or other evidence as it
deems necessary to judge the nature and permanency of the Participant's
condition.

(j) "Dividend Equivalent" means a right granted to a Participant under
Article 11.

(k) "Effective Date" has the meaning assigned such term in Section
2.1.

(l) "Fair Market Value", on any date, means (i) if the Stock is listed
on a securities exchange or is traded over the Nasdaq National Market, the
closing sales price on such exchange or over such system on such date or,
in the absence of reported sales on such date, the closing sales price on
the immediately preceding date on which sales were reported, or (ii) if the
Stock is not listed on a securities exchange or traded over the Nasdaq
National Market, the mean between the bid and offered prices as quoted by
Nasdaq for such date, provided that if it is determined that the fair
market value is not properly reflected by such Nasdaq quotations, Fair
Market Value will be determined by such other method as the Committee
determines in good faith to be reasonable.

(m) "Incentive Stock Option" means an Option that is intended to meet
the requirements of Section 422 of the Code or any successor provision
thereto.

(n) "Non-Qualified Stock Option" means an Option that is not an
Incentive Stock Option.

(o) "Option" means a right granted to a Participant under Article 7 of
the Plan to purchase Stock at a specified price during specified time
periods. An Option may be either an Incentive Stock Option or a
Non-Qualified Stock Option.

(p) "Other Stock-Based Award" means a right, granted to a Participant
under Article 12, that relates to or is valued by reference to Stock or
other Awards relating to Stock.

(r) "Parent" means a corporation which beneficially owns a majority of
the outstanding voting stock or voting power of the Corporation. For
Incentive Stock Options, the term shall have the same meaning as set forth
in Code Section 424(e).

(q) "Participant" means a person who, as an employee, officer,
director, consultant or advisor of the Corporation or any Parent or
Subsidiary, has been granted an Award under the Plan.

(o) "Performance Share" means a right granted to a Participant under
Article 9, to receive cash, Stock, or other Awards, the payment of which is
contingent upon achieving certain performance goals established by the
Committee.

(p) "Plan" means the RARE Hospitality International, Inc. 1997
Long-Term Incentive Plan, as amended from time to time.

(q) "Restricted Stock Award" means Stock granted to a Participant
under Article 10 that is subject to certain restrictions and to risk of
forfeiture.

(r) "Retirement" means a Participant's termination of employment with
the Corporation, Parent or Subsidiary after attaining any normal or early
retirement age specified in any pension, profit sharing or other retirement
program sponsored by the Corporation, or, in the event of the
inapplicability thereof with respect to the person in question, as
determined by the Committee in its reasonable judgment.

(s) "Stock" means the no par value common stock of the Corporation and
such other securities of the Corporation as may be substituted for Stock
pursuant to Article 14.

(t) "Stock Appreciation Right" or "SAR" means a right granted to a
Participant under Article 8 to receive a payment equal to the difference
between the Fair Market Value of a share of Stock as of the date of
exercise of the SAR over the grant price of the SAR, all as determined
pursuant to Article 8.

(u) "Subsidiary" means any corporation, limited liability company,
partnership or other entity of which 50% or more the outstanding voting
stock, voting power, general partnership interest, or membership interest
is beneficially owned directly or indirectly by the Corporation. For
Incentive Stock Options, the term shall have the meaning set forth in Code
Section 424(f).
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(v) "1933 Act" means the Securities Act of 1933, as amended from time
to time.

(w) "1934 Act" means the Securities Exchange Act of 1934, as amended
from time to time.

ARTICLE 4

ADMINISTRATION

4.1 Committee. The Plan shall be administered by the Compensation
Committee of the Board or, at the discretion of the Board from time to time, by
the Board. The Committee shall consist of two or more members of the Board who
are (i) "outside directors" as that term is used in Section 162(m) of the Code
and the regulations promulgated thereunder, and (ii) "non-employee directors" as
such term is defined in Rule 16b-3 promulgated under Section 16 of the 1934 Act
or any successor provision. During any time that the Board is acting as
administrator of the Plan, it shall have all the powers of the Committee
hereunder, and any reference herein to the Committee (other than in this Section
4.1) shall include the Board.

4.2 Action By The Committee. For purposes of administering the Plan, the
following rules of procedure shall govern the Committee. A majority of the
Committee shall constitute a quorum. The acts of a majority of the members
present at any meeting at which a quorum is present, and acts approved
unanimously in writing by the members of the Committee in lieu of a meeting,
shall be deemed the acts of the Committee. Each member of the Committee is
entitled to, in good faith, rely or act upon any report or other information
furnished to that member by any officer or other employee of the Corporation or
any Parent or Subsidiary, the Corporation's independent certified public
accountants, or any executive compensation consultant or other professional
retained by the Corporation to assist in the administration of the Plan.

4.3 Authority of Committee. The Committee has the exclusive power,
authority and discretion to:

(a) Designate Participants;

(b) Determine the type or types of Awards to be granted to each
Participant;

(d) Determine the terms and conditions of any Award granted under the
Plan, including but not limited to, the exercise price, grant price, or
purchase price, any restrictions or limitations on the Award, any schedule
for lapse of forfeiture restrictions or restrictions on the exercisability
of an Award, and accelerations or waivers thereof, based in each case on
such considerations as the Committee in its sole discretion determines;

(e) Accelerate the vesting or lapse of restrictions of any outstanding
Award, based in each case on such considerations as the Committee in its
sole discretion determines;

(f) Determine whether, to what extent, and under what circumstances an
Award may be settled in, or the exercise price of an Award may be paid in,
cash, Stock, other Awards, or other property, or an Award may be canceled,
forfeited, or surrendered;

(g) Prescribe the form of each Award Agreement, which need not be
identical for each Participant;

(h) Decide all other matters that must be determined in connection
with an Award;

(i) Establish, adopt or revise any rules and regulations as it may
deem necessary or advisable to administer the Plan;

(j) Make all other decisions and determinations that may be required
under the Plan or as the Committee deems necessary or advisable to
administer the Plan; and

(k) Amend the Plan or any Award Agreement as provided herein.

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4.4. Decisions Binding. The Committee's interpretation of the Plan, any
Awards granted under the Plan, any Award Agreement and all decisions and
determinations by the Committee with respect to the Plan are final, binding, and
conclusive on all parties.

ARTICLE 5

SHARES SUBJECT TO THE PLAN

5.1 Number of Shares. Subject to adjustment as provided in Section 14.1,
the aggregate number of shares of Stock reserved and available for Awards or
which may be used to provide a basis of measurement for or to determine the
value of an Award (such as with a Stock Appreciation Right or Performance Share
Award) shall be 500,000, no more than 20% of which shall be Restricted Stock
Awards.

5.2. Lapsed Awards. To the extent that an Award is canceled, terminates,
expires or lapses for any reason, any shares of Stock subject to the Award will
again be available for the grant of an Award under the Plan and shares subject
to SARs or other Awards settled in cash will be available for the grant of an
Award under the Plan.

5.3. Stock Distributed. Any Stock distributed pursuant to an Award may
consist, in whole or in part, of authorized and unissued Stock, treasury Stock
or Stock purchased on the open market.

5.4. Limitation on Awards. Notwithstanding any provision in the Plan to
the contrary, the maximum number of shares of Stock with respect to one or more
Options and/or SARs that may be granted during any one calendar year under the
Plan to any one Covered Employee shall be 250,000. The maximum fair market value
of any Awards (other than Options and SARs) that may be received by a Covered
Employee (less any consideration paid by the Participant for such Award) during
any one calendar year under the Plan shall be $1,000,000.

ARTICLE 6

ELIGIBILITY

6.1. General. Awards may be granted only to individuals who are employees,
officers, directors, consultants or advisors of the Corporation or a Parent or
Subsidiary.

ARTICLE 7

STOCK OPTIONS

7.1. General. The Committee is authorized to grant Options to Participants
on the following terms and conditions:

(a) Exercise Price. The exercise price per share of Stock under an
Option shall be determined by the Committee.

(b) Time and Conditions of Exercise. The Committee shall determine
the time or times at which an Option may be exercised in whole or in part.
The Committee also shall determine the performance or other conditions, if
any, that must be satisfied before all or part of an Option may be
exercised. The Committee may waive any exercise provisions at any time in
whole or in part based upon factors as the Committee may determine in its
sole discretion so that the Option becomes exercisable at an earlier date.

(c) Payment. The Committee shall determine the methods by which the
exercise price of an Option may be paid, the form of payment, including,
without limitation, cash, shares of Stock, or other property (including
"cashless exercise" arrangements), and the methods by which shares of Stock
shall be delivered or deemed to be delivered to Participants. Without
limiting the power and discretion conferred on the Committee pursuant to
the preceding sentence, the Committee may, in the exercise of its
discretion, but need not, allow a Participant to pay the Option price by
directing the Corporation to

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withhold from the shares of Stock that would otherwise be issued upon
exercise of the Option that number of shares having a Fair Market Value on
the exercise date equal to the Option price, all as determined pursuant to
rules and procedures established by the Committee.

(d) Evidence of Grant. All Options shall be evidenced by a written
Award Agreement between the Corporation and the Participant. The Award
Agreement shall include such provisions as may be specified by the
Committee.

7.2. Incentive Stock Options. The terms of any Incentive Stock Options
granted under the Plan must comply with the following additional rules:

(a) Exercise Price. The exercise price per share of Stock shall be
set by the Committee, provided that the exercise price for any Incentive
Stock Option shall not be less than the Fair Market Value as of the date of
the grant.

(b) Exercise. In no event may any Incentive Stock Option be
exercisable for more than ten years from the date of its grant.

(c) Lapse of Option. An Incentive Stock Option shall lapse under the
earliest of the following circumstances; provided, however, that the
Committee may, prior to the lapse of the Incentive Stock Option under the
circumstances described in paragraphs (3), (4) and (5) below, provide in
writing that the Option will extend until a later date, but if the Option
is exercised after the dates specified in paragraphs (3), (4) and (5)
above, it will automatically become a Non-Qualified Stock Option:

(1) The Incentive Stock Option shall lapse as of the option
expiration date set forth in the Award Agreement.

(2) The Incentive Stock Option shall lapse ten years after it is
granted, unless an earlier time is set in the Award Agreement.

(3) If the Participant terminates employment for any reason other
than as provided in paragraph (4) or (5) below, the Incentive Stock
Option shall lapse, unless it is previously exercised, three months
after the Participant's termination of employment; provided, however,
that if the Participant's employment is terminated by the Corporation
for cause or by the Participant without the consent of the Corporation,
the Incentive Stock Option shall (to the extent not previously
exercised) lapse immediately.

(4) If the Participant terminates employment by reason of his
Disability, the Incentive Stock Option shall lapse, unless it is
previously exercised, one year after the Participant's termination of
employment.

(5) If the Participant dies while employed, or during the
three-month period described in paragraph (3) or during the one-year
period described in paragraph (4) and before the Option otherwise
lapses, the Option shall lapse one year after the Participant's death.
Upon the Participant's death, any exercisable Incentive Stock Options
may be exercised by the Participant's beneficiary.

Unless the exercisability of the Incentive Stock Option is
accelerated as provided in Article 13, if a Participant exercises an
Option after termination of employment, the Option may be exercised only
with respect to the shares that were otherwise vested on the
Participant's termination of employment.

(d) Individual Dollar Limitation. The aggregate Fair Market Value
(determined as of the time an Award is made) of all shares of Stock with
respect to which Incentive Stock Options are first exercisable by a
Participant in any calendar year may not exceed $100,000.00.

(e) Ten Percent Owners. No Incentive Stock Option shall be granted to
any individual who, at the date of grant, owns stock possessing more than
ten percent of the total combined voting power of all classes of stock of
the Corporation or any Parent or Subsidiary unless the exercise price per
share of such

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Option is at least 110% of the Fair Market Value per share of Stock at the
date of grant and the Option expires no later than five years after the
date of grant.

(f) Expiration of Incentive Stock Options. No Award of an Incentive
Stock Option may be made pursuant to the Plan after the day immediately
prior to the tenth anniversary of the Effective Date.

(g) Right to Exercise. During a Participant's lifetime, an Incentive
Stock Option may be exercised only by the Participant or, in the case of
the Participant's Disability, by the Participant's guardian or legal
representative.

(h) Directors. The Committee may not grant an Incentive Stock Option
to a non-employee director. The Committee may grant an Incentive Stock
Option to a director who is also an employee of the Corporation or Parent
or Subsidiary, but only in that individual's position as an employee and
not as a director.

ARTICLE 8

STOCK APPRECIATION RIGHTS

8.1. Grant of SARs. The Committee is authorized to grant SARs to
Participants on the following terms and conditions:

(a) Right to Payment. Upon the exercise of a Stock Appreciation
Right, the Participant to whom it is granted has the right to receive the
excess, if any, of:

(1) The Fair Market Value of one share of Stock on the date of
exercise; over

(2) The grant price of the Stock Appreciation Right as determined
by the Committee, which shall not be less than the Fair Market Value of
one share of Stock on the date of grant in the case of any SAR related
to an Incentive Stock Option.

(b) Other Terms. All awards of Stock Appreciation Rights shall be
evidenced by an Award Agreement. The terms, methods of exercise, methods of
settlement, form of consideration payable in settlement, and any other
terms and conditions of any Stock Appreciation Right shall be determined by
the Committee at the time of the grant of the Award and shall be reflected
in the Award Agreement.

ARTICLE 9

PERFORMANCE SHARES

9.1. Grant of Performance Shares. The Committee is authorized to grant
Performance Shares to Participants on such terms and conditions as may be
selected by the Committee. The Committee shall have the complete discretion to
determine the number of Performance Shares granted to each Participant. All
Awards of Performance Shares shall be evidenced by an Award Agreement.

9.2. Right to Payment. A grant of Performance Shares gives the Participant
rights, valued as determined by the Committee, and payable to, or exercisable
by, the Participant to whom the Performance Shares are granted, in whole or in
part, as the Committee shall establish at grant or thereafter. The Committee
shall set performance goals and other terms or conditions to payment of the
Performance Shares in its discretion which, depending on the extent to which
they are met, will determine the number and value of Performance Shares that
will be paid to the Participant.

9.3. Other Terms. Performance Shares may be payable in cash, Stock, or
other property, and have such other terms and conditions as determined by the
Committee and reflected in the Award Agreement.

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<PAGE> 33

ARTICLE 10

RESTRICTED STOCK AWARDS

10.1. Grant of Restricted Stock. The Committee is authorized to make
Awards of Restricted Stock to Participants in such amounts and subject to such
terms and conditions as may be selected by the Committee. All Awards of
Restricted Stock shall be evidenced by a Restricted Stock Award Agreement.

10.2. Issuance and Restrictions. Restricted Stock shall be subject to such
restrictions on transferability and other restrictions as the Committee may
impose (including, without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends on the Restricted Stock).
These restrictions may lapse separately or in combination at such times, under
such circumstances, in such installments, upon the satisfaction of performance
goals or otherwise, as the Committee determines at the time of the grant of the
Award or thereafter.

10.3. Forfeiture. Except as otherwise determined by the Committee at the
time of the grant of the Award or thereafter, upon termination of employment
during the applicable restriction period or upon failure to satisfy a
performance goal during the applicable restriction period, Restricted Stock that
is at that time subject to restrictions shall be forfeited and reacquired by the
Corporation; provided, however, that the Committee may provide in any Award
Agreement that restrictions or forfeiture conditions relating to Restricted
Stock will be waived in whole or in part in the event of terminations resulting
from specified causes, and the Committee may in other cases waive in whole or in
part restrictions or forfeiture conditions relating to Restricted Stock.

10.4. Certificates for Restricted Stock. Restricted Stock granted under
the Plan may be evidenced in such manner as the Committee shall determine. If
certificates representing shares of Restricted Stock are registered in the name
of the Participant, certificates must bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such Restricted Stock.

ARTICLE 11

DIVIDEND EQUIVALENTS

11.1 Grant of Dividend Equivalents. The Committee is authorized to grant
Dividend Equivalents to Participants subject to such terms and conditions as may
be selected by the Committee. Dividend Equivalents shall entitle the Participant
to receive payments equal to dividends with respect to all or a portion of the
number of shares of Stock subject to an Option Award or SAR Award, as determined
by the Committee. The Committee may provide that Dividend Equivalents be paid or
distributed when accrued or be deemed to have been reinvested in additional
shares of Stock, or otherwise reinvested.

ARTICLE 12

OTHER STOCK-BASED AWARDS

12.1. Grant of Other Stock-Based Awards. The Committee is authorized,
subject to limitations under applicable law, to grant to Participants such other
Awards that are payable in, valued in whole or in part by reference to, or
otherwise based on or related to shares of Stock, as deemed by the Committee to
be consistent with the purposes of the Plan, including without limitation shares
of Stock awarded purely as a "bonus" and not subject to any restrictions or
conditions, convertible or exchangeable debt securities, other rights
convertible or exchangeable into shares of Stock, and Awards valued by reference
to book value of shares of Stock or the value of securities of or the
performance of specified Parents or Subsidiaries. The Committee shall determine
the terms and conditions of such Awards.

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<PAGE> 34

ARTICLE 13

PROVISIONS APPLICABLE TO AWARDS

13.1. Stand-Alone, Tandem, and Substitute Awards. Awards granted under the
Plan may, in the discretion of the Committee, be granted either alone or in
addition to, in tandem with, or in substitution for, any other Award granted
under the Plan. If an Award is granted in substitution for another Award, the
Committee may require the surrender of such other Award in consideration of the
grant of the new Award. Awards granted in addition to or in tandem with other
Awards may be granted either at the same time as or at a different time from the
grant of such other Awards.

13.2. Exchange Provisions. The Committee may at any time offer to exchange
or buy out any previously granted Award for a payment in cash, Stock, or another
Award (subject to Section 14.1), based on the terms and conditions the Committee
determines and communicates to the Participant at the time the offer is made.

13.3. Term of Award. The term of each Award shall be for the period as
determined by the Committee, provided that in no event shall the term of any
Incentive Stock Option or a Stock Appreciation Right granted in tandem with the
Incentive Stock Option exceed a period of ten years from the date of its grant
(or, if Section 7.2(e) applies, five years from the date of its grant).

13.4. Form of Payment for Awards. Subject to the terms of the Plan and any
applicable law or Award Agreement, payments or transfers to be made by the
Corporation or a Parent or Subsidiary on the grant or exercise of an Award may
be made in such form as the Committee determines at or after the time of grant,
including without limitation, cash, Stock, other Awards, or other property, or
any combination, and may be made in a single payment or transfer, in
installments, or on a deferred basis, in each case determined in accordance with
rules adopted by, and at the discretion of, the Committee.

13.5. Limits on Transfer. No right or interest of a Participant in any
unexercised or restricted Award may be pledged, encumbered, or hypothecated to
or in favor of any party other than the Corporation or a Parent or Subsidiary,
or shall be subject to any lien, obligation, or liability of such Participant to
any other party other than the Corporation or a Parent or Subsidiary. No
unexercised or restricted Award shall be assignable or transferable by a
Participant other than by will or the laws of descent and distribution or,
except in the case of an Incentive Stock Option, pursuant to a domestic
relations order that would satisfy Section 414(p)(1)(A) of the Code if such
Section applied to an Award under the Plan; provided, however, that the
Committee may (but need not) permit other transfers where the Committee
concludes that such transferability (i) does not result in accelerated taxation,
(ii) does not cause any Option intended to be an incentive stock option to fail
to be described in Code Section 422(b), and (iii) is otherwise appropriate and
desirable, taking into account any state or federal tax or securities laws
applicable to transferable Awards.

13.6 Beneficiaries. Notwithstanding Section 13.5, a Participant may, in
the manner determined by the Committee, designate a beneficiary to exercise the
rights of the Participant and to receive any distribution with respect to any
Award upon the Participant's death. A beneficiary, legal guardian, legal
representative, or other person claiming any rights under the Plan is subject to
all terms and conditions of the Plan and any Award Agreement applicable to the
Participant, except to the extent the Plan and Award Agreement otherwise
provide, and to any additional restrictions deemed necessary or appropriate by
the Committee. If no beneficiary has been designated or survives the
Participant, payment shall be made to the Participant's estate. Subject to the
foregoing, a beneficiary designation may be changed or revoked by a Participant
at any time provided the change or revocation is filed with the Committee.

13.7. Stock Certificates. All Stock certificates delivered under the Plan
are subject to any stop-transfer orders and other restrictions as the Committee
deems necessary or advisable to comply with federal or state securities laws,
rules and regulations and the rules of any national securities exchange or
automated quotation system on which the Stock is listed, quoted, or traded. The
Committee may place legends on any Stock certificate to reference restrictions
applicable to the Stock.

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<PAGE> 35

13.8. Acceleration upon Certain Events. Upon the occurrence of a Change in
Control or in the event of the occurrence of any circumstance, transaction or
event not constituting a Change in Control but which the Board of Directors
deems to be, or to be reasonably likely to lead to, an effective change in
control of the Corporation of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of the 1934 Act, the Committee may in its
sole discretion declare all outstanding Options, Stock Appreciation Rights, and
other Awards in the nature of rights that may be exercised to be fully
exercisable, and/or all restrictions on all outstanding Awards to have lapsed,
in each case as of such date as the Committee may, in its sole discretion,
declare, which may be on or before the consummation of such transaction or
event. To the extent that this provision causes Incentive Stock Options to
exceed the dollar limitation set forth in Section 7.2(d), the excess Options
shall be deemed to be Non-Qualified Stock Options.

13.9. Acceleration for any Other Reason. Regardless of whether an event
has occurred as described in Section 13.8 above, the Committee may in its sole
discretion at any time determine that all or a portion of a Participant's
Options, Stock Appreciation Rights, and other Awards in the nature of rights
that may be exercised shall become fully or partially exercisable, and/or that
all or a part of the restrictions on all or a portion of the outstanding Awards
shall lapse, in each case as of such date as the Committee may, in its sole
discretion, declare. The Committee may discriminate among Participants and among
Awards granted to a Participant in exercising its discretion pursuant to this
Section 13.9.

13.10 Effect of Acceleration. If an Award is accelerated under Section
13.8, the Committee may, in its sole discretion, provide (i) that the Award will
expire after a designated period of time after such acceleration to the extent
not then exercised, (ii) that the Award will be settled in cash rather than
Stock, (iii) that the Award will be assumed by another party to the transaction
giving rise to the acceleration or otherwise be equitably converted in
connection with such transaction, or (iv) any combination of the foregoing. The
Committee's determination need not be uniform and may be different for different
Participants whether or not such Participants are similarly situated.

13.11. Performance Goals. The Committee may determine that any Award
granted pursuant to this Plan to a Participant (including, but not limited to,
Participants who are Covered Employees) shall be determined solely on the basis
of (a) the achievement by the Corporation or a Parent or Subsidiary of a
specified target return, or target growth in return, on equity or assets, (b)
the Corporation's, Parent's or Subsidiary's stock price, (c) the achievement by
a business unit of the Corporation, Parent or Subsidiary of a specified target,
or target growth in, net income or earnings per share, or (d) any combination of
the goals set forth in (a) through (c) above. Furthermore, the Committee
reserves the right for any reason to reduce (but not increase) any Award,
notwithstanding the achievement of a specified goal. If an Award is made on such
basis, the Committee shall establish goals prior to the beginning of the period
for which such performance goal relates (or such later date as may be permitted
under Code Section 162(m) or the regulations thereunder). Any payment of an
Award granted with performance goals shall be conditioned on the written
certification of the Committee in each case that the performance goals and any
other material conditions were satisfied.

13.12. Termination of Employment or Service. Whether military, government
or other service or other leave of absence shall constitute a termination of
employment or service in any other capacity shall be determined in each case by
the Committee at its discretion, and any determination by the Committee shall be
final and conclusive. A termination of employment or service in any other
capacity shall not occur in a circumstance in which a Participant transfers from
the Corporation to one of its Parents or Subsidiaries, transfers from a Parent
or Subsidiary to the Corporation, or transfers from one Parent or Subsidiary to
another Parent or Subsidiary.

13.13. Loan Provisions. With the consent of the Committee, the Corporation
may make, guarantee or arrange for a loan or loans to a Participant with respect
to the exercise of any Option granted under this Plan and/or with respect to the
payment of the purchase price, if any, of any Award granted hereunder and/or
with respect to the payment by the Participant of any or all federal and/or
state income taxes due on account of the granting or exercise of any Award
hereunder. The Committee shall have full authority to decide whether to make a
loan or loans hereunder and to determine the amount, terms and provisions of any
such loan or loans, including the interest rate to be charged in respect of any
such loan or loans, whether the loan or loans are to

A-10
<PAGE> 36

be made with or without recourse against the borrower, the terms on which the
loan is to be repaid and the conditions, if any, under which the loan or loans
may be forgiven.

ARTICLE 14

CHANGES IN CAPITAL STRUCTURE

14.1. General. In the event a share dividend is declared upon the Stock,
the shares of Stock then subject to each Award shall be increased
proportionately without any change in the aggregate purchase price therefor. In
the event the Stock shall be changed into or exchanged for a different number or
class of shares of stock or securities of the Corporation or of another
corporation or other entity, whether through reorganization, recapitalization,
stock split-up, combination of shares, merger or consolidation, there shall be
substituted for each such share of Stock then subject to each Award the number
and class of shares or other securities into which each outstanding share of
Stock shall be so changed or for which it shall be so exchanged, all without any
change in the aggregate purchase price for the shares or other securities then
subject to each Award.

ARTICLE 15

AMENDMENT, MODIFICATION AND TERMINATION

15.1. Amendment, Modification and Termination. The Board or the Committee
may, at any time and from time to time, amend, modify or terminate the Plan
without stockholder approval; provided, however, that the Board or Committee may
condition any amendment or modification on the approval of shareholders of the
Corporation if such approval is necessary or deemed advisable with respect to
tax, securities or other applicable laws, policies or regulations.

15.2 Awards Previously Granted. At any time and from time to time, the
Committee may amend, modify or terminate any outstanding Award without approval
of the Participant; provided, however, that such amendment, modification or
termination shall not, without the Participant's consent, reduce or diminish the
value of such Award determined as if the Award had been exercised, vested,
cashed in or otherwise settled on the date of such amendment or termination. No
termination, amendment, or modification of the Plan shall adversely affect any
Award previously granted under the Plan, without the written consent of the
Participant.

ARTICLE 16

GENERAL PROVISIONS

16.1. No Rights to Awards. No Participant or employee, officer, director,
consultant or advisor shall have any claim to be granted any Award under the
Plan, and neither the Corporation nor the Committee is obligated to treat
Participants and employees, officers, directors, consultants or advisors
uniformly.

16.2. No Stockholder Rights. No Award gives the Participant any of the
rights of a stockholder of the Corporation unless and until shares of Stock are
in fact issued to such person in connection with such Award.

16.3. Withholding. The Corporation or any Parent or Subsidiary shall have
the authority and the right to deduct or withhold, or require a Participant to
remit to the Corporation, an amount sufficient to satisfy federal, state, and
local taxes (including the Participant's FICA obligation) required by law to be
withheld with respect to any taxable event arising as a result of the Plan. With
respect to withholding required upon any taxable event under the Plan, the
Committee may, at the time the Award is granted or thereafter, require that any
such withholding requirement be satisfied, in whole or in part, by withholding
shares of Stock having a Fair Market Value on the date of withholding equal to
the amount to be withheld for tax purposes, all in accordance with such
procedures as the Committee establishes.

16.4. No Right to Employment, Directorship or Service in Other
Capacity. Nothing in the Plan or any Award Agreement shall interfere with or
limit in any way the right of the Corporation or any Parent or Subsidiary to
terminate any Participant's employment or status as an officer, director,
consultant or advisor at

A-11
<PAGE> 37

any time, nor confer upon any Participant any right to continue as an employee,
officer, director, consultant or advisor of the Corporation or any Parent or
Subsidiary.

l6.5. Unfunded Status of Awards. The Plan is intended to be an "unfunded"
plan for incentive and deferred compensation. With respect to any payments not
yet made to a Participant pursuant to an Award, nothing contained in the Plan or
any Award Agreement shall give the Participant any rights that are greater than
those of a general creditor of the Corporation or any Parent or Subsidiary.

16.6. Relationship to Other Benefits. No payment under the Plan shall be
taken into account in determining any benefits under any pension, retirement,
savings, profit sharing, group insurance, welfare or benefit plan of the
Corporation or any Parent or Subsidiary unless provided otherwise in such other
plan.

16.7. Expenses. The expenses of administering the Plan shall be borne by
the Corporation and its Parents or Subsidiaries.

16.8. Titles and Headings. The titles and headings of the Sections in the
Plan are for convenience of reference only, and in the event of any conflict,
the text of the Plan, rather than such titles or headings, shall control.

16.9. Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.

16.10. Fractional Shares. No fractional shares of Stock shall be issued
and the Committee shall determine, in its discretion, whether cash shall be
given in lieu of fractional shares or whether such fractional shares shall be
eliminated by rounding up.

16.11. Government and Other Regulations. The obligation of the Corporation
to make payment of awards in Stock or otherwise shall be subject to all
applicable laws, rules, and regulations, and to such approvals by government
agencies as may be required. The Corporation shall be under no obligation to
register under the 1933 Act, any of the shares of Stock paid under the Plan. If
the shares paid under the Plan may in certain circumstances be exempt from
registration under the 1933 Act, the Corporation may restrict the transfer of
such shares in such manner as it deems advisable to ensure the availability of
any such exemption.

16.12. Governing Law. To the extent not governed by federal law, the Plan
and all Award Agreements shall be construed in accordance with and governed by
the laws of the State of Georgia.

16.13 Additional Provisions. Each Award Agreement may contain such other
terms and conditions as the Committee may determine; provided that such other
terms and conditions are not inconsistent with the provisions of this Plan.

The foregoing is hereby acknowledged as being the RARE Hospitality
International, Inc. 1997 Long-Term Incentive Plan as adopted by the Board of
Directors of the Corporation on October 13, 1997.

RARE HOSPITALITY INTERNATIONAL, INC.

By: /s/ GEORGE W. MCKERROW, JR.
------------------------------------
George W. McKerrow, Jr.
Chairman and Chief Executive Officer

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<PAGE> 38

AMENDMENT NO. 1 TO THE
RARE HOSPITALITY INTERNATIONAL, INC.
1997 LONG-TERM INCENTIVE PLAN

THIS AMENDMENT NO. 1 (this "Amendment") to the RARE Hospitality
International, Inc. 1997 Long-Term Incentive Plan (the "Plan") is made this 20th
day of March, 1998.

The Board of Directors of RARE Hospitality International, Inc. (the
"Company") has determined that it is in the best interests of the Company and
its shareholders to increase the number of shares of the Company's common stock
subject to the Plan to a total of 750,000 shares.

The Board of Directors intends that the amendment to the Plan provided in
this Amendment No. 1 shall be submitted to the shareholders of the Company for
approval within one year from the date of adoption of this Amendment by the
Board of Directors.

Section 5.1 of the Plan is hereby amended by deleting Section 5.1 in its
entirety and substituting in lieu thereof a new Section 5.1 to read as follows:

"5.1. Number of Shares. Subject to adjustment as provided in Section 14.1,
the aggregate number of shares of Stock reserved and available for Awards or
which may be used to provide a basis of measurement for or to determine the
value of an Award (such as with a Stock Appreciation Right or Performance Share
Award) shall be 750,000, no more than 20% of which shall be Restricted Stock
Awards."

Except as expressly amended hereby, the terms of the Plan shall be and
remain unamended and the Plan as amended shall remain in full force and effect.

IN WITNESS WHEREOF, the Company has caused this Amendment to be executed by
its duly authorized representative on the day and year first above written.

RARE HOSPITALITY INTERNATIONAL, INC.

By: /s/ PHILIP J. HICKEY, JR.
------------------------------------
Its: President and Chief Executive
Officer

A-13
<PAGE> 39

AMENDMENT NO. 2 TO THE
RARE HOSPITALITY INTERNATIONAL, INC.
1997 LONG-TERM INCENTIVE PLAN

THIS AMENDMENT NO. 2 (this "Amendment") to the RARE Hospitality
International, Inc. 1997 Long-Term Incentive Plan, as previously amended, (the
"Plan") is made this 14th day of December, 1998.

The Board of Directors of RARE Hospitality International, Inc. (the
"Company") has determined that it is in the best interests of the Company and
its shareholders to revise Section 4.1 of the Plan as provided in this Amendment
No. 2.

The Plan is hereby amended by deleting Section 4.1 in its entirety and by
substituting in lieu thereof a new Section 4.1 to read as follows:

4.1 Committee. The Plan shall be administered by a committee (the
"Committee") appointed by the Board (which Committee shall consist of two or
more directors) or, at the discretion of the Board from time to time, the Plan
may be administered by the Board. It is intended that the directors appointed to
serve on the Committee shall be "non-employee directors" (within the meaning of
Rule 16b-3 promulgated under the 1934 Act) and "outside directors" (within the
meaning of Code Section 162(m) and the regulations thereunder) to the extent
that Rule 16b-3 and, if necessary for relief from the limitation under Code
Section 162(m) and such relief is sought by the Corporation, Code Section
162(m), respectively, are applicable. However, the mere fact that a Committee
member shall fail to qualify under either of the foregoing requirements shall
not invalidate any Award made by the Committee which Award is otherwise validly
made under the Plan. The members of the Committee shall be appointed by, and may
be changed at any time and from time to time in the discretion of, the Board.
During any time that the Board is acting as administrator of the Plan, it shall
have all the powers of the Committee hereunder, and any reference herein to the
Committee (other than in this Section 4.1) shall include the Board.

Except as expressly amended hereby, the terms of the Plan, as previously
amended, shall be and remain unchanged and the Plan as amended hereby shall
remain in full force and effect.

IN WITNESS WHEREOF, the Company has caused this Amendment to be executed by
its duly authorized representative on the day and year first above written.

RARE HOSPITALITY INTERNATIONAL, INC.

By: /s/ PHILIP J. HICKEY, JR.
------------------------------------
Its: President and Chief Executive
Officer

A-14
<PAGE> 40

AMENDMENT NO. 3 TO THE
RARE HOSPITALITY INTERNATIONAL, INC.
1997 LONG-TERM INCENTIVE PLAN

THIS AMENDMENT NO. 3 (this "Amendment") to the RARE Hospitality
International, Inc. 1997 Long-term Incentive Plan, as previously amended (the
"Plan") is made this 10th day of February 2000.

The Board of Directors of RARE Hospitality International, Inc. (the
"Corporation") has determined that it is in the best interests of the
Corporation and its shareholders to increase the number of shares of the
Corporation's common stock subject to the Plan to a total of 1,325,000, to grant
the Committee administering the Plan the authority to delegate to one or more
directors who are also officers of the Corporation to grant certain options
under the Plan, to provide certain limitations on the exercise price and term of
options granted under the Plan and to prohibit the extension of the original
term or reduction of the exercise price of options granted under the Plan, and
other amendments as provided herein.

The Board of Directors intends that the amendments to the Plan provided in
this Amendment No. 2 shall be submitted to the shareholders of the Corporation
for approval within one year of the date of adoption of this Amendment by the
Board of Directors.

Section 2.1 of the Plan is hereby amended by deleting such section in its
entirety and by substituting in lieu thereof a new Section 2.1 to read as
follows:

"2.1 Effective Date. The Plan was approved by the Board on October 13,
1997 (the "Effective Date") and by the shareholders of the Corporation on May
20,1998. Amendments to the Plan were approved by the Board on February 10, 2000
(the "2000 Amendments") and became effective as of such date. However, the 2000
Amendments and Plan, as so amended and restated, shall be submitted to the
shareholders of the Corporation for approval within 12 months of the Board's
approval thereof. No Incentive Stock Options covering shares in excess of
750,000 granted under the Plan may be exercised prior to approval of the 2000
Amendments by the shareholders and if the shareholders fail to approve the 2000
Amendments within 12 months of the Board's approval thereof, any Incentive Stock
Options covering shares in excess of 750,000 shares and previously granted
hereunder shall be automatically converted to Non-Qualified Stock Options
without any further act. In the discretion of the Committee, Awards may be made
to Covered Employees which are intended to constitute qualified
performance-based compensation under Code Section 162(m). Any such Awards shall
be contingent upon the shareholders having approved the 2000 Amendments."

Section 4.3 of the Plan is hereby amended by deleting such section in its
entirety and by substituting in lieu thereof a new Section 4.3 to read as
follows:

"4.3 Authority of Committee. Except as provided below, the Committee has
the exclusive power, authority and discretion to:

(a) Designate Participants;

(b) Determine the type or types of Awards to be granted to each
Participant;

(e) Accelerate the vesting or lapse of restrictions of any outstanding
Award, based in each case on such considerations as the Committee in its
sole discretion determines;

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<PAGE> 41

(g) Prescribe the form of each Award Agreement, which need not be
identical for each Participant;

(h) Decide all other matters that must be determined in connection
with an Award;

(i) Establish, adopt or revise any rules and regulations as it may
deem necessary or advisable to administer the Plan;

(j) Make all other decisions and determinations that may be required
under the Plan or as the Committee deems necessary or advisable to
administer the Plan; and

(k) Amend the Plan or any Award Agreement as provided herein.

Not withstanding the above, the Board or the Committee may expressly
delegate to a special committee consisting of one or more directors who are also
officers of the Corporation some or all of the Committee's authority under
subsections (a) through (g) above with respect to those eligible Participants
who, at the time of grant are not, and are not anticipated to be become, either
(i) Covered Employees or (ii) persons subject to the insider trading
restrictions of Section 16 of the 1934 Act."

Section 5.1 of the Plan is hereby amended by deleting such section in its
entirety and by substituting in lieu thereof a new Section 5.1 to read as
follows:

"5.1. Number of Shares. Subject to adjustment as provided in Section 14.1,
the aggregate number of shares of Stock reserved and available for Awards or
which may be used to provide a basis of measurement for or to determine the
value of an Award (such as with a Stock Appreciation Right or Performance Share
Award) shall be 1,325,000, no more than 20% of which shall be Restricted Stock
or unrestricted Stock Awards."

Section 7.1(a) of the Plan is hereby amended by deleting such section in its
entirety and by substituting in lieu thereof a new Section 7.1(a) to read as
follows:

"(a) Exercise Price. The exercise price per share of Stock under an Option
shall be determined by the Committee, provided that the exercise price for any
Option shall not be less than the Fair Market Value as of the date of the
grant."

Section 7.1(c) of the Plan is hereby amended by deleting such section in its
entirety and by substituting in lieu thereof a new Section 7.1(c) to read as
follows:

"(c) Payment. The Committee shall determine the methods by which the
exercise price of an Option may be paid, the form of payment, including, without
limitation, cash, shares of Stock, or other property (including "cashless
exercise" arrangements), and the methods by which shares of Stock shall be
delivered or deemed to be delivered to Participants; provided, however, that if
shares of Stock are used to pay the exercise price of an Option, such shares
must have been held by the Participant for at least six months."

Section 7.1(e) of the Plan is hereby amended by deleting such section in its
entirety and by substituting in lieu thereof a new Section 7.1(e) to read as
follows:

"(e) Exercise Term. In no event may any Option be exercisable for more
than ten years from the date of its grant."

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<PAGE> 42

Section 15.2 of the Plan is hereby amended by deleting such section in its
entirety and by substituting in lieu thereof a new Section 15.2 to read as
follows:

"15.2 Awards Previously Granted. At any time and from time to time, the
Committee may amend, modify or terminate any outstanding Award without approval
of the Participant; provided, however, that, subject to the terms of the
applicable Award Agreement, such amendment, modification or termination shall
not, without the Participant's consent, reduce or diminish the value of such
Award determined as if the Award had been exercised, vested, cashed in or
otherwise settled on the date of such amendment or termination; and provided
further that the original term of any Option may not be extended and, except as
otherwise provided in the anti-dilution provision of the Plan, the exercise
price of any Option may not be reduced. No termination, amendment, or
modification of the Plan shall adversely affect any Award previously granted
under the Plan, without the written consent of the Participant."

Except as expressly amended hereby, the terms of the Plan shall be and
remain unamended and the Plan as amended shall remain in full force and effect.

IN WITNESS WHEREOF, the Corporation has caused this Amendment to be
executed by its duly authorized representative on the day and year first above
written.

RARE HOSPITALITY INTERNATIONAL, INC.

By: /s/ PHILIP J. HICKEY, JR.
------------------------------------
Philip J. Hickey, Jr.
Its: President and Chief Executive
Officer

A-17
<PAGE> 43
PROXY FOR RARE HOSPITALITY INTERNATIONAL, INC.
ANNUAL MEETING OF SHAREHOLDERS
ATLANTA, GEORGIA

The undersigned shareholder of RARE Hospitality International, Inc.
(the "Company"), hereby constitutes and appoints Philip J. Hickey, Jr. and Joia
M. Johnson, or either one of them, each with full power of substitution, to
vote the number of shares of Company common stock which the undersigned would
be entitled to vote if personally present at the Annual Meeting of Shareholders
to be held at the Crowne Plaza Ravinia, 4355 Ashford-Dunwoody Road, Atlanta,
Georgia, on Monday, May 15, 2000, at 2:00 p.m. local time, or at any
adjournments thereof (the "Meeting"), upon the proposals described in the
Notice of Annual Meeting of Shareholders and Proxy Statement, both dated April
12, 2000, the receipt of which is acknowledged, in the manner specified below.
The proxies, in their discretion, are further authorized to vote for the
election of a person to the Board of Directors if any nominee named herein
becomes unable to serve or for good cause will not serve and are further
authorized to vote on matters properly brought before the Meeting or any
adjournment thereof, of which the Board of Directors did not have notice on or
before February 21, 2000. The Board of Directors recommends a vote FOR
Proposals 1, 2 and 3.

1. ELECTION OF DIRECTORS: To elect Philip J. Hickey Jr. and George W.
McKerrow Jr. to serve as Class II directors until the 2003 Annual Meeting of
Shareholders of the Company and until their successors are elected and
qualified:

FOR [ ] WITHHOLD AUTHORITY [ ]

To withhold authority for any individual nominee(s), write the name of the
nominee(s) in the space provided:

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

2. AMENDMENT OF LONG-TERM INCENTIVE PLAN: To approve the amendment of
the Company's 1997 Long-Term Incentive Plan to increase the number of shares of
Common Stock available for award by 575,000 shares, to grant the committee
administering the plan the authority to delegate to one or more directors who
are also officers of the corporation the ability to grant certain options under
the Plan, to provide certain limitations on the exercise price and term of
options granted under the Plan and to prohibit the extension of the original
term or reduction of the exercise price of options granted under the Plan, and
other amendments described in the Proxy Statement.

FOR [ ] AGAINST [ ] ABSTAIN [ ]

3. RATIFICATION OF AUDITORS: To ratify the selection of KPMG LLP to
serve as the independent auditors of the Company for the fiscal year ending
December 31, 2000:

FOR [ ] AGAINST [ ] ABSTAIN [ ]

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1, 2 AND 3, AND WITH DISCRETIONARY AUTHORITY ON ALL
OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT
THEREOF OF WHICH THE COMPANY DID NOT HAVE NOTICE ON OR BEFORE FEBRUARY 21,
2000.

<PAGE> 44

Please sign exactly as your name appears on your stock certificate and
date. Where shares are held jointly, each shareholder should sign. When signing
as executor, administrator, trustee, or guardian, please give full title as
such. If a corporation, please sign in full corporate name by President or
other authorized officer. If a partnership, please sign in partnership name by
authorized person.

------------------------------------------------
Signature of Shareholder

------------------------------------------------
Signature of Other Shareholder (if held jointly)

Dated: __________________________, 2000

THIS PROXY IS SOLICITED ON BEHALF OF RARE HOSPITALITY INTERNATIONAL, INC.'S
BOARD OF DIRECTORS AND MAY BE REVOKED BY THE SHAREHOLDER PRIOR TO ITS EXERCISE.