AGREEMENT

This AGREEMENT (this "Agreement"), dated as of June 7, 2004, by and among
Luby's, Inc., a Delaware corporation (together with its subsidiaries, the
"Company"), and Harris J. Pappas and Christopher J. Pappas, individuals residing
in Houston, Texas (together, the "Noteholders").

In consideration of the mutual covenants and agreements set forth herein and for
good and valuable consideration, the receipt of which is hereby acknowledged,
the parties hereto agree as follows:

1. Definitions

. As used in this Agreement, and unless the context requires a different
meaning, the following terms have the meanings indicated:

"Closing"

shall have the meaning specified in Section 6.

"Common Stock"

means the Company's common stock, par value $.32 per share, and any capital
stock for or into which such Common Stock hereafter is exchanged, converted,
reclassified or recapitalized by the Company or pursuant to an agreement or
business combination to which the Company is a party.

"Effective Date"

shall mean the effective date of the Senior Secured Refinancing Documents.

"Employment Agreement(s)"

shall have the meaning specified in Section 3.

"Note(s)"

shall have the meaning specified in Section 2.

"Original Notes" shall mean (i) those two certain Convertible Subordinated
Promissory Notes, due 2011, dated June 29, 2001, each in the original principal
amount of One Million Five Hundred Thousand Dollars ($1,500,000.00) and (ii)
those two certain Convertible Subordinated Promissory Notes, due 2011, dated
July 2, 2001, each in the original principal amount of Three Million Five
Hundred Thousand Dollars ($3,500,000.00).

"Purchase Agreement"

shall mean that certain Purchase Agreement between the Company and the
Noteholders, dated as of March 9, 2001.

"Senior Secured Refinancing Documents"

shall mean senior secured loan documents contemplated by (i) that certain Credit
Agreement, dated as of June 7, 2004 among the Company, as borrower, JPMorgan
Chase Bank, as administrative lender, and the lenders signatory thereto, and
(ii) that certain Term Loan Agreement dated as of June 7, 2004 among the
Company, as borrower, Guggenheim Corporate Funding, LLC, as administrative
lender, and the lenders signatory thereto including, without limitation, in each
case, any intercreditor agreement or subordination agreement required to be
executed and delivered by the Noteholders in connection with the execution and
delivery of the Senior Secured Refinancing Documents.

"Stock Options"

shall mean the two Stock Options granted to the Noteholders in connection with
the employment of the Noteholders, dated March 9, 2001, to purchase an aggregate
of 2,240,000 shares of common stock of the Company.

"Transaction Documents"

means this Agreement, the Notes, the Employment Agreements, the Stock Options
and the Purchase Agreement, each as amended pursuant hereto.

2.

Amendment of Notes. At the Closing, the Noteholders shall surrender the Original
Notes to the Company for cancellation, and the Company shall execute and deliver
to the Noteholders the Amended and Restated Convertible Subordinated Promissory
Notes in the form attached hereto as Exhibit A, to be effective as of the
Effective Date. Such Amended and Restated Convertible Subordinated Promissory
Notes are referred to herein individually as a "Note" and collectively as the
"Notes." In accordance with the terms of the Notes, on the Effective Date the
Company shall pay in cash to the Noteholders the amount of unpaid interest
accrued on the outstanding principal of the Original Notes up to and including
the Effective Date, including accrued interest at the rate set by the Original
Notes during an Event of Default (as defined in the Original Notes).

3. Employment Agreements. At the Closing, the Company and the Noteholders shall
execute and deliver the Employment Agreements in the form attached hereto as
Exhibit B, to be effective as of April 1, 2004. Such Employment Agreements are
referred to herein individually as an "Employment Agreement" and collectively as
the "Employment Agreements."

4. Amendment of Purchase Agreement. At the Closing, the Company and the
Noteholders shall execute and deliver a First Amendment to the Purchase
Agreement in the form attached hereto as Exhibit C, to be effective as of the
Effective Date.

5. Exercise of Stock Options.

(a) If the Closing occurs, then from and after the Effective Date, the
Noteholders shall jointly and severally limit their exercise of the Stock
Options such that the number of shares of Common Stock issued upon any
exercise(s) of the Stock Options does not exceed, in the aggregate, the Net
Treasury Shares Available (as hereinafter defined) unless and until sufficient
additional shares are listed with the New York Stock Exchange for issuance upon
exercise of the Stock Options. "Net Treasury Shares Available" means (x) the
number of shares of Common Stock then held by the Company in treasury, minus (y)
the number of shares of Common Stock issuable or issued after the Effective Date
under the Nonemployee Director Phantom Stock Plan, and minus (z) the number of
shares of Common Stock issuable or issued upon conversion of the Notes,
calculated assuming the lowest conversion price stated in the Notes.

(b) If the Closing occurs, then from and after the Effective Date, the Company
shall (i) use its commercially reasonable best efforts, including the
solicitation of shareholder approval, if necessary in the opinion of its
counsel, to list, within twelve (12) months after the Effective Date, on the New
York Stock Exchange additional shares of Common Stock equal to the number of
shares by which the aggregate number of shares of Common Stock acquirable by the
Noteholders under the Stock Options exceeds the Net Treasury Shares Available;
and (ii) reserve all shares of Common Stock held by the Company in treasury
solely for issuance pursuant to (x) the Nonemployee Director Phantom Stock Plan,
(y) the Notes, upon exercise by the Noteholders of their conversion rights
thereunder, assuming the lowest conversion price stated in the Notes, and (z)
the Stock Options, except to the extent the Company lists with the New York
Stock Exchange additional shares of Common Stock to permit full conversion of
the Notes into Common Stock, assuming the lowest conversion price stated in the
Notes, and full exercise of the Stock Options. If the Closing occurs, then from
and after the Effective Date, the Company shall not cancel, sell or otherwise
dispose of any shares of Common Stock held by the Company in treasury except to
the extent the Company lists with the New York Stock Exchange a number of
additional shares of Common Stock sufficient to permit full conversion of the
Notes into Common Stock, assuming the lowest conversion price stated in the
Notes, and full exercise of the Stock Options.

6. Closing.

The execution and delivery of the Notes, the Employment Agreements and the First
Amendment to the Purchase Agreement, as contemplated herein (the "Closing") will
take place at the offices of the Company at 2211 N.E. Loop 410, San Antonio,
Texas, at 10:00 a.m., local time, on the Effective Date, or on such other date
as mutually agreed to by the parties hereto.

7. Conditions to Effectiveness.

(a) All obligations of the Company under this Agreement shall be subject to (i)
the full execution and delivery by the Company and all other parties thereto of
Senior Secured Refinancing Documents satisfactory, in form and substance, to the
Company; and (ii) the Noteholders shall have performed and complied with all
covenants and obligations that this Agreement requires the Noteholders to
perform or comply with at or prior to Closing.

(b) All obligations of the Noteholders under this Agreement shall be subject to
(i) the full execution and delivery by the Company and all other parties thereto
of Senior Secured Refinancing Documents satisfactory, in form and substance, to
the Noteholders; and (ii) the Company shall have performed and complied with all
covenants and obligations that this Agreement requires the Company to perform or
comply with at or prior to Closing.

8. Termination. By notice given prior to or at the Closing, this Agreement may
be terminated (i) by the Company if any condition in Section 7(a) has not been
satisfied as of the Effective Date; (ii) by the Noteholders if any condition in
Section 7(b) has not been satisfied as of the Effective Date; or (iii) by mutual
written consent of the Company and the Noteholders. Each party's right of
termination under this Section is in addition to any other rights it may have
under this Agreement or otherwise, and the exercise of such right of termination
will not be an election of remedies. If this Agreement is terminated pursuant to
this Section, all obligations of the parties under this Agreement will
terminate.

9. Attorney Fees.

The Company shall pay reasonable attorney's fees charged to the Noteholders by
Fulbright & Jaworski, L.L.P. in connection with the negotiation, execution and
performance of this Agreement, up to, but not exceeding Fifty Thousand Dollars
($50,000.00).

10.

No Waiver; Modification in Writing. No failure or delay on the part of the
Company or a Noteholder in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given without the written consent of the Company,
on the one hand, and Noteholders or their permitted assigns, on the other hand,
provided that notice of any such waiver shall be given to each party hereto as
set forth below. Any amendment, supplement or modification of or to any
provision of this Agreement, or any waiver of any provision of this Agreement,
shall be effective only in the specific instance and for the specific purpose
for which made or given. Except where notice is specifically required by this
Agreement, no notice to or demand on any party hereto in any case shall entitle
the other party to any other or further notice or demand in similar or other
circumstances.

11.

Specific Performance. The parties recognize that in the event the Company or
Noteholders should refuse to perform under the provisions of this Agreement or
any other Transaction Document, monetary damages alone will not be adequate.
Noteholders or the Company, as the case may be, shall therefore be entitled, in
addition to any other remedies which may be available, including money damages,
to obtain specific performance of the terms of this Agreement. In the event of
any action to enforce this Agreement or any other Transaction Document
specifically, the Company and Noteholders hereby waive the defense that there is
an adequate remedy at law.

12.

Severability. If any term or other provision of this Agreement is invalid,
illegal, or incapable of being enforced by any rule of applicable law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated herein are not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal, or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated herein are consummated as originally
contemplated to the fullest extent possible.

13.

Parties in Interest. This Agreement shall be binding upon and, except as
provided below, inure solely to the benefit of each party hereto and their
successors and assigns, and nothing in this Agreement, express or implied, is
intended to confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement.

14. Notices. All notices and other communications hereunder shall be in writing
and shall be deemed given if delivered personally, telecopied or mailed by
registered or certified mail (return receipt requested), or sent by Federal
Express or other recognized overnight courier, to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):

If to Noteholders: Harris J. Pappas and Christopher J. Pappas
642 Yale
Houston, Texas 77007

with a copy to: Frank Markantonis
645 Heights Blvd.
Houston, Texas 77007

and Fulbright & Jaworski, L.L.P.
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
Attention: Charles H. Still

If to the Company: Luby's, Inc.
2211 Northeast Loop 410
San Antonio, Texas 78217-4673
Attention: Chairman of the Board

with a copy to: Hornberger Sheehan Fuller & Beiter Inc.
700 N. St. Mary's Street, Suite 600
San Antonio, Texas 78205
Attention: Drew R. Fuller, Jr.

Any of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered, on the date of receipt, if telecopied, three Business Days
after the date of mailing, if mailed by registered or certified mail, return
receipt requested, and one Business Day after the date of sending, if sent by
Federal Express or other recognized overnight courier.

15. Counterparts. This Agreement may be executed and delivered (including by
facsimile transmission) in one or more counterparts, all of which shall be
considered one and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.

16. Entire Agreement

. This Agreement (which term shall be deemed to include the Exhibits hereto and
the other certificates, documents and instruments delivered hereunder) and the
other Transaction Documents constitute the entire agreement of the parties
hereto and supersede all prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter hereof. There are no
representations or warranties, agreements, or covenants other than those
expressly set forth in this Agreement and the other Transaction Documents.

17. Governing Law

. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAW PROVISIONS.

18. Public Announcements

. The Company, on the one hand, and Noteholders, on the other, shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or the transactions contemplated
hereby, except for statements required by Law or by any listing agreements with
or rules of any national securities exchange or the National Association of
Securities Dealers, Inc., or made in disclosures reasonably determined as
required to be filed pursuant to the Securities Act or the Exchange Act.

19. Headings

. The headings of this Agreement are for convenience of reference only and are
not part of the substance of this Agreement.

IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement or
has caused this Agreement to be executed by its duly authorized officer as of
the date first written above.

     

LUBY'S, INC.

     

/s/Gasper Mir, III

     

Gasper Mir, III
Chairman of the Board

     

NOTEHOLDERS:

     

/s/Christopher J. Pappas

     

Christopher J. Pappas

     

/s/Harris J. Pappas

     

Harris J. Pappas