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EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”), between Luby’s, Inc., a Delaware
corporation (“Luby’s” or the “Company”), and Christopher J. Pappas, a resident
of Houston, Texas, (“Executive”) is executed this 9th day of November, 2005 to
be effective as of the 1st day of September, 2005 (“Effective Date”). For
purposes of this Agreement, “Luby’s” or the “Company” shall include the
subsidiaries of Luby’s. Luby’s and Executive are sometimes referred to herein
individually as a “Party,” and collectively as the “Parties.” The Parties hereby
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:

“Affiliate” means, with respect to any Person, any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by or
under common control with such Person. For purposes of this definition and this
Agreement, the term “control” (and correlative terms “controlling,” “controlled
by” and “under common control with”) means possession of the power, whether by
contract, equity ownership or otherwise, to direct the policies or management of
a Person.

“Associate” has the meaning ascribed to such term in Rule 12b-2 under the
Exchange Act.

“Beneficially Own” or “Beneficial Ownership” is defined in Rules 13d-3 and 13d-5
of the Exchange Act, but without taking into account any contractual
restrictions or limitations on voting or other rights.

“Board” or “Board of Directors” means the Board of Directors of the Company.

“Business Combination” means (i) any consolidation, merger, share exchange or
similar business combination transaction involving the Company with any Person
or (ii) the sale, assignment, conveyance, transfer, lease or other disposition
by the Company of all or substantially all of its assets.

“Change of Control” shall mean the occurrence of any of the events described in
subsections (i) through (iv) below:

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(i)   The Rights Agreement shall have been determined to be invalid or is
otherwise abrogated by a court of competent jurisdiction in a final and
non-appealable judgment rendered in connection with a contest for control of the
Company and a substitute defense mechanism having the effectiveness of the
Rights Agreement is not promptly adopted or, if adopted, is determined to be
invalid or is otherwise abrogated, and either (y) the Company has received a
report on Schedule 13D, or an amendment to such a report, filed with the SEC
pursuant to Section 13(d) of the Exchange Act disclosing that any Person or 13d
Group other than Christopher J. Pappas or Harris J. Pappas, individually or
together with their Affiliates and Associates and any 13d Group of which they
are a part, Beneficially Owns, directly or indirectly, twenty percent or more of
the combined voting power of the outstanding Common Stock, or (z) the Board of
Directors has actual knowledge of facts on the basis of which any Person or 13d
Group other than Christopher J. Pappas or Harris J. Pappas, individually or
together with their Affiliates and Associates and any 13d Group of which they
are a part, is required to file such a report on Schedule 13D, or to make an
amendment to such a report, with the SEC (or would be required to file such a
report or amendment upon the lapse of the applicable period of time specified in
Section 13(d) of the Securities Act) disclosing that such Person or 13d Group
other than Christopher J. Pappas or Harris J. Pappas, individually or together
with their Affiliates and Associates and any 13d Group of which they are a part,
Beneficially Owns, directly or indirectly, twenty percent or more of the
combined voting power of the outstanding Common Stock.

(ii)   Either (y) the purchase by any Person, other than the Company or a
wholly-owned subsidiary of the Company or Christopher J. Pappas or Harris J.
Pappas, individually or together with their Affiliates and Associates and any
13d Group of which they are a part, of shares of Common Stock pursuant to a
tender or exchange offer to acquire any Common Stock (or securities convertible
into Common Stock) for cash, securities or any other consideration or (z) any
Person, other than the Company or a wholly-owned subsidiary of the Company or
Christopher J. Pappas or Harris J. Pappas or any of their Affiliates, Associates
or members of any 13d Group of which they are a part, individually or together,
shall make any such offer to acquire any Common Stock pursuant to a tender or
exchange offer for cash, securities or any other consideration and either (1)
the Company shall have recommended that stockholders accept such offer or (2)
within 10 business days (as such term is used in Rule 14e-2 under the Exchange
Act), the Company shall have made no recommendation that stockholders reject
such offer or (3) the Company shall have recommended that stockholders reject
such offer and the Rights Agreement shall have been determined to be invalid or
is otherwise abrogated by a court of competent jurisdiction in a final and
non-appealable judgment rendered in connection with a contest for control of the
Company and a substitute defense mechanism having the effectiveness of the
Rights Agreement is not promptly adopted or, if adopted, is determined to be
invalid or is otherwise abrogated, provided that, after consummation of any such
offer, such Person Beneficially Owns, or would Beneficially Own, directly or
indirectly, twenty percent or more of the combined voting power of the
outstanding Common Stock (calculated as provided in paragraph (d) of Rule 13d-3
under the Exchange Act in the case of rights to acquire stock).

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(iii)   The Company shall, after approval by its Board of Directors or an
authorized committee thereof, enter into any agreement contemplating a
transaction described below, other than any such transaction with Christopher J.
Pappas or Harris J. Pappas, individually or together with their Affiliates and
Associates and any 13d Group of which they are a part:  (v) a transaction
pursuant to which the Company agrees to issue or sell, regardless of the
consideration therefor, a number of its shares of Common Stock that would result
in any Person acquiring Beneficial Ownership, directly or indirectly, of twenty
percent or more of the combined voting power of the outstanding Common Stock,
calculated as in clause (ii) above; (w) any consolidation, merger or similar
transaction involving the Company in which the Company is not the continuing or
surviving corporation or pursuant to which shares of Common Stock would be
converted into cash, securities or other property, other than a consolidation,
merger or similar transaction involving the Company in which holders of its
Common Stock immediately prior to the consolidation or merger or similar
transaction own at least a majority of the combined voting power of the
outstanding capital stock of the surviving corporation immediately after the
consolidation, merger or similar transaction (or at least a majority of the
combined voting power of the outstanding capital stock of a corporation which
owns directly or indirectly all of the voting stock of the surviving
corporation); (x) any consolidation, merger or similar transaction involving the
Company in which the Company is the continuing or surviving corporation but in
which the stockholders of the Company immediately prior to the consolidation,
merger or similar transaction do not hold at least a majority of the combined
voting power of the outstanding Common Stock of the continuing or surviving
corporation (except where such holders of Common Stock hold at least a majority
of the combined voting power of the outstanding capital stock of the corporation
which owns directly or indirectly all of the voting stock of the Company); (y)
any sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all or substantially all the assets of the Company
(except such a transfer to a corporation which is wholly owned, directly or
indirectly, by the Company), or any complete liquidation of the Company; or (z)
any consolidation, merger or similar transaction involving the Company where,
after the consolidation, merger or similar transaction, one Person owns 100% of
the shares of Common Stock (except where the holders of the Company’s voting
stock immediately prior to such consolidation, merger or similar transaction own
at least a majority of the combined voting power of the outstanding capital
stock of such Person immediately after such consolidation, merger or similar
transaction).

(iv)   A change in the majority of the members of the board of directors of the
Company within a 24-month period unless the election or nomination for election
by the shareholders of each new director was approved by the vote of at least
two-thirds of the directors then still in office who were in office at the
beginning of the 24-month period.

For purposes of this Agreement, the “effective date of a Change of Control” is
the date that an event described in subsection (i), (ii), (iii) or (iv) occurs
or the date upon which all the events necessary to constitute the Change of
Control shall have occurred.

“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.

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“Covenant Period” means:

(i)   twenty-four (24) months if Employee is terminated by the Company for Cause
or if Executive terminates his employment without Good Reason; or (ii) if
Executive’s employment is terminated for any other reason;

 
(x)
twelve (12) months for the activities prohibited by clauses (ii) and (iv) of
Section 11(b); and

 
(y)
twenty-four (24) months for the activities prohibited by any other provision of
Section 11.

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time, and the rules and regulations of the SEC promulgated thereunder.

“Person” means an individual or a corporation, partnership, trust, incorporated
or unincorporated association, limited liability company, joint venture, joint
stock company, government (or an agency or political subdivision thereof) or
other entity of any kind.

“Rights Agreement” means the Rights Agreement dated April 16, 1991 between the
Company and Ameritrust Company, N.A. as Agent, as amended from time to time.

“SEC” means the Securities and Exchange Commission.

“13d Group” means a group within the meaning of Section 13(d)(3) of the Exchange
Act.

2.   Employment. Luby’s hereby employs Executive, and Executive hereby accepts
employment with Luby’s, subject to the terms and conditions set forth in this
Agreement.

3.   Term. Subject to the provisions for termination of employment as provided
in Section 8(a), Executive’s employment under this Agreement shall be for a
period beginning on the Effective Date and ending on August 31, 2008 (“Term”).

4.   Compensation. Executive’s compensation during his employment under the
terms of this Agreement shall be as follows:

(a)   Base Salary. Luby’s shall pay to Executive a fixed annual base salary (the
“Base Salary”) of Four Hundred Thousand Dollars ($400,000) for each year of the
Term. The Base Salary shall be payable in equal, semi-monthly installments on
the 15th day and last day of each month or at such other times and in such
installments as may be agreed between Luby’s and Executive. All payments shall
be subject to the deduction of payroll taxes, income tax withholdings, and
similar deductions and withholdings as required by law.

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(b)   Bonus. During each year of the Term, in addition to the Base Salary,
Executive shall be eligible, but not entitled, to receive bonus compensation as
the Board of Directors of Luby’s or an authorized committee thereof shall from
time to time determine in its sole discretion.

5.   Expenses and Benefits.

(a)   During his employment hereunder, Executive is authorized to incur
reasonable and appropriate expenses related to the business of Luby’s, including
expenses for entertainment, travel, and similar matters. Luby’s will reimburse
Executive for such expenses upon presentation by Executive of such accounts and
records as Luby’s may from time to time reasonably require.

(b)   Luby’s also agrees to provide Executive with the following benefits during
his employment hereunder:

(i)     Employee Benefit Plans. Executive and, to the extent applicable,
Executive’s spouse, dependents, and beneficiaries, shall be allowed to
participate on the same terms in all benefits, plans, and programs, including
improvements or modifications of the same, which are now, or may hereafter be,
available to other executive employees of Luby’s; provided that Executive shall
not be permitted without the express consent of the Board of Directors of Luby’s
to participate in any bonus, incentive, profit-sharing, or similar cash payment
plan. Such benefits, plans, and programs may include, without limitation, stock
option or thrift plans, health insurance or health care plans, life insurance,
disability insurance, supplemental retirement plans, vacation, and sick leave.
Luby’s shall not, however, by reason of this paragraph be obligated to
institute, maintain, or refrain from changing, amending, or discontinuing any
such benefit plan or program, so long as such changes are similarly applicable
to executive employees generally.

(ii)    Vacations. Executive shall be entitled (in addition to the usual Luby’s
holidays) to paid vacation time for periods in each calendar year not exceeding
four (4) weeks.

(iii)   Working Facilities. Executive shall be furnished by Luby’s with an
office at the Company’s principal office in Houston, Texas, secretarial help and
other facilities and services, including but not limited to, full use of Luby’s
mail and communication facilities and services reasonably suitable to his
position and reasonably necessary for the performance of his duties under this
Agreement.

6.   Positions and Duties. Executive is employed hereunder as Chief Executive
Officer of Luby’s or in such other positions as the Parties may mutually agree.
In addition, if requested to do so, Executive shall serve as the chief executive
officer or other officer or as a member of the Board of Directors, or both, of
any subsidiary or affiliate of Luby’s. Executive agrees to serve in the position
referred to above and to perform diligently and to the best of his abilities the
duties and services appertaining to such office, as well as such additional
duties and services appropriate to such offices which the Parties mutually may
agree upon from time to time. Executive’s employment shall also be subject to
the policies maintained and established by Luby’s that are of general
applicability to Luby’s executive employees, as such policies may be amended
from time to time. Executive’s duties shall be performed principally at Luby’s
principal place of business in Houston, Texas and at the locations of its
operations. Executive acknowledges and agrees that Executive owes a fiduciary
duty of loyalty to act at all times in the best interests of Luby’s. In keeping
with such duty, Executive represents that he owes no duty to any other entity or
person regarding, and shall make full disclosure to Luby’s of, all business
opportunities pertaining to Company’s business which have not been previously
renounced by the Board of Directors, as contemplated by Section 11 hereof, and
shall not appropriate for Executive’s own benefit any such business
opportunities.

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7.   Extent of Service. Executive shall, during the term of this Agreement,
devote his primary working time, attention, energies and business efforts to his
duties as an employee of Luby’s and to the business and affairs of Luby’s
generally, and shall not, during the term of this Agreement, engage, directly or
indirectly, in any other business activity whatsoever, whether or not such
business activity is pursued for gain, profit or other pecuniary advantage,
except with the consent of the Board of Directors of Luby’s; however, this
Section 7 shall not be construed to prevent Executive from, nor require board
consent with respect to, (i) continuing executive’s senior level management of
non-cafeteria style restaurant businesses operated by executive’s privately-held
family company (“Executive’s Family Company”), (ii)  serving as a member of the
board of directors or board of trustees of Executive’s Family Company or other
companies or not-for-profit entities, or (iii) from investing his personal,
private assets as a passive investor in such form or manner as will not require
any active services on the part of Executive in the management or operation of
the affairs of the companies, partnerships, or other business entities in which
any such passive investments are made; provided in case of clause (i), (ii),
or (iii) such activities do not conflict with the business and affairs of Luby’s
or interfere with Executive’s ability to perform the services and discharge the
duties required of him hereunder.

8.   Termination.

(a)   Termination of Employment. Notwithstanding the provisions of Section 2,
the employment of the Executive pursuant to this Agreement shall terminate prior
to the expiration of the Term, upon the occurrence of any of the following
events:

(i)     the death of the Executive;

(ii)    the termination of the Executive’s employment by Luby’s due to the
Executive’s Disability (as defined in Section 8(b));

(iii)   the termination of the Executive’s employment by the Executive for “Good
Reason” (as defined in Section 8(d));

(iv)   the termination of the Executive’s employment by Luby’s for “Cause” (as
defined in Section 8(c)); or

(v)    for any reason whatsoever in the discretion of the Executive or Luby’s.

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(b)   Disability. For the purposes of this Agreement, the term “Disability”
shall mean Executive becoming incapacitated by accident, sickness, or other
circumstance that renders him physically or mentally unable to carry out the
duties and services required of him hereunder on a full-time basis for more than
one hundred twenty (120) days in any one hundred eighty (180) day period. If a
dispute arises between the Executive and the Company concerning the Executive’s
physical or mental ability to continue or return to the performance of his
duties as aforesaid, the Executive shall submit to examination by a competent
physician mutually agreeable to both parties or, if the parties are unable to
agree, by a physician appointed by the president of the Harris County Medical
Association, and such physician’s opinion shall be final and binding.

(c)   Cause. For purposes of this Agreement, the term “Cause” shall mean:

(i)     Executive’s conviction of a crime constituting a felony, or a
misdemeanor involving moral turpitude;

(ii)    The commission by Executive, or participation in, an illegal act or acts
that were intended to defraud Luby’s;

(iii)   the willful refusal by Executive to fulfill the duties and
responsibilities as Chief Executive Officer;

(iv)   the breach by Executive of material provisions of this Agreement, a
policy of Luby’s, or the code of conduct of Luby’s in each case after written
notice from the Board of Directors and, if correctible, the failure to correct
such breach within 30 days from the date such notice is given;

(v)    gross negligence or willful misconduct by Executive in the performance of
his duties and obligations to Luby’s;

(vi)   willful engagement by Executive in conduct known (or which should have
been known) to be materially injurious to Luby’s.

(d)   Good Reason. For purposes of this Agreement, “Good Reason” shall mean the
occurrence of any of the following circumstances, without the consent of the
Executive, unless such circumstances are remedied in all material respects by
Luby’s 30 days after Luby’s receipt of written notice thereof given by the
Executive:

(i)   the material diminution in the nature, scope, or duties of the Executive
or assignment of duties inconsistent with those of the Chief Executive Officer
or a change in the location of the principal business office of the Company in
which his services are to be carried out, to a place outside of Texas;

(ii)   any breach of a material provision of this Agreement by Luby’s after
written notice from Employee and, if correctible, the failure to correct such
breach within 30 days from the date such notice is given;

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(iii)   within two years after sale by Luby’s of all or substantially all of its
assets or the merger, share exchange, or other reorganization of Luby’s into or
with another corporation or entity (with respect to which Luby’s does not
survive), a diminution in employee benefits (including but not limited to
medical, dental, life insurance, and long-term disability plans) and perquisites
applicable to Executive from the greater of (A) the employee benefits and
perquisites provided by Luby’s to executives with comparable duties or (B) the
employee benefits and perquisites to which Executive was entitled immediately
prior to the date on which a change in control occurs.

(e)   Notice of Termination. If Luby’s or Executive desires to terminate
Executive’s employment hereunder at any time prior to expiration of the Term, it
or he shall do so by giving written notice to the other party that it or he has
elected to terminate Executive’s employment hereunder and stating the proposed
effective date and reason for such termination, provided that no such action
shall alter or amend any other provisions hereof or rights arising hereunder.

9.   Consequences of Termination.

(a)   By Expiration. If Executive’s employment hereunder shall terminate upon
expiration of the Term, then all compensation for periods subsequent to
termination and all benefits to Executive hereunder, other than (i) the
nonqualified stock option to purchase 1,120,000 shares of Common Stock of
Luby’s, with an exercise price per share equal to five dollars ($5.00) per share
dated March 9, 2001 and (ii) any other equity based compensation awards granted
to Executive by Luby’s (collectively, the “Awards”), each of which is governed
by its own terms in such circumstances, shall terminate contemporaneously with
termination of his employment.

(b)   Death or Disability. If the Executive’s employment is terminated during
the Term by reason of the Executive’s death or Disability, all Compensation and
benefits to Executive under this Agreement, other than the Awards, each of which
is governed by its own terms in such circumstances, shall terminate
contemporaneously with the termination of employment and without further
obligation to the Executive or the Executive’s legal representatives under the
Agreement (other than payment of the Executive’s Base Salary in respect of the
period through his date of death or termination for Disability).

(c)   Termination by the Executive without Good Reason or by the Company For
Cause. If the Executive’s employment is terminated by the Executive without Good
Reason, or by the Company for Cause, all compensation and benefits to Executive
under this Agreement, other than the Awards, each of which is governed by its
own terms in such circumstances, shall terminate contemporaneously with such
termination of employment and without further obligation to Executive or
Executive’s legal representatives under this Agreement (other than payment of
Executive’s Base Salary in respect of the period through his date of
termination).

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(d)   Termination by the Executive for Good Reason or by the Company without
Cause.

(i)   If the Executive’s employment is terminated by the Company without Cause
or by the Executive for Good Reason, the Company shall be obligated to pay to,
or make available to, the Executive Executive’s monthly Base Salary and benefits
in effect on the date of termination for the remainder of the Term. The
Executive shall have no obligation to seek other employment during any time
period for which he may receive payment pursuant to this subsection (d), and in
the event the Executive obtains other employment during such period, the
Company’s obligations to make payments pursuant to this subsection (d) shall not
be reduced. In the event that continued participation in any Luby’s benefit plan
contemplated by Section 5(b)(i) hereof is for whatever reason impermissible
during the remainder of the Term, Company shall arrange upon comparable terms
benefits substantially equivalent to those that may not be so provided under the
plan maintained by Luby’s. The parties agree that the payments provided for
herein constitute part of the consideration provided by the Company for the
Executive’s agreements contained in Section 6 hereof.

(ii)   Notwithstanding clause (i) of this subsection (d), if, at any time during
which the Executive would otherwise be entitled to receive any payment pursuant
to clause (i) of subsection (d), the Executive engages in any activity or takes
any action which would be prohibited under Sections 10 and 11 hereof, then the
Executive shall be deemed to have irrevocably forfeited any right to receive any
further payments pursuant to this Agreement, provided such forfeiture shall not
limit Luby’s rights to seek to enforce such provision or to seek damages;
provided, however, that the Awards and the benefits thereof shall not be in any
way affected by this clause (d)(ii) of this Section 9.

10.   Disclosure of Confidential Information. Executive acknowledges that Luby’s
will disclose to Executive, or place Executive in a position to have access to
or develop, trade secrets or Confidential Information of Luby’s or its
affiliates, and shall entrust Executive with business opportunities of Luby’s or
its affiliates, and shall place Executive in a position to develop business
goodwill on behalf of Luby’s or its affiliates. Except to the extent required in
the performance of his duties and obligations to Luby’s as expressly authorized
herein, or by prior written consent of a duly authorized officer or director of
Luby’s, Executive will not, directly or indirectly, at any time during his
employment with Luby’s, or for 18 months subsequent to the termination thereof,
for any reason whatsoever, with or without cause, breach the confidence reposed
in him by Luby’s by using, disseminating, disclosing, divulging, or in any
manner whatsoever disclosing or permitting to be divulged or disclosed in any
manner Confidential Information to any person, firm, corporation, association,
or other business entity. As used herein, the term “Confidential Information”
means any and all information concerning ideas, concepts, products, processes,
and services related to the business of Luby’s, including information relating
to research, development, inventions, manufacture, purchasing, accounting,
engineering, marketing, merchandising, or the selling of any product or products
to any customers of Luby’s, disclosed to Executive or known by Executive as a
consequence of or through his employment by Luby’s (or any parent, subsidiary or
affiliated corporations of Luby’s) including, but not necessarily limited to,
any person, firm, corporation, association, or other business entity with which
Luby’s has any type of agency agreement, or any shareholders, directors, or
officers of any such person, firm, corporation, association, or other business
entity; provided, however, that Confidential Information shall not include
information generally known in any industry in which Luby’s is or may become
engaged during the term of this Agreement, information disclosed publicly by
Luby’s or any information, ideas, products, processes, services, and concepts
existing and known to Executive prior to his employment by Luby’s. On
termination of employment with Luby’s, all documents, records, notebooks,
e-mails, or similar repositories of or containing Confidential Information,
including all copies of any documents, records, notebooks, e-mail, or similar
repositories of or containing Confidential Information, then in Executive’s
possession or in the possession of any third party under the control of
Executive or pursuant to any agreement with Executive, whether prepared by
Executive or any other person, firm, corporation, association, or other business
entity, will be delivered to Luby’s by Executive.

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11.   Noncompetition; Standstill.

(a)   Executive recognizes and understands that in performing the
responsibilities of his employment, he will occupy a position of fiduciary trust
and confidence, pursuant to which he will develop and acquire experience and
knowledge with respect to Luby’s business. It is the expressed intent and
agreement of Executive and Luby’s that such knowledge and experience shall be
used exclusively in the furtherance of the interests of Luby’s and not in any
manner which would be detrimental to Luby’s interests. In consideration of the
benefits herein, Executive therefore agrees that so long as he is employed by
Luby’s and for the Covenant Period after termination of Executive’s employment,
Executive will not directly or indirectly:

(i)   engage in any other “cafeteria-style” restaurant business (as defined in
the resolution of the Board of Directors of the Company dated March 7, 2001
adopted in connection with Executive's initial employment by the Company) or own
any interests whether as an owner, shareholder, joint venturer, partner or
otherwise, in any other association or entity that engages, directly or
indirectly, in any “cafeteria-style” restaurant business in each case in any
state where Luby’s or any of its affiliates are conducting business on the date
of this Agreement or in any contiguous state; provided, however, that nothing
herein shall prohibit Executive from holding or making passive investments in
limited partnerships or corporations whose securities are traded in a generally
recognized market provided that Executive’s interest, together with those of his
affiliates and family do not exceed 1% of the outstanding shares or interests in
such corporation or partnership; or

(ii)   render advice or services to, or otherwise assist, any other person,
association, or entity engaged, directly or indirectly, in any “cafeteria-style”
restaurant business in any state where Luby’s or its affiliates conduct business
on the date of this Agreement or in any contiguous state; or

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(iii)   contact or solicit any employee of Luby’s or any of its affiliates to
induce them to terminate his or her employment with Luby’s or such affiliates.

(b)   Executive agrees that for so long as he is employed by Luby’s and for the
Covenant Period he will not without the prior written consent of the Company:
(i) knowingly, after due inquiry, sell any shares of Common Stock, or right to
acquire Common Stock, to any person or group (as defined in Section 13(d)(3) of
the Exchange Act , as amended, and the regulations promulgated thereunder) that
would subsequent to such sale Beneficially Own in excess of 10% of the Company’s
issued and outstanding Common Stock (1% in the case of industry competitors),
(ii) solicit, or participate in a solicitation of proxies or votes or consents
to vote any voting securities of the Company or grant (except to the Company or
its representatives or representatives of the Executive) any proxies to vote
such securities or subject their shares in the Company to any voting trust or
other voting arrangement or agreement, (iii) form, join, or in any way
participate in, any group (as defined in Section 13(d)(3) of the Exchange Act,
as amended, and the regulations promulgated thereunder) with respect to voting
securities of the Company, or (iv) seek, propose, or make any public statement
regarding any merger, tender or exchange offer or other business combination
involving the Company or any sale, assignment, transfer, lease or other
disposition by the Company of all or substantially all of its assets; provided,
however, the covenants contained in this subsection (b) shall terminate and
shall be of no further force or effect upon the occurrence of a Change of
Control.

12.   Enforcement and Remedies. Executive understands that the restrictions set
forth here may limit Executive’s ability to engage in certain businesses in
certain geographic regions during the period provided for above, but
acknowledges that Executive will receive sufficiently high remuneration and
other benefits under this Agreement to justify such restriction. Executive
acknowledges that money damages would not be sufficient remedy for any breach of
Section 10 or 11 by Executive, and Luby’s shall be entitled to enforce the
provisions thereof by terminating any payments then owing to Executive under
this Agreement and/or by specific performance and injunctive relief as remedies
for such breach or any threatened breach. Such remedies shall not be deemed the
exclusive remedies for a breach, but shall be in addition to all remedies
available at law or in equity to Luby’s, including without limitation, the
recovery of damages from Executive and Executive’s agents involved in such
breach and remedies available to Luby’s pursuant to other agreements with
Executive.

13.   Insurance. Luby’s may, in its sole and absolute discretion, at any time
after the Effective Date, apply for and procure, as owner and for its own
benefit, insurance on the life of Executive, in such amounts and in such forms
as Luby’s may choose. Unless otherwise agreed by Luby’s, Executive shall have no
interest whatsoever in any such policy or policies, but Executive shall, at
Luby’s request, submit to such medical examinations, supply such information,
and execute and deliver such documents as may be required by the insurance
company or companies to which Luby’s has applied for such insurance.

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14.   Notice. All notices and communications hereunder shall be in writing and
shall be deemed given if delivered personally or mailed by registered or
certified mail (return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
 
If to Executive:
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
 
Attn: Charles H. Still
   
If to Luby’s:
Luby’s, Inc.
 
13111 Northwest Freeway, Suite 600
 
Houston, Texas 77040
 
Attention:
Chairman of the Board and
   
General Counsel
   
With a copy to:
Hornberger Sheehan Fuller & Beiter Incorporated
 
7373 Broadway, Suite 300
 
San Antonio, Texas 78209
 
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.   CONTROLLING LAW. THIS AGREEMENT SHALL BE DETERMINED AND GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING
EFFECT TO ANY CONFLICTS OF LAW PROVISIONS.

16.   Additional Instruments. This Agreement governs the rights and obligations
of Executive and Luby’s with respect to Executive’s base salary and certain
perquisites of employment. Executive’s rights and obligations both during the
term of his employment and thereafter with respect to stock options, life
insurance policies insuring the life of Executive, and other benefits under the
plans and programs maintained by Luby’s shall be governed by the separate
agreements, plans, and other documents and instruments governing such matters.

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17.   Liquidated Damages. In light of the difficulties in estimating the damages
for any early termination of employment, Luby’s and Executive hereby agree that
the payments, if any, to be received by Executive pursuant to this Agreement
shall be received by Executive as liquidated damages. Payment of the amounts set
forth in this Agreement, if any, shall be in lieu of any severance benefit
Executive may be entitled to under any severance plan or policy of Luby’s.

18.   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.

19.   Miscellaneous. No provision of this Agreement may be modified, waived or
discharged orally, but only by a waiver, modification or discharge in writing
signed by the Executive, and such officer of the Company as may be designated by
the Board. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the time or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. Wherever appropriate
to the intention of the parties hereto, the respective rights and obligations of
the parties hereto, will survive any termination or expiration of the term of
this Agreement as specifically set forth herein; in addition Sections 9, 10, 11,
12, 14, 15, 16, 17, 18, 19, 20, 21 and 23 shall survive such termination or
expiration to the extent the context thereof requires.

20.   Entire Agreement. This Agreement (which term shall be deemed to include
the exhibits hereto and any other certificates, documents or instruments
delivered hereunder), the Purchase Agreement dated March 9, 2001 among the
Company, Executives, and the other signatories thereto, as amended from time to
time (the “Purchase Agreement”), and the other Transaction Documents (as defined
in the Purchase Agreement) constitute the entire agreement of the Parties hereto
and supercede all prior agreements and understandings, both written and oral,
among the parties as to the subject matter hereof. There are no representations
or warranties, agreements, or covenants other than those expressly set forth
herein, in the Purchase Agreement and in the other Transaction Documents.

21.   Effect of Agreement. This Agreement shall be binding upon Executive and
his heirs, executors, legal representatives, successors and assigns, and Luby’s
and its legal representatives, successors and assigns. Except as provided in the
preceding sentence, this Agreement, and the rights and obligations of the
Parties hereunder, are personal and neither this Agreement, nor any right,
benefit, or obligation of either Party hereto, shall be subject to voluntary or
involuntary assignment, alienation, or transfer, whether by operation of law or
otherwise, without the prior written consent of the other Party.

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22.   Execution. 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.

23.   Deemed Resignations. Any termination of Executive’s employment shall
constitute an automatic resignation as an officer and director of Luby’s and
each subsidiary or affiliate of Luby’s.

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective
Date.

 
/s/Christopher J. Pappas
 
Christopher J. Pappas
     
Luby’s, Inc.
         
/s/Gasper Mir, III
 
Gasper Mir, III
 
Chairman of the Board

 
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