EMPLOYMENT AGREEMENT


            This  Agreement  is  entered  into  effective  as of this 1st day of
January,  1999, by and between Lone Star  Steakhouse & Saloon,  Inc., a Delaware
corporation (the "Corporation") and Michael J. Archer ("Employee").


                                    RECITALS

            WHEREAS,  the  Employee is  currently  serving as a Chief  Operating
Officer - Sullivan's/Del Frisco's of the Corporation and various subsidiaries of
the Corporation; and

            WHEREAS,  Employee is a principal  officer of the Corporation and an
integral part of its management;

            WHEREAS,  the  Corporation  desires  to  continue  the  services  of
Employee, whose experience, knowledge and abilities with respect to the business
and affairs of the Corporation are extremely valuable to the Corporation; and

            WHEREAS,  the  parties  hereto  desire to enter into this  Agreement
setting forth the terms and conditions of the continued employment  relationship
of the Corporation and Employee.

            NOW THEREFORE, it is agreed as follows:


                                    ARTICLE I

            Employment  Agreement.  The  Employment  Agreement  dated February 1
1998,  executed by the  Corporation  and the Employee is hereby  terminated  and
shall be superseded by this Agreement.


                                   ARTICLE II

            2.1 Term of  Employment.  The  Corporation  shall  initially  employ
Employee for a period of three years from the date hereof (the "Initial Term").

            2.2 Principal Place of Employment. The Corporation acknowledges that
the Employee's  principal  residence is currently located in Dallas,  Texas. The
Corporation  acknowledges  and agrees that the Employee shall


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be employed by the  Corporation  at an office to be  established  by Employee on
behalf of the Corporation in Dallas, Texas (the "Dallas Office").

            Employee may hire a secretary  or  secretarial  services,  upon such
salary  terms  and other  terms  and  conditions  which  are  acceptable  to the
Corporation, which such acceptance will not be unreasonably withheld.

            The Corporation shall be responsible to pay or immediately reimburse
Employee  for any and all  costs  and  expenses  incurred  in  establishing  and
operating the Dallas Office, including without limitation, any and all costs and
expenses arising out of any of the activities and items contemplated hereby.

            2.3 Extension of Initial Term. Upon each annual  anniversary date of
this Agreement,  this Agreement shall be extended  automatically  for successive
terms of one year each,  unless  either the  Corporation  or the Employee  gives
contrary  written notice to the other not later than 90 days prior to the annual
anniversary date thereof.


                                   ARTICLE III
                             Duties of the Employee


            General  Duties.  General  Duties.  Employee  shall  serve  as Chief
Operating  Officer  - Del  Frisco's/Sullivan's  of  the  Corporation.  In  close
coordination and cooperation  with the  Corporation,  Employee shall continue to
have  the  responsibility  for  the  development  of the  Corporation's  upscale
steakhouse  restaurant  concept  with an average  meal check  price in excess of
$18.00 (the "Division"). Employee shall continue to be responsible for marketing
and growth of the Division. Employee shall be responsible for the management and
day-to-day  operations  of the  Division.  He shall do and perform all services,
acts, or things necessary or advisable to manage and conduct the business of the
Corporation   consistent  with  such  position  subject  to  such  policies  and
procedures as may be established by the Board.

            Employee  shall:  (i)  devote  his  or  her  entire  business  time,
attention, and energies to the business of the Corporation, and, (ii) faithfully
and competently  perform his duties  hereunder;  and, Employee shall not, during
the term of this  Agreement,  engage in any other  business  activity  except as
permitted by Article 9.


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                                   ARTICLE IV
                                  Compensation

            4.1 Salary.  For  Employee's  services to the  Corporation  as Chief
Operating Officer - Sullivan's/Del Frisco's,  Employee shall be paid a salary at
the annual rate of  $250,000.00,  (herein  referred to as  "Salary")  payable in
twenty-four equal  installments on the first and fifteenth day of each month. On
the first day of each calendar year during the term of this  Agreement  with the
Corporation,  Employee  shall be eligible  for an  increase  in Salary  based on
recommendations made by the Compensation Committee of the Board.

            4.2 Bonus.  Employee is eligible to  participate in the stock option
plan of the employer and all bonus  compensation plans which may be offered from
time to time.

            4.3  Bonus.  Employee  shall be  eligible  to  receive a bonus  (the
"Bonus"),  which Bonus will be equal to sixty  percent  (60%) of the  Employee's
then Salary,  for any annual  period  hereunder.  The Bonus shall be paid at the
discretion of the Corporation.  Employee and the Corporation  agree to establish
mutually  and in good faith within  sixty (60) days  following  the date of this
Agreement,  goals and objectives,  in writing,  for the Employee for each annual
period of this  Agreement,  which such goals and objective shall be described in
as measurable and objective standards and criteria as practicable.  In the event
that  Employee does not fully  achieve the goals and  objectives  upon which the
Bonus is based in any annual period,  Employee shall  nonetheless be entitled to
receive a  proportionate  amount of the full  amount  of the  Bonus  that  would
otherwise  have been paid to  Employee  for such annual  period if Employee  had
fully achieved the goals and objective.  The  determination of the proportionate
amount of the Bonus to which Employee shall be entitled shall  correspond to the
level,  percentage or degree of Employee's  achievement  of goals and objective,
and shall not be an "all or nothing" test.

                                    ARTICLE V
                                Employee Benefits

            5.1 Use of Automobile.  The Corporation shall provide, at the option
of Employee,  with either the use of an automobile for business and personal use
or a car  allowance of to be specified by the  Corporation  which  complies with
I.R.S.  Guidelines.  The  Corporation  shall  pay  all  expenses  of  operating,
maintaining  and  repairing  the  automobile  and  shall  procure  and  maintain
automobile  liability insurance in respect thereof,  with such coverage insuring
each Employee for bodily injury and property damage.
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<PAGE>
            5.2 Medical, Life and Disability Insurance Benefits. The Corporation
shall provide employee with the medical,  life and disability insurance benefits
in accordance  with the  established  benefit  policies of the  Corporation.  In
addition,  the Corporation shall pay or reimburse  Employee for payment of those
certain (i) life insurance and (ii) long term disability  insurance  policies of
Employee in effect as of the date hereof,  which such  payments in the aggregate
equal approximately $4,700 annually.

            5.3  Business  Expenses.  Employee  shall  be  authorized  to  incur
reasonable  expenses for  promoting  the business of the  Corporation  including
expenses for  entertainment,  travel,  and similar items. The Corporation  shall
reimburse Employee for all such expenses upon the presentation by Employee, from
time to time, of an itemized account of such expenditures.

            5.4 Vacations. Employee shall be entitled to an annual paid vacation
commensurate  with the Corporation's  established  vacation policy for executive
officers. The timing of paid vacations shall be scheduled in a reasonable manner
by the Employee.

            5.5 Disability. Upon disability (as defined herein) of the Employee,
the  Employee  shall be entitled to receive an amount equal to 50% of his salary
(in addition to any disability  insurance  benefits received pursuant to Section
5.2 herein), such amount being paid semi-monthly in twelve equal installments.


                                   ARTICLE VI
                                   Termination

            6.1 Death.  Employee's employment hereunder shall be terminated upon
the Employee's death.

            6.2 Disability.  The Corporation may terminate Employee's employment
hereunder in the event  Employee is disabled and such  disability  continues for
more than 180 days.  Disability shall be defined as the inability of Employee to
render the services required of him under this Agreement as a result of physical
or mental incapacity.

            6.3         Cause.

            (a) The Corporation may terminate  Employee's  employment  hereunder
for Cause. For the purpose of this Agreement, "Cause" shall

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<PAGE>

mean the (i)  willful  and  intentional  failure by  Employee  to  substantially
perform his duties  hereunder,  other than any failure resulting from Employee's
incapacity due to physical or mental incapacity, or (ii) commission by Employee,
in connection with his employment by the  Corporation,  of an illegal act or any
act (though not illegal)  which is not in the ordinary  course of the Employee's
responsibilities  and which exposes the  Corporation  to a significant  level of
undue  liability.  For purposes of this  paragraph,  no act or failure to act on
Employee's  part shall be considered  to have met either of the preceding  tests
unless  done or  omitted  to be done by  Employee  not in good  faith  without a
reasonable  belief that his action or omission  was in the best  interest of the
Corporation.

            (b) Notwithstanding  the foregoing,  Employee shall not be deemed to
have been  terminated for Cause unless and until there shall have been delivered
to Employee a copy of a  resolution,  duly adopted by the  majority  vote of the
Board of Directors.

            6.4  Compensation  Upon Termination for Cause or Upon Resignation by
Employee.  Except as otherwise  set forth in Section 5.6 hereof,  if  Employee's
employment  shall be  terminated  for  Cause or if  Employee  shall  resign  his
position with the Corporation, the Corporation shall pay Employee's compensation
only  through the last day of  Employee's  employment  by the  Corporation.  The
Corporation  shall  then have no  further  obligation  to  Employee  under  this
Agreement.

            6.5         Involuntary Termination.  If:

                        (i) the Employee is  terminated  by  Corporation  at any
                        time  prior to the  termination  of this  Agreement  for
                        reasons  other than Cause (as defined  herein),  (ii) if
                        Corporation gives notice to the Employee,  in accordance
                        with Section 1.2 herein, that this Agreement will not be
                        renewed;

            Employee shall be paid, over the ensuing six (6) month period, a sum
            equal to the cash  compensation paid to him excluding all bonuses of
            any kind by  Corporation  for the six (6) month  period  immediately
            preceding  such  termination  or  non-renewal.  Such  six (6)  month
            period,  as the  case  may  be,  shall  begin:  (i) on the  date  of
            termination in the case of termination of Employee's employment; and
            (ii) on the  date  notice  of  non-renewal  is  given in the case of
            termination  of  this  Agreement  not  accompanied  by  simultaneous
            termination of Employee's employment with the Corporation.

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<PAGE>
                                   ARTICLE VII
                  No Obligation to Mitigate Damages; No Effect
                           on Other Contractual Rights

            7.1 No  Mitigation.  Employee  shall  not be  required  to  mitigate
damages or the  amount of any  payment  provided  for under  this  Agreement  by
seeking  other  employment  or  otherwise,  nor shall the amount of any  payment
provided  for under this  Agreement  be reduced  by any  compensation  earned by
Employee  as the result of  employment  by  another  employer  after  Employee's
termination or resignation.

            7.2 Other Contractual Rights. The provisions of this Agreement,  and
any  payment  provided  for  hereunder,  shall not reduce  any amount  otherwise
payable,  or in any way diminish  Employee's  existing  rights,  or rights which
would accrue  solely as a result of passage of time under any  employee  benefit
plan or other  contract,  plan or arrangement of which Employee is a beneficiary
or in which he participates.


                                  ARTICLE VIII
                          Successors to the Corporation

            Employee's Successors and Assigns. This Agreement shall inure to the
benefit of and be enforceable by Employee's personal and legal  representatives,
executors,   administrators,   successors,  heirs,  distributees,  devisees  and
legatees.  If Employee  should die while any  amounts  are still  payable to him
hereunder,  all such amounts, unless otherwise provided herein, shall be paid in
accordance  with the terms of this Agreement to Employee's  devisee,  legatee or
other designee or, if there be no such designee, to Employee's estate.


                                   ARTICLE IX
                            Restrictions on Employee

            9.1 Non-Disclosure;  Non-Solicitation.  Except in the performance of
his  duties  hereunder,  at no time  during  the  Term of  Employment  , and for
eighteen (18) months after the termination hereof, shall Employee,  individually
or jointly with others, for the benefit of Employee or any third party, publish,
disclose, use, or authorize anyone else to publish, disclose, or use, any secret
or confidential  material or information  relating to any aspect of the business
or operations of the Corporation,  including,  without


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<PAGE>

limitation,  any secret or  confidential  information  relating to the business,
customers, trade or industrial practices, trade secrets, technology,  recipes or
know-how of the Corporation.  Except in the performance of his duties hereunder,
at no time  during the term or six (6) months  thereafter,  shall  Employee  for
himself or on behalf of any other  person or entity  contact any employee of the
Corporation  for the purpose of hiring,  diverting or otherwise  soliciting  the
employee.

            9.2 Non-Competition.  During the Term of Employment and for eighteen
(18) months thereafter,  regardless of any termination pursuant to Article VI or
any  voluntary  termination  or  resignation  by Employee,  Employee  shall not,
individually or jointly with others, directly or indirectly, whether for his own
account or for that of any other person or entity,  be employed  by,  engage in,
own,  or hold any  ownership  interest  in any  person  or entity  engaged  in a
restaurant  business  the same as or similar to any  restaurant  business of the
Corporation without the Corporation's written consent.


                                    ARTICLE X
                                  Miscellaneous

            10.1 Indemnification. To the full extent permitted by law, the Board
shall authorize the payment of expenses  incurred by or shall satisfy  judgments
or fines  rendered  or  levied  against  Employee  in any  action  brought  by a
third-party  against  Employee  (whether or not the  Corporation  is joined as a
party  defendant)  to impose any  liability  or penalty on Employee  for any act
alleged to have been  committed by Employee  while  employed by the  Corporation
unless Employee was acting with gross negligence or willful misconduct. Payments
authorized  hereunder  shall  include  amounts  paid and  expenses  incurred  in
settling any such action or threatened action.

            10.2   Notices.   All   notices,   requests,   demands   and   other
communications hereunder,  including notice of termination by the Employee under
Article  11.1 of this  Agreement  must be in writing and shall be deemed to have
been duly given  upon  receipt  if  delivered  by hand,  sent by  telecopier  or
courier,  and three (3) days  after  such  communication  is mailed  within  the
continental  United  States  by  first  class  certified  mail,  return  receipt
requested, postage prepaid, to the other party.

            10.3  Arbitration.  The parties agree that any  disputes,  claims or
controversy  of any kind arising out of this  agreement or out of the employment
relationship  between  Employee  and  the  Corporation  shall  be  submitted  to
arbitration.  Employee simultaneously with execution of this

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<PAGE>
agreement   agrees  to  execute  the  Receipt   acknowledging   receipt  of  the
Corporation's Mandatory Arbitration Policy.

            10.4 Waiver of Breach. The waiver by any party hereto of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach by any party.

            10.5 Amendment. No amendment or modification of this Agreement shall
be deemed effective unless or until executed in writing by the parties hereto.

            10.6 Validity. This Agreement, having been executed and delivered in
the State of Kansas, its validity,  interpretation,  performance and enforcement
will be governed by the laws of that state.

            10.7 Section Headings.  Section and other headings contained in this
Agreement  are for  reference  purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

            10.8 Counterpart Execution. This Agreement may be executed in two or
more counterparts,  each of which shall be deemed an original,  but all of which
together shall constitute but one and the same instrument.

            10.9 Legal Fees.  Except in the event of termination for Cause,  and
only in the event a change of  control  of the  Corporation  has  occurred,  the
Corporation  shall pay all legal fees and expenses which Employee may incur as a
result  of  the  Corporation's   contesting  the  validity,   enforceability  or
Employee's interpretation of, or determination under, this Agreement.

            10.10  Exclusivity.   Specific  arrangements  referred  to  in  this
Agreement  are not  intended to exclude  Employee's  participation  in any other
benefits  available  to  executive  personnel  generally  or to  preclude  other
compensation or benefits as may be authorized by the Board from time to time.

            10.11 Partial Invalidity. If any provision in this Agreement is held
by a court of competent jurisdiction to be invalid, void, or unenforceable,  the
remaining  provisions  shall  nevertheless  continue in full force without being
impaired or invalidated in any way.

                                   ARTICLE XI

            11.1  Change  of  Control.  The  Employee  shall  have the  right to
terminate  his  employment  hereunder,  upon 10 days  notice to the  Corporation
within six months of Change of Control.  For the purposes of this  Agreement,  a
"Change of Control" means (i) the direct or indirect,  sale,


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lease,  exchange or other transfer of all or substantially  all (50% or more) of
the assets of the  Corporation  to any Person or Group of Persons  other than an
Affiliate  or  an  entity   controlled  by  an   Affiliate,   (ii)  the  merger,
consolidation  or other  business  combination of the  Corporation  with or into
another  corporation  with the effect that the  shareholders  of the Corporation
immediately  prior to the business  combination hold 50% or less of the combined
voting power of the then outstanding  securities of the surviving Person of such
merger  ordinarily (and apart from rights accruing under special  circumstances)
having the right to vote in the election of directors,  (iii) the replacement of
a majority of the Board of the Corporation over any period of two years or less,
from the directors who constituted the Board of the Corporation at the beginning
of such  period,  and such  replacement(s)  shall not have been  approved by the
Board of the Corporation as constituted at the beginning of such period,  (iv) a
Person or Group of Persons other than an Affiliate or an entity controlled by an
Affiliate,  shall,  as a result  of a tender  or  exchange  offer,  open  market
purchases,   privately  negotiated  purchases  or  otherwise,  have  become  the
beneficial  owner  (within  the  meaning  of Rule  13d-3  promulgated  under the
Securities  Exchange Act of 1934, as amended (the "Exchange  Act") of securities
of the Corporation  representing 50% or more of the combined voting power of the
then outstanding securities of the Corporation ordinarily (and apart from rights
accruing under special  circumstances)  having the right to vote in the election
of directors. A transaction  constituting a Change of Control shall be deemed to
have  occurred  upon  the  closing  of  the  transaction.   Notwithstanding  the
foregoing,  a  transaction  shall not  constitute a Change of Control under this
Agreement if the transaction is approved by (i) at least a majority of the Board
of the Corporation as constituted  immediately prior to the transaction and (ii)
Jamie B. Coulter, the Chairman of the Board of the Corporation.

            For  the  purposes  of  this   Agreement,   an  "Affiliate"  of  the
Corporation  shall mean any person that directly,  or indirectly  through one or
more  intermediaries,  controls or is controlled  by, or is under common control
with the  Corporation,  including but not limited to the  executive  officer and
directors of the Corporation.

            11.2 Termination of Non-Compete and  Non-Solicitation.  In the event
the Employee  elects to terminate this Agreement in connection  with a Change of
Control  under  the  terms of  Article  11.1,  the  provisions  of  Article  9.2
Non-Solicitation and 9.3 Non-Competition  shall be deemed to have expired and be
of no further force or effect as of the date of termination of the Employee.

            IN WITNESS WHEREOF,  the Corporation has caused this Agreement to be
executed and its seal affixed hereto by its officers  thereunto duly

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authorized; and the Employee has executed this Agreement, as of the day and year
first above written.



"CORPORATION"                           LONE STAR STEAKHOUSE &
        Attest                            SALOON, INC.


                                        By
---------------------------               -------------------------------------
Gerald T. Aaron, Secretary                Jamie B. Coulter, Chairman and
                                            Chief  Executive Officer


Witness                                 "EMPLOYEE"


---------------------------             ---------------------------------------
                                        Michael J. Archer




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