EMPLOYMENT AGREEMENT

         This  Agreement  is  entered  into  effective  as of  this  1st  day of
February,  1998,  by  and  between  Lone  Star  Steakhouse  &  Saloon,  Inc.,  a
corporation (the "Corporation") and Frank E. Furstenberg, Jr.
("Employee").

                                    RECITALS
                                    --------

         WHEREAS,  the Employee is currently  serving as a Vice  President - New
Store   Development  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

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

         1.2 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 II
                             Duties of the Employee
                             ----------------------

         General  Duties.  Employee  shall  serve as Vice  President - New Store
Development of the Corporation.  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,


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(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 8.

                                   ARTICLE III
                                  Compensation

         3.1 Salary.  For  Employee's   services  to  the  Corporation  as  Vice
President - New Store Development, Employee shall be paid a salary at the annual
rate of $110,000,  (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.

         3.2 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.

                                   ARTICLE IV
                                Employee Benefits
                                -----------------

         4.1 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.

         4.2 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.

         4.3 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.

         4.4 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.

         4.5 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


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benefits  received  pursuant to Section  4.2  herein),  such  amount  being paid
semi-monthly in twelve equal installments.

                                    ARTICLE V
                                   Termination
                                   -----------

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

         5.2 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.

         5.3 Cause.

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

         5.4 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.

         5.5 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



<PAGE>



             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.

                                   ARTICLE VI
                  No Obligation to Mitigate Damages; No Effect
                           on Other Contractual Rights
                           ---------------------------

         6.1 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.

         6.2 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 VII
                          Successors to the Corporation
                          -----------------------------

         7.1 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 VIII
                            Restrictions on Employee
                            ------------------------

         8.1 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



<PAGE>



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 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.

         8.2  Non-Competition.  During the Term of  Employment  and for eighteen
(18) months thereafter,  regardless of any termination  pursuant to Section 5 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 IX
                                  Miscellaneous
                                  -------------

         9.1  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.

         9.2 Notices.  Any notices  required or permitted to be given under this
Agreement  shall be sufficient if in writing and sent by mail to his  residence,
in the  case  of  Employee,  or to its  principal  office,  in the  case  of the
Corporation.

         9.3 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.

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




<PAGE>


         9.5 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.

         9.6 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.

         9.7  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.

         9.8 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.

         9.9 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.

         9.10 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.

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



-----------------------------------               ------------------------------
                                                  Frank E. Furstenberg, Jr.