-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VLsa/98hq2xUQzDsRx4D2dJr3fXRoTWsFW4V6FffuD96lqbKLF2N3QBfrjA60IiJ 4Q+3DNNNL0SCc91/Gn6FhA== 0000016099-99-000008.txt : 19990414 0000016099-99-000008.hdr.sgml : 19990414 ACCESSION NUMBER: 0000016099-99-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19990228 FILED AS OF DATE: 19990413 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LUBYS CAFETERIAS INC CENTRAL INDEX KEY: 0000016099 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 741335253 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-08308 FILM NUMBER: 99592445 BUSINESS ADDRESS: STREET 1: 2211 NE LOOP 410 STREET 2: P O BOX 33069 CITY: SAN ANTONIO STATE: TX ZIP: 78265-3069 BUSINESS PHONE: 2106549000 FORMER COMPANY: FORMER CONFORMED NAME: CAFETERIAS INC DATE OF NAME CHANGE: 19810126 10-Q 1 TEXT OF 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 (Mark One) [x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended February 28, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________________ to ____________________ Commission file number: 1-8308 LUBY'S, INC. ________________________________________________________________________________ (Exact name of registrant as specified in its charter) Delaware 74-1335253 __________________________ ____________________________ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2211 Northeast Loop 410, P. O. Box 33069 San Antonio, Texas 78265-3069 ________________________________________________________________________________ (Address of principal executive offices) (Zip Code) 210/654-9000 ________________________________________________________________________________ (Registrant's telephone number, including area code) Luby's Cafeterias, Inc. ________________________________________________________________________________ (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___ ___ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock: 22,420,375 shares outstanding as of February 28, 1999 (exclusive of 4,982,692 treasury shares) Part I - FINANCIAL INFORMATION Item 1. Financial Statements. LUBY'S, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Three Months Ended Six Months Ended February 28, February 28, 1999 1998 1999 1998 ____ ____ ____ ____ (Amounts in thousands except per share data) Sales $123,771 $123,204 $249,479 $247,876 Costs and expenses: Cost of food 29,213 30,889 62,022 62,746 Payroll and related costs 37,344 37,402 76,453 76,712 Occupancy and other operating expenses 39,360 37,866 77,872 75,874 General and administrative expenses 6,090 5,232 11,754 10,506 ________ ________ ________ ________ 112,007 111,389 228,101 225,838 ________ ________ ________ ________ Income from operations 11,764 11,815 21,378 22,038 Interest expense (1,280) (1,259) (2,446) (2,525) Other income, net 620 222 900 903 ________ ________ ________ ________ Income before income taxes 11,104 10,778 19,832 20,416 Provision for income taxes 3,885 3,837 6,941 7,268 ________ ________ ________ ________ Net income $ 7,219 $ 6,941 $ 12,891 $ 13,148 ________ ________ ________ ________ Net income per share - basic and assuming dilution $.32 $.30 $.57 $.57 Cash dividends per share $.20 $.20 $.40 $.40 Average number of shares outstanding 22,491 23,271 22,811 23,270 See accompanying notes. Part I - FINANCIAL INFORMATION (continued) Item 1. Financial Statements (continued). LUBY'S, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) February 28, August 31, 1999 1998 ____________ __________ (Thousands of dollars) ASSETS Current assets: Cash and cash equivalents $ 6,776 $ 3,760 Trade accounts and other receivables 702 704 Food and supply inventories 4,956 5,072 Prepaid expenses 4,289 4,375 Deferred income taxes 1,218 1,201 ________ ________ Total current assets 17,941 15,112 Property held for sale 13,208 17,340 Investments and other assets - at cost 10,639 7,992 Property, plant, and equipment - at cost, net 299,605 298,597 ________ ________ $341,393 $339,041 ________ ________ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable - trade $ 12,052 $ 12,482 Dividends payable 4,484 4,654 Accrued expenses and other liabilities 21,425 28,231 Income taxes payable 2,196 2,069 ________ ________ Total current liabilities 40,157 47,436 Long-term debt 91,000 73,000 Deferred income taxes and other credits 13,835 13,191 Shareholders' equity: Common stock 8,769 8,769 Paid-in capital 27,025 27,012 Retained earnings 266,411 262,540 Less cost of treasury stock (105,804) (92,907) ________ ________ Total shareholders' equity 196,401 205,414 ________ ________ $341,393 $339,041 ________ ________ See accompanying notes. Part I - FINANCIAL INFORMATION (continued) Item 1. Financial Statements (continued). LUBY'S, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended February 28, 1999 1998 ____ _____ (Thousands of dollars) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 12,891 $ 13,148 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 9,755 10,422 Decrease in accrued expenses and other liabilities (6,793) (2,948) Other, net 1,232 (7,778) ________ ________ Net cash provided by operating activities 17,085 12,844 ________ ________ CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from disposal of property held for sale 4,456 3,568 Purchases of land held for future use (3,192) (948) Purchases of property, plant, and equipment (10,754) (10,899) ________ ________ Net cash used in investing activities (9,490) (8,279) ________ ________ CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock under stock option plan --- 42 Proceeds from long-term debt 355,000 454,000 Reductions of long-term debt (337,000) (452,000) Purchases of treasury stock (13,389) --- Dividends paid (9,190) (9,307) ________ ________ Net cash used in financing activities (4,579) (7,265) ________ ________ Net increase (decrease) in cash and cash equivalents 3,016 (2,700) Cash and cash equivalents at beginning of period 3,760 6,430 ________ ________ Cash and cash equivalents at end of period $ 6,776 $ 3,730 ________ ________ See accompanying notes. Part I - FINANCIAL INFORMATION (continued) Item 1. Financial Statements (continued). LUBY'S, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY For the Six Months Ended February 28, 1999 and 1998 (UNAUDITED)
Total Common Stock Paid-in Retained Shareholders' Issued Treasury Capital Earnings Equity ______ ________ _______ ________ ____________ (Thousands of dollars) Balance at August 31, 1997 $8,769 $(93,014) $26,945 $276,140 $218,840 Net income for the period --- --- --- 13,148 13,148 Common stock issued under employee benefit plans, net of shares tendered in partial payment and including tax benefits --- 107 --- (65) 42 Cash dividends --- --- --- (9,308) (9,308) ______ ________ _______ ________ ________ Balance at February 28, 1998 $8,769 $(92,907) $26,945 $279,915 $222,722 ______ ________ _______ ________ ________ Balance at August 31, 1998 $8,769 $(92,907) $27,012 $262,540 $205,414 Net income for the period --- --- --- 12,891 12,891 Common stock issued under employee benefit plans, net of shares tendered in partial payment and including tax benefits --- 21 13 --- 34 Cash dividends --- --- --- (9,020) (9,020) Purchases of treasury stock --- (12,918) --- --- (12,918) ______ ________ _______ ________ ________ Balance at February 28, 1999 $8,769 $(105,804) $27,025 $266,411 $196,401 ______ ________ _______ ________ ________ See accompanying notes.
Part I - FINANCIAL INFORMATION (continued) Item 1. Financial Statements (continued). LUBY'S, INC. NOTES TO FINANCIAL STATEMENTS February 28, 1999 (UNAUDITED) Note 1: The accompanying unaudited financial statements are presented in accordance with the requirements of Form 10-Q and, consequently, do not include all of the disclosures normally required by generally accepted accounting principles. All adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods have been made. All such adjustments are of a normal recurring nature. The results for the interim period are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the consolidated financial statements and footnotes included in Luby's annual report on Form 10-K for the year ended August 31, 1998. The accounting policies used in preparing these consolidated financial statements are the same as those described in Luby's annual report on Form 10-K. Part I - FINANCIAL INFORMATION (continued) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Liquidity and Capital Resources _______________________________ Cash and cash equivalents increased by $3,016,000 from the end of the preceding fiscal year to February 28, 1999. All capital expenditures for fiscal 1999 are being funded from cash flows from operations, cash equivalents, and long-term debt. Capital expenditures for the six months ended February 28, 1999, were $13,946,000. As of February 28, 1999, the company owned six undeveloped land sites, one land site on which a restaurant is under construction, and several properties held for sale. During the six months ended February 28, 1999, the company purchased 850,300 shares of its common stock at a cost of $12,918,000, which are being held as treasury stock. These shares were purchased under a 1,000,000 share authorization which expired December 31, 1998. To complete the treasury stock purchases and fund capital expenditures, the company required external financing and borrowed funds under a $125,000,000 line-of-credit agreement. As of February 28, 1999, the amount outstanding under this line of credit was $91,000,000. The company believes that additional financing from external sources can be obtained on terms acceptable to the company in the event such financing is required. Results of Operations _____________________ Quarter ended February 28, 1999 compared to the quarter ended February 28, 1998. ___________________________________________________________________________ Sales increased $567,000, or 0.5%, due to the addition of one new restaurant in fiscal 1999 and five in fiscal 1998. Sales volumes at restaurants opened over one year increased approximately 2.5% during the quarter; however, this was partially offset by a decrease in sales from the closing of five restaurants in fiscal 1998 and eight restaurants in fiscal 1999. Cost of food decreased $1,676,000, or 5.4%. As a percentage of sales, food costs were lower versus the prior year due to various factors including increased drink sales from new self-serve drink counters and other sales mix changes, the impact of a new manager compensation plan which provides more of an incentive to improve margins at all sales volumes, and recent price increases. Payroll and related costs remained relatively flat versus the prior year. Occupancy and other operating expenses increased $1,494,000, or 3.9%, due primarily to an increase in advertising expenditures, higher food-to-go packaging costs, and higher costs associated with the rollout of a new uniform program for restaurant employees. These increases were partially offset by lower depreciation expense associated with store closings and asset impairments. General and administrative expenses increased $858,000, or 16.4%, due primarily to higher corporate salaries and benefits associated with the addition of new positions to support the implementation of the company's strategic plan and costs relating to increased recruiting and training efforts for store management. The effective income tax rate decreased from 35.6% to 35.0% due to lower estimated state taxes. Six months ended February 28, 1999 compared to the six months ended February 28, 1998. ____________________________________________________________________ Sales increased $1,603,000, or 0.6%, due primarily to the addition of one new restaurant in fiscal 1999 and five in fiscal 1998. Sales volumes at restaurants opened over one year increased approximately 2.1% during the fiscal year; however, this was partially offset by a decrease in sales from the closing of five restaurants in fiscal year 1998 and eight restaurants in fiscal 1999. Cost of food decreased $724,000, or 1.2%. As a percentage of sales, food costs were lower versus the prior year due to various factors including increased drink sales from new self-serve drink counters and other sales mix changes, the impact of a new manager compensation plan which provides more of an incentive to improve margins at all sales volumes, and recent price increases. Payroll and related costs decreased $259,000, or 0.3%, due primarily to store closings. Occupancy and other operating expenses increased $1,998,000, or 2.6%, due to an increase in advertising expenditures, higher food-to-go packaging costs, and higher costs associated with the rollout of a new uniform program for all hourly employees. These increases were partially offset by lower depreciation expense associated with store closings and asset impairments. General and administrative expenses increased $1,248,000, or 11.9%, due to higher corporate salaries and benefits associated with the addition of new positions to support the implementation of the company's strategic plan and costs relating to increased recruiting and training efforts for store management. Interest expense decreased $79,000, or 3.1%, due to lower average borrowings under the line-of-credit agreement and a lower weighted average interest rate during the current period as compared to the same period last year. The provision for income taxes decreased $327,000, or 4.5%, due in part to lower income from operations. In addition, the effective income tax rate decreased from 35.6% to 35.0% due to lower estimated state taxes. The Year 2000 _____________ During 1998 the company, in the ordinary course of business, decided to migrate its information technology from internally developed systems to commercially available products which are Year 2000 compliant for a variety of business reasons. The transition to the new technology was completed in January 1999. The company believes the Year 2000 will not pose significant operational problems for its computer systems. The cost of the Year 2000 project is estimated to be $200,000, primarily for services and costs of updating some existing software. The company is also surveying suppliers and customers to determine the status of their Year 2000 compliance programs. Based on findings and discussions to date with vendors, the company does not believe a contingency plan is required and does not intend to create one as it believes the likelihood is remote that its vendors have not fully addressed the Year 2000 issues or that it would have a material impact on the company's operations. Forward-Looking Statements __________________________ The company wishes to caution readers that various factors could cause the actual results of the company to differ materially from those indicated by forward-looking statements made from time to time in news releases, reports, proxy statements, registration statements, and other written communications (including the preceding sections of this Management's Discussion and Analysis), as well as oral statements made from time to time by representatives of the company. Except for historical information, matters discussed in such oral and written communications are forward-looking statements that involve risks and uncertainties, including but not limited to general business conditions, the impact of competition, the success of operating initiatives, changes in the cost and supply of food and labor, the seasonality of the company's business, taxes, inflation, and governmental regulations. Part II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders. (a) The 1999 annual meeting of shareholders of Luby's Cafeterias, Inc. was held on January 8, 1999. (b) The directors elected at the meeting were Ronald K. Calgaard, Judith B. Craven, David B. Daviss, Arthur R. Emerson, and Roger R. Hemminghaus. The other directors whose terms continued after the meeting are Lauro F. Cavazos, John B. Lahourcade, Barry J.C. Parker, Walter J. Salmon, George H. Wenglein, and Joanne Winik. (c) The matters voted upon at the meeting were (i) the election of one director to serve until the 2001 annual meeting of shareholders and four directors to serve until the 2002 annual meeting of shareholders, (ii) the adoption of an amendment to the Certificate of Incorporation to change the corporate name to "Luby's, Inc.," (iii) the approval of the Luby's Incentive Stock Plan, and (iv) the approval of the appointment of Ernst & Young LLP as auditors for the 1999 fiscal year. (d) With respect to the election of directors, the results of the voting were: Shares Voted Shares Broker Nominee For Abstained Nonvotes _____________________ ____________ _________ _________ Ronald K. Calgaard 18,504,613 2,842,206 -0- Judith B. Craven 18,426,233 2,920,586 -0- David B. Daviss 18,734,112 2,612,707 -0- Arthur R. Emerson 18,433,750 2,913,069 -0- Roger R. Hemminghaus 19,188,301 2,158,518 -0- (e) With respect to amending the Certificate of Incorporation to change the corporate name, the results of the voting were: Shares voted "for" 19,418,450 Shares voted "against" 1,876,725 Shares abstaining 51,644 Broker nonvotes -0- (f) With respect to the approval of the Luby's Incentive Stock Plan, the results of the voting were: Shares voted "for" 15,732,387 Shares voted "against" 2,997,257 Shares abstaining 169,180 Broker nonvotes 2,447,995 (g) With respect to the approval of the appointment of auditors, the results of the voting were: Shares voted "for" 21,212,430 Shares voted "against" 65,778 Shares abstaining 68,611 Broker nonvotes -0- Part II - OTHER INFORMATION (continued) Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits 3(a) Amendment to the Certificate of Incorporation of Luby's Cafeterias, Inc., filed with the Secretary of State of Delaware on January 11, 1999. 3(b) Certificate of Incorporation of Luby's, Inc., as currently in effect. 3(c) Bylaws of Luby's, Inc. as currently in effect (filed as Exhibit 3(c) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1998, and incorporated herein by reference). 4(a) Description of Common Stock Purchase Rights of Luby's Cafeterias, Inc. in Form 8-A (filed April 17, 1991, effective April 26, 1991, File No. 1-8308, and incorporated herein by reference). 4(b) Amendment No. 1 dated December 19, 1991, to Rights Agreement dated April 16, 1991 (filed as Exhibit 4(b) to the company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1991, and incorporated herein by reference). 4(c) Amendment No. 2 dated February 7, 1995, to Rights Agreement dated April 16, 1991 (filed as Exhibit 4(d) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1995, and incorporated herein by reference). 4(d) Amendment No. 3 dated May 29, 1995, to Rights Agreement dated April 16, 1991 (filed as Exhibit 4(d) to the company's Quarterly Report on Form 10-Q for the quarter ended May 31, 1995, and incorporated herein by reference). 4(e) Credit Agreement dated February 27, 1996, among Luby's Cafeterias, Inc., Certain Lenders, and NationsBank of Texas, N.A. (filed as Exhibit 4(e) to the company's Quarterly Report on Form 10-Q for the quarter ended February 29, 1996, and incorporated herein by reference). 4(f) First Amendment to Credit Agreement dated January 24, 1997, among Luby's Cafeterias, Inc., Certain Lenders, and NationsBank of Texas, N.A. (filed as Exhibit 4(f) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference). 4(g) ISDA Master Agreement dated June 17, 1997, between Luby's Cafeterias, Inc. and NationsBank, N.A., with Schedule and Confirmation dated July 7, 1997 (filed as Exhibit 4(g) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1997, and incorporated herein by reference). 4(h) ISDA Master Agreement dated July 2, 1997, between Luby's Cafeterias, Inc. and Texas Commerce Bank National Association, with Schedule and Confirmation dated July 2, 1997 (filed as Exhibit 4(h) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1997, and incorporated herein by reference). 4(i) Second Amendment to Credit Agreement dated July 3, 1997, among Luby's Cafeterias, Inc., Certain Lenders, and NationsBank of Texas, N.A. (filed as Exhibit 4(i) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1997, and incorporated herein by reference). 10(a) Form of Deferred Compensation Agreement entered into between Luby's Cafeterias, Inc. and various officers (filed as Exhibit 10(b) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1981, and incorporated herein by reference). 10(b) Form of Amendment to Deferred Compensation Agreement between Luby's Cafeterias, Inc. and various officers and former officers adopted January 14, 1997 (filed as Exhibit 10(b) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference). 10(c) Luby's Cafeterias, Inc. Incentive Bonus Plan for Fiscal 1998 adopted January 9, 1998 (filed as Exhibit 10(g) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1998, and incorporated herein by reference). 10(d) Performance Unit Plan of Luby's Cafeterias, Inc. approved by the shareholders January 12, 1984 (filed as Exhibit 10(f) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1984, and incorporated herein by reference). 10(e) Amendment to Performance Unit Plan of Luby's Cafeterias, Inc. adopted January 14, 1997 (filed as Exhibit 10(h) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference). 10(f) Management Incentive Stock Plan of Luby's Cafeterias, Inc. (filed as Exhibit 10(i) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1989, and incorporated herein by reference). 10(g) Amendment to Management Incentive Stock Plan of Luby's Cafeterias, Inc. adopted January 14, 1997 (filed as Exhibit 10(k) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference). 10(h) Nonemployee Director Deferred Compensation Plan of Luby's Cafeterias, Inc. adopted October 27, 1994 (filed as Exhibit 10(g) to the company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1994, and incorporated herein by reference). 10(i) Amendment to Nonemployee Director Deferred Compensation Plan of Luby's Cafeterias, Inc. adopted January 14, 1997 (filed as Exhibit 10(m) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference). 10(j) Amendment to Nonemployee Director Deferred Compensation Plan of Luby's Cafeterias, Inc. adopted March 19, 1998 (filed as Exhibit 10(o) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1998, and incorporated herein by reference). 10(k) Nonemployee Director Stock Option Plan of Luby's Cafeterias, Inc. approved by the shareholders on January 13, 1995 (filed as Exhibit 10(h) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1995, and incorporated herein by reference). 10(l) Amendment to Nonemployee Director Stock Option Plan of Luby's Cafeterias, Inc. adopted January 14, 1997 (filed as Exhibit 10(o) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference). 10(m) Employment Contract dated January 12, 1996, between Luby's Cafeterias, Inc. and John B. Lahourcade (filed as Exhibit 10(i) to the company's Quarterly Report on Form 10-Q for the quarter ended February 29, 1996, and incorporated herein by reference). 10(n) Luby's Cafeterias, Inc. Supplemental Executive Retirement Plan dated May 30, 1996 (filed as Exhibit 10(j) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1996, and incorporated herein by reference). 10(o) Amendment to Luby's Cafeterias, Inc. Supplemental Executive Retirement Plan adopted January 14, 1997 (filed as Exhibit 10(r) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference). 10(p) Amendment to Luby's Cafeterias, Inc. Supplemental Executive Retirement Plan adopted January 9, 1998 (filed as Exhibit 10(u) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1998, and incorporated herein by reference). 10(q) Employment Agreement dated September 15, 1997, between Luby's Cafeterias, Inc. and Barry J.C. Parker (filed as Exhibit 10(u) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1997, and incorporated herein by reference). 10(r) Amendment dated January 8, 1999, to Employment Agreement between Luby's Cafeterias, Inc. and Barry J.C. Parker. 10(s) Term Promissory Note of Barry J.C. Parker in favor of Luby's Cafeterias, Inc., dated November 10, 1997, in the original principal sum of $199,999.00 (filed as Exhibit 10(v) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1997, and incorporated herein by reference). 10(t) Stock Agreement dated November 10, 1997, between Barry J.C. Parker and Luby's Cafeterias, Inc. (filed as Exhibit 10(w) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1997, and incorporated herein by reference). 10(u) Luby's Cafeterias, Inc. Nonemployee Director Phantom Stock Plan adopted March 19, 1998 (filed as Exhibit 10(aa) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1998, and incorporated herein by reference). 10(v) Salary Continuation Agreement dated May 14, 1998, between Luby's Cafeterias, Inc. and Sue Elliott (filed as Exhibit 10(cc) to the company's Quarterly Report on Form 10-Q for the quarter ended May 31, 1998, and incorporated herein by reference). 10(w) Salary Continuation Agreement dated June 1, 1998, between Luby's Cafeterias, Inc. and Alan M. Davis (filed as Exhibit 10(dd) to the company's Quarterly Report on Form 10-Q for the quarter ended May 31, 1998, and incorporated herein by reference). 10(x) Luby's Incentive Stock Plan adopted October 16, 1998 (filed as Exhibit 10(cc) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1998, and incorporated herein by reference). 10(y) Incentive Bonus Plan for Fiscal 1999 adopted October 16, 1998 (filed as Exhibit 10(dd) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1998, and incorporated herein by reference). 10(z) Form of Change in Control Agreement entered into between Luby's, Inc. and Barry J.C. Parker, President and Chief Executive Officer, as of January 8, 1999. 10(aa) Form of Change in Control Agreement entered into between Luby's, Inc. and each of its Senior Vice Presidents as of January 8, 1999. 11 Statement re computation of per share earnings. 99(a) Corporate Governance Guidelines of Luby's Cafeterias, Inc. as amended January 7, 1999. (b) Reports on Form 8-K No reports on Form 8-K have been filed during the quarter for which this report is filed. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. LUBY'S, INC. (Registrant) By: BARRY J.C. PARKER _____________________________ Barry J. C. Parker President and Chief Executive Officer By: LAURA M. BISHOP _____________________________ Laura M. Bishop Senior Vice President and Chief Financial Officer Dated: April 13, 1999 EXHIBIT INDEX Number Document 3(a) Amendment to the Certificate of Incorporation of Luby's Cafeterias, Inc., filed with the Secretary of State of Delaware on January 11, 1999. 3(b) Certificate of Incorporation of Luby's, Inc., as currently in effect. 3(c) Bylaws of Luby's, Inc. as currently in effect (filed as Exhibit 3(c) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1998, and incorporated herein by reference). 4(a) Description of Common Stock Purchase Rights of Luby's Cafeterias, Inc. in Form 8-A (filed April 17, 1991, effective April 26, 1991, File No. 1-8308, and incorporated herein by reference). 4(b) Amendment No. 1 dated December 19, 1991, to Rights Agreement dated April 16, 1991 (filed as Exhibit 4(b) to the company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1991, and incorporated herein by reference). 4(c) Amendment No. 2 dated February 7, 1995, to Rights Agreement dated April 16, 1991 (filed as Exhibit 4(d) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1995, and incorporated herein by reference). 4(d) Amendment No. 3 dated May 29, 1995, to Rights Agreement dated April 16, 1991 (filed as Exhibit 4(d) to the company's Quarterly Report on Form 10-Q for the quarter ended May 31, 1995, and incorporated herein by reference). 4(e) Credit Agreement dated February 27, 1996, among Luby's Cafeterias, Inc., Certain Lenders, and NationsBank of Texas, N.A. (filed as Exhibit 4(e) to the company's Quarterly Report on Form 10-Q for the quarter ended February 29, 1996, and incorporated herein by reference). 4(f) First Amendment to Credit Agreement dated January 24, 1997, among Luby's Cafeterias, Inc., Certain Lenders, and NationsBank of Texas, N.A. (filed as Exhibit 4(f) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference). 4(g) ISDA Master Agreement dated June 17, 1997, between Luby's Cafeterias, Inc. and NationsBank, N.A., with Schedule and Confirmation dated July 7, 1997 (filed as Exhibit 4(g) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1997, and incorporated herein by reference). 4(h) ISDA Master Agreement dated July 2, 1997, between Luby's Cafeterias, Inc. and Texas Commerce Bank National Association, with Schedule and Confirmation dated July 2, 1997 (filed as Exhibit 4(h) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1997, and incorporated herein by reference). 4(i) Second Amendment to Credit Agreement dated July 3, 1997, among Luby's Cafeterias, Inc., Certain Lenders, and NationsBank of Texas, N.A. (filed as Exhibit 4(i) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1997, and incorporated herein by reference). 10(a) Form of Deferred Compensation Agreement entered into between Luby's Cafeterias, Inc. and various officers (filed as Exhibit 10(b) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1981, and incorporated herein by reference). 10(b) Form of Amendment to Deferred Compensation Agreement between Luby's Cafeterias, Inc. and various officers and former officers adopted January 14, 1997 (filed as Exhibit 10(b) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference). 10(c) Luby's Cafeterias, Inc. Incentive Bonus Plan for Fiscal 1998 adopted January 9, 1998 (filed as Exhibit 10(g) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1998, and incorporated herein by reference). 10(d) Performance Unit Plan of Luby's Cafeterias, Inc. approved by the shareholders January 12, 1984 (filed as Exhibit 10(f) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1984, and incorporated herein by reference). 10(e) Amendment to Performance Unit Plan of Luby's Cafeterias, Inc. adopted January 14, 1997 (filed as Exhibit 10(h) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference). 10(f) Management Incentive Stock Plan of Luby's Cafeterias, Inc. (filed as Exhibit 10(i) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1989, and incorporated herein by reference). 10(g) Amendment to Management Incentive Stock Plan of Luby's Cafeterias, Inc. adopted January 14, 1997 (filed as Exhibit 10(k) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference). 10(h) Nonemployee Director Deferred Compensation Plan of Luby's Cafeterias, Inc. adopted October 27, 1994 (filed as Exhibit 10(g) to the company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1994, and incorporated herein by reference). 10(i) Amendment to Nonemployee Director Deferred Compensation Plan of Luby's Cafeterias, Inc. adopted January 14, 1997 (filed as Exhibit 10(m) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference). 10(j) Amendment to Nonemployee Director Deferred Compensation Plan of Luby's Cafeterias, Inc. adopted March 19, 1998 (filed as Exhibit 10(o) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1998, and incorporated herein by reference). 10(k) Nonemployee Director Stock Option Plan of Luby's Cafeterias, Inc. approved by the shareholders on January 13, 1995 (filed as Exhibit 10(h) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1995, and incorporated herein by reference). 10(l) Amendment to Nonemployee Director Stock Option Plan of Luby's Cafeterias, Inc. adopted January 14, 1997 (filed as Exhibit 10(o) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference). 10(m) Employment Contract dated January 12, 1996, between Luby's Cafeterias, Inc. and John B. Lahourcade (filed as Exhibit 10(i) to the company's Quarterly Report on Form 10-Q for the quarter ended February 29, 1996, and incorporated herein by reference). 10(n) Luby's Cafeterias, Inc. Supplemental Executive Retirement Plan dated May 30, 1996 (filed as Exhibit 10(j) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1996, and incorporated herein by reference). 10(o) Amendment to Luby's Cafeterias, Inc. Supplemental Executive Retirement Plan adopted January 14, 1997 (filed as Exhibit 10(r) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1997, and incorporated herein by reference). 10(p) Amendment to Luby's Cafeterias, Inc. Supplemental Executive Retirement Plan adopted on January 9, 1998 (filed as Exhibit 10(u) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1998, and incorporated herein by reference). 10(q) Employment Agreement dated September 15, 1997, between Luby's Cafeterias, Inc. and Barry J.C. Parker (filed as Exhibit 10(u) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1997, and incorporated herein by reference). 10(r) Amendment dated January 8, 1999, to Employment Agreement between Luby's Cafeterias, Inc. and Barry J.C. Parker. 10(s) Term Promissory Note of Barry J.C. Parker in favor of Luby's Cafeterias, Inc., dated November 10, 1997, in the original principal sum of $199,999.00 (filed as Exhibit 10(v) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1997, and incorporated herein by reference). 10(t) Stock Agreement dated November 10, 1997, between Barry J.C. Parker and Luby's Cafeterias, Inc. (filed as Exhibit 10(w) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1997, and incorporated herein by reference). 10(u) Luby's Cafeterias, Inc. Nonemployee Director Phantom Stock Plan adopted March 19, 1998 (filed as Exhibit 10(aa) to the company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1998, and incorporated herein by reference). 10(v) Salary Continuation Agreement dated May 14, 1998, between Luby's Cafeterias, Inc. and Sue Elliott (filed as Exhibit 10(cc) to the company's Quarterly Report on Form 10-Q for the quarter ended May 31, 1998, and incorporated herein by reference). 10(w) Salary Continuation Agreement dated June 1, 1998, between Luby's Cafeterias, Inc. and Alan M. Davis (filed as Exhibit 10(dd) to the company's Quarterly Report on Form 10-Q for the quarter ended May 31, 1998, and incorporated herein by reference). 10(x) Luby's Incentive Stock Plan adopted October 16, 1998 (filed as Exhibit 10(cc) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1998, and incorporated herein by reference). 10(y) Incentive Bonus Plan for Fiscal 1999 adopted October 16, 1998 (filed as Exhibit 10(dd) to the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1998, and incorporated herein by reference). 10(z) Form of Change in Control Agreement entered into between Luby's, Inc. and Barry J.C. Parker, President and Chief Executive Officer, as of January 8, 1999. 10(aa) Form of Change in Control Agreement entered into between Luby's, Inc. and each of its Senior Vice Presidents as of January 8, 1999. 11 Statement re computation of per share earnings. 99(a) Corporate Governance Guidelines of Luby's Cafeterias, Inc. as amended January 7, 1999. EX-3 2 AMENDMENT TO AND CURRENT CERTIF OF INCORPORATION Exhibit 3(a) State of Delaware Office of the Secretary of State I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT OF "LUBY'S CAFETERIAS, INC.," CHANGING ITS NAME FROM "LUBY'S CAFETERIAS, INC." TO "LUBY'S, INC." FILED IN THIS OFFICE ON THE ELEVENTH DAY OF JANUARY, A.D. 1999, AT 10 O'CLOCK A.M. A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE COUNTY RECORDER OF DEEDS. EDWARD J. FREEL ____________________________________ Edward J. Freel, Secretary of State AUTHENTICATION: 9513495 DATE: 01-11-99 2277358 8100 991010526 CERTIFICATE OF AMENDMENT TO CERTIFICATE OF INCORPORATION OF LUBY'S CAFETERIAS, INC. _______________________ LUBY'S CAFETERIAS, INC., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That a meeting of the Board of Directors of Luby's Cafeterias, Inc., resolutions were duly adopted setting forth a proposed amendment to the Certificate of Incorporation of said corporation, declaring said amendment to be advisable and calling a meeting of the stockholders of said corporation for consideration thereof. The resolution setting forth the proposed amendment is as follows: RESOLVED: That the Board of Directors of Luby's Cafeterias, Inc., (the "Corporation") declares it advisable that Article First of the Certificate of Incorporation be amended so as to read in its entirety as follows: "FIRST: The name of the Corporation is LUBY'S, INC." AND BE IT FURTHER RESOLVED: That the Board of Directors hereby directs that such proposed amendment be considered at the 1999 Annual Meeting of Shareholders of the Corporation. SECOND: That thereafter, pursuant to resolution of its Board of Directors, an annual meeting of the stockholders of said corporation was duly called and held, upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware, at which meeting the necessary number of shares as required by statute were voted in favor of the amendment. THIRD: That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, said LUBY'S CAFETERIAS, INC. has caused this certificate to be signed by James R. Hale, its Secretary, this 8th day of January, 1999. LUBY'S CAFETERIAS, INC. By: JAMES R. HALE ___________________________ James R. Hale, Secretary Exhibit 3(b) CERTIFICATE OF INCORPORATION OF LUBY'S, INC. FIRST. The name of the Corporation is LUBY'S, INC. SECOND. The address of the registered office of the Corporation in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of the registered agent of the Corporation at such address is The Corporation Trust Company. THIRD. The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. FOURTH. The total number of shares of all classes of stock which the Corporation shall have authority to issue is one hundred million (100,000,000) shares of Common Stock of the par value of thirty-two cents ($.32) per share. FIFTH. The period of the Corporation's duration is perpetual. SIXTH. (a) Number, Election and Terms of Directors. The business and affairs of the Corporation shall be managed by a Board of Directors which shall consist of not less than nine nor more than fifteen persons, who need not be residents of the State of Delaware or stockholders of the Corporation. The exact number of directors within the minimum and maximum limitations specified in the preceding sentence shall be fixed from time to time by the Board of Directors pursuant to a resolution adopted by a majority of the entire Board of Directors. The directors shall be divided into three classes, as nearly equal in number as possible, with the term of office of the first class to expire at the 1992 Annual Meeting of Stockholders, the term of office of the second class to expire at the 1993 Annual Meeting of Stockholders and the term of office of the third class to expire at the 1994 Annual Meeting of Stockholders. At each Annual Meeting of Stockholders following such initial classification and election, directors elected to succeed those directors whose terms expire shall be elected for a term of office to expire at the third succeeding Annual Meeting of Stockholders after their election. (b) Newly Created Directorships. A directorship to be filled by reason of an increase in the number of directors may be filled (i) by election at an Annual or Special Meeting of Stockholders called for that purpose or (ii) by the Board of Directors for a term of office continuing only until the next election of one or more directors by the stockholders; provided that the Board of Directors may not fill more than two such directorships during the period between any two successive Annual Meetings of Stockholders. (c) Vacancies in the Board of Directors. Any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause shall be filled by a majority vote of the directors then in office, and directors so chosen shall hold office for a term expiring at the Annual Meeting of Stockholders at which the term of the class to which they have been elected expires. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. (d) Removal of Directors. Any director, or the entire Board of Directors, may be removed from office at any time , but only for cause and only by the affirmative vote of the holders of at least 80% of the voting power of all of the shares of the Corporation entitled to vote generally in the election of directors, voting together as a single class. (a) Amendment, Repeal, etc. Notwithstanding any other provisions of this Certificate of Incorporation or the By-laws of the Corporation (and notwithstanding the fact that a lesser percentage may be specified by law, this Certificate of Incorporation or the By-laws of the Corporation), the affirmative vote of the holders of 80% or more of the voting power of the shares of the Corporation then outstanding, voting together as a single class, shall be required to alter, amend, repeal or adopt any provision inconsistent with this Article Sixth. SEVENTH. In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware, the Board of Directors is expressly authorized to make, alter, adopt, amend, change or repeal the By-laws of the Corporation. EIGHTH. The Corporation reserves the right to amend, altar, change or repeal any provision contained in this Certificate of Incorporation in the manner now or hereafter prescribed by the laws of the State of Delaware. All rights herein conferred are granted subject to this reservation. NINTH. The Corporation shall have the power to indemnify to the fullest extent permitted by, and in the manner permissible under, the laws of the State of Delaware any person made, or threatened to be made, a party to any action, suit or proceeding, whether criminal, civil. administrative or investigative, by reason of the fact that he is or was a director, advisory director or officer of the Corporation, or served another corporation, partnership, joint venture, trust or other enterprise as a director, advisory director, officer, employee, or agent at the request of the Corporation, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding. The Board of Directors in its discretion shall have the power on behalf of the Corporation to indemnify similarly any person, other than a director, advisory director or officer, made a party to any action, suit or proceeding by reason of the fact that he is or was an employee or agent of the Corporation. The provisions of this Article Ninth shall be applicable to persons who have ceased to be directors, advisory directors, officers, employees or agents of the Corporation and shall inure to the benefit of their heirs, executors and administrators. TENTH. Pursuant to section 102(b)(7) (or any successor statute) of the General Corporation Law of the State of Delaware, the personal liability of a director to the Corporation or the stockholders of the Corporation for monetary damages for breach of fiduciary duty is hereby eliminated. The terms of the preceding sentence, however, shall not eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to the Corporation or the stockholders of the Corporation, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 (or a successor statute) of the General Corporation Law of the State of Delaware, or (iv) for any transaction from which the director derived an improper personal benefit. ELEVENTH. Section 1. Vote Required for Certain Business Combinations. A. Higher Vote for Certain Business Combinations. In addition to any affirmative vote required by law or this Certificate of Incorporation, and except as otherwise expressly provided in Section 2 of this Article: (i) any merger or consolidation of the Corporation or any Subsidiary (as hereinafter defined) with (a) any Interested Stockholder (as hereinafter defined) or (b) any other corporation (whether or not itself an Interested Stockholder) which is, or after such merger or consolidation would be, an Affiliate (as hereinafter defined) of an Interested Stockholder; or (ii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions) to or with any Interested Stockholder or any Affiliate of any Interested Stockholder of any assets of the Corporation or any Subsidiary having an aggregate Fair Market Value of $10,000,000 or more; or (iii) the issuance or transfer by the Corporation or any Subsidiary (in one transaction or a series of transactions) of any securities of the Corporation or any Subsidiary to any Interested Stockholder or any Affiliate of any Interested Stockholder in exchange for cash, securities or other property (or a combination thereof) having an aggregate Fair Market Value of $10,000,000 or more; or (iv) the adoption of any plan or proposal for the liquidation or dissolution of the Corporation proposed by or on behalf of an Interested Stockholder or any Affiliate of any Interested Stockholder; or (v) any reclassification of securities (including any reverse stock split), or recapitalization of the Corporation, or any merger or consolidation of the Corporation with any of its Subsidiaries or any other transaction with any of its Subsidiaries or any other transaction (whether or not with or into or otherwise involving an Interested Stockholder) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of equity or convertible securities of the Corporation or any Subsidiary which is directly or indirectly owned by any Interested Stockholder or any Affiliate of any Interested Stockholder; shall require the affirmative vote of the holders of at least 80% of the voting power of the then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (the "Voting Stock"), voting together as a single class. Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that a lesser percentage may be specified, by law or in any agreement with any national securities exchange or otherwise. B. Definition of "Business Combination". The term "Business Combination" as used in this Article shall mean any transaction which is referred to in any one or more of clauses (i) through (v) of paragraph A of this Section 1. Section 2. When Higher Vote is Not Required. The provisions of Section 1 of this Article shall not be applicable to any particular Business Combination, and such Business Combination shall require only such affirmative vote as is required by law and any other provision of this Certificate of Incorporation, if all of the conditions specified in either of the following paragraphs A and B are met: A. Approval by Continuing Directors. The Business Combination shall have been approved by a majority of the Continuing Directors (as hereinafter defined). B. Price and Procedure Requirements. All of the following conditions shall have been met: (i) The aggregate amount of the cash and the Fair Market Value (as hereinafter defined) as of the date of the consummation of the Business Combination of consideration other than cash to be received per share by holders of Common Stock in such Business Combination shall be at least equal to the higher of the following: (a) (if applicable) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by the Interested Stockholder for any shares of Common Stock acquired by it (1) within the two-year period immediately prior to the first public announcement of the proposal of the Business Combination (the "Announcement Date") or (2) in the transaction in which it became an Interested Stockholder, whichever is higher; and (b) the Fair Market Value per share of Common Stock on the Announcement Date or on the date on which the Interested Stockholder became an Interested Stockholder (such latter date being referred to in this Article as the "Determination Date"), whichever is higher. (ii) The aggregate amount of the cash and the Fair Market Value as of the date of the consummation of the Business Combination of consideration other than cash to be received per share by holders of shares of any other class of outstanding Voting Stock shall be at least equal to the highest of the following (it being intended that the requirements of this paragraph B(ii) shall be required to be met with respect to every class of outstanding Voting Stock, whether or not the Interested Stockholder has previously acquired any shares of a particular class of Voting Stock): (a) (if applicable) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by the Interested Stockholder for any shares of such class of Voting Stock acquired by it (1) within the two-year period immediately prior to the Announcement Date or (2) in the transaction in which it became an Interested Stockholder, whichever is higher; (b) (if applicable) the highest preferential amount per share to which the holders of shares of such class of Voting Stock are entitled in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation; and (c) the Fair Market Value per share of such class of Voting Stock on the Announcement Date or on the Determination Date, whichever is higher. (iii) The consideration to be received by holders of a particular class of outstanding Voting Stock (including Common Stock) shall be in cash or in the same form as the Interested Stockholder has previously paid for shares of such class of Voting Stock. If the Interested Stockholder has paid for shares of any class of Voting Stock with varying forms of consideration, the form of consideration for such class of Voting Stock shall be either cash or the form used to acquire the largest number of shares of such class of Voting Stock previously acquired by it. In the determination of amounts per share pursuant to subparagraphs (i) and (ii) of this paragraph B, appropriate adjustment shall be made to reflect any stock dividend, stock split, combination of shares or similar event. (iv) After such Interested Stockholder has become an Interested Stockholder and prior to the consummation of such Business Combination: (a) there shall have been (1) no reduction in the annual rate of dividends paid on the Common Stock (except as necessary to reflect any subdivision of the Common Stock), except as approved by a majority of the Continuing Directors, and (2) an increase in such annual rate of dividends as necessary to reflect any reclassification (including any reverse stock split), recapitalization, reorganization or any similar transaction which has the affect of reducing the number of outstanding shares of the Common Stock, unless the failure so to increase such annual rate is approved by a majority of the Continuing Directors; and (b) such Interested Stockholder shall have not become the beneficial owner of any additional shares of Voting Stock except as part of the transaction which results in such Interested Stockholder becoming an Interested Stockholder. (v) After such Interested Stockholder has become an Interested Stockholder, such Interested Stockholder shall not have received the benefit, directly or indirectly (except proportionately as a stockholder), of any loans, advances, guarantees, pledges or other financial assistance or any tax credits or other tax advantages provided by the Corporation, whether in anticipation of or in connection with such Business Combination or otherwise. (vi) A proxy or information statement describing the proposed Business Combination and complying with the requirements of the Securities Exchange Act of 1934 and the rules and regulations thereunder (or any subsequent provisions replacing such Act, rules or regulations) shall be mailed to public stockholders of the Corporation at least 30 days prior to the consummation of such Business Combination (whether or not such proxy or information statement is required to be mailed pursuant to such Act or subsequent provisions). Section 3. Certain Definitions. For the purposes of this Article: A. A "person" shall mean any individual, firm, corporation or other entity. B. "Interested Stockholder" shall mean any person (other than the Corporation or any Subsidiary) who or which: (i) is the beneficial owner, directly or indirectly, of more than 10% of the voting power of the outstanding Voting Stock; or (ii) is an Affiliate of the Corporation and at any time within the two-year period immediately prior to the date in question was the beneficial owner, directly or indirectly, of 10% or more of the voting power of the then outstanding Voting Stock; or (iii) is an assignee of or has otherwise succeeded to any shares of Voting Stock which were at any time within the two-year period immediately prior to the date in question beneficially owned by any Interested Stockholder, if such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act of 1933. C. A person shall be a "beneficial owner" of any Voting Stock: (i) which such person or any of its Affiliates or Associates (as hereinafter defined) beneficially owns, directly or indirectly; or (ii) which such person or any of its Affiliates or Associates has (a) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (b) the right to vote pursuant to any agreement, arrangement or understanding; or (iii) which are beneficially owned, directly or indirectly, by any other person with which such person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of Voting Stock. D. For the purposes of determining whether a person is an Interested Stockholder pursuant to paragraph B of this Section 3, the number of shares of Voting Stock deemed to be outstanding shall include shares deemed owned through application of paragraph C of this Section 3, but shall not include any other shares of Voting Stock which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise. E. "Affiliate" or "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on October 1, 1985. F. "Subsidiary" means any corporation of which a majority of any class of equity security is owned, directly or indirectly, by the Corporation; provided, however, that for the purposes of the definition of Interested Stockholder set forth in paragraph B of this Section 3, the term "Subsidiary" shall mean only a corporation of which a majority of each class of equity security is owned, directly or indirectly, by the Corporation. G. "Continuing Director" means any member of the Board of Directors of the Corporation (the Board) who is unaffiliated with the Interested Stockholder and was a member of the Board prior to the time that the Interested Stockholder became an Interested Stockholder, and any successor of a Continuing Director who is unaffiliated with the Interested Stockholder and is recommended to succeed a Continuing Director by a majority of Continuing Directors then on the Board. H. Fair Market Value means: (i) in the case of stock, the highest closing sale price during the 30-day period immediately preceding the date in question of a share of such stock on the Composite Tape for New York Stock Exchange- Listed Stocks, or, if such stock is not quoted on the Composite Tape, on the New York Stock Exchange, or, if such stock is not listed on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934 on which such stock is listed, or, if such stock is not listed on any such exchange, the highest closing bid quotation with respect to a share of such stock during the 30-day period preceding the date in question on the National Association of Securities Dealers, Inc. Automated Quotations System or any system then in use, or if no such quotations are available, the fair market value on the date in question of a share of such stock as determined by the Board in good faith; and (ii) in the case of property other than cash or stock, the fair market value of such property on the date in question as determined by the Board in good faith. I. In the event of any Business Combination in which the Corporation survives, the phrase "other consideration to be received" as used in paragraphs B(i) and B(ii) of Section 2 of this Article shall include the shares of Common Stock and/or the shares of any other class of outstanding Voting Stock retained by the holders of such shares. Section 4. Powers of the Board of Directors. A majority of the directors of the Corporation shall have the power and duty to determine for the purposes of this Article, on the basis of information known to them after reasonable inquiry, (A) whether a person is an Interested Stockholder, (B) the number of shares of Voting Stock beneficially owned by any person, (C) whether a person is an Affiliate or Associate of another and (D) whether the assets which are the subject of any Business Combination have, or the consideration to be received for the issuance or transfer of securities by the Corporation or any Subsidiary in any Business Combination has, an aggregate Fair Market Value of $10,000,000 or more. Section 5. No Effect on Fiduciary Obligations of Interested Stockholders. Nothing contained in this Article shall be construed to relieve any Interested Stockholder from any fiduciary obligation imposed by law. Section 6. Amendment, Repeal. etc. Notwithstanding any other provisions of this Certificate of Incorporation or the By-laws of the Corporation (and notwithstanding the fact that a lesser percentage may be specified by law, this Certificate of Incorporation or the By-laws of the Corporation), the affirmative vote of the holders of 80% or more of the voting power of the shares of the then outstanding Voting Stock, voting together as a single class, shall be required to alter, amend, repeal or adopt any provision inconsistent with this Article Eleventh. TWELFTH. Special meetings of the stockholders of the Corporation may be called (1) by the President, the Board of Directors, or such other person or persons as may be authorized in the Corporation's By-laws or (2) by the holders of at least fifty percent of all the shares of the Corporation entitled to vote at the proposed special meeting. THIRTEENTH. Any action required or permitted to be taken by the stockholders of the Corporation must be effected at an annual or special meeting of stockholders of the Corporation and may not be effected by any consent in writing by such stockholders. FOURTEENTH. The name and post office address of the incorporator signing this Certificate of Incorporation is James R. Hale, 112 East Pecan, Suite 2000, San Antonio, Texas 78205. The undersigned, being the incorporator herein before named, for the purposes of organizing a corporation pursuant to the General Corporation Law of the State of Delaware, does make this certificate, hereby declaring and certifying that this is his act and deed and the facts herein stated are true, and accordingly has hereunto set his hand this 28th day of October, 1991. /s/James R. Hale ______________________________ James R. Hale, Incorporator EX-10 3 CHANGE IN CONTROL AND AMEND TO EMPL AGREEMENTS Exhibit 10(r) January 8, 1999 Mr. Barry J.C. Parker President and Chief Executive Officer Luby's Cafeterias, Inc. P. O. Box 33069 San Antonio, Texas 78265-3069 Dear Mr. Parker: Pursuant to authorization by the Board of Directors of Luby's Cafeterias, Inc. (the "Company") on this date, this letter will confirm that your employment agreement with the Company dated September 15, 1997, is hereby amended to increase your minimum base salary to $390,000 per year ($32,500 per month) effective as of March 1, 1999. Sincerely, DAVID B. DAVISS ______________________ David B. Daviss Chairman of the Board Accepted and agreed to: BARRY J.C. PARKER ______________________ Barry J.C. Parker Exhibit 10(z) PRESIDENT FORM OF CHANGE IN CONTROL AGREEMENT BETWEEN LUBY'S, INC. AND (EXECUTIVE NAME) THIS AGREEMENT is made and entered into effective as of the 8th day of January, 1999 by and between LUBY'S, INC., a Delaware corporation (hereinafter "Luby's") and [Executive Name] (hereinafter, the "Executive"). WHEREAS Executive is a valuable employee of Luby's and an integral part of its management; and WHEREAS Luby's wishes to encourage Executive to continue Executive's career with and services to Luby's for the period during and after an actual or threatened Change In Control; and WHEREAS the Board of Directors of Luby's has determined that it would be in the best interests of Luby's and its shareholders to assure: (i) continuity in the management of Luby's in the event of a Change In Control and (ii) that Executive can act objectively and in the best interests of Luby's and its shareholders in evaluating any such Change in Control, by entering into this Agreement with Executive; NOW, THEREFORE, in consideration of the services to be performed by Executive for Luby's in the future, as well as the promises and covenants contained in this Agreement, the parties agree as follows: 1. Definitions. For purposes of this Agreement, the following terms shall have the meanings prescribed below: 1.1 Board. "Board" means the Board of Directors of Luby's. Except where this Agreement requires that action be taken by a specified percentage or number of the members of the Board, action on behalf of the Board may be taken by its Executive Committee, or by any other committee or individual specifically authorized to act on behalf of the Board by resolution of the Board. 1.2 Change In Control. A "Change In Control" is the occurrence of any of the events described in subsections (a) through (d) below: (a) Either (i) receipt by Luby's of a report on Schedule 13D, or an amendment to such a report, filed with the Securities and Exchange Commission (the "SEC") pursuant to Section 13(d) of the Securities Exchange Act of 1934 (the "1934 Act") disclosing that any person (as such term is used in Section 13(d) of the 1934 Act) ("Person"), is the beneficial owner, directly or indirectly, of twenty percent or more of the combined voting power of the outstanding stock of Luby's, or (ii) actual knowledge by the Board of facts on the basis of which any Person 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 1934 Act) disclosing that such Person is the beneficial owner, directly or indirectly, of twenty percent or more of the combined voting power of the outstanding stock of Luby's. (b) Purchase by any Person other than Luby's or a wholly-owned subsidiary of Luby's, of shares pursuant to a tender or exchange offer to acquire any stock of Luby's (or securities convertible into stock) for cash, securities or any other consideration provided that, after consummation of the offer, such Person is the beneficial owner (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of twenty percent or more of the combined voting power of the outstanding stock of Luby's (calculated as provided in paragraph (d) of Rule 13d-3 under the 1934 Act in the case of rights to acquire stock). (c) Approval by the shareholders of Luby's of a transaction described in any of the following paragraphs: (1) Any consolidation or merger of Luby's in which Luby's is not the continuing or surviving corporation or pursuant to which shares of stock of Luby's would be converted into cash, securities or other property, other than a consolidation or merger of Luby's in which holders of its stock immediately prior to the consolidation or merger own at least a majority of the combined voting power of the outstanding stock of the surviving corporation immediately after the consolidation or merger (or at least a majority of the combined voting power of the outstanding stock of a corporation which owns directly or indirectly all of the voting stock of the surviving corporation). (2) Any consolidation or merger in which Luby's is the continuing or surviving corporation but in which the shareholders of Luby's immediately prior to the consolidation or merger do not hold at least a majority of the combined voting power of the outstanding stock of the continuing or surviving corporation (except where such holders of stock hold at least a majority of the combined voting power of the outstanding stock of the corporation which owns directly or indirectly all of the voting stock of Luby's). (3) Any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all the assets of Luby's (except such a transfer to a corporation which is wholly owned, directly or indirectly, by Luby's), or any complete liquidation of Luby's. (4) Any merger or consolidation of Luby's where, after the merger or consolidation, one Person owns 100% of the shares of stock of Luby's (except where the holders of Luby's voting stock immediately prior to such merger or consolidation own at least a majority of the combined voting power of the outstanding stock of such Person immediately after such merger or consolidation). (d) A change in the majority of the members of the Board within a 24-month period unless the election or nomination for election by Luby's 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. A Change In Control occurs on the date that an event described in subsection (a), (b) or (d) occurs. In the case of a transaction described in subsection (c) which is subject to approval by the shareholders, the Change In Control occurs on the date the transaction is completed. 1.3 Code. "Code" means the Internal Revenue Code of 1986, as amended. 1.4 Disability. "Disability" or "Disabled" means the inability of Executive as a result of physiological or psychological condition to perform the essential functions of any position held by Executive on or after the date a Change In Control occurred. 1.5 Discharge for Cause. Solely for purposes of this Agreement, "Discharge for Cause" means a termination of Executive's employment by Luby's because of Executive's gross negligence, gross misconduct (active or passive), fraud or dishonesty which has resulted, or is likely to result, in material economic damage to Luby's, as determined in good faith by a vote of two-thirds of the non-employee directors at a meeting of the Board at which Executive has been afforded an opportunity to be heard. 1.6 Good Reason. "Good Reason" means the occurrence, on or after the date of a Change In Control and without Executive's written consent, of any of the following events or circumstances, as determined in good faith by Executive: (a) A reduction in Executive's base salary in effect immediately prior to the Change In Control. (b) A material reduction in Executive's target opportunity, measured as a percentage of base salary, to earn annual or long-term incentives or bonuses. (c) A material reduction by Luby's of Executive's job duties and responsibilities, or change in the rank or responsibilities of the party to whom the Executive reports, from that which existed immediately prior to the Change In Control, including but not limited to the assignment to Executive of duties and responsibilities which are materially inconsistent with those of Executive's position immediately prior to the Change In Control. (d) Assignment or reassignment of Executive to another place of employment that is more than 50 miles (measured by the shortest paved highway route) from Executive's place of employment immediately prior to the Change In Control. (e) A failure by Luby's to pay to Executive when due any deferred compensation that was deferred by Executive prior to the Change in Control. (f) A failure by Luby's to adjust, if necessary, the terms of any stock option granted to Executive prior to the date of Change in Control so as to provide Executive with a new stock option or other benefit of equivalent economic value. (g) A failure by Luby's to comply with the terms and conditions of this Agreement. Notwithstanding the foregoing: (aa) An event or circumstance shall not constitute Good Reason unless Executive provides written notice to Luby's specifying the basis for Executive's determination that Good Reason exists within six months after the first day on which such Good Reason existed. If Luby's cures the event or circumstance within 30 days of receiving such written notice (including retroactive restoration of any lost compensation or benefits, where reasonably possible), Good Reason shall be deemed never to have existed. (bb) Luby's and Executive may, upon mutual written agreement, waive and provision of this section which would otherwise constitute Good Reason. 2. Term of Agreement. This Agreement shall become effective as of the date written in the first paragraph of this Agreement and shall be for an initial term ending on December 31, 2000. The term of this Agreement shall be automatically extended on each December 31 for one additional calendar year, unless Luby's provides written notice to Executive prior to a December 31 that this sentence shall cease to apply on that December 31. (For example, on December 31, 2000, the term will be automatically extended to December 31, 2001 unless Luby's gives written notice to Executive prior to December 31, 2000.). This Agreement will apply to any Change in Control that occurs during the term of this Agreement. 3. Eligibility for Benefits. Except as provided in section 3.1, if Executive is a full-time employee of Luby's on the date a Change In Control occurs, Executive shall be entitled to the benefits provided under section 4. following the occurrence of either of the following events: (a) Executive's employment is involuntarily terminated by Luby's during the 36-month period following the Change In Control. (b) Executive terminates employment with Luby's for Good Reason during the 36-month period following the Change In Control; provided that the period in which Luby's could correct the Good Reason has expired. 3.1 Disqualification from Benefits. Notwithstanding the provisions of section 3., Executive shall not be eligible for any benefits under this Agreement under any of the following circumstances: (a) Luby's terminates Executive's employment due to Discharge for Cause. (b) Executive's employment with Luby's terminates due to Disability or Executive's death. (c) Executive voluntarily terminates employment without Good Reason. For purposes of this Agreement, a voluntary termination of employment includes any termination that qualifies as a form of "retirement" under any employee pension benefit plan maintained by Luby's that covers Executive; provided that Good Reason does not exist at the time of such retirement. (d) Executive's employment is terminated pursuant to any policy of Luby's that requires or permits mandatory retirement of Executive upon attainment of a specified age and that complies with applicable laws and regulations. If this section 3.1 applies, Executive shall be subject to the normal Policies of Luby's regarding such events and shall be eligible for only such Compensation and benefits as would apply if this Agreement did not exist. 3.2 Anticipation of Change In Control. If (i) Executive's employment is involuntarily terminated by Luby's, or Executive terminates such employment with Luby's for Good Reason, on or after the date on which a public announcement is made by Luby's of its intention to participate in a transaction which would constitute a Change In Control, (ii) Executive would be eligible under section 3. if the Change In Control had already occurred, (iii) section 3.1 does not apply, and (iv) the Change In Control actually occurs, then Executive's employment shall be deemed solely for purposes of this Agreement to have terminated under section 3. on the date the Change In Control occurred and Executive shall be entitled to the benefits provided under section 4. 4. Benefits. If Executive is eligible under section 3. and Executive promptly executes and delivers to the Company a waiver, release, and separation agreement tendered by the Company, which release the Company, its officers, directors, stockholders, employees, agents, assigns, subsidiaries and affiliates from all claims that arise out of or relate in any way to the Executive's employment or termination of employment with the Company, including claims under anti-discrimination laws (except that claims for vested wages, or vested benefits shall not be waived), Executive will receive the benefits provided under section 4.1 through section 4.5. 4.1 Severance Payment. Within five business days after Executive's termination of employment under section 3. occurs, Luby's will pay to Executive a lump sum equal to three times the sum of the amounts determined under subsections (a) and (b): (a) Executive's annual base salary immediately prior to the Change In Control. (b) (i) If Executive has been employed by the Company for less than one year as of the date termination of employment occurs, as determined under section 3., the amount added to the amount in section 4.1(a) shall be the short-term target cash bonus for the year in which the termination occurs; and (ii) If the Executive has been employed by the Company for more than one year as of the date termination of employment occurs, as determined under section 3., the amount added to the amount in section 4.1(a) shall be the average of (x) the actual short term cash bonus received by the Executive during the preceding fiscal year and (y) the short-term cash target bonus for the year in which the termination occurs. The payment under this section 4.1 shall also include amounts for any accrued but unpaid salary and any accrued but unused vacation under Luby's policies which is outstanding on the date Executive's employment terminates. 4.2 Stock Options and Restricted Stock. All stock options granted to Executive which are outstanding on the date of Executive's termination of employment under section 3. shall become vested, and all restrictions on restricted shares of Luby's stock granted to Executive shall lapse on that date. All of Executive's outstanding stock options shall be exercisable, subject to earlier expiration pursuant to the terms of the individual option agreements, during the two year period following the termination of Executive's employment. 4.3 Continuation of Welfare Benefits. During the 36 month period following Executive's termination of employment under section 3., Executive will be eligible for continuation of coverage for Executive and Executive's eligible dependents under all life insurance, disability, accident and health insurance coverage in effect at the time Executive's employment terminated, subject to the following: (a) Such coverage shall be provided under the same terms and conditions as apply to similarly situated active employees of Luby's during such period. Executive shall pay to Luby's the contribution, if any, required to be paid for such coverage by similarly situated active employees of Luby's during such period. (b) If a group insurance carrier refuses to provide the coverage described in this section 4.3 under its contract issued to Luby's, or if Luby's reasonably determines that the coverage required under this section 4.3 would cause a welfare plan sponsored by Luby's to violate any provision of the Code prohibiting discrimination in favor of highly compensated employees or key employees, Luby's will use its best efforts to obtain for Executive an individual insurance policy providing comparable coverage. However, if Luby's determines in good faith that comparable coverage cannot be obtained for less than two times the premium or premium equivalent for such coverage under Luby's welfare plan or plans, Luby's sole obligation under this section 4.3 with respect to that coverage will be limited to paying to Executive a monthly amount equal to two times the monthly premium or premium equivalent for that coverage under Luby's plans. (c) Benefits provided to Executive or Executive's dependents under this section will be secondary to any comparable benefits provided by another employer to the extent permitted by applicable law. 4.4 Retirement Benefits. Within five business days after Executive's employment terminates under section 3. (or as soon thereafter as the amount payable under this section can reasonably be determined), Luby's will pay executive a lump sum equal to the sum of the following amounts: (a) Retirement Plans. The present value of the additional benefit to which Executive would be entitled under the qualified defined benefit pension plan and non-qualified supplemental executive retirement plan, if any, that covered Executive on the date the termination of employment occurred, determined by assuming that Executive's employment had continued for an additional 36 months and that Executive's rate of compensation being recognized by each such plan immediately prior to the termination of employment had continued in effect during such period. The "present value" for purposes of this subsection (a) shall be determined by using the actuarial equivalent factors specified in the qualified defined benefit pension plan for determining lump sum distributions (disregarding any restriction on the size of lump sum distributions allowed). (b) Savings Plans. The sum of the additional contributions (other than pre-tax salary deferral contributions by Executive) that would have been made or credited by Luby's to Executive's accounts under each qualified defined contribution plan and non-qualified supplemental executive savings plan, if any, that covered Executive on the date the termination of employment occurred, determined by assuming that: (1) Executive's employment had continued for an additional 36 months. (2) Executive's rate of compensation being recognized by each plan immediately prior to the termination of employment had continued in effect during such period. (3) In the case of matching contributions, Executive's rate of pre-tax salary deferral contributions in effect immediately prior to the termination of employment had remained in effect throughout such period. (4) In the case of discretionary contributions by Luby's, Luby's continued to make such contributions during such period at the rate that applied to the most recent plan year that ended prior to the termination of employment. 4.5 Limitation on Payments. In the event that the severance and other benefits provided for in this Agreement or otherwise payable to the Executive (i) constitute "parachute payments" within the meaning of Section 280G (as it may be amended or replaced) of the Code and (ii) but for this section 4.5, would be subject to the excise tax imposed by Section 4999 (as it may be amended or replaced) of the Code (the "Excise Tax"), then the Executive's severance benefits hereunder section 3. shall be either: (a) delivered in full, or (b) delivered as to such lesser extent which would result in no portion of such severance benefits being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by the Executive on an after-tax basis, of the greatest amount of severance benefits, notwithstanding that all or some portion of such severance benefits may be taxable under the Excise Tax. Unless Luby's and the Executive otherwise agree in writing, any determination required under this section 4.5 shall be made in writing in good faith by the accounting firm serving as Luby's independent public accountants immediately prior to the Change of Control (the "Accountants"). In the event of a reduction in benefits hereunder, the Executive shall be given the choice of which benefits to reduce. For purposes of making the calculations required by this section 4.5, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of the Code. Luby's and the Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this section. Luby's shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this section 4.5. 4.6 No Offsets. Executive shall be under no obligation to seek other employment or otherwise mitigate the amounts payable by Luby's under section 4. There will be no offset against the amounts payable under section 4. on account of any compensation or earnings from any subsequent employment or self- employment of Executive, except as provided in section 4.3(c). Luby's obligations to make the payments provided for this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which Luby's may have against Executive or others, unless Executive has given written consent to such as set-off or is subject to a final judgment in favor of Luby's. 5. Source of Payments. Except as otherwise provided in this section, all payments provided in section 4. shall be paid from the general funds of Luby's, and Luby's shall not be required to establish a special or separate fund or otherwise segregate assets to assure payments will be made under this Agreement. (a) On or before the date a Change In Control occurs (or as soon as reasonably possible following a Change In Control for which Luby's has no advance warning), Luby's will establish a trust in the form generally known as a "rabbi trust", and will immediately deposit into that trust an amount equal to the total of the estimated amounts to which Executive would become entitled under sections 4.1, 4.3 and 4.4, in the event the requirements of section 3. are satisfied. (1) The trustee shall be a national bank or trust company selected by Luby's and reasonably acceptable to Executive. (2) The amount to be deposited in the trust shall be determined by an actuary employed by a nationally recognized actuarial and benefits consulting firm selected by Luby's which shall be reasonably acceptable to Executive. (b) In the event Executive satisfies the requirements of section 3. and becomes entitled to payments under section 4., those payments shall be made from the assets of the trust to the extent those assets are sufficient. Luby's obligations under this Agreement shall be reduced to the extent of the payments made from the trust. (c) If Executive does not become eligible under section 3. within 24 months after the date a Change In Control occurs, or if an event described in section 3.1 occurs that makes Executive ineligible for benefits, the trust shall terminate and its assets shall be returned to Luby's. Notwithstanding the foregoing provisions of this section, it is expressly understood and agreed that Executive (and any dependent, beneficiary or estate of Executive who becomes entitled to payments hereunder) shall at all times be an unsecured creditor of Luby's, and shall have no rights to assets of Luby's (including assets held in any trust) that are superior to other unsecured creditors of Luby's. Nothing in this Agreement shall be interpreted as creating a constructive trust over any assets of Luby's or creating a fiduciary relationship between Luby's and Executive or any other person. 6. Enforcement. The rights and obligations created under this Agreement shall be enforced as follows: (a) Arbitration. In the event of any dispute or difference between Luby's and Executive with respect to the subject matter or interpretation of this Agreement or the enforcement of rights hereunder, such dispute or difference shall be submitted to arbitration. The arbitrator or arbitrators shall be selected by agreement of the parties or, if they cannot agree on an arbitrator or arbitrators within 30 days after the date one party notified the other of the desire to have the question settled by arbitration, then the arbitrator or arbitrators shall be selected by the American Arbitration Association (the "AAA") in Dallas, Texas upon the application of either party. The determination reached in such arbitration shall be final and binding on both parties without any right of appeal or further dispute. Execution of the determination by such arbitrator may be sought in any court of competent jurisdiction. In any such arbitration or subsequent proceeding, Executive shall be entitled to seek both legal and equitable relief and remedies, including but not limited to specific performance of Luby's obligations under this Agreement. The arbitrators shall not be bound by judicial formalities and may abstain from following the strict rules of evidence and shall interpret this Agreement as an honorable engagement and not merely as a legal obligation. Unless otherwise agreed by the parties, any such arbitration shall take place in San Antonio, Texas, and shall be conducted in accordance with the Rules of the AAA. (b) Costs and Expenses. Luby's will pay all fees of the arbitrators, whether the arbitration is initiated by Luby's or Executive. In addition, Luby's will pay, upon written demand from Executive, all legal fees and expenses which Executive may reasonably incur in connection with the arbitration or subsequent judicial proceedings to enforce this Agreement, plus interest on any award at the applicable federal rate, under Code Section 7872(f)(2); provided, however, that this sentence shall not apply unless Executive recovers through such action some amount or benefit (regardless of size or value) in excess of the amount Luby's had offered prior to commencement of the action. (c) Survival. The obligations under this section 6. shall survive the termination of this Agreement for any reason, whether such termination is by Luby's, by Executive, upon the expiration of this Agreement, or otherwise. 7. Successor Employer. If Executive becomes an employee of another entity as a result of a transaction in which Luby's consolidates or merges into or with such entity or transfers all or substantially all of its assets to such entity (whether or not the transaction constitutes a Change In Control), the term "Luby's" in this Agreement shall mean such other entity and this Agreement shall continue in full force and effect. If Executive becomes an employee of a wholly owned subsidiary of Luby's (or of a successor entity described in the previous sentence), Executive shall be deemed for purposes of this Agreement to continue as an employee of Luby's (or the successor entity) while employed by such subsidiary. 8. Miscellaneous Provisions. 8.1 Amendment. This Agreement may be amended or modified only in writing, signed by both parties. 8.2 Tax Withholding. Luby's may withhold from any payments made under this Agreement all federal, state or other taxes which it determines to be required pursuant to any law or governmental regulation or ruling. 8.3 Death of Executive Following Entitlement to Payments. If Executive dies after becoming eligible under section 3., but before all payments provided under section 4. have been made, the remaining payments shall be made to the beneficiary designated by Executive on the signature page of this Agreement or in the most recent written instrument filed with Luby's prior to Executive's death which specifically refers to this Agreement. Executive may revoke such a beneficiary designation at any time, without consent of any beneficiary, and file a new designation. If no effective beneficiary designation is on file with Luby's at the time of Executive's death, the remaining payments shall be paid to Executive's estate. 8.4 Entire Agreement. This Agreement contains the entire understanding of the parties with regard to all matters contained herein. There are no other agreements, conditions or representations, oral or written, expressed or implied, with regard thereto. This Agreement supersedes all prior agreements relating to separation payments following a Change In Control between Executive and Luby's or any predecessor to Luby's. However, this Agreement shall not operate to reduce any benefit or compensation to which Executive is entitled under any plan, policy or program maintained by Luby's that does not specifically relate to payments following a Change In Control, including but not limited to benefits or compensation under incentive plans, qualified retirement plans, or nonqualified supplemental or excess pension or savings plans. 8.5 Assignment. Luby's may in its sole discretion assign this Agreement to any entity which succeeds to the business of Luby's through merger, consolidation, a sale of all or substantially all of the assets of Luby's, or any similar transaction. Executive acknowledges that the services to be rendered by Executive are unique and personal. Accordingly, Executive may not assign any of Executive's rights or obligations under this Agreement. 8.6 Successors. Subject to section 8.5, the provisions of this Agreement shall be binding upon the parties hereto, upon any successor to or assign of Luby's, and upon Executive's heirs and the personal representative of Executive or Executive's estate. 8.7 No Attachment. Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge or hypothecation or to execution, attachment, levy or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void and of no effect. 8.8 Notices. Any notice required to be given under this Agreement shall be in writing and shall be delivered either in person or by certified or registered mail, return receipt requested. Any notice by mail shall be addressed as follows: If to Luby's, to: Luby's, Inc. c/o Chairman of the Executive Committee 2211 Northeast Loop 410 San Antonio, Texas 78217-4673 Telephone: (210) 654-9000 Facsimile: (210) 654-3211 with a copy to: Cauthorn Hale Hornberger Fuller Sheehan & Becker Incorporated 700 N. St. Mary's Street, Suite 620 San Antonio, Texas 78205 Attention: James R. Hale or Drew R. Fuller, Jr. Telephone: (210) 271-1700 Facsimile: (210) 271-1730 If to Executive, to: _______________________ _______________________ _______________________ with a copy to: _______________________ _______________________ _______________________ or to such other addresses as either party may designate in writing to the other party from time to time. 8.9 Waiver of Breach. Any waiver by either party of compliance with any provision of this Agreement by the other party shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by such party of a provision of this Agreement, unless the waiver specifically states that it is a continuing waiver or that it applies to other provisions. No waiver by Luby's shall be valid unless in writing and signed by the chief executive officer of Luby's. No waiver by Executive shall be valid unless in writing and signed by Executive. 8.10 Severability. If any one or more of the provisions (or portions thereof) of this Agreement shall for any reason be held by a final determination of a court of competent jurisdiction to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision (or portions of the provisions) of this Agreement, and the invalid, illegal or unenforceable provisions shall be deemed replaced by a provision that is valid, legal and enforceable and that comes closest to expressing the intention of the parties hereto. 8.11 Governing Law. This Agreement shall be interpreted and enforced in accordance with the laws of the State of Texas, without giving effect to conflict of law principles. 8.12 Headings. The headings of sections herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement. 8.13 Counterparts. This Agreement may be executed by either of the parties hereto in counterparts, each of which shall be deemed to be an original, but all such counterparts shall constitute a single instrument. IN WITNESS WHEREOF, Luby's has caused this Agreement to be executed by its duly authorized officer, and Executive has executed this Agreement, all effective as of the date first above written. LUBY'S, INC. a Delaware corporation By: ________________________ Its: ________________________ Name: ________________________ EXECUTIVE By: ________________________ Its: ________________________ Name: ________________________ I hereby designate ____________________ as the beneficiary of all payments due to me under section 4. of this Agreement for purposes of section 8.3 of this Agreement. ________________________ Executive Date: ___________________ PRESIDENT Exhibit 10(aa) SR. VICE PRESIDENT FORM OF CHANGE IN CONTROL AGREEMENT BETWEEN LUBY'S, INC. AND (EXECUTIVE NAME) THIS AGREEMENT is made and entered into effective as of the 8th day of January, 1999 by and between LUBY'S, INC., a Delaware corporation (hereinafter "Luby's") and [Executive Name] (hereinafter, the "Executive"). WHEREAS Executive is a valuable employee of Luby's and an integral part of its management; and WHEREAS Luby's wishes to encourage Executive to continue Executive's career with and services to Luby's for the period during and after an actual or threatened Change In Control; and WHEREAS the Board of Directors of Luby's has determined that it would be in the best interests of Luby's and its shareholders to assure: (i) continuity in the management of Luby's in the event of a Change In Control and (ii) that Executive can act objectively and in the best interests of Luby's and its shareholders in evaluating any such Change in Control, by entering into this Agreement with Executive; NOW, THEREFORE, in consideration of the services to be performed by Executive for Luby's in the future, as well as the promises and covenants contained in this Agreement, the parties agree as follows: 1. Definitions. For purposes of this Agreement, the following terms shall have the meanings prescribed below: 1.1 Board. "Board" means the Board of Directors of Luby's. Except where this Agreement requires that action be taken by a specified percentage or number of the members of the Board, action on behalf of the Board may be taken by its Executive Committee, or by any other committee or individual specifically authorized to act on behalf of the Board by resolution of the Board. 1.2 Change In Control. A "Change In Control" is the occurrence of any of the events described in subsections (a) through (d) below: (a) Either (i) receipt by Luby's of a report on Schedule 13D, or an amendment to such a report, filed with the Securities and Exchange Commission (the "SEC") pursuant to Section 13(d) of the Securities Exchange Act of 1934 (the "1934 Act") disclosing that any person (as such term is used in Section 13(d) of the 1934 Act) ("Person"), is the beneficial owner, directly or indirectly, of twenty percent or more of the combined voting power of the outstanding stock of Luby's, or (ii) actual knowledge by the Board of facts on the basis of which any Person 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 1934 Act) disclosing that such Person is the beneficial owner, directly or indirectly, of twenty percent or more of the combined voting power of the outstanding stock of Luby's. (b) Purchase by any Person other than Luby's or a wholly-owned subsidiary of Luby's, of shares pursuant to a tender or exchange offer to acquire any stock of Luby's (or securities convertible into stock) for cash, securities or any other consideration provided that, after consummation of the offer, such Person is the beneficial owner (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of twenty percent or more of the combined voting power of the outstanding stock of Luby's (calculated as provided in paragraph (d) of Rule 13d-3 under the 1934 Act in the case of rights to acquire stock). (c) Approval by the shareholders of Luby's of a transaction described in any of the following paragraphs: (1) Any consolidation or merger of Luby's in which Luby's is not the continuing or surviving corporation or pursuant to which shares of stock of Luby's would be converted into cash, securities or other property, other than a consolidation or merger of Luby's in which holders of its stock immediately prior to the consolidation or merger own at least a majority of the combined voting power of the outstanding stock of the surviving corporation immediately after the consolidation or merger (or at least a majority of the combined voting power of the outstanding stock of a corporation which owns directly or indirectly all of the voting stock of the surviving corporation). (2) Any consolidation or merger in which Luby's is the continuing or surviving corporation but in which the shareholders of Luby's immediately prior to the consolidation or merger do not hold at least a majority of the combined voting power of the outstanding stock of the continuing or surviving corporation (except where such holders of stock hold at least a majority of the combined voting power of the outstanding stock of the corporation which owns directly or indirectly all of the voting stock of Luby's). (3) Any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all the assets of Luby's (except such a transfer to a corporation which is wholly owned, directly or indirectly, by Luby's), or any complete liquidation of Luby's. (4) Any merger or consolidation of Luby's where, after the merger or consolidation, one Person owns 100% of the shares of stock of Luby's (except where the holders of Luby's voting stock immediately prior to such merger or consolidation own at least a majority of the combined voting power of the outstanding stock of such Person immediately after such merger or consolidation). (d) A change in the majority of the members of the Board within a 24- month period unless the election or nomination for election by Luby's 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. A Change In Control occurs on the date that an event described in subsection (a), (b) or (d) occurs. In the case of a transaction described in subsection (c) which is subject to approval by the shareholders, the Change In Control occurs on the date the transaction is completed. 1.3 Code. "Code" means the Internal Revenue Code of 1986, as amended. 1.4 Disability. "Disability" or "Disabled" means the inability of Executive as a result of physiological or psychological condition to perform the essential functions of any position held by Executive on or after the date a Change In Control occurred. 1.5 Discharge for Cause. Solely for purposes of this Agreement, "Discharge for Cause" means a termination of Executive's employment by Luby's because of Executive's gross negligence, gross misconduct (active or passive), fraud or dishonesty which has resulted, or is likely to result, in material economic damage to Luby's, as determined in good faith by a vote of two-thirds of the non-employee directors at a meeting of the Board at which Executive has been afforded an opportunity to be heard. 1.6 Good Reason. "Good Reason" means the occurrence, on or after the date of a Change In Control and without Executive's written consent, of any of the following events or circumstances, as determined in good faith by Executive: (a) A reduction in Executive's base salary in effect immediately prior to the Change In Control. (b) A material reduction in Executive's target opportunity, measured as a percentage of base salary, to earn annual or long-term incentives or bonuses. (c) A material reduction by Luby's of Executive's job duties and responsibilities, or change in the rank or responsibilities of the party to whom the Executive reports, from that which existed immediately prior to the Change In Control, including but not limited to the assignment to Executive of duties and responsibilities which are materially inconsistent with those of Executive's position immediately prior to the Change In Control. (d) Assignment or reassignment of Executive to another place of employment that is more than 50 miles (measured by the shortest paved highway route) from Executive's place of employment immediately prior to the Change In Control. (e) A failure by Luby's to pay to Executive when due any deferred compensation that was deferred by Executive prior to the Change in Control. (f) A failure by Luby's to adjust, if necessary, the terms of any stock option granted to Executive prior to the date of Change in Control so as to provide Executive with a new stock option or other benefit of equivalent economic value. (g) A failure by Luby's to comply with the terms and conditions of this Agreement. Notwithstanding the foregoing: (aa) An event or circumstance shall not constitute Good Reason unless Executive provides written notice to Luby's specifying the basis for Executive's determination that Good Reason exists within six months after the first day on which such Good Reason existed. If Luby's cures the event or circumstance within 30 days of receiving such written notice (including retroactive restoration of any lost compensation or benefits, where reasonably possible), Good Reason shall be deemed never to have existed. (bb) Luby's and Executive may, upon mutual written agreement, waive any provision of this section which would otherwise constitute Good Reason. 2. Term of Agreement. This Agreement shall become effective as of the date written in the first paragraph of this Agreement and shall be for an initial term ending on December 31, 2000. The term of this Agreement shall be automatically extended on each December 31 for one additional calendar year, unless Luby's provides written notice to Executive prior to a December 31 that this sentence shall cease to apply on that December 31. (For example, on December 31, 2000, the term will be automatically extended to December 31, 2001 unless Luby's gives written notice to Executive prior to December 31, 2000.) This Agreement will apply to any Change in Control that occurs during the term of this Agreement. 3. Eligibility for Benefits. Except as provided in section 3.1, if Executive is a full-time employee of Luby's on the date a Change In Control occurs, Executive shall be entitled to the benefits provided under section 4. following the occurrence of either of the following events: (a) Executive's employment is involuntarily terminated by Luby's during the 24-month period following the Change In Control. (b) Executive terminates employment with Luby's for Good Reason during the 24-month period following the Change In Control; provided that the period in which Luby's could correct the Good Reason has expired. 3.1 Disqualification from Benefits. Notwithstanding the provisions of section 3., Executive shall not be eligible for any benefits under this Agreement under any of the following circumstances: (a) Luby's terminates Executive's employment due to Discharge for Cause. (b) Executive's employment with Luby's terminates due to Disability or Executive's death. (c) Executive voluntarily terminates employment without Good Reason. For purposes of this Agreement, a voluntary termination of employment includes any termination that qualifies as a form of "retirement" under any employee pension benefit plan maintained by Luby's that covers Executive; provided that Good Reason does not exist at the time of such retirement. (d) Executive's employment is terminated pursuant to any policy of Luby's that requires or permits mandatory retirement of Executive upon attainment of a specified age and that complies with applicable laws and regulations. If this section 3.1 applies, Executive shall be subject to the normal policies of Luby's regarding such events and shall be eligible for only such compensation and benefits as would apply if this Agreement did not exist. 3.2 Anticipation of Change In Control. If (i) Executive's employment is involuntarily terminated by Luby's, or Executive terminates such employment with Luby's for Good Reason, on or after the date on which a public announcement is made by Luby's of its intention to participate in a transaction which would constitute a Change In Control, (ii) Executive would be eligible under section 3. if the Change In Control had already occurred, (iii) section 3.1 does not apply, and (iv) the Change In Control actually occurs, then Executive's employment shall be deemed solely for purposes of this Agreement to have terminated under section 3. on the date the Change In Control occurred and Executive shall be entitled to the benefits provided under section 4. 4. Benefits. If Executive is eligible under section 3. and Executive promptly executes and delivers to the Company a waiver, release, and separation agreement tendered by the Company, which release the Company, its officers, directors, stockholders, employees, agents, assigns, subsidiaries and affiliates from all claims that arise out of or relate in any way to the Executive's employment or termination of employment with the Company, including claims under anti-discrimination laws (except that claims for vested wages, or vested benefits shall not be waived), Executive will receive the benefits provided under section 4.1 through section 4.5. 4.1 Severance Payment. Within five business days after Executive's termination of employment under section 3. occurs, Luby's will pay to Executive a lump sum equal to two times the sum of the amounts determined under subsections (a) and (b): (a) Executive's annual base salary immediately prior to the Change In Control. (b) (i) If Executive has been employed by the Company for less than one year as of the date termination of employment occurs, as determined under section 3., the amount added to the amount in section 4.1(a) shall be the short-term target cash bonus for the year in which the termination occurs; and (ii) If the Executive has been employed by the Company for more than one year as of the date termination of employment occurs, as determined under section 3., the amount added to the amount in section 4.1(a) shall be the average of (x) the actual short term cash bonus received by the Executive during the preceding fiscal year and (y) the short-term cash target bonus for the year in which the termination occurs. The payment under this section 4.1 shall also include amounts for any accrued but unpaid salary and any accrued but unused vacation under Luby's policies which is outstanding on the date Executive's employment terminates. 4.2 Stock Options and Restricted Stock. All stock options granted to Executive which are outstanding on the date of Executive's termination of employment under section 3. shall become vested, and all restrictions on restricted shares of Luby's stock granted to Executive shall lapse on that date. All of Executive's outstanding stock options shall be exercisable, subject to earlier expiration pursuant to the terms of the individual option agreements, during the two year period following the termination of Executive's employment. 4.3 Continuation of Welfare Benefits. During the 24 month period following Executive's termination of employment under section 3., Executive will be eligible for continuation of coverage for Executive and Executive's eligible dependents under all life insurance, disability, accident and health insurance coverage in effect at the time Executive's employment terminated, subject to the following: (a) Such coverage shall be provided under the same terms and conditions as apply to similarly situated active employees of Luby's during such period. Executive shall pay to Luby's the contribution, if any, required to be paid for such coverage by similarly situated active employees of Luby's during such period. (b) If a group insurance carrier refuses to provide the coverage described in this section 4.3 under its contract issued to Luby's, or if Luby's reasonably determines that the coverage required under this section 4.3 would cause a welfare plan sponsored by Luby's to violate any provision of the Code prohibiting discrimination in favor of highly compensated employees or key employees, Luby's will use its best efforts to obtain for Executive an individual insurance policy providing comparable coverage. However, if Luby's determines in good faith that comparable coverage cannot be obtained for less than two times the premium or premium equivalent for such coverage under Luby's welfare plan or plans, Luby's sole obligation under this section 4.3 with respect to that coverage will be limited to paying to Executive a monthly amount equal to two times the monthly premium or premium equivalent for that coverage under Luby's plans. (c) Benefits provided to Executive or Executive's dependents under this section will be secondary to any comparable benefits provided by another employer to the extent permitted by applicable law. 4.4 Retirement Benefits. Within five business days after Executive's employment terminates under section 3. (or as soon thereafter as the amount payable under this section can reasonably be determined), Luby's will pay Executive a lump sum equal to the sum of the following amounts: (a) Retirement Plans. The present value of the additional benefit to which Executive would be entitled under the qualified defined benefit pension plan and non-qualified supplemental executive retirement plan, if any, that covered Executive on the date the termination of employment occurred, determined by assuming that Executive's employment had continued for an additional 24 months and that Executive's rate of compensation being recognized by each such plan immediately prior to the termination of employment had continued in effect during such period. The "present value" for purposes of this subsection (a) shall be determined by using the actuarial equivalent factors specified in the qualified defined benefit pension plan for determining lump sum distributions (disregarding any restriction on the size of lump sum distributions allowed). (b) Savings Plans. The sum of the additional contributions (other than pre-tax salary deferral contributions by Executive) that would have been made or credited by Luby's to Executive's accounts under each qualified defined contribution plan and non-qualified supplemental executive savings plan, if any, that covered Executive on the date the termination of employment occurred, determined by assuming that: (1) Executive's employment had continued for an additional 24 months. (2) Executive's rate of compensation being recognized by each plan immediately prior to the termination of employment had continued in effect during such period. (3) In the case of matching contributions, Executive's rate of pre-tax salary deferral contributions in effect immediately prior to the termination of employment had remained in effect throughout such period. (4) In the case of discretionary contributions by Luby's, Luby's continued to make such contributions during such period at the rate that applied to the most recent plan year that ended prior to the termination of employment. 4.5 Limitation on Payments. In the event that the severance and other benefits provided for in this Agreement or otherwise payable to the Executive (i) constitute "parachute payments" within the meaning of Section 280G (as it may be amended or replaced) of the Code and (ii) but for this section 4.5, would be subject to the excise tax imposed by Section 4999 (as it may be amended or replaced) of the Code (the "Excise Tax"), then the Executive's severance benefits hereunder section 3. shall be either: (a) delivered in full, or (b) delivered as to such lesser extent which would result in no portion of such severance benefits being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by the Executive on an after-tax basis, of the greatest amount of severance benefits, notwithstanding that all or some portion of such severance benefits may be taxable under the Excise Tax. Unless Luby's and the Executive otherwise agree in writing, any determination required under this section 4.5 shall be made in writing in good faith by the accounting firm serving as Luby's independent public accountants immediately prior to the Change of Control (the "Accountants"). In the event of a reduction in benefits hereunder, the Executive shall be given the choice of which benefits to reduce. For purposes of making the calculations required by this section 4.5, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of the Code. Luby's and the Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this section. Luby's shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this section 4.5. 4.6 No Offsets. Executive shall be under no obligation to seek other employment or otherwise mitigate the amounts payable by Luby's under section 4. There will be no offset against the amounts payable under section 4. on account of any compensation or earnings from any subsequent employment or self-employment of Executive, except as provided in section 4.3(c). Luby's obligations to make the payments provided for this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which Luby's may have against Executive or others, unless Executive has given written consent to such as set-off or is subject to a final judgment in favor of Luby's. 5. Source of Payments. Except as otherwise provided in this section, all payments provided in section 4. shall be paid from the general funds of Luby's, and Luby's shall not be required to establish a special or separate fund or otherwise segregate assets to assure payments will be made under this Agreement. (a) On or before the date a Change In Control occurs (or as soon as reasonably possible following a Change In Control for which Luby's has no advance warning), Luby's will establish a trust in the form generally known as a "rabbi trust", and will immediately deposit into that trust an amount equal to the total of the estimated amounts to which Executive would become entitled under sections 4.1, 4.3 and 4.4, in the event the requirements of section 3. are satisfied. (1) The trustee shall be a national bank or trust company selected by Luby's and reasonably acceptable to Executive. (2) The amount to be deposited in the trust shall be determined by an actuary employed by a nationally recognized actuarial and benefits consulting firm selected by Luby's which shall be reasonably acceptable to Executive. (b) In the event Executive satisfies the requirements of section 3. and becomes entitled to payments under section 4., those payments shall be made from the assets of the trust to the extent those assets are sufficient. Luby's obligations under this Agreement shall be reduced to the extent of the payments made from the trust. (c) If Executive does not become eligible under section 3. within 24 months after the date a Change In Control occurs, or if an event described in section 3.1 occurs that makes Executive ineligible for benefits, the trust shall terminate and its assets shall be returned to Luby's. Notwithstanding the foregoing provisions of this section, it is expressly understood and agreed that Executive (and any dependent, beneficiary or estate of Executive who becomes entitled to payments hereunder) shall at all times be an unsecured creditor of Luby's, and shall have no rights to assets of Luby's (including assets held in any trust) that are superior to other unsecured creditors of Luby's. Nothing in this Agreement shall be interpreted as creating a constructive trust over any assets of Luby's or creating a fiduciary relationship between Luby's and Executive or any other person. 6. Enforcement. The rights and obligations created under this Agreement shall be enforced as follows: (a) Arbitration. In the event of any dispute or difference between Luby's and Executive with respect to the subject matter or interpretation of this Agreement or the enforcement of rights hereunder, such dispute or difference shall be submitted to arbitration. The arbitrator or arbitrators shall be selected by agreement of the parties or, if they cannot agree on an arbitrator or arbitrators within 30 days after the date one party notified the other of the desire to have the question settled by arbitration, then the arbitrator or arbitrators shall be selected by the American Arbitration Association (the "AAA") in Dallas, Texas upon the application of either party. The determination reached in such arbitration shall be final and binding on both parties without any right of appeal or further dispute. Execution of the determination by such arbitrator may be sought in any court of competent jurisdiction. In any such arbitration or subsequent proceeding, Executive shall be entitled to seek both legal and equitable relief and remedies, including but not limited to specific performance of Luby's obligations under this Agreement. The arbitrators shall not be bound by judicial formalities and may abstain from following the strict rules of evidence and shall interpret this Agreement as an honorable engagement and not merely as a legal obligation. Unless otherwise agreed by the parties, any such arbitration shall take place in San Antonio, Texas, and shall be conducted in accordance with the Rules of the AAA. (b) Costs and Expenses. Luby's will pay all fees of the arbitrators, whether the arbitration is initiated by Luby's or Executive. In addition, Luby's will pay, upon written demand from Executive, all legal fees and expenses which Executive may reasonably incur in connection with the arbitration or subsequent judicial proceedings to enforce this Agreement, plus interest on any award at the applicable federal rate, under Code Section 7872(f)(2); provided, however, that this sentence shall not apply unless Executive recovers through such action some amount or benefit (regardless of size or value) in excess of the amount Luby's had offered prior to commencement of the action. (c) Survival. The obligations under this section 6. shall survive the termination of this Agreement for any reason, whether such termination is by Luby's, by Executive, upon the expiration of this Agreement, or otherwise. 7. Successor Employer. If Executive becomes an employee of another entity as a result of a transaction in which Luby's consolidates or merges into or with such entity or transfers all or substantially all of its assets to such entity (whether or not the transaction constitutes a Change In Control), the term "Luby's" in this Agreement shall mean such other entity and this Agreement shall continue in full force and effect. If Executive becomes an employee of a wholly- owned subsidiary of Luby's (or of a successor entity described in the previous sentence), Executive shall be deemed for purposes of this Agreement to continue as an employee of Luby's (or the successor entity) while employed by such subsidiary. 8. Miscellaneous Provisions. 8.1 Amendment. This Agreement may be amended or modified only in writing, signed by both parties. 8.2 Tax Withholding. Luby's may withhold from any payments made under this Agreement all federal, state or other taxes which it determines to be required pursuant to any law or governmental regulation or ruling. 8.3 Death of Executive Following Entitlement to Payments. If Executive dies after becoming eligible under section 3., but before all payments provided under section 4. have been made, the remaining payments shall be made to the beneficiary designated by Executive on the signature page of this Agreement or in the most recent written instrument filed with Luby's prior to Executive's death which specifically refers to this Agreement. Executive may revoke such a beneficiary designation at any time, without consent of any beneficiary, and file a new designation. If no effective beneficiary designation is on file with Luby's at the time of Executive's death, the remaining payments shall be paid to Executive's estate. 8.4 Entire Agreement. This Agreement contains the entire understanding of the parties with regard to all matters contained herein. There are no other agreements, conditions or representations, oral or written, expressed or implied, with regard thereto. This Agreement supersedes all prior agreements relating to separation payments following a Change In Control between Executive and Luby's or any predecessor to Luby's. However, this Agreement shall not operate to reduce any benefit or compensation to which Executive is entitled under any plan, policy or program maintained by Luby's that does not specifically relate to payments following a Change In Control, including but not limited to benefits or compensation under incentive plans, qualified retirement plans, or nonqualified supplemental or excess pension or savings plans. 8.5 Assignment. Luby's may in its sole discretion assign this Agreement to any entity which succeeds to the business of Luby's through merger, consolidation, a sale of all or substantially all of the assets of Luby's, or any similar transaction. Executive acknowledges that the services to be rendered by Executive are unique and personal. Accordingly, Executive may not assign any of Executive's rights or obligations under this Agreement. 8.6 Successors. Subject to section 8.5, the provisions of this Agreement shall be binding upon the parties hereto, upon any successor to or assign of Luby's, and upon Executive's heirs and the personal representative of Executive or Executive's estate. 8.7 No Attachment. Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge or hypothecation or to execution, attachment, levy or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void and of no effect. 8.8 Notices. Any notice required to be given under this Agreement shall be in writing and shall be delivered either in person or by certified or registered mail, return receipt requested. Any notice by mail shall be addressed as follows: If to Luby's, to: Luby's, Inc. c/o Chairman of the Executive Committee 2211 Northeast Loop 410 San Antonio, Texas 78217-4673 Telephone: (210) 654-9000 Facsimile: (210) 654-3211 with a copy to: Cauthorn Hale Hornberger Fuller Sheehan & Becker Incorporated 700 N. St. Mary's Street, Suite 620 San Antonio, Texas 78205 Attention: James R. Hale or Drew R. Fuller, Jr. Telephone: (210) 271-1700 Facsimile: (210) 271-1730 If to Executive, to: _______________________ _______________________ _______________________ with a copy to: _______________________ _______________________ _______________________ or to such other addresses as either party may designate in writing to the other party from time to time. 8.9 Waiver of Breach. Any waiver by either party of compliance with any provision of this Agreement by the other party shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by such party of a provision of this Agreement, unless the waiver specifically states that it is a continuing waiver or that it applies to other provisions. No waiver by Luby's shall be valid unless in writing and signed by the chief executive officer of Luby's. No waiver by Executive shall be valid unless in writing and signed by Executive. 8.10 Severability. If any one or more of the provisions (or portions thereof) of this Agreement shall for any reason be held by a final determination of a court of competent jurisdiction to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision (or portions of the provisions) of this Agreement, and the invalid, illegal or unenforceable provisions shall be deemed replaced by a provision that is valid, legal and enforceable and that comes closest to expressing the intention of the parties hereto. 8.11 Governing Law. This Agreement shall be interpreted and enforced in accordance with the laws of the State of Texas, without giving effect to conflict of law principles. 8.12 Headings. The headings of sections herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement. 8.13 Counterparts. This Agreement may be executed by either of the parties hereto in counterparts, each of which shall be deemed to be an original, but all such counterparts shall constitute a single instrument. IN WITNESS WHEREOF, Luby's has caused this Agreement to be executed by its duly authorized officer, and Executive has executed this Agreement, all effective as of the date first above written. LUBY'S, INC. a Delaware corporation By: ________________________ Its: ________________________ Name: ________________________ EXECUTIVE By: ________________________ Its: ________________________ Name: ________________________ I hereby designate _____________________ as the beneficiary of all payments due to me under section 4. of this Agreement for purposes of section 8.3 of this Agreement. ________________________ Executive Date: ___________________ EX-11 4 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS Exhibit 11 COMPUTATION OF PER SHARE EARNINGS The following is a computation of the weighted average number of shares outstanding which is used in the computation of per share earnings for Luby's, Inc. for the three and six months ended February 28, 1999 and 1998. Three months ended February 28, 1999: 22,626,065 x shares outstanding for 31 days 701,408,015 22,420,375 x shares outstanding for 59 days 1,322,802,125 _____________ 2,024,210,140 Divided by number of days in the period 90 _____________ 22,491,224 Six months ended February 28, 1999: 23,270,675 x shares outstanding for 52 days 1,210,075,100 23,163,097 x shares outstanding for 9 days 208,467,873 22,870,798 x shares outstanding for 30 days 686,123,940 22,626,065 x shares outstanding for 31 days 701,408,015 22,420,375 x shares outstanding for 59 days 1,322,802,125 _____________ 4,128,877,053 Divided by number of days in the period 181 _____________ 22,811,475 Three months ended February 28, 1998: 23,270,675 x shares outstanding for 90 days 2,094,360,750 Divided by number of days in the period 90 _____________ 23,270,675 Six months ended February 28, 1998: 23,266,374 x shares outstanding for 18 days 418,794,732 23,266,921 x shares outstanding for 17 days 395,537,657 23,268,328 x shares outstanding for 9 days 209,414,952 23,270,675 x shares outstanding for 137 days 3,188,082,475 _____________ 4,211,829,816 Divided by number of days in the period 181 _____________ 23,269,778 EX-27 5 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS AUG-31-1999 Feb-28-1999 6,776 0 702 0 4,956 17,941 463,587 163,982 341,393 40,157 0 0 0 8,769 187,632 341,393 249,479 249,479 138,475 138,475 77,872 0 2,446 19,832 6,941 12,891 0 0 0 12,891 0.57 0.57 Other stockholders' equity amount is less cost of treasury stock of $105,804.
EX-99 6 CORP GOVERNANCE GUIDELINES Exhibit 99(a) Luby's Cafeterias, Inc. Corporate Governance Guidelines As Amended January 7, 1999 ROLE AND RESPONSIBILITIES OF BOARD 1. Ethical Business Environment The Board believes that the long-term success of Luby's is dependent on the maintenance of an ethical business environment that focuses on adherence to both the letter and spirit of the law and regulations and the highest standards of corporate citizenship. 2. Oversight The Board acknowledges that Luby's has many different stakeholders. However, the paramount duty of Luby's Board and management is to the shareholders; the interests of other stakeholders are relevant as a derivative of the duty to shareholders. The Board is the ultimate decision making body except for those matters reserved by law to the shareholders. The management team approved by the Board is charged by the Board with the day-to-day management of Luby's affairs. The Board monitors corporate performance against business plans on a regular basis to evaluate whether the business is being properly managed. 3. Senior Management The Board selects and regularly evaluates the CEO. The appointment and regular evaluation of a Chief Operating Officer, if any, will be made by the Board in conjunction with the CEO. The Board determines the CEO's compensation and reviews and approves the compensation of senior management. It periodically reviews succession planning and management development with the CEO. 4. Strategy The Board ensures that a strategic planning process is in place, is used, and produces sound choices. It reviews and approves major corporate strategies and monitors the implementation of current strategic initiatives to assess whether they are on schedule, on budget, and producing effective results. 5. Material Transactions The Board reviews and approves material transactions not in the ordinary course of business including significant capital allocations and expenditures. 6. Internal Controls, Reporting, and Compliance The Board satisfies itself as to the adequacy of internal controls, risk management, financial reporting, and compliance with laws and regulations. 7. Corporate Governance The Board nominates directors to serve on the Board and ensures that the structure and practices of the Board provide for sound corporate governance. COMPOSITION OF THE BOARD 8. Independent Director An "Independent Director' is a person who is not a current and, generally, not a former member of management and has no relationship or activity that could affect or appear to affect his or her ability to exercise independent judgment as a director. The Governance Committee reviews the circumstances in each case and determines when a Board member or candidate is not independent. The Board will seek to maintain a substantial majority of independent directors. Various regulatory agencies have adopted differing concepts of independence (e.g. SEC, NYSE, IRS). These external definitions are not part of these Guidelines and should be consulted only for the specific purposes for which they were intended. 9. Number of Directors Luby's Bylaws provide for the Board to fix the number of directors at not less than nine or more than fifteen. When the current number is less than fifteen, the Board may adjust the number upward to accommodate an outstanding potential candidate or during periods of transition when new directors may overlap with retiring directors. 10. Membership Criteria The Governance Committee is responsible for recommending to the Board the appropriate skills and characteristics for prospective Board candidates in the context of the current Board makeup and the perceived needs of Luby's at that point in time. This assessment should include issues of general business experience, specialized knowledge, functional skills, other Board and time commitments, personal characteristics, age, independence, and diversity. 11. Screening, Selection, and Invitation to Serve Luby's Bylaws provide that director candidates standing for election by the shareholders shall be nominated by the Board or by a shareholder as provided in the Bylaws. Vacancies in the Board shall be filled by selection of the current directors. The Governance Committee is responsible for screening potential candidates with input from all Board members. The COB will coordinate the extension of an invitation to Board membership. 12. Directors Who Change Principal Job Responsibility Directors should as a matter of course tender their resignation from the Board upon retirement, a change of employer, or other significant change in their professional roles and responsibilities. The Board, through its Governance Committee, should then consider whether it is in the best interest of Luby's to accept this resignation or to ask the director to continue to serve. 13. Retirement Age and Term Limits A director shall not be eligible to stand for election or reelection to the Board after reaching the age of 70 years. Except for incumbent directors as of March 19, 1998, who were then 70 years of age or older, a director will offer his or her resignation from the Board upon reaching the age of 70 years effective at the next annual meeting of shareholders. The Board does not believe that there should be term limits for directors. Rather, the Board believes that the Governance Committee should consider each Director's contribution to the Board every three years, prior to his of her nomination for reelection. 14. Selection of CEO and COB There is no policy as to whether the offices of the CEO and COB should be separate and, if separate, whether the COB should be an independent director. The Board remains free to make these choices in any way it deems best at the time. 15. Lead Director If the offices of the CEO and COB are not separate or if the COB is not considered by the Board to be an independent director, the independent directors will elect one of their number to serve as Lead Director. The Lead Director will chair meetings of independent directors, will facilitate communications between other members of the Board and the CEO and COB, and will assume other duties which the independent directors as a whole may designate from time to time. Directors are always free to communicate directly with the CEO and COB. 16. Limitations on Tenure as Independent COB or Lead Director An Independent COB or Lead Director serves at the pleasure of the Board. It is the sense of the Board that a director's service as Independent COB or Lead Director should generally not extend beyond the annual meeting of shareholders after three consecutive years of service. FUNCTIONING OF THE BOARD 17. Board Meetings Article III of Luby's Bylaws spells out required procedures for calling and conducting meetings of the Board in order to conduct corporate business. The Board sets the number and schedule of Regular Board meetings for the entire year at the annual meeting of the Board in January. Currently the Board has five Regular Meetings each year. The COB , the CEO, or a majority of directors may call Special Meetings of the Board as necessary. 18. Board Agendas The CEO in conjunction with the COB or Lead Director will establish and publish an agenda for each meeting of the Board. Board members may suggest items for inclusion on the agenda and, subject to the authority of the COB and the will of the majority, may raise for discussion at any Board meeting subjects not on the agenda. 19. Board Materials Distributed in Advance Information and data that are important to the Board's understanding of the business of the meeting and presentations on special subjects should, when practical, be distributed at least one week in advance of the meeting to permit directors to prepare for the meeting. This will conserve Board meeting time and allow discussion to focus on questions and analysis of these materials. Management will try to keep materials as brief as possible while still providing the desired information. Lengthy reports or documents, when practical, should be accompanied by executive summaries. Directors are encouraged to comment on the adequacy and effectiveness of materials provided. 20. Attendance of Nondirectors at Board Meetings The CEO may invite members of senior management who are not Board members to regularly participate in portions of the Board meeting. Further, the Board encourages the participation at Board meetings of managers who can provide additional insight into items being discussed or who have substantial future potential in the Company and who should be given exposure to the Board. Portions of all Board meetings will be reserved for private deliberation among Board members. 21. Meetings of Independent Directors Independent directors will, at least twice a year, meet privately at the request of the COB (or Lead Director) or upon the Board's own motion. These meetings may include a discussion with the CEO. FUNCTIONING OF COMMITTEES OF THE BOARD 22. Board Committees The current standing committees of the Board are: Executive, Audit, ompensation, and Governance. From time to time the Board may create a new or disband an existing Committee depending on particular interests of the Board, issues facing the Company, or legal requirements. 23. Committee Charters Each Committee should, with leadership from its Chair, develop and maintain a charter describing its duties and responsibilities. Charters developed or amended will be reviewed by the Governance Committee and approved by the full Board. 24. Assignment and Rotation of Committee Membership The Governance Committee in consultation with the COB or Lead Director, the CEO, and individual Board members, will assign Board members and chairs to various Committees, subject to Board approval. Assignments should comply with various applicable regulations (e.g. SEC, NYSE, IRS) and with the desires of individual members insofar as possible. Consideration should be given to rotating committee membership and chairs from time to time generally on a three to five year schedule. 25. Scheduling of Committee Meetings and Committee Agendas The Chair of each Committee, in consultation with its members, the COB, and management, determines the frequency, length, and agenda of each meeting of the Committee. 26. Committee Reports to the Board The Chair of each Committee will report to the full Board as soon as practical following a Committee meeting all matters discussed, decisions reached, and recommendations made for Board approval. The Chair will have an opportunity to comment on Committee activities at each Board meeting. Minutes of all Committee meetings will be distributed to all Board members. MISCELLANEOUS 27. Board Access to Management Board members have complete access to Luby's management. Board members should use judgment to insure that this contact is not distracting to business operations or that it could be perceived as infringing on the responsibilities of the CEO. Correspondence from a Board member to a member of management should be copied to the CEO and COB. 28. Communications with the Public and Various Constituencies The CEO is responsible for establishing effective communications with Luby's various constituencies, i.e. press, shareholders, potential investors, customers, communities, suppliers, creditors, and corporate partners. Management speaks for Luby's, and Board members should communicate with these constituencies only with the consent and generally at the request of management. 29. Assessing Board Performance Approximately annually, the COB will survey Board members on their perceptions of the performance and effectiveness of the Board and solicit suggestions for improving its performance. The objective is to increase the effectiveness of the Board and not to evaluate individual Board members. The results of this survey will be reported by the COB to the full Board. 30. Board Compensation Luby's policy is to compensate nonmanagement directors competitively relative to companies of comparable size. The Governance Committee will annually recommend to the full Board for its consideration director compensation for the next year. 31. Stock Ownership Guidelines for Directors The Board believes that each Luby's director should accumulate a meaningful investment in Luby's stock and has established guidelines for share ownership. Currently, directors are expected to accumulate, over time, common shares with a market value of at least $100,000. Luby's has established a tax deferred Nonemployee Director Phantom Stock Plan. Beginning in 1999 and until the ownership guidelines are met, the nonemployee director will receive at least $10,000 of the annual retainer in phantom stock units to be redeemed for a like number of common shares when he or she ceases for any reason to be a director. Once ownership guidelines have been met, the director will not be obligated to acquire additional phantom stock units or common shares. 32. Review of Guidelines The Governance Committee is responsible for periodic review of these Guidelines, as well as consideration of other corporate governance issues that may, from time to time, merit consideration of the entire Board. 33. Intent These Guidelines are intended to be a statement of general principles to guide the Board in formulating corporate policy. The Guidelines are not rules or bylaws. They may be amended from time to time by the Board. In addition, the Board may on occasion depart from the Guidelines when circumstances indicate that a departure is in the best interest of the Company and its shareholders. -----END PRIVACY-ENHANCED MESSAGE-----