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)
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
Part I - FINANCIAL INFORMATION (continued)
Item 1. Financial Statements (continued).
<TABLE>
LUBY'S, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the Six Months Ended February 28, 1999 and 1998
(UNAUDITED)
<CAPTION>
Total
Common Stock Paid-in Retained Shareholders'
Issued Treasury Capital Earnings Equity
______ ________ _______ ________ ____________
(Thousands of dollars)
<S> <C> <C> <C> <C> <C>
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.
</TABLE>
<PAGE>
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.
<PAGE>
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.
<PAGE>
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-
<PAGE>
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.
<PAGE>
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
<PAGE>
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.
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
<PAGE>
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
<PAGE>
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
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
<PAGE>
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
<PAGE>
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: ___________________
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
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1999
<PERIOD-END> Feb-28-1999
<CASH> 6,776
<SECURITIES> 0
<RECEIVABLES> 702
<ALLOWANCES> 0
<INVENTORY> 4,956
<CURRENT-ASSETS> 17,941
<PP&E> 463,587
<DEPRECIATION> 163,982
<TOTAL-ASSETS> 341,393
<CURRENT-LIABILITIES> 40,157
<BONDS> 0
0
0
<COMMON> 8,769
<OTHER-SE> 187,632<F1>
<TOTAL-LIABILITY-AND-EQUITY> 341,393
<SALES> 249,479
<TOTAL-REVENUES> 249,479
<CGS> 138,475
<TOTAL-COSTS> 138,475
<OTHER-EXPENSES> 77,872
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,446
<INCOME-PRETAX> 19,832
<INCOME-TAX> 6,941
<INCOME-CONTINUING> 12,891
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,891
<EPS-PRIMARY> 0.57
<EPS-DILUTED> 0.57
<FN>
<F1>Other stockholders' equity amount is less cost of treasury stock of
$105,804.
</FN>
</TABLE>
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.
