2003 Finance Charter: LUB


DATED JULY 26, 2001


The Finance and Audit Committee (the "committee") of the Board of Directors
(the "board") of Luby's, Inc. (the "company") is formed by the board to monitor
and evaluate corporate financial plans and performance and to assist the Board
in monitoring (1) the integrity of the financial statements of the company, (2)
the compliance by the company with legal and regulatory requirements and (3) the
independence and performance of the company's internal and external auditors.
The committee shall fully report its actions and findings to the board.

The committee shall have the authority to retain special legal, accounting
or other consultants to advise the committee. The committee may request any
officer or employee of the company or the company's outside counsel or external
auditor to attend a meeting of the committee or to meet with any members of, or
consultants to, the committee.


The duties and responsibilities of the committee will include but are not
limited to the following:


1. Review the annual audited financial statements with management,
including major issues regarding accounting and auditing principles and

2. Review the annual financial statements, evaluate corporate financial
performance, and provide summaries to the board.

3. Review accounting policies and any changes therein in order to assure
their propriety.

4. Review the asset/liability valuation methods used by management. Such
review should include, but not be limited to, a review of reports
concerning non-producing assets, and the adequacy of reserve balances.

5. Review the company's tax status, including the status of tax reserves
and significant tax planning issues.

6. Review legal and such regulatory and tax matters that may have a
material impact on the financial statements, related compliance policies
and programs, and reports received from regulators and provide a summary
to the board.

7. Review an analysis prepared by management and the external auditor of
significant financial reporting issues and judgments made in connection
with the preparation of the company's financial statements.


1. Review the external and internal audit scopes and plans, and the
coordination of internal and external audit efforts to ensure
completeness, reduction of redundant efforts, and the effective use of
audit resources.

2. Review the proposed external audit performance fees and consider the
results of the external auditor's last peer review, litigation status
and disciplinary actions, if any. Provide the board with recommendations
regarding the selection and engagement of external auditors.


3. Review and evaluate external audit reports, including the matters
related to the conduct of the audit which are to be communicated to the
committee under generally accepted auditing standards.

4. Consider and review with management, the director of internal audit and
the external auditor:

a. Significant findings during the year and management's responses

b. Any difficulties encountered in the course of audits, including any
restrictions on the scope of work or access to required

c. Any changes required in the planned scope of the internal audit

d. Internal audit compliance with the Institute of Internal Auditors'
Standards for the Professional Practice of Internal Auditing

5. Consider and review with management, the external auditor, and the
director of internal audit the adequacy of internal controls including
computerized information system controls.

6. Review management's plans for engaging the external auditor to perform
non-audit advisory services during the year, to ensure the independence
of the auditor is protected.

7. Meet with the director of internal audit, the external auditor, and
management in separate executive sessions to discuss any matters that
the committee or these groups believe should be discussed privately with
the committee.

8. Review and approve any recommendation from management to discharge the
external auditor or to reassign or dismiss the director of internal

9. Ensure that the external auditor submits on a periodic basis (but no
less often than annually) a formal written statement delineating all
relationships between the external auditor and the company or any of its
affiliates. Periodically meet with the managing partner having
responsibility for the company's account and, in all cases, meet with
the managing partner when such responsibility passes to another partner.

10. Actively engage in a dialogue with the external auditor with respect to
any disclosed relationships or services that may impact the objectivity
and independence of the external auditor and recommend that the board
take appropriate action in response to the external auditor's report to
satisfy itself of the external auditor's independence.

11. Have a clear understanding with management and the external auditor
that the external auditor for the company is ultimately accountable to
the board and the committee.

12. Review the independence of the internal audit department and the
ability of the department to raise issues to the appropriate level of
authority, including direct access to the chief executive officer.
Ensure that the internal audit function, in addition to its support of
the chief financial officer and chief executive officer, is responsive
to the needs of the committee and ultimately the board of directors;
direct access between the board and the committee and the director of
internal audit must be preserved by the committee and recognized by


1. Review, analyze, and recommend for approval to the board, management's
policies and plans regarding:

a. Financial management, including but not limited to major
acquisitions, investments and capital expenditures; and

b. Business risk management, including credit risks, control risks,
asset/liability management risks (such as non-producing assets),
regulatory risks (such as tax exposure items), operations risks and
management risks.


2. Inquire of management, the director of internal audit, and the external
auditors about other significant financial risks and exposures.

3. Review annually the adequacy and costs of the company's insurance.

4. At least semi-annually review all significant litigation and claims
against the company that might negatively impact financial results.


1. Review management's financial plans, projections and forecasts and
report (with appropriate recommendations) to the board of directors.

2. Review and evaluate corporate financial performance on a periodic basis,
and ensure that management provides appropriately definitive quarterly
summaries to the board.

3. Review proposed operating and capital budgets, and propose such approval
actions as are appropriate to the full board.

4. At least semi-annually review the company's balance sheet and report
findings to the board.

5. Review and approve the planned issuance of debt and equity and the
repurchase of company equity.

6. Review and approve adequacy and significant changes in the company's
bank credit agreement and report such findings and actions to the board.

7. Review plans to acquire or dispose of assets that in aggregate exceed
$5,000,000 in any fiscal year or any individual assets that exceed


1. At least annually, review, assess the adequacy of, and update the
committee and Internal Audit charters.

2. Periodically, but no less frequently than annually, review and update
the committee Addendum.

3. At least biennially, perform a self-assessment of committee performance.


1. With the support of management and the external auditor, prepare the
financial report required by the rules of the Securities and Exchange
Commission to be included in the company's annual proxy statement.

2. Review the periodic filings required under the rules of the Securities
and Exchange Commission with management and the external auditor prior
to filing.

While the committee has the responsibilities and powers set forth in this
charter, it is not the duty of the committee to plan or conduct audits or to
determine that the company's financial statements are complete and accurate and
are in accordance with generally accepted accounting principles. This is the
responsibility of management and the external auditor. Nor is it the duty of the
committee to conduct investigations, to resolve disagreements, if any, between
management and the external auditor or to assure compliance with laws and
regulations and the company's Policy Guide on Standards of Conduct. It is
management's responsibility to ensure that appropriate reports are made to the



The committee shall continue in existence on a permanent basis until
dissolved by the board.


The chair and the vice chair of the committee shall be appointed by the
board with due consideration given to nominee(s) presented by the Executive


The membership of the committee shall consist of at least three (3)
directors appointed by the board of directors on consideration of nominee(s)
presented by the Executive Committee, and the officers shall consist of a chair
and vice chair. The members of the committee shall meet the independence and
experience requirements of the New York Stock Exchange. Members of the committee
shall be independent of management and free of any relationship that, in the
opinion of the board, would interfere with the exercise of their independence
from management and the company. In addition, all committee members shall be
financially literate, and at least one member shall have accounting or related
financial management expertise.


The committee shall meet at such times and shall conduct such business as
is more specifically described in the attached addendum. The chief financial
officer/treasurer will coordinate meetings between the committee and the
external auditor and director of internal audit. However, the committee or any
member of the committee has the right to contact the external auditor or the
director of internal audit directly. The external auditor or director of
internal audit has the right to contact the committee or any member of the
committee if that should be necessary. Agendas and advance materials will be
provided to the committee members at least one week in advance of meetings.
Special meetings may be held as called by the chair.

Meetings are to be attended by members of the committee, or a substitute
approved by the chair of the committee, the appointed recorder, the chief
financial officer/treasurer, and any guest whose attendance is approved in
advance by the chair.

The chief financial officer/treasurer will be the primary point of contact
and provide administrative support to the committee.


The board chair in collaboration with the chair of the committee shall
designate a person to record the proceedings of the committee's meetings and to
distribute such record as directed by the chair. The records of the committee
meetings shall be confidential, but shall be distributed to all board members,
and retained as directed by the board chair for a period of at least ten years.

The chair may authorize the creation and distribution of reports or
position papers as appropriate.


This charter was reviewed by the committee and approved by the board on
July 26, 2001, in order to govern the subsequent operation of the committee.