Deferred Compensation Agreement between LS Management, Inc. and Jamie B. Coulter

 EXHIBIT 10.24 DEFERRED COMPENSATION AGREEMENT THIS AGREEMENT is made this October 4, 2002, by and between LS Management, Inc. (the "Company"), a Delaware corporation and Jamie B. Coulter ("Participant"). WHEREAS, the Participant has been issued stock options under the 1992 Incentive and Nonqualified Stock Option Plan of Lone Star Steakhouse & Saloon, Inc., as amended; WHEREAS, Participant intends to exercise these options on or before their respective expiration dates; WHEREAS, compensation earned with respect to certain of Participant's options may fail to qualify as "performance-based" compensation within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"); WHEREAS, the Company has implemented the Lone Star Steakhouse & Saloon, Inc. Stock Option Deferred Compensation Plan (the "Plan"), which terms and conditions are hereby incorporated by reference herein and made a part hereof, in order that compensation paid to the Participant will be deductible under Section 162 of the Code; WHEREAS, the Participant has agreed, at the request of the Company, to defer receipt of the income that would otherwise be recognized upon the exercise of certain of his options, and has further agreed that such deferral shall be subject to the terms and conditions of the Plan; NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements herein contained and as an inducement to Participant to continue as an employee of the Company, the parties hereto hereby agree as follows: 1. DEFERRAL OF COMPENSATION. The Participant has been granted a stock option to purchase 300,000 shares of Lone Star Steakhouse and Saloon, Inc. ("Lone Star") stock that will expire on 2/3/03. Participant intends to exercise the option on or before the expiration date by tendering shares of Lone Star stock previously acquired by him in satisfaction of the exercise price, and hereby irrevocably elects to defer the receipt of shares resulting from the exercise of the stock option in excess of the number of shares used to exercise the option (the "excess shares"). Upon exercise, a number of shares equal to the number of shares used to exercise the option to the Participant in a transaction intended to qualify under section 1036 of the Code shall be returned to the Participant. The Company shall accept the deferral of the excess shares and will cause Lone Star to transfer such shares to the Trustee of a so-called "rabbi trust" of which Lone Star shall be deemed to be the Grantor, substantially in the form of trust agreement set forth as Exhibit A hereto for the benefit of the Participant. The Trustee, at the request of Participant, may sell or dispose of the shares, but only in a manner which minimizes the potential negative impact on the marketability or price of Lone Star stock. The Trustee will maintain an account balance for the Participant reflecting the amount deferred (initially, the fair market value of the excess shares) as adjusted for any income, gains or losses from Trust investments, which adjusted account balance will be distributed to  Participant pursuant to the terms of this Agreement. Participant shall have the right to determine the investment policy of the Trust, but the Compensation Committee of the Lone Star Board may change such investment policy where the Compensation Committee reasonably determines that such change is in the best interests of the Company. 2. DEFERRAL PERIOD. The deferral period will be from the above date of option exercise until the date that is 30 days after the Participant's termination of service with the Company, or Lone Star or any of its Affiliates (the "Lone Star Group") for any reason. The Company, or its delegate, will provide the Participant periodic statements of the Participant's Deferral Account Balance including any income, gains or losses. 3. REPORTING. The Company, or its delegate, will provide the Participant periodic statements of the Participant's Deferral Account Balance including any income, gains or losses. 4. PAYMENT OF DEFERRED COMPENSATION. Neither the Company nor any member of the Lone Star Group shall have any obligation or liability to deliver any Shares under the Plan unless such delivery would comply with all applicable laws and all applicable requirements of any securities exchange or similar entity. 5. ASSIGNMENT. The Participant's rights under this Agreement may not be assigned, sold, transferred, or otherwise conveyed by him nor is anyone other than him entitled to receive payments under this Agreement. 6. ENTIRE AGREEMENT. This Deferred Compensation Agreement and the Plan, incorporated herein by reference, contain the entire understanding between the Participant and the Company regarding the deferral of compensation by the Participant and the payment of deferred compensation to the Participant by the Company. 7. NOT A CONTRACT OF EMPLOYMENT. The terms and conditions of this agreement and the Plan shall not be deemed to constitute a contract of employment between the Company or any member of the Lone Star Group and the Participant, and the Participant (or Participant's Beneficiary) shall have no rights against the Company or any member of the Lone Star Group except as may otherwise be specifically provided herein. Moreover, nothing in this agreement or Plan shall be deemed to give a Participant the right (i) to be retained in the employ or other service of the Company (or any member of the Lone Star Group) for any specific length of time; (ii) to interfere with the right of the Company (or any member of the Lone Star Group) to discipline or discharge the Participant at any time; (iii) to hold any particular position or responsibility with the Company (or any member of the Lone Star Group); or (iv) to receive any particular compensation from the Company (or any member of the Lone Star Group). 8. INTERPRETATIONS. This Agreement is subject in all respects to the terms of the Plan. In the event that any provision of this Agreement is inconsistent with the terms of the Plan, the terms of the Plan shall govern. Any question of administration or interpretation arising under this Agreement shall be determined by the Compensation Committee of the Board of Directors of Lone Star or their delegates, and such determination shall be final and conclusive upon all parties in interest. 2  9. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, except to the extent superceded by federal law. 10. CAPITALIZED TERMS. Capitalized terms used in this Deferred Compensation Agreement will, unless otherwise indicated, have the meaning given them in the Plan. IN WITNESS WHEREOF, the undersigned have signed this Deferred Compensation Agreement on the day and year first above written. LS Management, Inc. Jamie B. Coulter By /s/ John D. White /s/ Jamie B. Coulter ------------------- ----------------------------- Title: President 3