RETENTION AGREEMENT

1.1.7.                     monthly payments for a period equal to the Severance Period, each equal to one-twelfth of Executive’s annual base rate of salary (as in effect immediately prior to his cessation or, if that cessation is due to a resignation for Good Reason described in Section 1.2.3(ii), then at the rate in effect immediately prior to such reduction).

Notwithstanding the foregoing, no amount will be paid or benefit or right provided under this Agreement unless Executive executes and delivers to the Company, in a form satisfactory to the Company, a release substantially identical to that attached hereto as Exhibit A in a manner consistent with the requirements of the Older Workers Benefit Protection Act and all other applicable laws (the “Release”). The severance benefits described in this Section 1.1 will be paid (or, in the case of the benefits described in
Sections 1.1.4 – 1.1.7, will begin to be paid or provided) as soon as administratively practicable following the date the Release becomes irrevocable. The payments, benefits and rights described in this Section 1.1 will be offset by severance benefits due under any employment agreement, severance plan or similar arrangement maintained by the Company.

1.2.                              Definitions. For purposes of this Agreement:

1.2.1.                     “Cause” means, with respect to Executive: (i) conviction of, or the entry of a plea of guilty or no contest to, a felony or any other conduct that causes the Company or its affiliates public disgrace or disrepute, (ii) gross negligence or willful misconduct with respect to the Company or any of its affiliates (including, without limitation fraud, embezzlement, theft or proven dishonesty in the course of employment); (iii) alcohol abuse or use of controlled drugs other than in accordance with a physician’s prescription; (iv) refusal, failure or inability to substantially perform the duties of his position, which failure, refusal or inability (if curable) is not cured within ten days after delivery of notice thereof; (v) material breach of any agreement with, policy of or duty owed to the Company or any of its affiliates, which breach (if curable) is not cured within ten days after delivery of notice thereof; or (vi) poor work performance. Notwithstanding the foregoing, if Executive and the Company (or any of its affiliates) have entered into an employment, consulting or other similar agreement that specifically defines “cause” or any substantially similar concept, “Cause” will have the meaning of such term as defined in that agreement. For avoidance of doubt, a cessation of employment due to (a) a mental or physical condition entitling Executive to benefits under any Company-maintained or provided disability plan or policy or (b) death, will not constitute a termination by the Company “without Cause.”

1.2.2.                     “Change in Control” means the first occurrence of any of the following after the Effective Date (whether in one transaction or a series of related transactions): (i) the sale, transfer, assignment or other disposition (including by merger or consolidation, but excluding any sales by stockholders made as part of an underwritten public offering of common stock) by stockholders of the Company of more than 50% of the voting power represented by the then outstanding capital stock of the Company, (ii) the sale of substantially all the assets of the Company (other than a transfer of financial assets made in the ordinary course of business for the purpose of securitization), or (iii) the liquidation or dissolution of the Company.

1.2.3.                     “Good Reason” means (i) reassignment of Executive to a position with authority, duties or responsibilities that are substantially inferior to those of his existing position,

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(ii) a reduction in Executive’s annual base salary, or (iii) a relocation of Executive’s principal worksite to a location more than twenty (20) miles from his existing worksite or residence; provided, however, that none of the foregoing events or conditions will constitute “Good Reason” unless: (x)  Executive provides the Company with written objection to the event or condition within 90 days following the occurrence thereof, (y) the Company does not reverse or otherwise cure the event or condition within fifteen (15) days of receiving that written objection, and (z) Executive resigns his employment within thirty (30) days following the expiration of that cure period; and provided further, that notwithstanding the foregoing, if Executive and the Company (or any of its affiliates) have entered into an employment, consulting or other similar agreement that specifically defines “good reason,” “constructive discharge” or any substantially similar concept, “Good Reason” will have the meaning of such term as defined in that agreement.

1.2.4.                     “Severance Period” means 18 months reduced by the number of full or partial months (if any) transpired since the occurrence of a Change in Control.

SECTION 2.                            Avoidance of Golden Parachute Excise Taxes. Notwithstanding any other provision of this Agreement, to the extent that any payment, right and/or benefit otherwise due hereunder (when added to all other payments, rights and benefits due to Executive from the Company and its affiliates)(collectively, the “Payments” and each, a “Payment”) will constitute an “excess parachute payment” under Section 280G of the Internal Revenue Code (the “Code”) or any successor provision, that Payment will not be paid or provided unless approved by the stockholders of the Company in a manner, and at a time, consistent with the requirements of Section 280G(b)(5)(B) of the Code and the regulations promulgated thereunder. The Company agrees that, if the foregoing sentence is implicated, it will timely submit the excess Payments to its stockholders for their approval, will recommend that its stockholders vote in favor of those Payments and will otherwise exercise reasonable efforts to encourage the approval of those Payments in a manner consistent with the requirements of Section 280G(b)(5)(B) of the Code.

SECTION 3.                            Miscellaneous.

3.1.                              No Mitigation; No Offset. Following any cessation of Executive’s employment with the Company, Executive will be under no obligation to seek other employment and there will be no offset against amounts due to Executive hereunder on account of remuneration attributable to subsequent employment of Executive by a third party.

3.2.                              No Liability of Officers and Directors for Severance Upon Insolvency. Notwithstanding any other provision of this Agreement and intending to be bound by this provision, Executive hereby (a) waives any right to claim payment of amounts owed to him or her, now or in the future, pursuant to this Agreement from directors or officers of the Company if the Company becomes insolvent, and (b) fully and forever releases and discharges the Company’s officers and directors from any and all claims, demands, liens, actions, suits, causes of action or judgments arising out of any present or future claim for such amounts.

3.3.                              Successors and Assigns. This Agreement will inure to the benefit of and be binding upon the Company and Executive and their respective successors, executors, administrators and heirs. The Company may assign this Agreement to any direct or indirect

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subsidiary of Company, or any successor to all or substantially all of its assets and business by means of liquidation, dissolution, merger, consolidation, transfer of assets, sale of stock or otherwise. The rights and obligations of Executive hereunder are personal to Executive and may not be assigned by him.

3.4.                              Notice. Any notice or communication required or permitted under this Agreement shall be made in writing and (a) sent by overnight courier, (b) mailed by certified or registered mail, return receipt requested or (c) sent by telecopier, addressed as follows:

If to Executive, to the address set forth in his personnel file.

If to Company:

Real Mex Restaurants, Inc.
5660 Katella Avenue
Suite 100
Cypress, CA 90630
Attention: Chairman of the Board
Facsimile No.: (562) 346-1465

or to such other address as either party may from time to time specify by notice given to the other party in the manner described above.

3.5.                              Entire Agreement; Amendments. This Agreement contains the entire agreement and understanding of the parties hereto relating to the subject matter hereof, and merges and supersedes all prior and contemporaneous discussions, agreements and understandings of every nature relating to the subject matter hereof, except as otherwise specifically provided for herein. This Agreement may not be changed or modified, except by an Agreement in writing signed by each of the parties hereto.

3.6.                              Waiver. Any waiver by either party of any breach of any term or condition in this Agreement shall not operate as a waiver of any other breach of such term or condition or of any other term or condition, nor shall any failure to enforce any provision hereof operate as a waiver of such provision or of any other provision hereof or constitute or be deemed a waiver or release of any other rights, in law or in equity.

3.7.                              Governing Law