**Exhibit
      10.25**









**PERFORMANCE
      UNIT AGREEMENT**




This
      AGREEMENT made as of August 16, 2005, by and between Mexican Restaurants, Inc.
      (the "Corporation"), and **** Andrew
      Dennard (the "Recipient") **.**




WHEREAS,
      the Compensation Committee (the “Committee”) of the Board of Directors of the
      Corporation has awarded Performance Units to the Recipient, the terms of which
      are set forth in this Agreement, in consideration of Recipient’s continued
      service to the Corporation.




NOW,
      THEREFORE, the Corporation and the Recipient hereby agree as
      follows:




1.  Grant
      of Award .
      The
      Recipient is hereby granted as of August 16, 2005, subject to shareholder
      approval (the "Grant Date") a Performance Unit Award (the "Award"), subject
      to
      the terms and conditions hereinafter set forth, with respect to Fifty Thousand
      (50,000) performance units ("Units”). This award is subject to the approval by
      the shareholders of the Mexican Restaurants, Inc. 2005 Long Term Incentive
      Plan.
      The Units covered by the Award shall vest, if at all, in accordance with Section
      2. On the date the Award vests (if at all), Recipient will receive, net of
      applicable withholding for federal and state income and applicable employment
      taxes, a cash payment representing the product of (i) the number of Units vested
      and (ii) the average of the high and low price of the Common Stock, $1.00 par
      value per share (the “Fair Market Value Per Share”), of the Corporation on the
      last business day immediately preceding the Business Combination.




2.  Vesting .




(a)  The
      Award
      will vest, if at all, only if, on or before August 16, 2010, there is a Business
      Combination, and then the percentage of the Award which becomes vested will
      be
      determined based upon the Fair Market Value Per Share of the Corporation on
      the
      last business day immediately preceding the Business Combination, as
      follows:









Fair
                Market Value Per Share
            Percentage
                of Units VestedLess
                than $20
            0%$20
                or greater
            100%


(b)  In
      the
      event of the termination of Recipient's employment with the Corporation prior
      to
      a Business Combination, the Award shall be forfeited in its
      entirety.




3.  Transfer
      Restrictions .
      This
      Award is non-transferable otherwise than by will or by the laws of descent
      and
      distribution, and may not otherwise be assigned, pledged or hypothecated and
      shall not be subject to execution, attachment or similar process. Upon any
      attempt by the Recipient (or the Recipient's successor in interest after the
      Recipient's death) to effect any such disposition, or upon the levy of any
      such
      process, the Award may immediately become null and void, at the discretion
      of
      the Board.




4.  Arbitration . Any
      dispute or controversy arising under or in connection with this Agreement shall
      be settled exclusively by arbitration conducted before a panel of three
      arbitrators in Texas in accordance with the rules of the American Arbitration
      Association then in effect. Judgment may be entered on the arbitrator’s award in
      any court having jurisdiction. The Corporation shall pay directly or reimburse
      the Recipient for any legal fees incurred by the Recipient in connection with
      any arbitration in which he prevails.




5.  Miscellaneous .
      This
      Agreement (a) shall be binding upon and inure to the benefit of any successor
      of
      the Corporation, (b) shall be governed by the laws of the State of Texas and
      any
      applicable laws of the United States, and (c) may not be amended without the
      written consent of both the Corporation and the Recipient. No contract or right
      of employment shall be implied by this Agreement.




6.  Incorporation
      of 2005 Plan Provisions .
      Capitalized terms not otherwise defined herein shall have the meanings set
      forth
      in the Corporation's Mexican Restaurants, Inc. 2005 Long Term Incentive Plan,
      as
      amended from time to time.




IN
      WITNESS HEREOF, the Recipient and the Corporation have executed this Performance
      Unit Award as of the day and year first above written.









RECIPIENT:
            MEXICAN
                RESTAURANTS, INC.BY:ANDREW
                DENNARD
            CURT
                GLOWACKI