**Exhibit 10.19**

 

**EXECUTION COPY**

 

**RESTRICTED STOCK AGREEMENT**

 

THIS AGREEMENT (the “Agreement”)is made and entered into as of this 31st day of October, 2004, byand between Real Mex Restaurants, Inc., a Delaware corporation (the “Company”)and Steven Lau Tanner (the “Employee”).

 

WHEREAS, the Companyregards the Employee as a key employee and in connection with his employment bythe Company effective January 12, 2004, the Company has determined that itwould be in the best interests of the Company and its stockholders to issue acertain number of shares of restricted Series C 15% Cumulative CompoundingParticipating Preferred Stock, par value $0.001 per share of the Company (the “Series CPreferred Stock”) and to issue a certain number of shares of restricted Series A12.5% Cumulative Compounding Preferred Stock, par value $0.001 per share of theCompany (the “Series A Preferred Stock”) and to issue a certainnumber of shares of restricted Series B 13.5% Cumulative CompoundingPreferred Stock, par value $0.001 per share of the Company (the “Series BPreferred Stock”) to the Employee as an inducement for him to remain in theemploy of the Company and as an incentive for his continuing effort during hisemployment with the Company; and

 

WHEREAS, the RestrictedShares (as defined below) shall, subject to the terms and conditions set forthherein, be non-transferable and subject to forfeiture and repurchase by theCompany in certain cases;

 

NOW THEREFORE, inconsideration of the mutual covenants hereinafter set forth and for other goodand valuable consideration, the receipt and sufficiency of which is herebyacknowledged, the Company and the Employee hereby agree as follows:

 

# 1.                                       Issuanceand Sale of Restricted Shares. Subject to the restrictions, terms and conditions of this Agreement, theCompany hereby issues to the Employee 232 shares of the Company’s Series CPreferred Stock, 295 shares of the Company’s Series A Preferred Stock and208 shares of the Company’s Series B Preferred Stock (collectively the “RestrictedShares”).  Subject to therestrictions, terms and conditions of this Agreement, the Employee herebypurchases the Restricted Shares for a purchase price of $594,208 payable asfollows:

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| ** **                    | ** ** | **Restricted  Shares** | ** ** | **Purchase  Price** | ** ** | **Original  Consideration** | ** ** | **Additional  Consideration** | ** ** |
|-------------------------------|------------|------------------------|------------|---------------------|------------|-----------------------------|------------|-------------------------------|------------|
| Series C Preferred Stock |       | 232                    |       | $                   | 414,000    |                        | $          | 232                           |       | $ | 413,768 |   |
| Series A Preferred Stock |       | 295                    |       | 180,000             |       | 295                         |       | 179,705                       |       |
| Series B Preferred Stock |       | 208                    |       | 208                 |       | 208                         |       | 0                             |       |
|                          |       |                   |       | $                   | 594,208    |                        | $          | 735                           |       | $ | 593,473 |   |

 

## (a)                                  $1.00per share of Restricted Shares ($735) is being paid by the Employee to theCompany as of the date hereof (the “Original Consideration”); and

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## (b)                                 theremaining price for the Restricted Shares ($593,473) (the “AdditionalConsideration”) is payable by the Employee to the Company upon theoccurrence of a Liquidity

 

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## Event (as defined below).  In the event that the AdditionalConsideration is not paid when due, the Employee shall forfeit the RestrictedShares and there shall be no further recourse to the Employee.

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# 2.                                       Vestingof Restricted Shares.

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## (a)                                  TheRestricted Shares so issued to the Employee shall vest only upon the occurrenceof the following events:  (i) a saleof the Company to an unaffiliated third person, whether by merger,consolidation, reorganization, sale of all or substantially all of the Company’sassets, or sale of a majority of the outstanding shares of the Company’scapital stock, (ii) an Initial Public Offering (as defined below), and (iii) foreach series of Preferred Stock, a voluntary redemption of that series ofPreferred Stock at the option of the Company in connection with a refinancingor similar event (each of the events described in clause (i), (ii) and (iii) above,a “Liquidity Event”, and for item (iii) the Liquidity Event shallonly be for that series of Preferred Stock voluntarily redeemed.

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## (b)                                 Untilvested in accordance with Section 2(a) hereof, the Restricted Sharesshall be held by the Company on behalf of the Employee in a custodialcapacity.  The Restricted Shares shallbear the legend(s) required by Paragraph 6 of this Agreement.  Upon the occurrence of a Liquidity Event, theRestricted Shares shall immediately vest in full and, upon receipt by theCompany of the payment by the Employee of the Additional Consideration pursuantto Section 2(c) below, the Company shall promptly release theRestricted Shares to the Employee.

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## (c)                                  Uponthe occurrence of a Liquidity Event, the Employee shall pay to the Company anamount equal to the Additional Consideration by wire transfer in same day fundsto an account designated by the Company to the Employee.

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For purposes of this Section 2,an “Initial Public Offering” means a firm commitment underwritten publicoffering pursuant to an effective registration statement under the SecuritiesAct of 1933, as amended (the “Securities Act”) (other than a SpecialRegistration Statement or a registration statement relating to a Unit Offering(in each case as defined below)) in respect of the offer and sale of shares of Class ACommon Stock, par value $.001 per share of the Company (the “Common Stock”)for the account of the Company resulting in aggregate net proceeds to theCompany and any stockholders selling shares of Common Stock in such offering ofnot less than $20,000,000; “Special Registration Statement” means aregistration statement on Form S-8 or S-4 or any similar or successor formor any other registration statement relating to an exchange offer or anoffering of securities solely to the Company’s employees or security holders orused in connection with the acquisition of the business of another person orentity; and “Unit Offering” shall mean a public offering of acombination of debt and equity securities of the Company in which (i) notmore than 10% of the gross proceeds received from the sale of such securitiesis attributed to such equity securities, and (ii) after giving effect tosuch offering, the Company does not have a class of equity securities requiredto be registered under the Securities Exchange Act of 1934, as amended (the “ExchangeAct”).

 

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# 3.                                       Representationsand Warranties of the Employee.  TheEmployee hereby represents and warrants to and covenants with the Company asfollows:

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## (a)                                  TheEmployee has full legal right and capacity to enter into this Agreement and toperform his obligations hereunder without the need for the consent of any otherperson or entity; this Agreement has been duly executed and delivered andconstitutes the legal, valid and binding obligation of the Employee enforceableagainst the Employee in accordance with the terms hereof; and the execution,delivery and performance of this Agreement by the Employee do not contravene orviolate any laws, rules or regulations applicable to him.

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## (b)                                 TheRestricted Shares being acquired hereunder are being acquired by such Employeefor investment and not with a view to any distribution thereof that wouldviolate the Securities Act or the applicable state securities laws of anystate; and such Employee will not distribute the Restricted Shares in violationof the Securities Act or the applicable securities laws of any state.

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## (c)                                  TheEmployee understands that the Restricted Shares being acquired hereunder havenot been registered under the Securities Act or the securities laws of any stateand must be held indefinitely unless transfer thereof is subsequentlyregistered under the Securities Act and any applicable state securities laws orunless an exemption from such registration becomes or is available.

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## (d)                                 TheEmployee is financially able to hold the Restricted Shares being acquiredhereunder for long-term investment, believes that the nature and amount of theRestricted Shares being purchased are consistent with such Employee’s overallinvestment program and financial position, and recognizes that there aresubstantial risks involved in the purchase of the Restricted Shares.

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## (e)                                  TheEmployee acquiring Restricted Shares hereunder confirms that (i) theEmployee is familiar with the business of the Company, (ii) the Employeehas had the opportunity to ask questions of the officers and directors of theCompany and to obtain (and that the Employee has received to its satisfaction)such information about the business and financial condition of the Company ashe has reasonably requested, and (iii) the Employee has such knowledge andexperience in financial and business matters such that such Employee is capableof evaluating the merits and risks of the prospective investment in theRestricted Shares.

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## (f)                                    TheEmployee’s residence and social security number are as set forth below theEmployee’s signature to this Agreement.

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## (g)                                 Informulating a decision to enter into this Agreement, such Employee has reliedsolely upon an independent investigation of the Company’s business and uponconsultations with the Employee’s legal and financial advisors with respect tothis Agreement and the nature of the Employee’s investment.

 

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## (h)                                 SuchEmployee represents and warrants to the Company that it qualifies as an “accreditedinvestor” within the meaning of Rule 501(a) of Regulation Dpromulgated under the Securities Act.

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# 4.                                       SecuritiesHolders Agreement.  The Employeehereby acknowledges and agrees that the Restricted Shares shall be treated as “Securities”under the Amended and Restated Securities Holders Agreement, dated as of June 28,2000, among the Company, Bruckmann, Rosser, Sherrill & Co., L.P.,Furman Selz Investors II, L.P. and the other investors named therein, asamended from time to time in accordance with its terms (the “SecuritiesHolders Agreement”).

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# 5.                                       Rightsof Stockholder.  Subject to theapplicable terms and provisions of the Delaware General Corporation Law (orother applicable law), the Securities Holders Agreement and this Agreement, theEmployee shall have all the rights of a stockholder with respect to theRestricted Shares, including, without limitation (a) the right to vote theRestricted Shares and to receive all cash dividends or other cash distributionspaid or made with respect thereto, and (b) the right to receive (i) anystock and other securities of the Company (or any corporation which shall becombined with or into which the Company shall be merged) and (ii) anyother assets which are distributed with respect to, or in exchange for, theRestricted Shares; provided, however, that the Employee agreesthat (x) the stock and other securities and other assets as described aboveshall be subject to the same restrictions as herein provided with respect tothe Restricted Shares and shall continue to be held by the Company, ascustodian, in accordance with and subject to the same terms and conditionsherein provided with and respect to the Restricted Shares and (y) any cashdividends or any distributions paid or made with respect to any unvestedRestricted Shares shall be held in escrow by the Company, as escrowee for thebenefit of the Employee, until such time as the Restricted Shares with respectto which any such cash dividends or cash distributions were paid or made vestin accordance with Section 2 hereof. The Employee agrees and understands that nothing contained in thisAgreement provides, or is intended to provide, the Employee with any protectionagainst potential future dilution of his stockholder interest in the Companyfor any reason.

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# 6.                                       RestrictedShare Certificate.  Upon the issuanceof the Restricted Shares pursuant to Section 1 hereof, the Company shallprepare a share certificate or share certificates registered in the name of theEmployee (but held by the Company as custodian until such Restricted Sharesshall vest in accordance with Section 2(a) hereof) bearing thefollowing legend (and any other legends determined by the Company to berequired by any applicable law):

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THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIESACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANYSTATE AND MAY NOT BE TRANSFERRED WITHOUT REGISTRATION UNDER THE SECURITIESACT OR STATE SECURITIES LAWS OR AN OPINION OF COUNSEL,

 

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SATISFACTORY TO REAL MEX RESTAURANTS, INC., THAT SUCHREGISTRATION IS NOT REQUIRED.

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE AREALSO SUBJECT TO THE TERMS AND CONDITIONS OF AN AMENDED AND RESTATED SECURITIESHOLDERS AGREEMENT, BY AND AMONG REAL MEX RESTAURANTS, INC. AND THE HOLDERSSPECIFIED THEREIN, A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICEOF REAL MEX RESTAURANTS, INC.  THE SALE,TRANSFER OR OTHER DISPOSITION OF THE SECURITIES IS SUBJECT TO THE TERMS OF SUCHAGREEMENT AND THE SECURITIES ARE TRANSFERABLE ONLY UPON PROOF OF COMPLIANCETHEREWITH.

 

IN ADDITION, THE SECURITIES REPRESENTED BY THISCERTIFICATE ARE SUBJECT TO THE RESTRICTIONS, TERMS AND CONDITIONS OF ARESTRICTED STOCK AGREEMENT, DATED AS OF THE DATE HEREOF, BY AND BETWEEN MR.STEVEN L.TANNER AND THE COMPANY, AND THE COMPANY RESERVES THE RIGHT TO REFUSETO RECORD THE TRANSFER OF THIS CERTIFICATE UNTIL ALL SUCH RESTRICTIONS ARESATISFIED, ALL SUCH TERMS ARE COMPLIED WITH AND ALL SUCH CONDITIONS ARE MET.

 

# 7.                                       Non-transferability.  Subject to the terms and provisions of thisAgreement and the Securities Holders Agreement, the vested Restricted Sharesreceived under this Agreement may be sold by the Employee (unless such salewould violate any applicable securities laws). Unvested Restricted Shares issued to the Employee pursuant to thisAgreement may not be sold, pledged or otherwise transferred in any way(including, without limitation, in connection with the exercise of any “tag-along”or similar rights of the Employee pursuant to the Stockholders Agreement ofotherwise), and shall not be subject to execution, attachment, or similarprocess.  Any attempt to sell, transfer,pledge, or otherwise dispose of or hypothecate any of the Restricted Sharescontrary to the terms and provisions of this Agreement, or the levy of anyexecution, attachment or similar process upon the Restricted Shares, shall benull and void and without legal force or effect.

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# 8.                                       TheCompany’s Obligation to Repurchase Unvested Restricted Shares; Forfeiture ofUnvested Restricted Shares.  TheEmployee and the Company agree that, upon the termination of the Employee’semployment with the Company for any reason at any time (including, withoutlimitation, upon the Employee’s death, permanent disability or otherwise), theCompany shall redeem by purchase, and the Employee shall be obligated to sellto the Company, all of the unvested Restricted Shares then held by theEmployee.  The price to be paid to theEmployee by

 

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# the Company for each such unvested Restricted Sharesshall be the Original Consideration per share. Such redemption transaction shall close on a date to be determined bythe Company and reasonably acceptable to the Employee, but in no event shallsuch closing occur more than 60 days after the effective date of anytermination of the Employee’s employment. Regardless of whether the Company makes the payment described in this Section 8to the Employee upon any such termination of the Employee’s employment, allRestricted Shares that are unvested as of the date of the Employee’stermination for any reason shall be forfeited as of the date of any suchtermination (and shall be returned to the Company’s treasury forcancellation).  In addition, all (x)stock and securities and other assets and (y) any cash dividends ordistributions paid in respect of the unvested Restricted Shares as of the dateof the Employee’s termination for any reason shall also be forfeited.

 

# 9.                                       NoCorporate Restrictions; Restricted Stock Not to Affect Employment.  Nothing contained in this Agreement shall bedeemed to prevent the Company from taking any corporate action which it deemsto be appropriate or in its best interests, whether or not such action wouldhave an adverse effect on the value of any of the Restricted Shares issued tothe Employee (and the Employee and/or any other person or entity shall have noclaim against the Company, its directors or its shareholders as a result of anysuch actions).  The Restricted Sharesgranted hereunder shall not confer upon the Employee any right to continue inthe employment of the Company.

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# 10.                                 Notices.  All notices and requests hereunder shall bein writing and delivered personally, by facsimile transmission, telex, telecopyor sent by overnight courier or via certified mail, return receipt requested,postage prepaid, properly addressed as follows:

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| To the Company,  at:  |   | Real Mex  Restaurants, Inc.. |
|-----------------------|--------|-----------------------------------|
|                  |   | 4001 Via Oro  Avenue              |
|                  |   | Suite 200                    |
|                  |   | Long Beach, CA  90810             |
|                  |   | Attention: Chairman  of the Board |
|                  |   | Facsimile No.:  (310) 834-2762    |
|                  |   |                              |
| To the Employee,  at: |   | Mr. Steven  L. Tanner        |
|                  |   | [Intentionally  withheld]         |

 

or such otheraddress as may be stated in a notice given as hereinabove provided.

 

# 11.                                 EntireAgreement.  This Agreement containsthe entire agreement between the parties with respect to the subject mattercontained herein, and supersedes all prior agreements or prior understanding,whether oral or written, between the parties relating to such subject matter.  No modification or amendment of thisAgreement shall be effective unless in writing and signed by the party againstwhich it is sought to be enforced.

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# 12.                                 Withholding;Taxes.  As a condition precedent tothe actual receipt of any certificates for any vested Restricted Shares, theEmployee shall, at the time the Restricted

 

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# Shares vest, pay to the Company in cash an amountequal to the applicable withholding, excise, employment or other taxesdetermined by the Company as being required to be withheld or collected underapplicable federal, state or local laws; provided, however thatin lieu of such cash payment, the Company may redeem a number of such vestedRestricted Shares having a fair market value (as determined in good faith bythe board of directors of the Company) equal to such applicable withholding,excise, employment or other taxes. Furthermore, the Company shall have the right to deduct and withhold anysuch applicable taxes from, or in respect of, any dividends or otherdistributions paid on the Restricted Shares. All taxes, if any, on any payments to the Employee hereunder shall bethe responsibility of and shall be paid by the Employee.

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# 13.                                 Compliancewith Laws.  The issuance of theRestricted Shares pursuant to this Agreement shall be subject to, and shallcomply with, any applicable requirements of federal and state securities laws, rules andregulations (including, without limitation, the provisions of the SecuritiesAct, the Exchange Act and the respective rules and regulations promulgatedthereunder) and any other law or regulation applicable thereto, and the Companyshall not be obligated to issue or deliver any of the Restricted Sharespursuant to this Agreement if such issuance or delivery would violate any suchrequirements.  The foregoing shall not,however, be deemed to require the Company to effect any registration or theRestricted Shares under any such law or rules or regulations.

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# 14.                                 BindingAgreement.  This Agreement shallinure to the benefit of and be binding upon, and enforceable by (a) theCompany and its successors and assigns, and (b) the Employee and hisheirs, estate, legal representatives or other beneficiaries; provided, however,that the Employee shall not be entitled to assign or otherwise transfer any ofits rights hereunder without the prior written consent of the Company.

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# 15.                                 GoverningLaw.  This Agreement shall begoverned by and construed in accordance with the laws of the State of Delaware,without reference to the principles of conflict of laws.

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# 16.                                 Referencesto the Employee.  For purposes ofthis Agreement, any reference to the Employee shall include, if appropriate,his spouse, heirs, legatees, devisees, estate, legal representatives and/orother beneficiaries.

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# 17.                                 Miscellaneous.  No benefit under this Agreement shall betaken into account in determining any benefits under any retirement,profit-sharing, life insurance or other employee benefit plan maintained by theCompany.

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**[signature page follows]**

 

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IN WITNESS WHEREOF, thisAgreement has been executed by the undersigned as of the day and year abovewritten.

 

 
|   |   | REAL MEX RESTAURANTS, INC. |
|--------|--------|----------------------------|
|   |   |                       |
|   |   |                       |
|   |   | By:                        | /s/ Harold O. Rosser |   |
|   |   |                       | Name: Harold O. Rosser |
|   |   |                       | Title: Compensation Committee  Chairman of  the Board of Directors |
|   |   |                       |   |
|   |   |                       |   |
|   |   |                       | /s/ Steven Lau Tanner |   |
|   |   |                       | Steven Lau Tanner |
|   |   |                       | [Intentionally  withheld] |

 

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