**EXHIBIT3**

 

**SECURITY AGREEMENT**

**(BRAI)**

 

1.             **Grant**.

 

BostonRestaurant Associates, Inc. (“Debtor”), a corporation organized under the lawsof Delaware with its principal office in Saugus, Massachusetts (a) grants toCommerce Bank & Trust Company, a Massachusetts trust company with officesin Worcester, Massachusetts (“Secured Party”), a security interest in theproperty defined below as “Collateral” and (b) to the extent applicable,pledges and collaterally assigns the Collateral to Secured Party.

 

2.             **Purpose.  **The foregoing grant, pledge, and assignment shallsecure the full and timely payment, performance, and observance of all Debtor’smonetary and non-monetary obligations to Secured Party now existing andhereafter arising, direct or indirect, absolute or contingent, liquidated orunliquidated, due or to become due, and whether joint, several, or joint andseveral (collectively “Obligations”), including without implied limitation (a)Debtor’s obligations arising from a Loan Agreement of even date between Debtorand Secured Party (“Loan Agreement”), (b) the indebtedness evidenced byDebtor’s promissory note of even date in the face amount of $922,305.00 issuedto Secured Party by Debtor (“Note”), and (c) all promissory notes issued in thefuture by Debtor to Secured Party (“Future Notes”).

 

3.             **Collateral.**

 

“Collateral”means all of the Debtor’s rights and interests now owned or hereafter acquiredin the property described on Exhibit A1, attached, together with all cash andnon-cash proceeds and products of such property.  Each category of collateral listed on Exhibit A shall have themeaning attributed to it in the Massachusetts Uniform Commercial Code, asamended from time to time, the definitional sections of which are incorporatedhere by reference as if set forth fully in this agreement.  Without limiting the generality of theforegoing provisions, “Collateral” also means and includes all rights andinterests of Debtor in (a) the trademarks listed on Exhibit A2, attached, and(b) any cash and non-cash proceeds thereof.

 

4.             **Covenants, Warranties, and Agreements**.

 

A.            **Ownership and location of Collateral. **Debtor warrants to Secured Partyand covenants with Secured Party that (1) Debtor owns the Collateral free andclear of all claims, liens, and security interests, other than those listed onExhibit B, attached (“Permitted Encumbrances”), (2) Debtor has the power andauthority to make and perform this agreement, (3) the only locations of theCollateral are and will be at the places listed on Exhibit C, attached, and (4)Debtor has and will have no Collateral except at the foregoing locations or intransit thereto.  The term “PermittedEncumbrances” shall include not only the currently existing liens listed onExhibit B but also any liens arising from any equipment financing that isexpressly permitted in the Loan Agreement.

 

B.            **General. **Debtorcovenants and agrees with Secured Party as follows:

 

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(1)           it will timely pay Secured Party allamounts required by the Obligations, whether on demand, at maturity, by acceleration,or otherwise, and will otherwise perform and observe strictly in accordancewith their terms all of the Obligations;

 

(2)           it will defend the Collateral againstthe claims and demands of all persons and will indemnify and hold harmlessSecured Party against all such claims and demands unless the same arise fromSecured Party’s gross negligence or willful misconduct;

 

(3)           it will not permit any of theCollateral, or any business records relating to the Collateral, to be removedfrom a permitted location without the prior written consent of Secured Party,except in the ordinary course of business;

 

(4)           it will immediately advise SecuredParty in writing of any change in its place of business, or the opening of anynew place of business;

 

(5)           it will not (a) permit any securityinterests (other than Secured Party’s security interest and the PermittedEncumbrances) to attach to any of the Collateral; (b) permit any of theCollateral to be levied upon under any legal process or to become the subjectof any lien unless such lien is dissolved within thirty (30) days after thelien arises; (c) transfer in any manner whatsoever any interest in theCollateral, except in the ordinary course of business, without the priorwritten consent of the Secured Party; (d) permit to be done or to occuranything that may materially impair the value of any of the Collateral or thesecurity intended to be afforded by this agreement; or (e) permit any tangibleCollateral to become an accession to other goods, unless such other goods areowned by Debtor; and

 

(6)           it will (a) perform and observe infull and on time all its duties and other undertakings with respect to theobligations secured by the Permitted Encumbrances and (b) will not materiallymodify the obligations secured by the Permitted Encumbrances.

 

C.            **Promissory notes and tangible chattelpaper**.  If at any time Debtorholds or acquires any promissory notes or tangible chattel paper, then withinfive (5) business days Debtor shall endorse, assign, and deliver such items toSecured Party, together with such instruments of transfer or assignment, dulyexecuted in blank, as Secured Party from time to time may specify.

 

D.            **Deposit accounts**.  For each deposit account that Debtor at anytime opens or maintains, Debtor shall, at Secured Party’s request and optionafter any Event of Default, pursuant to an agreement in form and substancesatisfactory to Secured Party, either (1) cause the depositary bank to agree tocomply at any time with instructions given by Secured Party to such depositarybank directing the disposition of funds from time to time credited to suchdeposit account, without further consent of Debtor, or (2) arrange for SecuredParty to become the customer of the depositary bank with respect to the depositaccount, with Debtor being permitted to withdraw funds from such depositaccount only with the consent of Secured Party.  Secured Party agrees with Debtor that Secured Party shall notgive any such instructions or withhold any withdrawal rights from Debtor,unless an Event of Default (i) has occurred and is continuing or (ii) wouldresult if effect were given to a withdrawal not otherwise permitted by the LoanDocuments.  The provisions of thisparagraph shall not apply to (a) any deposit account for which Debtor, thedepositary bank, and Secured Party have entered into a control agreement orcash collateral agreement, (b) deposit accounts for which Secured Party is thedepositary, and (c) deposit accounts specially and exclusively used forpayroll, payroll taxes, employee expense

 

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reimbursements, and otheremployee wage and benefit payments to or for the benefit of Debtor’s employees.

 

E.             **Investmentproperty**.  If Debtor at anytime holds or acquires any certificated securities, then within five (5)business days after the signing of this agreement or the acquisition of thecertificates, whichever is earlier, Debtor shall endorse, assign, and deliversuch certificates to Secured Party, accompanied by such instruments of transferor assignment, duly executed in blank, as Secured Party from time to time mayspecify.  If any securities now orhereafter acquired by Debtor are uncertificated and are issued to Debtor or itsnominee directly by the issuer, then Debtor shall immediately notify SecuredParty thereof, and at Secured Party’s request and option, pursuant to anagreement in form and substance satisfactory to Secured Party, either shall (1)cause the issuer to agree to comply with instructions given by Secured Party asto such securities, without further consent of Debtor or such nominee, or (2)arrange for Secured Party to become the registered owner of thesecurities.  If any certificatedsecurities, uncertificated securities, or other investment property now orhereafter acquired by Debtor are held by Debtor or its nominee through asecurities intermediary or commodity intermediary, then Debtor immediatelyshall notify Secured Party thereof, and at Secured Party’s request and option,pursuant to an agreement in form and substance satisfactory to Secured Party,Debtor either shall (a) cause such securities intermediary or commodityintermediary to agree to comply with entitlement orders or other instructionsgiven by Secured Party as to such securities or other investment property, orto apply any value distributed on account of any commodity contract as directedby Secured Party, in each case without further consent of Debtor or suchnominee, or (b) in the case of financial assets or other investment property heldthrough a securities intermediary, arrange for Secured Party to become theentitlement holder with respect to such investment property, with Debtor beingpermitted to exercise rights to withdraw or otherwise deal with such investmentproperty only with the consent of Secured Party.  Secured Party shall not give any such entitlement orders,instructions, or directions to any such issuer, securities intermediary, orcommodity intermediary, and shall not withhold its consent to the exercise ofany withdrawal or dealing rights by Debtor, unless an Event of Default (i) hasoccurred and is continuing or (ii) would result from a requested withdrawal ordealing. The provisions of this paragraph shall not apply to any financialassets credited to a securities account for which Secured Party is thesecurities intermediary.

 

F.             **Collateralin the possession of a bailee**. If at any time any goods that constitute Collateral are in thepossession of a bailee, then Debtor promptly shall notify Secured Party.  If requested by Secured Party, Debtorpromptly shall obtain an acknowledgement from the bailee, in form and substancesatisfactory to Secured Party, that the bailee holds such Collateral for thebenefit of Secured Party and will act upon Secured Party’s instructions withoutthe further consent of Debtor.  SecuredParty shall not give any such instructions unless an Event of Default hasoccurred and is continuing or would occur after taking into account any actionby Debtor with respect to the bailee.

 

G.            **Electronic chattel paper andtransferable records**.  IfDebtor at any time holds or acquires an interest in any electronic chattelpaper or any “transferable record,” as that term is defined in Section 201 ofthe federal Electronic Signatures in Global and National Commerce Act, or in§16 of the Uniform Electronic Transactions Act as in effect in any relevantjurisdiction, Debtor promptly shall notify Secured Party thereof and at therequest of Secured Party shall take such action as Secured Party requests tovest in Secured Party control, under § 9-105 of the Uniform Commercial Code(“UCC”), of such electronic chattel paper, or control, under Section 201 of thefederal Electronic Signatures in Global and National Commerce Act, or as thecase may be, §16 of the Uniform Electronic Transactions Act, as in effect insuch jurisdiction, of such transferable record. Secured Party agrees toarrange,

 

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pursuant toprocedures satisfactory to Secured Party and as long as such  procedures will not result in SecuredParty’s loss of control, for Debtor to make alterations to the electronicchattel paper or transferable record permitted under UCC § 9-105, or as thecase may be, Section 201 of the federal Electronic Signatures in Global and NationalCommerce Act or §16 of the Uniform Electronic Transactions Act for a party incontrol to make without loss of control, unless an Event of Default hasoccurred and is continuing or would occur after taking into account any actionby Debtor with respect to such electronic chattel paper or transferable record.

 

H.            **Letter-of-credit rights**.  If Debtor at any time is a beneficiary undera letter of credit, then Debtor promptly shall notify Secured Party.  At Secured Party’s request and option Debtorshall, pursuant to an agreement in form and substance satisfactory to SecuredParty, either (1) arrange for the issuer and any confirmer of such letter ofcredit to consent to an assignment to Secured Party of the proceeds of anydrawing under the letter of credit or (2) arrange for Secured Party to becomethe transferee beneficiary of the letter of credit, provided that Secured Partyagrees that the proceeds of any drawing under the letter of credit are to beapplied to the Obligations.

 

I.              **Commercialtort claims**.  If Debtor atany time holds or acquires a commercial tort claim, then Debtor immediatelyshall notify Secured Party in a writing of the details of such claim and shallgrant to Secured Party in writing a security interest in such claim and in itsproceeds, all upon the terms of this agreement, such writing to be in form andsubstance reasonably satisfactory to Secured Party.

 

J.             **Goods.**  With respect to Collateral consisting ofgoods, Debtor covenants and agrees with Secured Party as follows:

 

(1)           Debtor will insure the Collateralagainst all hazards requested in good faith by Secured Party, such insurancebeing issued by insurers reasonably satisfactory to Secured Party and being inan amount reasonably satisfactory to Secured Party; will cause Secured Party tobe named as sole loss payee on such insurance; and will use the proceeds ofsuch insurance, if Secured Party releases the proceeds to Debtor pursuant tothe following subsection, to repair or replace the Collateral free of all liensand security interests other than Secured Party’s and (to the extentapplicable) the Permitted Encumbrances. If Debtor fails to obtain such insurance, Secured Party shall have theright (but not the obligation) to obtain it at Debtor’s expense, whereuponDebtor shall reimburse Secured Party on demand;

 

(2)           Insurance proceeds attributable tothe Collateral shall be delivered to and initially held by Secured Party ascash collateral for the Obligations.  Ifno Event of Default is outstanding, then (a) if the amount of proceeds is less than $50,000, Secured Partyshall deliver such proceeds to Debtor and Debtor shall repair or replace thedamaged or destroyed Collateral, or (b) if the amount of proceeds equals orexceeds $50,000, and if Secured Party reasonably determines that it is feasiblefor the damaged or destroyed Collateral to be repaired or replaced withoutmaterial prejudice to Secured Party, Secured Party shall disburse from time totime all or any part of such proceeds upon such terms and conditions as SecuredParty reasonably decides advisable, for direct application by Debtor to therepair or replacement of the Collateral. If any Event of Default is outstanding when Secured Party receives anyinsurance proceeds, or if any Event of Default occurs while Secured Party isholding any such proceeds, then instead of delivering such proceeds to Debtor,Secured Party may apply all or any part of such proceeds to payment of theObligations;

 

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(3)           Debtor will keep the Collateral ingood condition and repair, reasonable wear and tear excepted, and will permitSecured Party and its agents to inspect the Collateral from time to time uponoral notice of at least twenty-four hours during normal business hours uponSecured Party’s request; and

 

(4)           Debtor will pay Secured Party ondemand all amounts, including reasonable attorney’s fees, paid or incurred bySecured Party (a) for any costs which Secured Party incurs to dischargeDebtor’s duties with regard to taxes, levies, insurance, repairs, ormaintenance of the Collateral, and (b) in taking possession of, disposing of,or preserving the Collateral.

 

K.            **Other Collateral**.  With respect to all Collateral other thaninventory and equipment, Debtor covenants and agrees as follows:

 

(1)           immediately after Secured Party’srequest from time to time upon and during the continuance of an Event ofDefault, Debtor will give notice of Secured Party’s security interest to anypersons obligated to Debtor on any such Collateral;

 

(2)           within five (5) business days afterSecured Party’s request upon and during the continuance of an Event of Default,Debtor will deliver to Secured Party any Collateral requested by it, inconnection with which Debtor on demand shall make or furnish all endorsements,notations, records, information, and other forms of assistance requested bySecured Party to enable it to perfect its security interest in such Collateral,to hold, transfer, or collect the proceeds of such Collateral, and/or toenforce Debtor’s and Secured Party’s rights with respect to such Collateral;and

 

(3)           it will take any actions that arereasonably necessary or advisable to preserve its rights against accountdebtors and any other obligors on such Collateral.

 

L.             **Otheractions**.  Debtor agrees to takeany other action requested by Secured Party to ensure the attachment,perfection, first priority, and enforceability of Secured Party’s securityinterest in any and all of the Collateral, including without impliedlimitation, (a) executing, delivering, and (where appropriate) filing financingstatements and amendments under the UCC, to the extent, if any, that Debtor’ssignature is required, (b) causing Secured Party’s name to be noted as securedparty on any certificate of title for titled goods if such notation is acondition to attachment, perfection, priority, or enforceability of SecuredParty’s security interest in such Collateral, (c) complying with any provisionof any statute, regulation, or treaty of the United States as to any Collateralif compliance with such provision is a condition to attachment, perfection,priority, or enforceability of Secured Party’s security interest in suchCollateral, (d) using its best efforts to obtain governmental and other thirdparty consents and approvals, including without limitation any consent of anylicensor, lessor, or other person obligated on Collateral, (e) using its bestefforts to obtain waivers from mortgagees and landlords (but only for locationsthat are not in shopping malls) in form and substance reasonably satisfactoryto Secured Party and (f) taking all actions required by any earlier orsubsequent versions of the UCC or by other law, as reasonably determined bySecured Party.

 

5.                                       **Representationsand warranties concerning Debtor’s name and legal status**.

 

Debtor represents andwarrants to Secured Party (a) that Debtor’s exact legal name and organizationalstatus are correctly stated in Section 1 of this agreement and (b) that anyorganizational identification number is correctly stated on the signature pageof this agreement.

 

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6.             **Covenants concerning Debtor’s legalstatus**.

 

Debtorcovenants with Secured Party that (a) without providing at least thirty daysprior written notice to Secured Party, Debtor will not change its name, itsplace of business, the location of its chief executive office, its mailingaddress, or its organizational identification number, (b) if Debtor does nothave an organizational identification number and later obtains one, Debtorimmediately shall notify Secured Party, and (c) Debtor will not change its typeof organization, jurisdiction of organization, or other legal structure.

 

7.             **Miscellaneous representations andwarranties**.

 

Debtorrepresents and warrants to Secured Party that (a) none of the Collateralconstitutes, or is the proceeds of, “farm products” as defined in §9-102(a)(34) of the UCC, and (b) Debtor holds no commercial tort claim.

 

8.             **Covenants concerning Collateral**.

 

Debtorcovenants with Secured Party that Debtor will (a) not use the Collateral inviolation of any law or any policy of insurance, (b) pay when due all taxes,assessments, governmental charges, and levies made upon the Collateral,incurred in connection with the use or operation of the Collateral, or incurredin connection with this agreement, unless (x) the same are being contested ingood faith by proper legal proceedings and (y) adequate reserves have beenestablished and maintained therefor, and (c) operate its business in compliancewith (i) all applicable material provisions of the federal Fair Labor StandardsAct, as amended, and (ii) all applicable material provisions of federal, state,and local statutes and ordinances dealing with the control, shipment, storage,or disposal of hazardous materials or substances.

 

9.             **Power of Attorney**.

 

For purposesof Section 4L of this agreement, Debtor irrevocably appoints Secured Party asDebtor’s attorney-in-fact to do all acts and things which Secured Party in goodfaith decides advisable to perfect and continue perfected its rights and toprotect the Collateral, all as fully and completely as Debtor could do ifDebtor were acting on its own behalf. The powers conferred on Secured Party in this section are solely toprotect its interests in the Collateral and shall not impose any duty upon itto exercise any such powers.  SecuredParty shall be accountable only for the amounts that it actually receives as aresult of the exercise of the foregoing powers.  Neither Secured Party nor any of its officers, directors,employees, or agents shall be liable to Debtor for any act or failure to act,except for Secured Party’s own gross negligence or willful misconduct.

 

10.           **Authorization.**

 

Debtorirrevocably authorizes Secured Party at any time to file any initial UCCfinancing statements and amendments that (a) describe the Collateral (i) as“all assets” of Debtor (or terms of similar import), regardless of whether anyparticular asset falls within the scope of Article 9 of the UCC, or (ii) asbeing of an equal or lesser scope or with greater detail, and (b) include anyother information required by part 5 of Article 9 of the UCC, including (i)whether Debtor is an organization, the type of organization, and anyorganization identification number issued to Debtor and, (ii) in the case of a 

 

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financing statement filed as afixture filing or indicating Collateral as as-extracted collateral or timber tobe cut, a sufficient description of the real property to which the Collateralrelates.  Debtor agrees to furnish allsuch information to Secured Party promptly upon Secured Party’s request.

 

11.           **Events of Default**.

 

Each of thefollowing circumstances and occurrences shall constitute an Event of Defaultunder this agreement:

 

(1)           Material breach of any warranty,covenant, or other provision of this agreement unless (a) such breach is curedwithin an expressly applicable cure period or (b) if this agreement provides noexpressly applicable cure period,  then(i) the breach is readily curable and (ii) the breach is fully cured  withinthe shortest reasonable period, which shall not exceed thirty (30) days;

 

(2)           Material misrepresentation in thisagreement or in any document furnished to Secured Party by or on behalf ofDebtor;

 

(3)           The imposition upon any Collateral ofany lien or encumbrance other than the Permitted Encumbrances and/or a securityinterest in favor of Secured Party.

 

(4)           The making of any levy, seizure,sequestration, or attachment of or upon any property of Debtor in an aggregateamount exceeding $50,000, unless released or dissolved within ten (10) days;

 

(5)           The issuance of any injunction orother order which, in Secured Party’s judgment, materially impairs Debtor’sbusiness or its financial condition, unless such injunction is dissolved orstayed within ten (10) days after its issuance;

 

(6)           The filing by Debtor in any forum ofany petition, answer, or similar document seeking (a) relief under anybankruptcy, insolvency, or similar law, or (b) the appointment of a receiver,trustee, or other fiduciary to take charge of any of Debtor’s property;

 

(7)           The filing against Debtor in anyforum of any petition or similar document under any bankruptcy, insolvency, orsimilar law, if such is not dismissed within forty-five (45) days;

 

(8)           The filing against Debtor in anyforum of any petition or similar document seeking the appointment of areceiver, trustee, or other fiduciary to take charge of any of Debtor’sproperty, if such is not dismissed within forty-five (45) days;

 

(9)           Debtor’s written statement oracknowledgment of its inability to pay its debts as they become due;

 

(10)         Any assignment by Debtor for thebenefit of any of its creditors, or any composition by Debtor with any of itscreditors;

 

(11)         The dissolution of Debtor as acorporation;

 

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(12)         The commencement of any proceedingseeking the dissolution of Debtor, unless such proceeding is dismissed withinforty-five (45) days; or

 

(13)         Any circumstance or occurrence thatconstitutes an Event of Default as defined in the Note or in any other legaldocument that secures, evidences, or states any of the Obligations.

 

12.           **Power to Sell or Collect Collateral.**

 

A.            After any Event ofDefault, Secured Party shall have, in addition to all other rights andremedies, the rights and remedies of a secured party under the applicableprovisions of the UCC, including without implied limitation the right to takepossession of the Collateral.  For thatpurpose Secured Party may enter upon any premises on which the Collateral maybe situated and may remove the Collateral therefrom.  Unless the Collateral is perishable, threatens to declinespeedily in value, or is of a type customarily sold on a recognized market,Secured Party shall give Debtor at least ten (10) days’ prior written notice ofthe time and place of any public sale of Collateral or of the time after whichany private sale or any other intended disposition is to be made.

 

B.            At any time in itsdiscretion after any Event of Default, Secured Party may for the purpose ofobtaining security for payment of the Obligations (1) transfer any securitiesor other property constituting Collateral into its own name or that of itsnominee, (2) receive the income thereon, (3) hold the same as security, or (4)apply it against principal, interest, or other sums due on the Obligations, andSecured Party may demand, collect, receipt for, settle, compromise, adjust, suefor, foreclose, or realize upon any Collateral as it may determine, whether ornot the same are then due.  After anyEvent of Default, Secured Party (1) may receive, open, and dispose of mailaddressed to Debtor, (2) may endorse notes, checks, drafts, money orders,documents of title, or other evidence of payment, shipment, or storage or anyother form of Collateral, on behalf of and in the name of Debtor, and (3) maydeliver to any post office a letter substantially in the form attached asExhibit D.

 

13.           **Standards for exercising remedies**.

 

To the extent thatapplicable law imposes duties on Secured Party to exercise remedies in acommercially reasonable manner, Debtor acknowledges and agrees that it is notcommercially unreasonable for Secured Party (a) to decline to incur expensesthat are reasonably necessary (i) to prepare the Collateral for disposition or(ii) to complete work in process, (b) to fail to obtain third-party consentsfor access to any Collateral or to obtain (or if not required by other law, tofail to obtain) governmental or third party consents for the collection ordisposition of the Collateral, (c) to fail to (i) exercise collection remediesagainst account debtors or other persons obligated on the Collateral or (ii)remove liens, encumbrances, or any adverse claims against the Collateral, (d)to exercise collection remedies against account debtors and other personsobligated on the Collateral, directly or through the use of collection agenciesand other collection specialists, (e) to advertise dispositions of theCollateral through publications or media of general circulation, whether or notthe Collateral is of a specialized nature, (f) to contact other persons,whether or not in the same business as Debtor, for expressions of interest inacquiring all or any portion of the Collateral, (g) to hire one or moreprofessional auctioneers to assist in the disposition of  the Collateral, whether or not theCollateral is of a specialized nature, (h) to dispose of the Collateral byutilizing Internet sites that provide for the auction of assets of the typesincluded in the Collateral or that have the reasonable capability of doing so,or that match buyers and sellers of assets, (i) to dispose of assets inwholesale rather than retail markets, (j) to disclaim disposition warranties,(k) to purchase insurance or credit enhancements to insure Secured Partyagainst risks of

 

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loss, collection,or disposition of the Collateral or to provide to Secured Party a guaranteedreturn from the collection or disposition of the Collateral, and (l) to obtainthe services of brokers, investment bankers, consultants, and otherprofessionals to assist Secured Party in the collection or disposition of anyof the Collateral. Debtor acknowledges (a) that the purpose of this section is toprovide a nonexhaustive list of examples of actions or omissions that would notbe commercially unreasonable in Secured Party’s exercise of its remedies and(b) that other actions or omissions by Secured Party shall not be deemedcommercially unreasonable because of their omission from this section.  Nothing in this section shall be construedto grant any rights to Debtor or to impose any duties upon Secured Party thatwould not have been granted or imposed by this agreement or by applicable lawin the absence of this section.

 

14.           **Marshalling.**

 

Secured Party shall notbe required to marshal any present or future collateral security for  the Obligations or to resort to suchcollateral security or other assurances of payment in any particular order.  All of Secured Party’s rights under thisagreement and in respect of such collateral security and other assurances ofpayment shall be cumulative and in addition to all other rights, howeverexisting or arising.  To the extent thatit lawfully may do so, Debtor agrees that it will not invoke any law relatingto the marshalling of collateral which might delay or impede the enforcement ofSecured Party’s rights under this agreement, or under any other instrumentcreating or evidencing any of the Obligations, under which any of theObligations is outstanding or by which any of the Obligations is secured orpayment thereof is otherwise assured. To the extent that it lawfully may do so, Debtor hereby irrevocablywaives the benefits of all such laws.

 

15.           **Deposits.**

 

Regardless ofthe adequacy of the Collateral, any deposits or other sums at any time creditedby or due from Secured Party to Debtor may, at any time after any Event ofDefault, be applied to the Obligations or may be set off against liabilities onwhich Debtor is liable as a primary obligor and may, at or after the maturitythereof, be applied to or set off against liabilities on which Debtor is liableas a secondary obligor.

 

16.           **Waivers and Assents**.

 

To the fullextent permitted by law, but except as expressly provided otherwise in thisagreement, Debtor waives demand, notice, and protest of all instruments; noticeof acceptance of this agreement; notice of loans made, credit extended, andcollateral received or delivered; notice of all other actions taken by SecuredParty in reliance on this agreement; and all other demands and notices of anydescription.  With respect both to theObligations and the Collateral, Debtor assents to any extension, postponement,or other indulgence; to any substitution, exchange, or release of anyCollateral; to the addition or release of any person primarily or secondarily liable; to the acceptance of partialpayments; and to any settlement, compromise, or adjustment, all in such manner andat such time or times as Secured Party decides advisable.  To the full extent permitted by law, SecuredParty shall have no duty as to the collection or protection of the Collateralor any income therefrom; as to the preservation of rights against priorparties; or as to the preservation of any rights pertaining thereto.  Secured Party may exercise its rights withrespect to the Collateral without resort or regard to other sources ofreimbursement for the Obligations. Secured Party shall not be deemed to have waived any of its rightsunless such waiver is given in writing and is signed by Secured Party.  No delay or omission on the part

 

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of Secured Party in exercisingany right shall operate as a waiver.  Nowaiver shall arise from any course of conduct by Secured Party.  A waiver on one occasion shall not beconstrued as a bar to, or waiver of, any right on any future occasion.  All rights and remedies of Secured Party,whether available by law or stated in this agreement or in any other instrumentor document, shall be cumulative, and all such rights and remedies may beexercised singly, concurrently, or sequentially.

 

17.           **Expenses; Proceeds of Collateral**.

 

Debtor shallreimburse to Secured Party on demand for any and all expenses, including reasonableprofessional fees and reasonable counsel fees, incurred or paid by SecuredParty in protecting or enforcing its rights under this agreement (i) afternotice to Debtor, if no Event of Default is then outstanding, or (ii) after anyEvent of Default.  After deducting allsuch expenses, the balance of any proceeds of collection or sale of theCollateral shall be applied to the payment of principal, interest, and othersums due on the Obligations in such order as Secured Party may determine,proper allowance for interest on Obligations not then due being made, and anysurplus shall be paid as required by law.

 

18.           **General.**

 

A.            Notices shall be effective (1) uponactual delivery to the addressee’s principal office by any means or (2) whensent by certified mail (return receipt requested) to the addressee’s principaloffice.  In the case of notice bycertified mail, notice shall be deemed given on the third business day aftermailing.

 

B.            Notices shall be sent to thefollowing addresses or to such other address as a party designates by noticeduly given:

 
| ***Debtor***:                      |   | ***Secured Party***:               |
|------------------------------------|--------|------------------------------------|
|                               |   |                               |
| Boston Restaurant Associates, Inc. |   | Commerce  Bank & Trust Company |
| 999 Broadway                       |   | 390 Main Street                    |
| Suite 400                          |   | Worcester, MA 01608                |
| Saugus, MA 01906                   |   | Attn: Senior Loan Officer          |
| Attn:  President              |   |                               |

 

C.            Copies of notices shall be sent tocounsel as follows, but failure to send such a copy shall not affect thevalidity of the notice:

 
| ***Debtor***:           |   | ***Secured Party***:                 |
|-------------------------|--------|--------------------------------------|
|                    |   |                                 |
| Andrew P. Strehle, Esq. |   | Dale R. Harger, Esq.                 |
| Brown Rudnick,          |   | Mountain, Dearborn & Whiting LLP |
| Berlack Israels LLP     |   | 370 Main Street                      |
| 1 Financial Center      |   | Worcester, MA 01608                  |
| Boston, MA 02111        |   |                                 |

 

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D.            Because this agreement has beennegotiated and signed in Massachusetts in reliance upon the applicability ofMassachusetts substantive law, the construction, validity, and performance ofthis agreement shall be governed by the laws of Massachusetts, disregarding anylaw or doctrine that might dictate the application of the law of another stateexcept for Sections 9-301 through 9-307 of the Massachusetts UCC.  This agreement shall benefit the parties’successors and assigns and shall bind their successors and assigns.  This agreement may not be amended,supplemented, or otherwise changed except by a written instrument signed byboth parties.  This agreement containsthe entire understanding of the parties, superseding all negotiations,  representations, and prior understandingswith respect to the subject matter hereof.

 

E.             The defined terms “Loan Agreement,”“Note,” and “Future Notes” shall include all future amendments, restatements,modifications, renewals, and replacements.

 

19.           **Jury waiver**.  DEBTOR AND SECURED PARTY EACH WAIVE THE RIGHT TO TRIAL BY JURY INANY ACTION IN WHICH BOTH DEBTOR AND SECURED PARTY ARE PARTIES.

 

20.           **Organizational number. **Debtor represents that its “organizational number” forUCC purposes is 2196645.

 

21.           **Oven**. Notwithstanding anything to the contrary in this agreement, (a) the term“Collateral” shall not include the antique oven, or the components of suchoven, located at 11 1⁄2 Thacher Street, Boston, Massachusetts, but (b) to theextent that Debtor now has or hereafter acquires any interest in such oven,Debtor covenants and agrees with Secured Party that Debtor will not (i) sell orotherwise transfer ownership thereof, or (ii) grant to any person or entity anysecurity interest or other lien therein, and (c) in case of any mortgageforeclosure by Secured Party on the real estate in which the oven is located,Debtor covenants and agrees to cooperate with Secured Party in arranging thesale or removal of the oven.

 

Signed as asealed instrument April 30, 2002.

 
| Witness: |                                   |   |
|----------|----------------------------------------|--------|
|     | Boston  Restaurant Associates, Inc.    |
|     |                                   |   |
|     |                                   | By     |   |   |
|     | George R. Chapdelaine,                 |
|     | President and  Chief Executive Officer |
|     |                                   |
|     |                                   |   |
|     | Commerce  Bank & Trust Company     |
|     |                                   |   |
|     |                                   | By     |   |   |
|     | Roger F. Allard,                       |
|     | Senior Vice President                  |
|          |                                        |        |  |  |  |

 

11

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