EXHIBIT 10.09


 


SECOND ALLONGE TO
LOAN AGREEMENT


 


THIS SECOND
ALLONGE TO LOAN AGREEMENT (hereafter the “Allonge”) is made and entered into as
of the 13th day of February, 2004, between Commerce Bank & Trust Company, a
Massachusetts trust company with a principal place of business at 386 Main
Street, Worcester, Massachusetts (hereinafter “Lender”) and Boston Restaurant
Associates, Inc., a Delaware corporation with offices located in Saugus,
Massachusetts (hereinafter “Borrower”) and is firmly affixed to and made a part
of a certain Loan Agreement by and between Borrower and Lender dated as of
April 30, 2002, as amended by that certain Allonge to Loan Agreement dated as
of August 20, 2003 (hereinafter, as amended, the “Loan Agreement”), which
establishes a revolving credit facility (hereinafter “Revolver”) in the maximum
principal amount of Three Million Five Hundred Thousand and 00/100 Dollars
($3,500,000.00).


 


The Borrower
has informed the Lender that the Borrower has arranged for its subsidiary,
Ocean, Inc., to open new Pizzeria Regina restaurants at the Prudential Center
and at the South Station Transportation Building, both in Boston,
Massachusetts.  The Borrower wishes to
draw funds on the Revolver to finance the cost of outfitting such
restaurants.  Because the Borrower is
not in compliance with certain financial covenants prescribed by the Loan
Agreement, however, the Borrower is ineligible to draw on the Revolver unless
Lender waives such non-compliance.


 


The Lender has
agreed to grant the necessary waivers on the terms and conditions set forth in
this instrument, including without implied limitation the condition that
notwithstanding the waivers set forth below, all drawings on the Revolver shall
be subject to all other applicable provisions of the Loan Agreement.


 


FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of
which are hereby acknowledged, the Borrower and Lender hereby agree that the
Loan Agreement is hereby amended as follows:


 


1.                                       Limited
Financial Covenants Waiver.  With
respect to all periods ending on or before April 30, 2004, the Lender hereby
waives any non-compliance by the Borrower with the following provisions:
Section 15A (Profitability), Section 15B (Losses), Section 15C (Debt service
coverage), Section 15D (Capital Expenditures), and Section 15E (Tangible Net
Worth).  Such waiver does not extend to
any other period or any other provision. 
In order to give full effect to such waiver, the Borrower and Lender
adopt the following provisions respecting the test dates and the measurement
periods to be considered on such test dates:


 


(a)                                  Section
15A (Profitability) shall next be tested for the fiscal year ending April 30,
2005.


 


(b)                                 Section
15B (Losses) shall next be tested for the fiscal quarter ending October 31,
2004 (which shall include tests of performance for the fiscal quarter ending
July 31, 2004 and the fiscal quarter ending October 31, 2004).


 


(c)                                  Section
15C (Debt Service Coverage) shall next be tested July 31, 2004,


 

















 


provided that
the test period shall be only the one fiscal quarter ending July 31, 2004
(instead of the four quarters ending July 31, 2004, as provided in Section
15C).  The test for October 31, 2004
shall measure only the two fiscal quarters ending October 31, 2004 (instead of
the four quarters ending October 31, 2004, as provided in Section 15C).  The test for January 31, 2005 shall measure
only the three fiscal quarters ending January 31, 2005 (instead of the four
quarters ending January 31, 2005, as provided in Section 15C).  The test for April 30, 2005 (and each test
date thereafter) shall measure the four fiscal quarters ending on such date(s),
as provided in Section 15C.


 


(d)                                 Section
15D (Capital Expenditures) shall next be tested for the fiscal year ending
April 30, 2005.


 


(e)                                  Section
15E (Tangible Net Worth) shall next be tested as of July 31, 2004.


 


2.                                       Capital
Expenditures.  For purposes of
clause (b)(ii) of Section 15D of the Loan Agreement, the Lender hereby approves
the capital expenditures associated with the build-out of the two new Pizzeria
Regina’s to be owned by Ocean, Inc. and opened at the Prudential Center in
Boston, Massachusetts and at the South Station Transportation Building in
Boston, Massachusetts.


 


3.                                       Consideration
for Amendment.  In consideration of
the Lender’s agreements hereunder:


 


(a)                                  Waiver
Fee.  The Borrower agrees to pay the
Lender a waiver fee of Thirty-Five Thousand and 00/100 Dollars ($35,000.00),
such fee to be non-deductible and fully earned and payable on the date hereof.  Notwithstanding anything else to the contrary
in any of the Loan Documents (including, without limitation, Section 4A of the
Loan Agreement), the Lender agrees that the Borrower may use proceeds of the
Revolver to pay such waiver fee to the Lender on the date hereof.


 


(b)                                 Warrants.  The Borrower agrees to execute and deliver
to the Lender on this date a warrant in the form attached as Exhibit A
hereto.


 


4.                                       Interest
Rates.  In order to put into effect
a reversible 1% increase in the applicable interest rates under the Loan
Agreement, the Borrower and the Lender agree as follows:


 


(a)                                  Interest
Rates--Future Project Notes.  Exhibit
A (Project Note form) to the Loan Agreement is hereby amended by striking
and deleting Section 4a thereof and replacing it with the following:


 


“a.                                 Rate


 


(1)                                  Until Conversion Date.  Until the Conversion Date, the annual rate
of interest on the outstanding principal balance shall be a continuously
variable rate equal to the sum of (i) Lender’s Base Rate (defined below), as
changed from time to time, plus (ii) the Pre-Conversion Date Applicable Margin
(as defined below).


 

















 


(2)                                  After Conversion Date.  During the first twelve (12) months after
the Conversion Date, the annual rate of interest on the outstanding principal
balance shall be a fixed rate equal to the sum of (i) Lender’s Base Rate as of
the Conversion Date, plus (ii) the Post-Conversion Date Applicable Margin (as
defined below).  On the first
anniversary of the date of this Note (“First Adjustment Date”), the annual rate
of interest shall be changed to the sum of (i) Lender’s Base Rate as of the
First Adjustment Date, plus (ii) the Post-Conversion Date Applicable Margin (as
defined below).  The rate as thus
adjusted shall remain fixed for the year following the First Adjustment Date.  On each anniversary of the First Adjustment
Date, the annual rate of interest again shall be changed to the sum of (i) the
Lender’s Base Rate as of the date of the adjustment, plus (ii) the
Post-Conversion Date Applicable Margin; the rate as thus adjusted shall remain
fixed for the following year (or in the case of the final adjustment, the
following partial year preceding the maturity date of this note).  Notwithstanding the foregoing, the
interest rate shall also change immediately upon any change (upward or
downward) in the Pre-Conversion Date Applicable Margin or Post-Conversion Date
Applicable Margin (whether or not such change in the Pre-Conversion Date
Applicable Margin or Post-Conversion Date Applicable Margin occurs on any
anniversary date).


 


(3)                                  Applicable Margins and Compliance
Date.   If this note is
executed and delivered prior to the Compliance Date (as defined below), then
the “Pre-Conversion Date Applicable Margin” shall be (i) two and three-quarters
percent (2.75%) until the Compliance Date and (ii) one and three-quarters percent
(1.75%) thereafter.


 


If the Conversion Date occurs prior to the Compliance Date (as defined
below), then the “Post-Conversion Date Applicable Margin” shall be (i) three
percent (3.00%) until the Compliance Date and (ii) two percent (2.00%)
thereafter.


 


The term “Compliance Date” shall mean the date on or after July 31,
2004 on which the Borrower delivers to the Lender a Covenant Compliance
Certificate in the form required by Section 17A(4) of the Loan Agreement
indicating in reasonable detail that the Borrower is in compliance with the
financial covenants set forth in Section 15C (Debt Service Coverage) and
Section 15E (Tangible Net Worth) and that there is no Event of Default that has
occurred and is continuing.”


 


(b)                                      The
foregoing amendments to the Project Note form shall be deemed to be reversed,
and the Project Note form shall be deemed to be restored to its original form
as attached to the original Loan Agreement, upon the Compliance Date.


 


(c)                                       Interest
Rate—Consolidation Note.  The
Borrower agrees to execute and deliver to the Lender on this date a First
Allonge to $922,305 Note (Consolidation) in the form attached as Exhibit B
hereto.


 

















 


(d)                                      Interest
Rate—MIT Project Note.  The Borrower
agrees to execute and deliver to the Lender on this date a First Allonge to
$2,500,000 Project Note in the form attached as Exhibit C hereto.


 


As hereby
amended, the Loan Agreement is hereby ratified and confirmed in all respects,
and all terms and provisions of the Loan Agreement not amended hereby shall
remain in full force and effect.


 


WITNESS THE EXECUTION HEREOF,
as an instrument under seal as of the date first set forth above.


 


	
   

  	
  BORROWER:

  
	
   

  	
  BOSTON
  RESTAURANT ASSOCIATES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LENDER:

  
	
   

  	
  COMMERCE
  BANK & TRUST COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title: