**EXHIBIT 10.09**

 

**SECOND ALLONGE TOLOAN AGREEMENT**

 

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

 

The Borrowerhas informed the Lender that the Borrower has arranged for its subsidiary,Ocean, Inc., to open new Pizzeria Regina restaurants at the Prudential Centerand at the South Station Transportation Building, both in Boston,Massachusetts.  The Borrower wishes todraw funds on the Revolver to finance the cost of outfitting suchrestaurants.  Because the Borrower isnot in compliance with certain financial covenants prescribed by the LoanAgreement, however, the Borrower is ineligible to draw on the Revolver unlessLender waives such non-compliance.

 

The Lender hasagreed to grant the necessary waivers on the terms and conditions set forth inthis instrument, including without implied limitation the condition thatnotwithstanding the waivers set forth below, all drawings on the Revolver shallbe subject to all other applicable provisions of the Loan Agreement.

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# FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency ofwhich are hereby acknowledged, the Borrower and Lender hereby agree that theLoan Agreement is hereby amended as follows:

 

1.                                       LimitedFinancial Covenants Waiver.  Withrespect to all periods ending on or before April 30, 2004, the Lender herebywaives any non-compliance by the Borrower with the following provisions:Section 15A (Profitability), Section 15B (Losses), Section 15C (Debt servicecoverage), Section 15D (Capital Expenditures), and Section 15E (Tangible NetWorth).  Such waiver does not extend toany other period or any other provision. In order to give full effect to such waiver, the Borrower and Lenderadopt the following provisions respecting the test dates and the measurementperiods to be considered on such test dates:

 

(a)                                  Section15A (Profitability) shall next be tested for the fiscal year ending April 30,2005.

 

(b)                                 Section15B (Losses) shall next be tested for the fiscal quarter ending October 31,2004 (which shall include tests of performance for the fiscal quarter endingJuly 31, 2004 and the fiscal quarter ending October 31, 2004).

 

(c)                                  Section15C (Debt Service Coverage) shall next be tested July 31, 2004,

 

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provided thatthe 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 Section15C).  The test for October 31, 2004shall measure only the two fiscal quarters ending October 31, 2004 (instead ofthe four quarters ending October 31, 2004, as provided in Section 15C).  The test for January 31, 2005 shall measureonly the three fiscal quarters ending January 31, 2005 (instead of the fourquarters ending January 31, 2005, as provided in Section 15C).  The test for April 30, 2005 (and each testdate thereafter) shall measure the four fiscal quarters ending on such date(s),as provided in Section 15C.

 

(d)                                 Section15D (Capital Expenditures) shall next be tested for the fiscal year endingApril 30, 2005.

 

(e)                                  Section15E (Tangible Net Worth) shall next be tested as of July 31, 2004.

 

2.                                       CapitalExpenditures.  For purposes ofclause (b)(ii) of Section 15D of the Loan Agreement, the Lender hereby approvesthe capital expenditures associated with the build-out of the two new PizzeriaRegina’s to be owned by Ocean, Inc. and opened at the Prudential Center inBoston, Massachusetts and at the South Station Transportation Building inBoston, Massachusetts.

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3.                                       Considerationfor Amendment.  In consideration ofthe Lender’s agreements hereunder:

 

(a)                                  WaiverFee.  The Borrower agrees to pay theLender 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 contraryin any of the Loan Documents (including, without limitation, Section 4A of theLoan Agreement), the Lender agrees that the Borrower may use proceeds of theRevolver to pay such waiver fee to the Lender on the date hereof.

 

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

 

4.                                       InterestRates.  In order to put into effecta reversible 1% increase in the applicable interest rates under the LoanAgreement, the Borrower and the Lender agree as follows:

 

(a)                                  InterestRates--Future Project Notes.  ExhibitA (Project Note form) to the Loan Agreement is hereby amended by strikingand deleting Section 4a thereof and replacing it with the following:

 

“a.                                 *Rate*

 

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

 

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(2)                                  ***After Conversion Date.***  During the first twelve (12) months afterthe Conversion Date, the annual rate of interest on the outstanding principalbalance shall be a fixed rate equal to the sum of (i) Lender’s Base Rate as ofthe Conversion Date, plus (ii) the Post-Conversion Date Applicable Margin (asdefined below).  On the firstanniversary of the date of this Note (“First Adjustment Date”), the annual rateof interest shall be changed to the sum of (i) Lender’s Base Rate as of theFirst Adjustment Date, plus (ii) the Post-Conversion Date Applicable Margin (asdefined below).  The rate as thusadjusted shall remain fixed for the year following the First Adjustment Date.  On each anniversary of the First AdjustmentDate, the annual rate of interest again shall be changed to the sum of (i) theLender’s Base Rate as of the date of the adjustment, plus (ii) thePost-Conversion Date Applicable Margin; the rate as thus adjusted shall remainfixed for the following year (or in the case of the final adjustment, thefollowing partial year preceding the maturity date of this note).  Notwithstanding the foregoing, theinterest rate shall also change immediately upon any change (upward ordownward) in the Pre-Conversion Date Applicable Margin or Post-Conversion DateApplicable Margin (whether or not such change in the Pre-Conversion DateApplicable Margin or Post-Conversion Date Applicable Margin occurs on anyanniversary date).

 

(3)                                  ***Applicable Margins and ComplianceDate.***   If this note isexecuted and delivered prior to the Compliance Date (as defined below), thenthe “Pre-Conversion Date Applicable Margin” shall be (i) two and three-quarterspercent (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 definedbelow), then the “Post-Conversion Date Applicable Margin” shall be (i) threepercent (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 ComplianceCertificate in the form required by Section 17A(4) of the Loan Agreementindicating in reasonable detail that the Borrower is in compliance with thefinancial covenants set forth in Section 15C (Debt Service Coverage) andSection 15E (Tangible Net Worth) and that there is no Event of Default that hasoccurred and is continuing.”

 

(b)                                      Theforegoing 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 formas attached to the original Loan Agreement, upon the Compliance Date.

 

(c)                                       InterestRate—Consolidation Note.  TheBorrower agrees to execute and deliver to the Lender on this date a FirstAllonge to $922,305 Note (Consolidation) in the form attached as Exhibit Bhereto.

 

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(d)                                      InterestRate—MIT Project Note.  The Borroweragrees 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 herebyamended, the Loan Agreement is hereby ratified and confirmed in all respects,and all terms and provisions of the Loan Agreement not amended hereby shallremain 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: |

 

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