Document:

Exhibit 10.14

 

Loan
Agreement

 

This is an agreement
among Boston Restaurant Associates, Inc., a Delaware corporation with its
headquarters in Saugus, Massachusetts (“BRAI”), George R. Chapdelaine (“Trustee”),
only in his capacity as Trustee of BRA Nominee Trust (“Trust”) under a
declaration of trust dated January 23, 1991, recorded with the Suffolk
County Registry of Deeds in Book 16684, Page 20, and filed with the
Suffolk Registry District of the Land Court as Document No. 472988, and
Commerce Bank & Trust Company, a Massachusetts trust company with its
headquarters in Worcester, Massachusetts (“Lender”).

 

1.                                       Circumstances of the agreement.  BRAI, the Trustee, and Lender enter into this
agreement in the following circumstances.

 

A.                                   Through wholly-owned
subsidiaries, BRAI operates a chain of sixteen restaurants.  Such restaurants (“Restaurants”) are listed
on the schedule attached to this agreement as Schedule 1.

 

B.                                     The
Trustee owns three connected condominium units in Boston, Massachusetts (“Property”),
which are leased to one of BRAI’s subsidiaries for its use as one of the
Restaurants and for storage.

 

C.                                     Pursuant
to a Loan Agreement dated April 30, 2002 (“2002 Loan Agreement”), Lender
established for BRAI certain credit facilities in the maximum amount of
$3,500,000 (“2002 Loans”).

 

D.                                    BRAI
and the Trustee (“Borrowers”) have requested that Lender consolidate and
restructure the 2002 Loans by making the following loans (“New Loans”):

 

 

(1)                                  $800,000
to the Trustee (“Mortgage Loan”), the proceeds of which will be used primarily
to pay off a portion of the outstanding balance of the 2002 Loans; and

 

(2)                                  $1,500,000
to BRAI (“Term Loan”), the proceeds of which will be used primarily to pay off
the remainder of the outstanding balance of the 2002 Loans.

 

E.                                      Lender
has approved Borrowers’ loan request on the terms and conditions stated in this
agreement and in certain other legal documents signed on this date.

 

2.                                       Certain definitions.  The following
defined terms are used in this agreement.

 

A.                                   “Loan Documents” means
this agreement and all other legal documents signed and delivered to Lender by
Borrowers before, upon, or after the date of this agreement in connection with
any aspect of the transactions contemplated by this agreement, including
without implied limitation (1) the promissory notes that evidence the New
Loans, (2) a collateral assignment of a life insurance policy, (3) a
mortgage of even date granted by the Trustee to Lender on the Property, and (4) an
assignment of leases and rents of even date with respect to the Property,
together with all amendments, restatements, modifications, replacements,
renewals, supplements, and substitutions thereof and therefor.  A list of the Loan Documents as of the date
of this agreement is attached to this agreement as Schedule 2.

 

B.                                     “Related Documents”
means all agreements and all other legal documents signed and delivered between
or among Lender and any third party or parties on or after the date of this
agreement in connection with the transactions contemplated by this agreement
(including third-party documents also signed by one or both of the Borrowers),
together with all amendments, restatements, modifications, replacements,
renewals, supplements, and 

 

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substitutions.  Among the Related
Documents are (1) a Multi-Party Guaranty Agreement of even date (“Guaranty
Agreement”) among Lender, Borrowers, and BRAI’s subsidiaries, other than
Polcari’s of Hyannis, Inc., which are listed on Schedule 1 (“Subsidiaries”),
and (2) a Multi-Party Security Agreement of even date among Lender, BRAI,
and all of the Subsidiaries except Polcari’s of Cambridge, Inc.  A list of the Related Documents as of the
date of this agreement is attached to this agreement as Schedule 3.

 

C.                                     “Obligations”
means all monetary and non-monetary obligations of payment, performance,
observance, or otherwise, owed to Lender by Borrowers in connection with the
transactions contemplated by this agreement, by the other Loan Documents,
and/or by the Related Documents, regardless of whether such obligations are now
existing or hereafter arising, due or to become due, matured or unmatured,
contingent or absolute, liquidated or unliquidated, or joint, several, or joint
and several.

 

D.                                    “Obligors” means
collectively Borrowers and the Subsidiaries.

 

3.                                       New Loans.  Lender shall advance the proceeds of the New
Loans as soon after the date of this agreement as Borrowers have satisfied all
of Lender’s closing and funding conditions. 
Borrowers agree to satisfy such conditions within thirty days after the
date of this agreement.

 

4.                                       Status of commitment letter.  Lender’s commitment
letter dated January 19, 2005, is terminated by this agreement.

 

5.                                       Key person life insurance.  At all times while
any of the Obligations remain outstanding, BRAI shall keep in full force and
effect, through one or more insurers reasonably satisfactory to Lender, one or
more policies of insurance (“Policies”) on the life of BRAI’s President, who is
now George R. Chapdelaine (“Executive”). 
At all times the Policies (1) shall 

 

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be owned by BRAI, (2) shall identify BRAI as the beneficiary, (3) shall
provide death benefits aggregating not less than One Million Dollars
($1,000,000), net of policy loans, payable to BRAI upon the death of the
Executive, and (4) shall be collaterally assigned to Lender in the net
amount of $1,000,000 as security for the Obligations on terms and conditions
satisfactory to Lender.  No such
collateral assignment shall be considered complete until it has been
acknowledged by the insurer.  Upon the
death of the current Executive or any successor Executive, Lender may apply the
proceeds of the Policies to payment of the Obligations in such a manner as
Lender decides advisable, even if no Event of Default is then outstanding.  The insurance coverage required by this Section 5
shall be in addition to the insurance coverage referenced in Section 7B.

 

6.                                       Prohibition regarding cash dividends and
distributions.   BRAI covenants and agrees with Lender that it
will not pay any cash dividends to any of its stockholders or make any other
cash distribution to any of its stockholders on account of the stock held by
such stockholders, except that Borrower may pay dividends to the holders of its
preferred stock issued as of January 20, 2005 (“Preferred Stock”), as
required by the terms thereof.  BRAI
represents to Lender that the Preferred Stock was issued pursuant to and in
accordance with documents in the form of those that are attached to this agreement
as collective Exhibit D.

 

7.                                       Debentures.

 

A.                                   BRAI represents to
Lender (a) that the list attached as Schedule 4 identifies correctly
all of BRAI’s outstanding convertible debentures (“Debentures”) and (b) that
all of the Debentures are in the form attached as Exhibit A.  BRAI shall make no payments of principal on
the Debentures while any of the Obligations remain outstanding, except as
provided in Section 7B, but may make regularly scheduled payments of
interest on the Debentures as long 

 

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as (i) no Event of Default has occurred, is outstanding, and has
not been cured, waived, or ceased to exist, and (ii) the payment of
interest would not cause an Event of Default to occur.  BRAI shall not voluntarily convert any of the
Debentures if any Event of Default is outstanding.

 

B.                                     Subject to the
provisions of Section 5 of this agreement, BRAI may use up to $1,000,000
of the proceeds of key man life insurance policy number 75119693 to permit the
holders of the Debentures to redeem, on a pro rata basis amongst themselves,
pursuant to an agreement dated as of December 31, 1996, up to $1,000,000
in principal amount of the Debentures.

 

8.                                       Redemption of stock.  BRAI shall not redeem any shares of its stock
without Lender’s prior express written approval, which shall not be
unreasonably withheld or delayed.   A
stockholder’s conversion of Preferred Stock to common stock shall not be
considered a violation of the foregoing provision, provided that BRAI makes no
payment in consideration of such conversion.

 

9.                                       Prohibition regarding loans, investments, and
acquisitions.  Without
Lender’s prior express written approval, BRAI shall not Invest in or Acquire
(as defined below) any other business organization, except that BRAI may Invest
in any of the Subsidiaries.   In this Section 9,
“Invest in or Acquire” means (i) to lend money, (ii) to guaranty
another’s obligations (except to Lender), (iii) to purchase securities or
debt, (iv) to acquire directly or indirectly any equity interest, and (v) to
acquire all or substantially all of the assets of an organization.

 

10.                                 New
Indebtedness; Renovation Projects.

 

A.                                   New
Indebtedness.   BRAI shall
not incur any New Indebtedness without Lender’s prior express written
consent.  “New Indebtedness” includes any
actual or contingent liability arising after the date of this agreement from (1) an
extension of credit, (2) a guaranty by 

 

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any of the Obligors of another’s indebtedness or obligations, or (3) any
other consensual transaction which creates in any of the Obligors a direct or
indirect obligation of future payment; New Indebtedness does not include,
however, (i) indebtedness incurred in financing a Renovation Project, as
defined below, provided that such financing is permissible under Section 10B,
(ii)   indebtedness to vendors
incurred in the ordinary course of business to the extent that (a)  the
invoice is payable within ninety (90) days after the delivery of the goods or
services, and (b) payment is not more than thirty (30) days overdue, (iii) indebtedness
owed to Lender, and (iv) guarantees of others’ indebtedness to Lender.

 

B.                                     Renovation Projects.   If BRAI and/or one of the
Subsidiaries wishes to borrow money to renovate one or more of the Restaurants,
then BRAI shall notify Lender of the scope and cost of the project (“Renovation
Project”) and of the amount of financing desired (“Renovation Financing”).  Lender shall use reasonable efforts to notify
BRAI within thirty (30) days thereafter as to the terms and conditions, if any,
on which Lender is willing to provide Renovation Financing.  If Lender makes any offer to provide
Renovation Financing (“Offer”) then BRAI shall not proceed with the Renovation
Project unless BRAI either accepts the Offer or elects to proceed with the
Renovation Project without any Renovation Financing.  If Lender fails to make an Offer, then BRAI
shall (i) proceed with the Renovation Project without any Renovation
Financing, (ii) cancel the Renovation Project, or (iii) with Lender’s
prior express written consent, obtain Renovation Financing from a third party.

 

11.                                 Existing
debt.   Borrowers represent to Lender that the list
attached to this agreement as Schedule 5 (“Other Debt”) identifies
correctly all indebtedness of the Obligors, including capital leases, other
than (a) the debt represented by the Debentures and (b) trade debt 

 

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to vendors.  Lender acknowledges
that BRAI’s obligations with respect to the Preferred Stock do not constitute
indebtedness for purposes of this Section 11.

 

12.                                 Financial
covenants.  BRAI covenants and agrees with Lender as
follows:

 

A.                                   Profitability.    As of the end of each fiscal year,
BRAI shall have annual net after-tax income
of at least one dollar ($1.00).

 

B.                                     Losses.  BRAI shall not have negative net after-tax
income in more than two consecutive fiscal quarters, even if the quarters span
two fiscal years, except with the respect to the last quarter of BRAI’s 2005
fiscal year and the first quarter of its 2006 fiscal year.

 

C.                                     Debt service coverage.

 

(1)                                  As of the end of each
fiscal quarter of each fiscal year of BRAI, subject to Section 12C(2), the
ratio of (a) BRAI’s Adjusted Operating Cash Flow for the four most recent
quarters, to (b) its Debt Service Liability for such four quarters, shall
be (c) at least one and one-half to one (1.50:1.00). “Adjusted Operating
Cash Flow” means (x) the sum of (i)  net income after corporate income
taxes, (ii) interest payable on loans and capital leases, (iii) depreciation
expense, and (iv) amortization expense, less (y) the sum of (i) internally
financed capital expenditures and (ii) dividends paid in accordance with Section 6
of this agreement to holders of the Preferred Stock, all for the four most
recent quarters, and all on a consolidated basis.  “Debt Service Liability” means the sum of all
principal and interest payable during such four quarters on all loans and
capital leases.  A copy of the formula to
be used for calculation of the foregoing covenant is attached to this agreement
as Exhibit B.

 

(2)                                  For the first three
quarters of the fiscal year ending in April 2006, notwithstanding the
ratio and the testing schedule prescribed by Section 12C(1), BRAI’s
debt service coverage ratio shall be measured and tested only as follows: (i) such
ratio shall be at least 

 

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1.10:1.00  for the single fiscal
quarter ending in July 2005; (ii) at least 1.30:1.00 for the two
fiscal quarters ending in October 2005; and (iii) at least 1.50:1.00
for the three fiscal quarters ending in January 2006.

 

D.                                    Capital expenditures.  In no fiscal year
shall BRAI’s aggregate capital expenditures, calculated as prescribed below,
exceed Five Hundred Thousand Dollars ($500,000).  In calculating its capital expenditures, BRAI
(a) shall include all payments due to be made by any of the Obligors
during the year on capital leases to the extent that the payment obligations
were created during the year (whether through renewal, extension, or
supplementation of a previously existing lease or through execution of a new
lease) but (b) shall exclude (i) the financed portion of the costs of
any Renovation Project if such costs are incurred in accordance with Section 10
of this agreement and (ii) the costs of the current renovation of the
Restaurant in Saugus, Massachusetts.  A
list of the Obligors’ current capital leases, including annual payment
obligations, is attached to this agreement as Schedule 6.

 

E.                                      Tangible net worth.  At all times the sum
of (1) BRAI’s tangible net worth, as defined by generally accepted
accounting principles (“GAAP”), and (2) the outstanding principal balance
of any indebtedness that is subordinated to Lender’s claims against BRAI on
terms that are satisfactory to Lender (including the Debentures), shall be at
least Seven Hundred Thousand Dollars ($700,000).

 

F.                                Consolidation.  In
determining BRAI’s compliance with the covenants set forth in this Section 12,
Borrower’s financial performance and condition shall be consolidated with that
of the Subsidiaries.

 

G.                               Exclusion.  For all purposes of this Section 12,
there shall be excluded all amounts reasonably allocable to Polcari’s of
Cambridge, Inc.

 

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13.                                 Methodology
for determining compliance with covenants. 
Compliance with all financial covenants in this agreement
shall be determined from the financial statements and certificates submitted to
Lender pursuant to this agreement, together with such other information as
Lender obtains.  BRAI shall ensure that
such financial statements and certificates permit the ready and accurate
calculation of all ratios and other components of the covenants.  If Lender determines to its satisfaction that
such documents do not fully or accurately report the information necessary to
calculate such items, then BRAI shall appropriately revise or supplement the
documents within ten business days after Lender’s written request.

 

14.                                 Reporting.

 

A.                                   Borrowers agree to
deliver to Lender the following reports and information on the following
conditions and terms:

 

(1)                                  Within thirty days
before the end of each of BRAI’s fiscal years: A business operating plan for
the upcoming fiscal year, prepared internally on a consolidated and consolidating
basis, including monthly cash flow projections, and also including any
projected new restaurant;

 

(2)                                  Within forty-five
days after the end of each fiscal quarter of BRAI:  An internally prepared financial statement of
BRAI, such statement to include a balance sheet, a statement of profit and
loss, and a statement of cash flow, on both a consolidated and an
unconsolidated basis;

 

(3)                                  Within one hundred
twenty days after the end of each of BRAI’s fiscal years: consolidating and
consolidated financial statements of BRAI for the fiscal year most recently
ended, including a statement of profit and loss, a balance sheet, and a
statement of cash flow, such consolidated financial statements (but not such
consolidating financial statements) to 

 

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be audited by an independent certified public accountant reasonably
satisfactory to Lender (for which purpose, Lender approves BDO Seidman),
together with any management letter and all other letters, reports, and other
documents given by such accountant to BRAI,

 

(4)                                  At the same times
when reports are due to be delivered to Lender pursuant to the preceding
subsections (2) and (3): A Covenant Compliance Certificate in one of the
forms attached to this agreement as Exhibit C, duly executed by the
President or Treasurer of BRAI, together with a reasonably detailed explanation
and documentation of the calculations made in preparing the certificate; and

 

(5)                                  Within fifteen days
after their filing: Copies of all documents filed by BRAI with the Securities
and Exchange Commission.

 

B.                                     All financial
statements, certificates, and reports submitted to Lender shall be in such form
as Lender from time to time requests in good faith.  If Lender in good faith requests additional
information and/or documents pertaining to the business or financial affairs of
any of the Obligors, then Borrowers shall deliver such information and
documents to Lender in a form reasonably satisfactory to Lender within ten days
after Lender’s request.

 

C.                                     In addition to the
Audits, Borrowers agree to allow Lender and its representatives to inspect and
copy any and all books, records, and other documents and information (including
information stored electronically) concerning the Obligors’ business and
finances.  Lender shall be given such
access to such documents and information during business hours, upon reasonable
notice, and with such frequency as Lender reasonably decides advisable.  Borrowers shall cooperate with Lender during
such inspections and shall instruct their representatives, employees,
bookkeepers, and accountants also to cooperate with Lender.  If any item that Lender wishes to review
belongs to one of the Subsidiaries and is not in BRAI’s 

 

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possession, then BRAI promptly shall cause the item (or a copy thereof)
to be made available to Lender at a time and place satisfactory to Lender.  Lender’s activities under this Section 14C
shall be conducted at Lender’s expense unless such activities are undertaken in
response to an Event of Default, in which case Borrowers shall reimburse Lender
therefor within ten days after Lender’s written request.

 

D.                                    From time to time
within ten days after a written request by Lender, one or more senior officers
of BRAI shall meet with Lender to assess BRAI’s operating performance and such
other issues as Lender designates.  Such
meetings shall be held at times and places reasonably selected by Lender.  At such meetings BRAI (1) shall provide
Lender with all documents and information requested in good faith by Lender and
(2) shall make available for consultation any employees, agents, and
consultants whose attendance is reasonably requested in good faith by Lender.

 

15.                                 Standard
representations and warranties.  This Section 15 includes
provisions pertaining not only to Borrowers but also to the Subsidiaries.  Borrowers acknowledge and agree with Lender
that any violation of such a provision will constitute an Event of Default even
if Borrowers bear no direct responsibility for the violation.  On that basis, Borrowers jointly and
severally warrant and represent to Lender as follows with respect to themselves
and the Subsidiaries.

 

A.                                   Organization.  Each of the
Obligors has been duly organized under the laws of the state of its
organization and is in good standing under the laws of such states and under
the laws of every other jurisdiction in which it does business and in which the
failure to be so qualified would have a material adverse effect upon its
operations.  Each of the Obligors has the
power and authority to own its assets, (ii) to operate its business as
presently conducted,

 

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(iii) to enter into (a) this agreement and the other Loan
Documents (in the case of Borrowers) or (b) the Related Documents (in the
case of Borrowers and/or the Subsidiaries) (all collectively “Principal
Agreements”) and (iv) to perform and observe its obligations under the
Principal Agreements.

 

B.                                     Authorization.  The signing, delivery, and performance
of the Principal Agreements (1) have been duly authorized by all required
votes and other actions of the Obligors and their stockholders, directors, or
beneficiaries (2) do not and will not contravene any law or regulation in
any material respect, (3) are in accord with the Obligors’ organizational
documents and all other governing documents, and (4) do not and will not
in any material respect constitute a violation of, or a default under, any
agreement, instrument, judgment, order, decree, permit, license, or other
restriction or undertaking binding upon any of the Obligors or any of their
assets, nor will the same result in the creation (other than in favor of
Lender) of any mortgage, pledge, security interest, lien, encumbrance, or
charge upon any of the Obligors’ assets.

 

C.                                     Valid and binding obligations.  The Principal
Agreements and all of their terms and conditions are valid and binding
obligations of the Obligors and are enforceable in accordance with such terms,
except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting the rights of creditors generally.

 

D.                                    Approvals.  Except as set forth in Schedule 7,
attached, the Obligors’ signing and delivery of the Principal Agreements and
their performance of their obligations under the Principal Agreements do not
require any approval, consent, filing, or registration with (1) any
government or governmental agency or authority, or (2) any nongovernmental
entity or person.

 

E.                                      Ownership of collateral.  At the time the
Obligors mortgage, pledge, assign, or otherwise transfer to Lender as
collateral any interest in any property (1) each of the 

 

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Obligors is and shall remain the lawful owner of such interest; (2) each
of the Obligors now has and always shall retain the right to mortgage, pledge,
assign, or otherwise transfer such interest; (3) except to the extent
expressly permitted by another provision of this agreement or any of the other
Loan Documents or Related Documents no such interest now is, or in the future
shall be, mortgaged, pledged, assigned, or otherwise transferred to any person
other than Lender, or in any way encumbered, without Lender’s prior express
written consent, and (4) the Obligors will defend the same against the
claims and demands of all persons.

 

F.                                      Initial financial
statements.  In
entering into this agreement Lender has relied upon Borrower’s audited
financial statements for the period ending April 25, 2004, and unaudited
financial statements for the period ending January 23, 2005 (“Initial
Financial Statements”).  The Initial
Financial Statements (a) were prepared in accordance with GAAP and (b) fairly
presented (i) the financial condition of the Obligors and (ii) the
operation of the Obligors’ businesses. 
As of the date or dates of the Initial Financial Statements, the
Obligors had no material indebtedness or other material liabilities, debts, or
obligations whether accrued, absolute, contingent, or otherwise, whether due or
to become due, including but not limited to liabilities or obligations on
account of taxes or other governmental charges, other than those reflected in
the Initial Financial Statements.

 

G.                                     Changes.  Since the date or dates of the Initial
Financial Statements there have been no changes in the assets, liabilities,
financial condition, operations, prospects, or business of the Obligors, the
effects of which have been materially adverse, individually or in the aggregate
as to any one or all of the Obligors. 
Each of the Obligors (1) owns assets having a fair saleable value
in excess of the amount required to pay the probable liability on its existing
and 

 

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anticipated debts and other obligations, and (2) has access to
adequate capital for the conduct of its business and the discharge of its debts
as such debts mature.

 

H.                                    Accuracy of Other Financial and Business
Information.  In addition to the Initial Financial
Statements, Borrowers have provided Lender various documents concerning their
financial position, business operations, business prospects, and related
matters, all of which are identified on the attached Schedule 8 (“Initial
Business Information”).  All the Initial
Business Information is true and accurate in all material respects.  Borrowers have disclosed to Lender all
information which is reasonably necessary to make the Initial Business
Information, together with the Initial Financial Statements, not misleading as
to the Obligors’ finances, businesses, and prospects.

 

I.                                         Events of Default.  As of the date of
this agreement, no Event of Default (defined below) exists, and no circumstance
or condition exists which, but for the passage of time or the giving of notice,
or both, would constitute an Event of Default.

 

J.                                        Taxes.  The Obligors have filed all
federal, state, and other tax returns which are required and either have paid
in full all required taxes, assessments, and other governmental charges or have
established adequate reserves for any taxes which they are contesting.  The Obligors have established adequate
reserves for the payment of all federal, state, and other tax liabilities not
yet due and payable.

 

K.                                    Litigation.  There is neither pending nor, to
the best of Borrowers’ knowledge, threatened, any litigation, proceeding, or
governmental investigation, administrative or judicial, which if decided
adversely might have a materially adverse effect on any of the Obligors’
businesses, properties, or condition (whether financial or otherwise) or on
their ability to perform their obligations under the Principal Agreements.

 

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L.                                      Margin rules.  No monies advanced by Lender will
be used to purchase or carry any “margin security” or “margin stock” as such
terms are used in Regulations T, U, and X of the Board of Governors of the
Federal Reserve System, or to extend credit to others for such purposes.  The Obligors are not engaged principally in,
or have one of their important activities, the business of extending credit to
purchase or carry any such margin security or margin stock.  If requested by Lender, the Obligors will
furnish Lender with a statement in conformity with the requirements of Federal
Reserve Form U-1 referred to in such regulations.

 

M.                                 ERISA.   (1) No “Employee Benefit Plan”
as such term is defined in the Employee Retirement Income Security Act of 1974
and regulations thereunder (“ERISA”), as the same have been and shall be
amended from time to time and maintained by the Obligors (individually a “Plan”
and collectively the “Plans”) or any related trust or any trustee or
administrator thereof, has engaged in a “prohibited transaction” (as such term
is defined in Section 406 of ERISA) which would subject any party,
including the Obligors, the Plans themselves, or any trustee, administrator or
service provider to any material tax or penalty on prohibited transactions
imposed by Section 4972 of the Internal Revenue Code (“Code”); (2) no
Pension Plan subject to Title IV of ERISA or to the minimum funding standards
of Section 302 of Title I of ERISA has ever been sponsored by the Obligors
or terminated, nor have there been any reportable events (as that term is
defined Section 4043 of ERISA) with respect to any such Pension Plan since
the effective date of ERISA, nor has any such Pension Plan incurred any “accumulated
funding deficiency” (as such term is defined in Section 422(a) of the
Code) whether or not waived, since the effective date of ERISA; and (3) the
Obligors are not now and never have been a party to any multi-employer pension
or benefit plan nor have they participated 

 

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in any unfunded plan providing for post-retirement health insurance
except for coverage as may be required by ERISA.

 

N.                                    Compliance.  The Obligors possess all necessary and
material permits, approvals, authorizations, consents, licenses, franchises,
registrations, and other rights and privileges (including patents, trademarks,
trade names, and copyrights) to allow them to own and operate their businesses
without any material violation of law or of the rights of others.  The Obligors are duly authorized, qualified,
licensed under, and in compliance with, all material laws, regulations, authorizations,
and orders of public authorities to the extent that the same are necessary or
applicable to the ownership and operation of their businesses.

 

O.                                    Hazardous materials.  To the best of
Borrowers’ knowledge, the Obligors have not violated in any material respect
any local, state, or federal law or regulation relating to the storage,
generation, use, transportation, treatment, or disposal of solid wastes, and no
such material violation has occurred at any time at, on, or from any real
estate ever owned by the Obligors or any predecessor in interest of the
Obligors.  There has occurred no material
spill, discharge, leak, emission, injection, escape, dumping, or release of any
kind of any toxic or hazardous substances as defined under any applicable local,
state, or federal laws or regulations on any such real estate or into the
environment surrounding any such real estate other than those releases of waste
water or air emissions permissible under such laws or regulations or allowable
under valid permits held by the Obligors or any predecessor in interest.  The Obligors have no knowledge of any facts
which could form a basis for any liabilities, damages, obligations, losses, or
expenses relating to any such environmental conditions. The Obligors have received
no notice of responsibility or other notice or demand relating to any alleged
violation of any law or regulation relating to hazardous substances or
environmental conditions.

 

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P.                                      Accuracy of books and records.  All books and
records of the Obligors accurately reflect in all material respects all matters
and transactions reported or recorded therein.

 

Q.                                    Subsidiaries.  Except as set forth in Schedule 1,
the Obligors (1) have no wholly owned subsidiaries and (2) have no
investments in the stock or securities of any other corporation, firm,
partnership, trust, or other entity. 
BRAI represents (1) that it owns all the issued and outstanding
stock of all of the corporate Subsidiaries except Fantail Restaurant, Inc.,
(2) that Ocean, Inc. owns all the issued and outstanding stock of
Fantail Restaurant, Inc., and (3) that BRAI owns the entire
beneficial interest in the Trust.

 

R.                                     Insurance.  The Obligors now maintain and
always have maintained insurance coverage against such risks and in such amounts
as they reasonably believe necessary to protect against all reasonably
foreseeable claims for property damage, personal injury, and other risks.

 

16.                                 Standard
Covenants and Warranties.  This Section 16 includes
provisions pertaining to the Subsidiaries as well as to Borrowers.  Borrowers agree with Lender that any
violation of such a provision will constitute an Event of Default even if
Borrowers bear no direct responsibility for the violation.  On this basis, Borrowers jointly and
severally covenant with Lender and warrant to Lender as follows.

 

A.                                   Legal
existence and good standing.  Each of the Obligors will maintain
its legal existence and good standing in the state of its organization and will
maintain its qualification to do business in every other state in which it is
currently qualified if the failure to maintain such qualification would have a
material adverse effect upon its operations, except that if BRAI closes the
Restaurant operated by Polcari’s of Cambridge, Inc., or closes or sells
the 

 

17

 

Subsidiaries’ current Restaurants located in Florida and/or New Jersey,
then the subsequent dissolution of the corporation operating each such closed
Restaurant shall not constitute a violation of this Section 16A.  Each of the Obligors will qualify to do
business in every other state in which such qualification becomes required by
law and thereafter will maintain such qualification, unless a failure to so
qualify would not have any material adverse effect.

 

B.                                     Conduct of Business.  Each of the Obligors
will duly observe and comply in all material respects with all applicable laws
and all requirements of any governmental authorities relative to its assets and
to the conduct of its business. Each of the Obligors will obtain, maintain, and
keep in full force and effect, all material authorizations, approvals,
consents, franchises, licenses, permits and other rights and privileges
necessary to the conduct of its business.

 

C.                                     Losses and disputes regarding collateral.  Borrowers
immediately will notify Lender of any event materially adversely affecting any
material part of any tangible or intangible property in which Lender has a
security interest, whether the property is owned by one of the Borrowers or by
one of the Subsidiaries.

 

D.                                    Maintenance and insurance of assets, other
insurance.  Each of the Obligors will insure
its assets against such hazards and liabilities, in such form and amounts, and
with such insurers, as may be reasonably satisfactory to Lender. Each of the
Obligors will maintain insurance against such other risks and liabilities,
including liability for property damage and personal injury, in such form and
amounts, and with such insurers, as may be reasonably satisfactory to Lender.  From time to time on Lender’s request, and
without any request at least thirty days before any insurance policy is due to
expire, Borrowers will provide Lender with certificates of the foregoing
insurance policy or policies.

 

18

 

E.                                      Taxes.   Each of the Obligors will pay or cause to be
paid:

 

(1)                                  All taxes,
assessments, and other governmental charges on or against it or its properties
prior to such taxes becoming delinquent, unless such tax, assessment, or charge
is being contested in good faith by proper legal proceedings and adequate
reserves have been established and maintained therefor;

 

(2)                                  All excise, sales,
and other taxes or charges which become due and payable with respect to any
sale or other transaction giving rise to any account receivable or other right
to the payment of money or with respect to the collection thereof.

 

F.                                      [Intentionally
omitted ]

 

G.                                     [Intentionally
omitted ]

 

H.                                    [Intentionally
omitted]

 

I.                                         ERISA Compliance.  Neither the Obligors
nor any Pension Plan of the Obligors will:

 

(1)                                  engage in any
prohibited transaction (as defined in ERISA) which would subject any party,
including the Obligors, the Plans themselves, or any trustee, administrator, or
service provider to any material tax or penalty on prohibited transactions
imposed by Section 4972 of the Internal Revenue Code (“Code”);

 

(2)                                  incur any “accumulated
funding deficiency” (as defined in Section 412(a) of the Code or Section 302
of ERISA), whether or not waived; or

 

(3)                                  terminate any Pension
Plan in a manner which could result in the imposition of a lien on any property
of any of the Obligors.

 

19

 

J.                                        Pension Plans. 
With respect to any Pension Plan the benefits under which
are guaranteed in whole or in part by the Pension Benefit Guaranty Corporation
(the “PBGC”), each of the Obligors shall:

 

(1)                                  Fund each Pension
Plan as required by the provisions of Section 412 of the Code and Section 302
of ERISA;

 

(2)                                  Cause each Pension
Plan to pay all benefits when due in accordance with applicable law; and

 

(3)                                  Furnish to Lender (i) written
notice of the occurrence of a Reportable Event (as such term is defined in Section 4043
of ERISA), such notice to be given promptly, but in any event within five (5) days
of the occurrence of a Reportable Event with respect to a Pension Plan; (ii) a
copy of any request for a waiver of the funding standards or an extension of
the amortization periods required under Section 4122 of the Code and Section 302
of ERISA, such copy to be furnished not later than the date of submission of
the request to the Department of Labor or to the Internal Revenue Service (the “IRS”),
as the case may be; (iii) a copy of any notice of intent to terminate any
Pension Plan, such copy to be furnished no later than the date of submission to
the PBGC; and (iv) notice that the Obligor will or may incur any liability
to or on account of a Pension Plan under Section 4062, 4063, 4064, 4201 or
4204 of ERISA, such notice to be given within the ten (10) days after the
Obligor knows or has reason to know thereof. 
Any notice to be provided to Lender under this Section shall
include a certificate of the Obligor’s chief financial officer setting forth
details as to such occurrence and the action, if any, which is required or
proposed to be taken, together with any notices required or proposed to be
filed with or by the Obligor, the PBGC, the IRS, the trustee, or the plan
administrator with respect thereto.

 

20

 

K.                                    Notification of default.  Within five (5) business
days after becoming aware of the existence of any circumstance or occurrence
which with or without the giving of notice or the passage of time, or both,
would cause or constitute an Event of Default, Borrowers will give Lender
written notice thereof, specifying the nature of the matter and the action
being taken or proposed to be taken with respect thereto.

 

L.                                      Notification of litigation.  Borrowers will
notify Lender in writing of any litigation commenced against any of the
Obligors and of any proceeding commenced against any of the Obligors by any
governmental agency or authority, if there is any reasonable likelihood that
such litigation or proceeding, singly or in combination with others, reasonably
might be expected to have a material adverse effect upon any or all of the
Obligors.  Such notice will be given
within five business days after the commencement of the action or proceeding.

 

M.                                 Notification
of material adverse change.  Borrowers will notify Lender within
five business days after there occurs or arises any circumstance or occurrence
which might reasonably be expected to constitute or cause either a material
adverse change in the financial or business condition of any or all of the
Obligors or a material diminution in the value of any material part of its
tangible or intangible property of any or all of the Obligors.

 

N.                                    Maintenance of books and records.   Each of the Obligors will keep adequate
records and books of account, in which true and complete entries will be made
reflecting all of the material business and financial transactions relating to
its business and its assets.

 

O.                                    Inspection by Lender.    Each
of the Borrowers will permit Lender from time
to time on reasonable oral notice (and not, in any case, less than twenty-four
hours) to inspect its facilities and tangible assets.

 

21

 

P.                                      Further assurances.  Borrowers will sign
and deliver such additional documents, instruments, and other papers, and will
take all such actions, as Lender reasonably requires to assure to Lender its
rights under this agreement and the other Loan Documents and to carry into
effect the provisions of this agreement.

 

Q.                                    Environmental regulations and hazardous materials.  Each of the Obligors
will comply in all material respects at all times with any and all applicable
federal, state, and local laws, rules, orders, and regulations governing
hazardous materials, hazardous wastes, or oil as defined in any local, state,
or federal laws, rules, orders, and regulations and will otherwise comply in
all material respects with all laws and regulations relating to pollution
control in all jurisdictions in which it operates.

 

R.                                     Merger and consolidation.  Without Lender’s
prior express written consent, none of the Obligors will consolidate with or
merge with or into any other corporation or other entity, even if the Obligor
would be the survivor.

 

S.                                      Performance of Other Contracts.  Each of the Obligors
will perform and observe all of its material duties and obligations under its
present and future material contracts and agreements with vendors, lenders,
lessors, lessees, and other persons and organizations.

 

T.                                     Operating Account; autocharge.  BRAI and the Subsidiaries will maintain all of
their principal depository accounts and investment accounts with Lender.  One or more such accounts (“Operating
Accounts”) shall be designated as the source of Borrowers’ payments of the New
Loans.  BRAI may maintain accounts at
other banks for payroll transactions and for the daily depositing of revenue,
but the balance of any such deposit accounts shall be transferred daily to
Lender.  Borrowers shall ensure that the
balance of immediately available funds in the Operating Accounts is sufficient
to enable Lender to withdraw from the 

 

22

 

accounts when due every payment called for by this agreement or by the
notes evidencing the New Loans. 
Borrowers irrevocably authorize Lender to make such withdrawals without
prior notice.

 

17.                                 Additional
representatives, warranties, covenants, and agreements.

 

A.                                   Ownership
of the Subsidiaries.  In
entering into this agreement, Lender relies upon (1) BRAI’s absolute and
unencumbered ownership and control of all beneficial interests in the Trust, (2) BRAI’s
absolute and unencumbered ownership and control of all shares of stock in all
of the corporate Subsidiaries except Fantail, and (3) Ocean’s absolute and
unencumbered ownership and control of all shares of stock of Fantail.  The purpose of this Section 17A is to
ensure that the foregoing ownership and control continue as long as any of the
Obligations remain outstanding, except with respect to Subsidiaries which are
dissolved pursuant to applicable provisions of this agreement.

 

(1)                                  Representations
and warranties.  BRAI
warrants and represents to Lender (a) that the ownership of the
Subsidiaries is accurately and completely set forth in this Section 17A, (b) that
all information set forth in Schedule 1 is true and complete, and (c) that
no information omitted from Schedule 1 is reasonably necessary to make the
included information not materially misleading. 
BRAI further warrants and represents to Lender that its interests in the
Subsidiaries and in the Trust (collectively “Interests”) are subject to no
agreement, warrant, trust, encumbrance, lien, or other obligation of any kind
whatsoever which could result in the voluntary or involuntary transfer to any
person or entity of all or any portion of such Interests.

 

(2)                                  Covenants.  BRAI covenants and agrees with Lender to
maintain exclusive and unencumbered ownership and control of the
Interests.  Without limiting the
generality of the preceding sentence, BRAI covenants and agrees with Lender as
follows:

 

23

 

(a)                                  Not to sell, pledge,
encumber, or otherwise transfer or agree to transfer in any manner whatsoever
any of the Interests;

 

(b)                                 Not to cause or permit
the issuance or sale of any additional capital stock of the corporate Subsidiaries;
and

 

(c)                                  Not to take any
actions contrary to the stated purposes of this Section 17A.  The corporate dissolutions referenced in Section 16A
of this agreement shall not be considered a violation of the foregoing
provisions.

 

(3)                                  Involuntary
transfers.   BRAI agrees with Lender that for the purposes
of this Section 17A any involuntary transfer of any interest in any of the
Interests shall constitute a breach of these covenants and agreements.

 

B.                                     Trademarks, franchises, and liquor licenses.  BRAI represents to Lender (1) that
the list attached as Schedule 9 identifies all liquor licenses in which
any of the Obligors has an interest, (2) that the list attached as Schedule 10
identifies all franchise agreements in which any of the Obligors acts as a franchisor,
and (3) that the list attached as Schedule 11 identifies all
trademarks and servicemarks in which any of the Obligors has an interest.

 

C.                                     Leases.  All
of the Restaurants operate in leased premises. 
The continuation of such leases (“Restaurant Leases”) is vital to the
Obligors’ success.  Accordingly, BRAI
shall ensure that none of the Subsidiaries materially defaults on any of the
Restaurant Leases and that (subject to Section 17A) each such lease is
renewed or extended before it expires.  
The term “Restaurant Leases” includes all future leases as well as
existing leases.  The termination of a
lease or sublease in connection with the closure or sale of a Restaurant made
in 

 

24

 

accordance with applicable provisions of this agreement or the other
Loan Documents shall not constitute a violation of this Section 17C.

 

18.                                 Events
of Default.  For purposes of this agreement an “Event
of Default” shall be any of the following:

 

(a)                                  any violation,
breach, non-compliance, or failure with respect to any duty, obligation,
agreement, covenant, warranty, representation, or other undertaking of
Borrowers set forth in this agreement (collectively “Breach”), unless either (i) the
Breach is cured within an expressly applicable cure period or grace period, or (ii) if
this agreement provides no expressly applicable cure period or grace period,
then (A) the Breach is readily curable, and (B) Borrowers promptly
commence a cure, and (C) Borrowers complete the cure within the shortest
reasonable period, which shall not exceed thirty days after the Breach first
arose or occurred;

 

(b)                                 any other event,
circumstance, or occurrence that is specifically designated in this agreement
as an Event of Default;

 

(c)                                  any event, circumstance,
or occurrence that is defined as an “event of default” in any of the other Loan
Documents or in any of the Related Documents, if the same has continued beyond
the expiration of any expressly applicable cure period or grace period;

 

(d)                                 any event, circumstance,
or occurrence that is defined as an “event of default” in any legal document
that sets forth, evidences, or secures (i) any other loan or credit
facility made or extended to any of the Obligors by Lender after the date of
this agreement, (ii) any loan or other credit facility extended to any of
the Obligors by any person or entity other than Lender, including not only
loans and credit facilities in existence on the date of this agreement but also
loans and credit facilities extended in the future;

 

25

 

(e)                                  any material default
not cured within any expressly applicable grace period or due period on any
lease of equipment or real estate in which any of the Obligors is the lessee,
whether such lease now exists or comes into existence in the future;

 

(f)                                    the termination or
expiration, within any one fiscal year of BRAI, of more than thirty-five
percent of the Restaurant Leases that were in force at the beginning of such
fiscal year; or

 

(g)                                 any
material adverse change in the financial condition of the Obligors as a whole.

 

19.                                 Certain
waivers.  LENDER AND BORROWERS HEREBY WAIVE
AND RELEASE IRREVOCABLY THEIR RIGHTS (1) TO HAVE A TRIAL BY JURY IN ANY
ACTION TO WHICH LENDER AND EITHER OR BOTH OF THE BORROWERS ARE PARTIES, WHETHER
AS PLAINTIFF, DEFENDANT, OR OTHERWISE, AND (2) TO ASSERT IN ANY SUCH
ACTION ANY CLAIM FOR PUNITIVE DAMAGES, EXEMPLARY DAMAGES, CONSEQUENTIAL
DAMAGES, AND ANY OTHER DAMAGES WHATSOEVER OTHER THAN ACTUAL DAMAGES.  In this section the terms “Lender” and “Borrowers”
include the parties’ stockholders, directors, trustees, beneficiaries,
officers, employees, attorneys, and agents. 
This section is intended by Lender and Borrowers to apply with full
force and effect to all of the Loan Documents as if it were set forth in full
in each one of the Loan Documents.

 

20.                                 Indemnity.  Borrowers jointly
and severally agree to indemnify Lender against, and hold Lender harmless from,
any and all losses, damages (whether compensatory, punitive, or otherwise),
liabilities, claims, causes of action (whether legal, equitable, or
administrative), judgments, court costs, and other expenses (including
reasonable professional fees and 

 

26

 

reasonable legal fees) which Lender suffers or incurs as a direct or
indirect consequence of: (a) Lender’s performance of this agreement, any
of the other Loan Documents, or any of the Related Documents, including without
implied limitation Lender’s exercise or failure to exercise any rights,
remedies, or powers; (b) Borrowers’ 
failure to perform any of Borrowers’ obligations as and when required by
this agreement, by any of the other Loan Documents, or by any of the Related
Documents, including without implied limitation any failure at any time of any
representation or warranty of Borrowers to be true and correct and any failure
by Borrowers to satisfy any condition; (c) any claim or cause of action of
any kind by any person or entity to the effect that Lender is in any way
responsible or liable for any act or omission of Borrowers or of any of the
Subsidiaries, whether on account of any theory of derivative liability or
otherwise; or (d) any claim or cause of action of any kind by any person
or entity that would have the effect of denying Lender the full benefit or
protection of any provision of the Loan Documents or the Related
Documents.  Lender’s rights of indemnity
shall not be directly or indirectly limited, prejudiced, impaired, or
eliminated in any way by any finding or allegation that Lender’s conduct is
active, passive, or subject to any other classification, or that Lender is
directly or indirectly responsible under any theory of any kind, character, or
nature for any act or omission by Borrowers, by one of the Subsidiaries, or by
any other person or entity except Lender. 
Notwithstanding the foregoing provisions, Borrowers shall not be
obligated to indemnify Lender to the extent that the foregoing arises from
Lender’s gross negligence or willful misconduct.  which Lender is determined by a court of
competent jurisdiction to have committed. 
Borrowers shall pay any indebtedness arising under this Section 20
to Lender within ten days following demand by Lender.  Borrowers’ obligations under this Section 20
shall survive the termination of this agreement.

 

27

 

21.                                 Miscellaneous.

 

A.                                   Costs.  Except to the extent
expressly otherwise provided in this agreement, Borrowers jointly and severally
shall reimburse Lender on demand for all costs and expenses, including without
limitation Lender’s reasonable professional fees and reasonable legal fees,
incurred by or on behalf of Lender in connection with (1) the closing of
the transactions contemplated by this agreement, (2) the future amendment,
restatement, or replacement, of this agreement or any of the other Loan Documents
or Related Documents, (3) the negotiation or other resolution of any
uncertainty, dispute, or controversy arising from or connected with the
transactions contemplated by this agreement, and (4) the enforcement of
any rights or remedies that are made available to Lender by law, by the
specific terms of this agreement, by any of the other Loan Documents, or by any
of the Related Documents.  The costs and
expenses covered by this Section 21A shall include, without implied
limitation, all costs and expenses incurred by Lender (including reasonable
professional fees and reasonable legal fees) in connection with any bankruptcy
case, bankruptcy proceeding, or other bankruptcy matter in which either or both
of the Borrowers is a debtor, regardless of the capacity or capacities in which
Lender is involved in any such bankruptcy. 
Nothing in this Section 21A shall be construed to limit Lender’s
rights or Borrowers’   obligations under
any other provision of this agreement.

 

B.                                     Termination. This
agreement shall terminate when all of the Obligations have been paid and
performed in full, but Sections 20 and 21A shall survive termination.

 

C.                                     Modification. This
agreement may be amended only in a writing that is signed by all parties to
this agreement.

 

D.                                    Governing law; choice of forum.  This agreement has been negotiated and signed
in the Commonwealth of Massachusetts, and all parties have relied upon the
applicability 

 

28

 

of the laws of the Commonwealth of Massachusetts.  Accordingly, this agreement shall be
interpreted and enforced in accordance with the internal laws of Massachusetts,
disregarding any law or doctrine that would dictate application of the law of
another state.  Borrowers covenant and
agree (1) not to commence any action against Lender, or involving Lender,
in any court that sits outside Massachusetts and (2) not to seek to
transfer to any court that sits outside Massachusetts any action commenced by
Lender in Massachusetts.

 

E.                                      Binding effect.  This agreement is binding upon the
successors and assigns of all parties, and it inures to the benefit of such
successors and assigns.

 

F.                                      Severability.  Even if one or more provisions of
this agreement are determined by a court         to
be invalid or unenforceable, the remaining provisions of this agreement
nevertheless shall continue in effect.

 

G.                                     Remedies cumulative.  All rights and
remedies afforded Lender by this agreement are cumulative; none shall be
construed to limit or impair any rights or remedies afforded Lender by the
other Loan Documents, by the Related Documents, or by law.

 

H.                                    No waiver.  No failure to act, omission, or
forbearance by Lender to exercise its rights or remedies under any or all of
the Loan Documents or Related Documents shall constitute a waiver by Lender of
such rights or remedies, regardless of how long such failure to act, omission,
or forbearance continues, unless Lender expressly waives such right in
writing.  No waiver by Lender in any in
one instance shall constitute a waiver in any other instance unless Lender
expressly so states in writing.

 

I.                                         No assignment.  None of Borrowers’ rights under
this agreement may be assigned, pledged, or otherwise transferred, nor may any
of Borrowers’ duties be delegated.

 

29

 

J.                                        No Third Parties Benefited.  This agreement is
entered into for the sole protection and benefit of Lender, Borrowers, and
their permitted successors and assigns. 
No other person or entity shall have any right of action under this
agreement.

 

K.                                    Notices.  Except
as otherwise expressly provided herein, all notices given under this agreement
shall be given in writing and shall be deemed given upon (1) actual
delivery to the office of the addressee or (2) if mailed, upon the third
business day after deposit in United States Postal Service by certified mail,
postage prepaid, addressed to the addresses of Borrowers or Lender appearing
below or to such other address as a party designates by written notice:

 

	
  BORROWERS:

  	
   

  	
  LENDER:

  
	
  999 Broadway

  	
   

  	
  390 Main Street

  
	
  Suite 400

  	
   

  	
  Worcester, MA 01608

  
	
  Saugus, MA 01906

  	
   

  	
  Attn:  Michael D. Thibeault,

  
	
  Attn: Controller

  	
   

  	
  Senior Vice President

  

 

Copies of all notices shall be sent to the addressee’s counsel as
follows, but the failure to send such a notice shall not affect its validity.

 

	
  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

  	
   

  	
   

  

 

L.                                      Relationship of Parties.    The relationship of Borrowers and Lender does
not constitute a joint venture, partnership, or agency relationship, but is and
shall at all times remain a relationship of borrower and lender, depositor and
depositary bank, assignor and assignee, pledgor and pledgee, and debtor and
secured party.

 

30

 

M.                                 Entire
agreement.  This agreement, the other Loan
Documents, and the Related Documents set forth the parties’ entire
understanding, superseding all prior negotiations, promises, and agreements.

 

N.                                    Construction.   Because all parties have
participated in the drafting of this agreement, the parties agree that any rule of
construction to the effect that an agreement should be construed against the
drafter shall be inapplicable.

 

Signed as a
sealed instrument April 14, 2005.

 

	
  Witnesses:

  	
   

  	
  Parties:

  
	
   

  	
   

  	
  Commerce Bank & Trust
  Company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Michael D. Thibeault,

  
	
   

  	
   

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Boston Restaurant Associates, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  George R. Chapdelaine, President

  
	
   

  	
   

  	
  and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BRA Nominee Trust

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  George R. Chapdelaine, only in his

  
	
   

  	
   

  	
  capacity as Trustee and not in his

  
	
   

  	
   

  	
  individual capacity

  

 

31Exhibit 10.15

 

NOTE

(Term)

 

	
  $1,500,000

  	
   

  	
  April 14, 2005

  

 

1.                                       Promise to pay.  For value received, Boston Restaurant
Associates, Inc., a Delaware corporation with offices in Saugus,
Massachusetts (“Borrower”), promises to pay to Commerce Bank & Trust
Company, a Massachusetts trust company with offices in Worcester, Massachusetts
(“Lender”), or order, in four (4) years, with interest as provided in this
note, the principal sum of ONE MILLION FIVE HUNDRED THOUSAND DOLLARS ($1,500,000).

 

2.                                       Loan Agreement.  This note evidences a loan made by Lender
pursuant to a certain Loan Agreement of even date among Lender, Borrower, and the
Trustee of BRA Nominee Trust (“Loan Agreement”).

 

3.                                       Payments.

 

a.                                       Time, number, and source of payments.  Borrower shall make forty-eight (48)
consecutive monthly payments.  The first
such payment shall be made one month after the date of this note, and each
subsequent payment shall be made on the same day of each succeeding month.  Borrower shall make the final payment on this
note on the fourth anniversary of the date of this note.

 

b.                                      Payment amounts.

 

(1)                                  Forty-seven (47) payments of interest and principal.  Each of the first forty-seven (47) payments
shall include interest and principal.  Except
as provided in paragraph 3b(2), below, each such payment shall be in the amount
that is necessary to repay the face amount of this note in full, in forty-eight
(48) equal consecutive monthly installments of principal and interest, with
interest at the then-applicable rate determined under paragraph 4a of this
note.  The amount of such monthly
installment payments shall be adjusted as needed to account for any change that
is made in the interest rate pursuant to paragraph 4a.

 

(2)                                  On
each occasion when Borrower makes a principal prepayment in an amount of
$100,000 or more, the remaining monthly payments prescribed by paragraph 3b(1),
above, shall be reduced to the amount that is necessary to repay the then-outstanding
principal balance of this note in full, in the number of months then remaining in
the term of this note, in equal consecutive monthly installments of principal
and interest at the then-applicable rate determined under paragraph 4a of this note.  The amount of such monthly installment payments
shall be adjusted as needed to account for any change that is made in the interest
rate pursuant to paragraph 4a.

 

(3)                                  Final payment.  The
final payment shall equal the sum of (a) all outstanding principal, plus (b) all
interest accrued and unpaid.

 

 

c.                                       Place of payment. 
Payments shall be made to Lender at its offices at 390 Main Street,
Worcester, Massachusetts, or at such other place as is designated in writing by
Lender.

 

d.                                      Application of payments. 
Payments shall be applied first to any late payment charges, then to
interest, then to principal.

 

e.                                       Prepayment.    Borrower may prepay this note in whole or in
part at any time without penalty unless any portion of the monies used for the
prepayment is derived directly or indirectly from a loan made by a party other
than Lender; in that case, Borrower’s prepayment shall be accompanied by an
additional payment calculated as follows:

 

	
   

  	
  Year of
  Prepayment

  	
   

  	
  Additional Payment

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  First year after
  note date

  	
   

  	
  Four percent
  (4%) of outstanding principal;

  
	
   

  	
  Second year
  after note date

  	
   

  	
  Three percent
  (3%) of outstanding principal;

  
	
   

  	
  Third year after
  note date

  	
   

  	
  Two percent (2%)
  of outstanding principal; and

  
	
   

  	
  Fourth year
  after note date

  	
   

  	
  One percent (1%)
  of outstanding principal.

  

 

f.                                         Manner of payment. 
All payments shall be made in lawful money of the United States of
America in immediately available funds.

 

g.                                      Autocharge.  Each
payment shall be made by Lender’s withdrawal of the amount due from an
autocharge account established by Borrower pursuant to the Loan Agreement.

 

h.                                      Business days.  Any
payment which falls due on a date which is not a Business Day shall be due on
the next Business Day.  A “Business Day”
is one on which Lender’s offices are open for business in Worcester,
Massachusetts.

 

4.                                       Interest.

 

a.                                       Rate.    The annual
rate of interest on the outstanding principal balance of this note shall be a continuously
variable rate equal to the sum of (i) Lender’s Base Rate, as changed from
time to time, and (ii) two percent (2.0%).

 

b.                                      Lender’s Base Rate. 
The term “Lender’s Base Rate” means the national prime interest rate
designated as such in the Wall Street Journal.  If such a rate ceases to be published, then
Lender shall select a substitute, and any selection made in good faith by
Lender shall be final and binding upon Borrower.

 

c.                                       Calculation.  Interest
shall be calculated on the actual number of days elapsed over a year assumed to
have 360 days.

 

d.                                      Default.  Notwithstanding the provisions of paragraph
4a, at Lender’s election after any Event of Default (defined below) the annual
rate of interest on the outstanding principal 

 

2

 

balance shall become a
continuously variable rate equal to the sum of (i) Lender’s Base Rate,
plus (ii) four percent (4.0%).

 

e.                                       Limitation.  If at any
time the rate of interest established by this note exceeds the maximum
permitted by law, then (a) any excess interest previously paid by Borrower
shall be reallocated to the reduction of the principal balance and (b) the
rate of interest with respect to future payments shall be reduced to such
maximum during any period in which the rate as otherwise calculated would
exceed such maximum.

 

5.                                       Security.  This note is secured by (i) a
Multi-Party Security Agreement of even date among Lender, Borrower, and
numerous subsidiaries of Borrower (“Security Agreement”) and by the other
documents that in the Loan Agreement are classified as “Loan Documents.”  Throughout this note the terms “Loan
Agreement,” “Security Agreement,” and “Guaranty Agreement” (defined below)
shall include all amendments, restatements, and replacements, and the term “Loan
Documents” shall be construed in accordance with the applicable provisions of
the Loan Agreement, as it may be amended.

 

6.                                       Acceleration.  At Lender’s election the entire outstanding
balance of principal and accrued interest shall become immediately due and
payable upon notice to Borrower of Lender’s exercise of this election following
any Event of Default.  An “Event of
Default” shall be any of the following:

 

(a)                                  Borrower’s
failure to make any payment due on this note on the date the payment is due,

 

(b)                                 Any
circumstance or occurrence that constitutes an “Event of Default” as defined in
any present or future note that evidences any indebtedness of Borrower to
Lender;

 

(c)                                  Any
circumstance or occurrence that constitutes an “Event of Default” as defined in
the Loan Agreement, the Security Agreement, the Guaranty Agreement, or any of
the other Loan Documents,

 

(d)                                 The
institution of any bankruptcy or insolvency proceeding by Borrower or any
guarantor of this note,

 

(e)                                  The
pendency for more than forty-five (45) days of any bankruptcy or insolvency
proceeding against Borrower or any guarantor of this note,

 

(f)                                    Any
composition or assignment for the benefit of creditors by Borrower or any
guarantor of this note,

 

(g)                                 The
pendency for more than forty-five (45) days of any receivership proceeding
against Borrower or any guarantor of this note, or

 

3

 

(h)                                 Any
circumstance or occurrence that constitutes an “Event of Default” as defined in
(i) a certain Multi-Party Guaranty Agreement of even date among Lender,
Borrower, Borrower’s subsidiaries, and the Trustee of BRA Nominee Trust (“Guaranty
Agreement”), or in (ii) any mortgage, assignment, or other instrument that
secures such Multi-Party Guaranty Agreement.

 

Lender’s
waiver of the foregoing election in one or more instances shall not constitute
a waiver of the election in any other instance, and no delay or forbearance by
Lender in exercising such election shall constitute a waiver.  No waiver by Lender shall be valid unless
made in writing, and no waiver granted by Lender on one or more occasions shall
oblige Lender to grant a waiver on any subsequent occasion.

 

7.                                       Costs of Collection.  Following (a) any acceleration that
occurs pursuant to paragraph 6 of this note or (b) Borrower’s failure to
pay this note at maturity, Borrower agrees to pay on demand all costs and
expenses, including reasonable professional fees and reasonable attorneys’
fees, incurred by Lender (i) in collecting amounts due under this note, (ii) in
enforcing its rights under this note, the Loan Agreement, the Security
Agreement, or any of the other Loan Documents, or (iii) in participating
in any capacity or capacities in any bankruptcy case or adversary proceeding in
which Borrower is a debtor.

 

8.                                       Waivers.  Borrower and all endorsers and guarantors of
this note waive all rights to presentment, dishonor, notice of dishonor, and
protest.

 

9.                                       Set off.  Any deposits or other sums at any time credited
by or due from Lender to Borrower, or to any endorser or guarantor of this
note, and any securities or other property of Borrower or any such endorser or
guarantor at any time in the possession of Lender may at all times be held and
treated as collateral for the payment of this note and any and all other
liabilities (direct or indirect, absolute or contingent, sole, joint, or
several, secured or unsecured, due or to become due, now existing or hereafter
arising) of Borrower to Lender. 
Regardless of the adequacy of collateral, Lender may apply or set off
such deposits or other sums against such liabilities at any time after an Event
of Default in the case of Borrower, but only with respect to matured
liabilities in the case of endorsers and guarantors unless otherwise provided
in a written agreement with such endorsers or guarantors.

 

10.                                 Replacement of original note.  Upon receipt of an affidavit and indemnity by
Lender as to the loss, theft, destruction, or mutilation of this note, Borrower
shall issue a replacement note identical to this instrument.

 

11.                                 Lender’s right to pledge note.  At any time Lender may pledge all or any
portion of its rights under this note to any Federal Reserve Bank.

 

12.                                 Participation agreements.  From time to time Lender may grant to one or
more banks or other financial institutions participating interests in the
indebtedness evidenced by this note.

 

4

 

13.                                 Miscellaneous.  This note may not be modified, extended, or
otherwise changed except by a written instrument signed by Lender and
Borrower.  This note shall be binding
upon Borrower’s successors and assigns. 
Because this note has been negotiated and signed in Massachusetts as an
integral part of a Massachusetts loan transaction, and because the parties have
relied upon the applicability of the substantive law of the Commonwealth of
Massachusetts, this note shall be construed and enforced in accordance with the
internal laws of the Commonwealth of Massachusetts, disregarding any law or
doctrine that might dictate application of the law of another state.  All remedies specified in this note are
cumulative, and no such remedies shall be considered to impair or preclude any
other remedies available to Lender by law or by agreement.

 

14.                                 JURY WAIVER.  BORROWER IRREVOCABLY WAIVES ITS RIGHT TO
TRIAL BY JURY IN ANY ACTION INVOLVING THIS NOTE OR THE DEBT WHICH THIS NOTE
EVIDENCES.

 

15.                                 Debentures.  The indebtedness evidenced by this note is
superior in right of payment to all debentures issued by Borrower, including
without implied limitation those identified on the list attached to this note
as Schedule 1.

 

Signed
as a sealed instrument.

 

	
  WITNESS:

  	
   

  	
   

  
	
   

  	
   

  	
  Boston
  Restaurant Associates, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  George R.
  Chapdelaine, President and

  
	
   

  	
   

  	
  Chief Executive
  Officer

  
						

 

5

 

NOTE

(mortgage)

 

	
  $800,000.00

  	
   

  	
  April 14, 2005

  

 

1.                                       Promise to pay.  For value received, George R. Chapdelaine,
not individually but as Trustee of BRA Nominee Trust u/d/t dated January 23,
1991, recorded with the Suffolk County Registry of Deedsin Book 16684, Page 20,
and filed with the Suffolk Registry District of the Land Court as Document No. 472988,
(“Borrower”), promises to pay to Commerce Bank & Trust Company, a
Massachusetts trust company with offices in Worcester, Massachusetts (“Lender”),
or order, in five (5) years,  with
interest as provided in this note, the principal sum of EIGHT HUNDRED THOUSAND
DOLLARS ($800,000.00).

 

2.                                       Loan Agreement.  This note evidences a loan made by Lender
pursuant to a certain Loan Agreement of even date (“Loan Agreement”) among
Lender, Borrower, and Boston Restaurant Associates, Inc. (“BRAI”).

 

3.                                       Payments.

 

a.                                       Time, number, and source of payments.  Borrower shall make sixty (60) consecutive
monthly payments.  The first such payment
shall be made one month after the date of this note, and each subsequent
payment shall be made on the same day of each succeeding month.  Borrower shall make the final payment on this
note on the fifth anniversary of the date of this note.

 

b.                                      Payment amounts.

 

(1)                                  Fifty-nine (59)  payments of
interest and principal.  Each
of the first fifty-nine (59) payments shall include interest and
principal.  Except as provided in
paragraph 3b(2), below, each such payment shall be in the amount that is
necessary to repay the face amount of this note in full, in two hundred forty
(240) equal consecutive monthly installments of principal and interest, with
interest at the then-applicable rate determined under paragraph 4a of this
note.  The amount of such monthly
installment payments shall be adjusted as needed to account for any change that
is made in the interest rate pursuant to paragraph 4a.

 

(2)                                  On
each occasion when Borrower makes a principal prepayment in an amount of $100,000
or more, the remaining monthly payments prescribed by paragraph 3b(1), above,
shall be reduced to the amount that is necessary to repay the then-outstanding
principal balance of this note in full, in that number of months which equals
the difference between (i) two hundred forty (240) and (ii) the
number of monthly payment dates that have passed since the date of this note,
in equal consecutive monthly installments of principal and interest at the
then-applicable rate determined under paragraph 4a of this note.  The amount of such monthly installment
payments shall be adjusted as needed to account for any change that is made in
the interest rate pursuant to paragraph 4a.

 

 

(3)                                  Final payment.  The
final payment shall be a balloon payment equal to the sum of (a) all
outstanding principal, plus (b) all interest accrued and unpaid.  Borrower acknowledges that Lender has no
obligation to renew or extend this note.

 

c.                                       Place of payment. 
Payments shall be made to Lender at its offices at 390 Main Street, Worcester,
Massachusetts, or at such other place as is designated in writing by Lender.

 

d.                                      Application of payments. 
Payments shall be applied first to any late payment charges, then to
interest, then to principal.

 

e.                                       Prepayment.    Borrower may prepay this note in whole or in
part at any time without penalty unless any portion of the monies used for the
prepayment is derived directly or indirectly from a loan made by a party other
than Lender; in that case, Borrower’s prepayment shall be accompanied by an additional
payment calculated as follows:

 

	
   

  	
  Year of
  Prepayment

  	
   

  	
  Additional Payment

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  First year after
  note date

  	
   

  	
  Five percent
  (5%) of outstanding principal;

  
	
   

  	
  Second year
  after note date

  	
   

  	
  Four percent
  (4%) of outstanding principal;

  
	
   

  	
  Third year after
  note date

  	
   

  	
  Three percent
  (3%) of outstanding principal;

  
	
   

  	
  Fourth year
  after note date

  	
   

  	
  Two percent (2%)
  of outstanding principal; and

  
	
   

  	
  Fifth year after
  note date

  	
   

  	
  One percent (1%)
  of outstanding principal.

  

 

f.                                         Manner of payment. 
All payments shall be made in lawful money of the United States of
America in immediately available funds.

 

g.                                      Autocharge.  Each
payment shall be made by Lender’s withdrawal of the amount due from an
autocharge account established by Borrower pursuant to the Loan Agreement.

 

h.                                      Business days.  Any
payment which falls due on a date which is not a Business Day shall be due on
the next Business Day.  A “Business Day”
is one on which Lender’s offices are open for business in Worcester,
Massachusetts.

 

4.                                       Interest.

 

a.                                       Rate.    The annual
rate of interest on the outstanding principal balance of this note shall be a
fixed rate of seven percent (7.0%).

 

b.                                      Calculation.  Interest
shall be calculated on the actual number of days elapsed over a year assumed to
have 360 days.

 

c.                                       Default.  Notwithstanding the provisions of paragraph
4a, at Lender’s election after any Event of Default (defined below) the annual
rate of interest on the outstanding principal balance shall become a
continuously variable rate equal to the sum of (i) Lender’s Base Rate, 

 

2

 

plus (ii) four
percent (4.0%).   The term “Lender’s Base
Rate” means the national prime interest rate designated as such in the Wall Street Journal. 
If such a rate ceases to be published, then Lender shall select a
substitute, and any selection made in good faith by Lender shall be final and
binding upon Borrower.

 

d.                                      Limitation.  If at any
time the rate of interest established by this note exceeds the maximum
permitted by law, then (a) any excess interest previously paid by Borrower
shall be reallocated to the reduction of the principal balance and (b) the
rate of interest with respect to future payments shall be reduced to such
maximum during any period in which the rate as otherwise calculated would
exceed such maximum.

 

5.                                       Security.  This note is secured by a mortgage of even
date granted to Lender by Borrower (“Mortgage”) and by the other documents that
in the Loan Agreement are classified as “Loan Documents.”  Throughout this note the terms “Loan
Agreement,” “Mortgage,” and “Guaranty Agreement” (defined below) shall include
all amendments, restatements, and replacements, and the term “Loan Documents”
shall be construed in accordance with the applicable provisions of the Loan
Agreement.

 

6.                                       Acceleration.  At Lender’s election the entire outstanding
balance of principal and accrued interest shall become immediately due and
payable upon notice to Borrower of Lender’s exercise of this election following
any Event of Default.  An “Event of
Default” shall be any of the following:

 

(a)                                  Borrower’s
failure to make any payment due on this note on the date the payment is due,

 

(b)                                 Any
circumstance or occurrence that constitutes an “Event of Default” as defined in
any present or future note that evidences any indebtedness of Borrower to
Lender;

 

(c)                                  Any
circumstance or occurrence that constitutes an “Event of Default” as defined in
the Loan Agreement, the Mortgage, the Guaranty Agreement, or any of the other
Loan Documents,

 

(d)                                 The
institution of any bankruptcy or insolvency proceeding by Borrower or any
guarantor of this note,

 

(e)                                  The
pendency for more than forty-five (45) days of any bankruptcy or insolvency
proceeding against Borrower or any guarantor of this note,

 

(f)                                    Any
composition or assignment for the benefit of creditors by Borrower or any
guarantor of this note,

 

(g)                                 The
pendency for more than forty-five (45) days of any receivership proceeding
against Borrower or any guarantor of this note, or

 

3

 

(h)                                 Any
circumstance or occurrence that constitutes an “Event of Default” as defined in
(i) a certain Multi-Party Guaranty Agreement of even date among Lender,
Borrower, BRAI, and numerous corporations affiliated with BRAI (“Guaranty
Agreement”), or in (ii) any security agreement or other instrument that
secures such Multi-Party Guaranty Agreement.

 

Lender’s
waiver of the foregoing election in one or more instances shall not constitute
a waiver of the election in any other instance, and no delay or forbearance by
Lender in exercising such election shall constitute a waiver.  No waiver by Lender shall be valid unless
made in writing, and no waiver granted by Lender on one or more occasions shall
oblige Lender to grant a waiver on any subsequent occasion.

 

 7.                                    Costs of Collection.  Following (a) any acceleration that
occurs pursuant to paragraph 6 of this note or (b) Borrower’s failure to
pay this note at maturity, Borrower agrees to pay on demand all costs and
expenses, including reasonable professional fees and reasonable attorneys’
fees, incurred by Lender (i) in collecting amounts due under this note, (ii) in
enforcing its rights under this note, the Loan Agreement, the Mortgage, or any
of the other Loan Documents, or (iii) in participating in any capacity or capacities
in any bankruptcy case or adversary proceeding in which Borrower is a debtor.

 

8.                                       Waivers.  Borrower and all endorsers and guarantors of
this note waive all rights to presentment, dishonor, notice of dishonor, and
protest.

 

9.                                       Set off.  Any deposits or other sums at any time
credited by or due from Lender to Borrower, or to any endorser or guarantor of
this note, and any securities or other property of Borrower or any such
endorser or guarantor at any time in the possession of Lender may at all times
be held and treated as collateral for the payment of this note and any and all
other liabilities (direct or indirect, absolute or contingent, sole, joint, or
several, secured or unsecured, due or to become due, now existing or hereafter
arising) of Borrower to Lender. 
Regardless of the adequacy of collateral, Lender may apply or set off
such deposits or other sums against such liabilities at any time after an Event
of Default in the case of Borrower, but only with respect to matured
liabilities in the case of endorsers and guarantors unless otherwise provided
in a written agreement with such endorsers or guarantors.

 

10.                                 Replacement of original note.  Upon receipt of an affidavit and indemnity by
Lender as to the loss, theft, destruction, or mutilation of this note, Borrower
shall issue a replacement note identical to this instrument.

 

11.                                 Lender’s right to pledge note.  At any time Lender may pledge all or any
portion of its rights under this note to any Federal Reserve Bank.

 

12.                                 Participation agreements.  From time to time Lender may grant to one or
more banks or other financial institutions participating interests in the
indebtedness evidenced by this note.

 

13.                                 Miscellaneous.  This note may not be modified, extended, or
otherwise changed except by a written instrument signed by Lender and
Borrower.  This note shall be binding
upon 

 

4

 

Borrower’s successors and
assigns.  Because this note has been
negotiated and signed in Massachusetts as an integral part of a Massachusetts
loan transaction, and because the parties have relied upon the applicability of
the substantive law of the Commonwealth of Massachusetts, this note shall be
construed and enforced in accordance with the internal laws of the Commonwealth
of Massachusetts, disregarding any law or doctrine that might dictate
application of the law of another state. 
All remedies specified in this note are cumulative, and no such remedies
shall be considered to impair or preclude any other remedies available to
Lender by law or by agreement.

 

14.                                 JURY WAIVER.  BORROWER IRREVOCABLY WAIVES ITS RIGHT TO
TRIAL BY JURY IN ANY ACTION INVOLVING THIS NOTE OR THE DEBT WHICH THIS NOTE
EVIDENCES.

 

Signed
as a sealed instrument.

 

	
  WITNESS:

  	
   

  	
   

  
	
   

  	
   

  	
  BRA Nominee
  Trust

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  George R.
  Chapdelaine, Trustee (not in

  his individual capacity)

  
						

 

5

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