Document:

Real Estate Promisory Note.

 Exhibit 10.41 
  

			
	BANKNORTH, N.A.	 	REAL ESTATE
	 	 	PROMISSORY NOTE

  

			
	 $8,000,000.00
	 	August 24, 2004

  
 FOR VALUE RECEIVED,
the undersigned Brookstone Company, Inc. (the “Borrower”), a New Hampshire corporation having a principal place of business at One Innovation Way, Merrimack, New Hampshire, hereby promises to pay to the order of Banknorth, N.A.
(hereinafter, with any subsequent holder, the “Bank”), at the office of the Bank located at 7 New England Executive Park, Burlington, Massachusetts, the sum of EIGHT MILLION DOLLARS ($8,000,000.00), with interest on the unpaid principal
balance of the within Note as more fully set forth herein. The outstanding principal of this Note shall accrue interest, at the Borrower’s option, from time to time, as set forth herein, at either (a) a variable per annum rate of interest equal
to the Prime Rate (as defined below) (during which periods, this Note shall be deemed a “Prime Rate Loan”), or (b) a fixed per annum rate of interest equal to the aggregate of LIBOR (as defined below) plus the Applicable Margin (as
defined below) (during which periods, this Note shall be deemed a “LIBOR Rate Loan”). At any time after the date hereof, so long as there has then occurred no Event of Default hereunder, the Borrower may choose to fix the interest
rate payable hereon on all or a portion of the principal balance by notifying the Bank in writing of its choice to fix the interest rate by executing an International SWAP Dealers Association, Inc. Master Agreement (the “Master Swap
Agreement”) for a period to expire on August 24, 2014. The definitions, terms, covenants and conditions of the Master Swap Agreement shall be hereby incorporated by reference herein, including all such terms as relate to indemnification by
the Borrower of the Bank’s credit risk due to “Early Termination” events. The formula for calculating damages in the event of any Early Termination event in a swap arrangement shall be as set forth in the Master Swap Agreement.

  
 This Note has been executed and delivered in accordance with
that certain Real Estate Loan Agreement (the “Loan Agreement”) of even date by and between the Borrower and the Bank. The Loan Agreement sets forth further terms and conditions upon which the entire unpaid principal hereof and all
interest hereon may become due and payable, and generally as to further rights of the Bank and due of the Borrower with respect hereto. Neither this reference to the Loan Agreement nor any provision thereof, shall affect or impair the absolute and
unconditional obligation of the Borrower to pay the principal and interest on the Note as provided herein. 
  
 PAYMENT OF PRINCIPAL AND INTEREST  
  
 Principal and interest shall be repaid as follows: 
  

	 	(a)	Interest shall be paid on each Interest Payment Date (as defined below). 

  

	 	(b)	Commencing September 24, 2004 and on the like day of each calendar month thereafter, the undersigned shall make one hundred twenty (120) monthly payments of principal, each in the
amount of (Sixty-Six Thousand Six Hundred Sixty-Six Dollars and Sixty-Seven Cents) ($66,666.67). 

 In the event the Borrower opts into a Master Swap Agreement: 
  

	 	(c)	Commencing on the first day of the first month following such election, and on the like day of each calendar month thereafter, the undersigned shall make consecutive monthly
payments of principal, (i) each in the amount as set forth on Exhibit A attached hereto, in the event that Borrower enters such Master Swap Agreement simultaneously herewith, or, (ii) if Borrower enters into a Master Swap Agreement subsequent to the
date of this Note, each in the amount as set forth on a schedule provided by the Bank at the time Borrower enters into such Master Swap Agreement, in each case, each such monthly payment of principal is to be made together with interest then due and
payable thereon. 

  
 In either event: 
  

	 	(d)	The entire outstanding principal balance hereof and all accrued and unpaid interest hereon shall be due and payable in full on August 24, 2014 (the “Maturity Date”).

  
 All calculations of interest payments shall be
made on the basis of an actual three hundred sixty-five/six (365/366)day year and the actual number of days elapsed. 
  
 After an Event of Default, the unpaid principal balance of this Note shall, at the option of the Bank, bear interest at a rate which is two (2) percentage
points per annum greater than that which would otherwise be applicable. 
  
 The Bank may collect a late charge not to exceed two percent (2.00%) of any installment of interest or principal, or of any other amount due to the Bank which is not paid or reimbursed by the Borrower within fifteen (15) days of the due
date thereof to defray the cost and extra expense involved in handling such delinquent payment and the increased risk of non-collection. All payments hereunder shall be adjusted in accordance with the Following Business Day Convention. 

 
 All payments made by the Borrower to the Bank should be in lawful money of
the United States in immediately available funds. All payments shall be applied first to the payment of all fees, expenses and other amounts due to the Bank (excluding principal and interest), then to accrued interest, and the balance on account of
outstanding principal; provided, however, that after default, payments will be applied to the obligations of Borrower to Bank as Bank determines in its sole discretion. The Bank is authorized, but not required, to charge principal and interest due
on this Note and all other amounts due hereunder to any account of the Borrower when and as it becomes due. 
  
 PREPAYMENT 
  
 (a) The
Borrower may prepay any Prime Rate Loan in whole or in part, at any time, without penalty or premium, 
  
 (b) At its option and upon four (4) days written notice to Bank, the Borrower may prepay any LIBOR Rate Loan in whole or in part from time to time without
premium or penalty 
  

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 but with accrued interest on the principal being prepaid to the date of such repayment provided that such LIBOR Rate Loan
may only be prepaid on the last Business Day of the then current Interest Period with respect thereto. 
  
 (c) Borrower shall have the right at any time and from time to time to prepay all or any portion of the principal owing under any LIBOR Rate Loan on a day
that is other than the last Business Day of the then current Interest Period for such LIBOR Rate Loan if no Event of Default exists and, in such event, Borrower shall pay to the Bank a Yield Maintenance Fee in an amount computed as follows: The
current rate for United States Treasury securities (bills on a discounted basis shall be converted to a bond equivalent) with a maturity date the last date of the then current Interest Period of the LIBOR Rate Loan, as applicable, as to which the
prepayment is made, shall be subtracted from the “cost of funds” component of the fixed rate in effect at the time of prepayment. If the result is zero or a negative number, there shall be no Yield Maintenance Fee. If the result is a
positive number, then the resulting percentage shall be multiplied by the amount of the principal balance being prepaid. The resulting amount shall be divided by 360 and multiplied by the number of days remaining in the Interest Period as to which
the prepayment is made. Said amount shall be reduced to present value calculated by using the number of days remaining in the designated term and using the above referenced United States Treasury security rate and the number of days remaining in the
term of the LIBOR Rate Loan as to which the prepayment is made. The resulting amount shall be the Yield Maintenance Fee due to Lender upon prepayment of such fixed rate loan. The term “cost of funds” means the per annum rate of interest
which Bank is required to pay, or is offering to pay, for wholesale liabilities of like tenor, adjusted for reserve requirements and such other requirements as may be imposed by federal, state or local government and regulatory agencies, as
determined by Bank. 
  
 If by reason of any Event of Default, the
Bank elects to declare any LIBOR Rate Loan to be immediately due and payable, then any Yield Maintenance Fee with respect to the same shall become due and payable in the same manner as though Borrower had exercised such right of prepayment. The
Borrower recognizes that the Bank will incur substantial additional costs and expenses including loss of yield and anticipated profitability in the event of a prepayment of any such LIBOR Rate Loan and that the Yield Maintenance Fee compensates
Lender for such costs and expenses. The Borrower acknowledges that the Yield Maintenance Fee is bargained for consideration and not a penalty. 
  
 (d) If the Borrower has entered into a SWAP Agreement pursuant to and as a condition of Borrower’s selection of the LIBOR Rate interest rate option,
prepayment shall be governed by the terms of the SWAP Agreement and without giving effect to the provisions of paragraphs (a), (b) and (c) above. 
  
 DEFINITIONS  
  
 For the purposes of this Note, capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Loan Agreement. 

 

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 INTEREST RATE SELECTION  
  

(a) Prime Rate Loans shall mature and become payable in full on the Maturity Date. LIBOR Rate Loans shall mature and become payable in full on the last
day of the Interest Period relating to such LIBOR Rate Loan. Upon maturity, a LIBOR Rate Loan may be continued as a LIBOR Rate Loan for an additional Interest Period or may be converted to a Prime Rate Loan. 
  
 (b) By delivering a continuation/conversion notice to the Bank on or before
10:00 a.m., New York time, on a Business Day, the Borrower may from time to time irrevocably elect, on not less than two (2) nor more than five (5) Business Days’ notice, (i) that a Prime Rate Loan may be converted as of the day prior to the
next Interest Payment Date relative to such Prime Rate Loan and to a LIBOR Rate Loan with an Interest Period as elected by the Borrower, or (ii) that a LIBOR Rate Loan be converted on the last day of an Interest Period into a LIBOR Rate Loan with a
different Interest Period, or converted to a Prime Rate Loan, or continued on the last day of an Interest Period as a LIBOR Rate Loan with a similar Interest Period, provided,however, that no LIBOR Rate Loan may be converted to, or
continued as, a LIBOR Rate Loan when any Default or Event of Default has occurred and is continuing, and no LIBOR Rate Loan may be converted to a LIBOR Rate Loan of a different duration if such LIBOR Rate Loan relates to any Hedging Obligations. In
the absence of delivery of a continuation/conversion notice with respect to any LIBOR Rate Loan at least two (2) Business Days before the last day of the then current Interest Period with respect thereto, such LIBOR Rate Loan shall, subject to the
foregoing limitations of this paragraph (b) and paragraph (c) below, on such last day, automatically be continued as a 30 day LIBOR Rate Loan. 
  
 (d) If the LIBOR Rate is unavailable for any reason whatsoever, the interest rate selected shall be deemed a Prime Rate Loan, and on the last day of the
applicable Interest Period of any LIBOR Rate Loan, such LIBOR Rate Loan shall be deemed converted to a Prime Rate Loan. 
  
 (e) Without in any way limiting the Borrower’s obligation to confirm in writing any telephonic notice, the Bank may act without liability upon the
basis of telephonic notice believed by the Bank in good faith to be from the Borrower prior to receipt of written confirmation. In each case, the Borrower waives the right to dispute the Bank’s record of the terms of such telephonic notice of
rate selection in the absence of manifest error. 
  
 (f) The
Borrower shall not be permitted to convert this Note to a LIBOR Rate Loan or continue any LIBOR Rate Loan for an additional Interest Period or fix the interest rate by executing a Master Swap Agreement after the occurrence of an Event of Default or
during the continuance thereof. 
  
 OTHER TERMS  
  
 The Borrower shall not use the proceeds of this Note for purchasing or
carrying any “margin stock” as such term is defined in Regulation U of the Board of Governors of the Federal Reserve System. 
  
 If, at any time, the rate of interest, together with all amounts which constitute interest and which are reserved, charged or taken by Bank as
compensation for fees, services or expenses incidental to the making, negotiating or collection of the loan evidenced hereby, shall be deemed by any competent court of law, governmental agency or tribunal to exceed the maximum rate of 
  

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 interest permitted to be charged by the Bank to the Borrower, then, during such time as such rate of interest would be
deemed excessive, that portion of each sum paid attributable to that portion of such interest rate that exceeds the maximum rate of interest so permitted shall be deemed a voluntary prepayment of principal. 
  
 If the Bank shall determine (a) (which determination shall, upon notice
thereof to the Borrower be conclusive and binding on the Borrower) that the introduction of or any change in or in the interpretation of any law, rule, regulation or guideline, (whether or not having the force of law) makes it unlawful, or any
central bank or other governmental authority asserts that it is unlawful, for the Bank to make, continue or maintain any LIBOR Rate Loan as, or to convert any loan into, a LIBOR Rate Loan of a certain duration, the obligations of the Bank to make,
continue, maintain or convert into any such LIBOR Rate Loan shall, upon such determination, forthwith be suspended until the Bank shall notify the Borrower that the circumstances causing such suspension no longer exist, and the LIBOR Rate Loan of
such type shall automatically convert into a Prime Rate Loan at the end of the then current Interest Periods with respect thereto or sooner, if required by such law or assertion. 
  

	 	(b)	If the Bank shall have determined that: 

  

	 	(i)	US dollar deposits in the relevant amount and for the relevant Interest Period are not available to the Bank in the London interbank market; 

  

	 	(ii)	by reason of circumstances affecting the Bank in the London interbank, adequate means do not exist for ascertaining the LIBOR Rate applicable hereunder to LIBOR Rate Loan of any
duration; or 

  

	 	(iii)	LIBOR no longer adequately reflects the Bank’s cost of funding loans; then, upon notice from the Bank to the Borrower, the obligations of the Bank under this Agreement to make
or continue any Advance as a LIBOR Rate Loan shall forthwith be suspended until the Bank shall notify the Borrower that the circumstances causing such suspension no longer exist. 

  
 (c) The Borrower agrees to reimburse the Bank (without duplication) for any
increase in the cost to the Bank, or reduction in the amount of any sum receivable by the Bank, in respect, or as a result of: 
  

	 	(i)	any conversion or repayment or prepayment of the principal amount of any LIBOR Rate Loan on a date other than the scheduled last day of the Interest Period applicable thereto,
whether pursuant to Section 2.5, 3.2 or otherwise; 

  

	 	(ii)	any loans not being made as a LIBOR Rate Loan in accordance with the Loan Request thereof; 

  

	 	(iii)	[Intentionally Omitted] 

  

	 	(iv)	any costs associated with any Hedging Obligations that (in the reasonable determination of the Bank) are required to be terminated as a result of any conversion, repayment or
prepayment of the principal amount of any LIBOR Rate 

  

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 Loan on a date other than the scheduled last day of the Interest Period applicable
thereto. 
  
 The Bank shall promptly notify the Borrower in writing of the
occurrence of any such event, such notice to state, in reasonable detail, the reasons therefor and the additional amount required fully to compensate the Bank for such increased cost or reduced amount. Such additional amounts shall be payable by the
Borrower to the Bank within thirty (30) days of its receipt of such notice, and such notice shall, in the absence of manifest error, be conclusive and binding on the Borrower. The Borrower understands, agrees and acknowledges the following: (i) the
Bank does not have any obligation to purchase, sell and/or match funds in connection with the use of LIBOR Rate as a basis for calculating the rate of interest on a LIBOR Rate Loan, (ii) the LIBOR Rate may be used merely as a reference in
determining such rate, and (iii) the Borrower has accepted the LIBOR Rate as a reasonable and fair basis for calculating such rate, the LIBOR Rate Prepayment Fee, and other funding losses incurred by the Bank. The Borrower further agree to pay the
Yield Maintenance Fee whether or not the Bank elects to purchase, sell and/or match funds. 
  
 (d) If on or after the date hereof the adoption of any applicable law, rule or regulation or guideline (whether or not having the force of law), or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by the Bank with any request or directive (whether or not having the force of law) of
any such authority, central bank or comparable agency: 
  

	 	(i)	shall subject the Bank to any tax, duty or other charge with respect to its LIBOR Rate Loans or its obligation to make LIBOR Rate Loans, or shall change the basis of taxation of
payments to the Bank of the principal of or interest on its LIBOR Rate Loans or any other amounts due under this agreement in respect of its LIBOR Rate Loans or its obligation to make LIBOR Rate Loans (except for the introduction of, or change in
the rate of, tax on the overall net income of the Bank or franchise taxes; or 

  

	 	(ii)	shall impose, modify or deem applicable any reserve, special deposit or similar requirement (including, without limitation, any such requirement imposed by the Board of Governors of
the Federal Reserve System of the United States) against assets of, deposits with or for the account of, or credit extended by, the Bank or shall impose on the Bank or on the London interbank market any other condition affecting its LIBOR Rate Loans
or its obligation to make LIBOR Rate Loans; 

  
 and the result of
any of the foregoing is to increase the cost to the Bank of making or maintaining any LIBOR Rate Loan, or to reduce the amount of any sum received or receivable by the Bank under this Agreement with respect thereto, by an amount deemed by the Bank
to be material, Bank shall promptly provide notice thereof to Borrower andwithin fifteen (15) days after said notice by the Bank, the Borrower shall pay to the Bank such additional amount or amounts as will compensate the Bank for such increased
cost or reduction. 
  

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 (e) If any change in, or the introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request (whether or not having the force of law) of any court, central bank, regulator or other governmental authority affects or would affect the amount of capital required or
expected to be maintained by the Bank, or person controlling the Bank, and the Bank determines (in its sole and absolute discretion) that the rate of return on its or such controlling person’s capital as a consequence of its commitments or the
loans made by the Bank is reduced to a level below that which the Bank or such controlling person could have achieved but for the occurrence of any such circumstance, then, Bank shall promptly provide notice thereof to the Borrower, and the Borrower
shall immediately pay directly to the Bank additional amounts sufficient to compensate the Bank or such controlling person for such reduction in rate of return. A statement of the Bank as to any such additional amount or amounts (including
calculations thereof in reasonable detail) shall, in the absence of manifest error, be conclusive and binding on the Borrower. In determining such amount, the Bank may use any method of averaging and attribution that it (in its sole and absolute
discretion) shall deem applicable. 
  
 (f) All payments by the
Borrower of principal of, and interest on, the LIBOR Rate Loans and all other amounts payable hereunder shall be made free and clear of and without deduction for any present or future Taxes. In the event that any withholding or deduction from any
payment to be made by the Borrower hereunder is required in respect of any Taxes pursuant to any applicable law, rule or regulation, then the Borrower will 
  

	 	(i)	pay directly to the relevant authority the full amount required to be so withheld or deducted; 

  

	 	(ii)	promptly forward to the Bank an official receipt or other documentation satisfactory to the Bank evidencing such payment to such authority; and 

  

	 	(iii)	pay to the Bank such additional amount or amounts as is necessary to ensure that the net amount actually received by the Bank will equal the full amount the Bank would have received
had no such withholding or deduction been required. 

  
 Moreover, if
any Taxes are directly asserted against the Bank with respect to any payment received by the Bank hereunder, the Bank may pay such Taxes and the Borrower will promptly pay such additional amount (including any penalties, interest or expenses) as is
necessary in order that the net amount received by the Bank after the payment of such Taxes (including any Taxes on such additional amount) shall equal the amount the Bank would have received had not such Taxes been asserted. 
  
 If the Borrower fails to pay any Taxes when due to the appropriate taxing authority or fails
to remit to the Bank the required receipts or other required documentary evidence, the Borrower shall indemnify the Bank for any incremental Taxes, interest or penalties that may become payable by the Bank as a result of any such failure.

  
 Upon the happening of any Event of Default (as defined in the
Agreement), the entire indebtedness with accrued interest thereon due under this Note, shall, at the option of the Bank, accelerate and become immediately due and payable without demand or notice of any kind. 
  

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 Failure to exercise such option shall not constitute a waiver of the right to exercise the same in the event of any
subsequent default. Further, the Borrower hereby agrees to pay all costs of collection including attorneys’ fees and disbursements incurred in connection with the Bank’s efforts to collect the indebtedness evidenced hereby. 
  
 The Borrower agrees to pay all taxes levied or assessed upon the outstanding
principal against any holder of this Note and to pay all costs, including attorneys’ reasonable fees, costs relating to the appraisal and/or valuation of assets and all other costs and expenses incurred in the collection, protection,
preservation, defense, administration or enforcement of this Note or any guaranty or endorsement of this Note or in any litigation arising out of the transactions of which this Note or any guaranty or endorsement of this Note is a part. 

 
 The Borrower agrees that no delay or failure on the part of the holder in
exercising any power, privilege, remedy, option or right hereunder shall operate as a waiver thereof or of any other power, privilege, remedy or right; nor shall any single or partial exercise of any power, privilege, remedy, option or right
hereunder preclude any other or future exercise thereof or the exercise of any other power, privilege, remedy, option or right. The rights and remedies expressed herein are cumulative, and may be enforced successively, alternately, or concurrently
and are not exclusive of any rights or remedies which holder may or would otherwise have under the provisions of all applicable laws, and under the provisions of all agreements between the Borrower and the Bank. 
  
 The Borrower hereby waives demand, notice, protest and all other demands and
notices in connection with the delivery, acceptance, performance, default or enforcement of this Note. The Borrower hereby assents to any extension or postponement of the time of payment or any other indulgence, to the addition or release of any
party or person primarily or secondarily liable, and to the addition, release and/or substitution of all or any portion of any collateral now or hereafter securing this Note. 
  
 If any provision of this Note shall, to any extent, be held invalid or unenforceable, then only such provisions shall be
deemed ineffective and the remainder of this Note shall not be affected. 
  
 Upon receipt of an affidavit of an officer of the Bank and indemnification as to the loss, theft, destruction or mutilation of the Note or any related agreement which is not of public record, and, in the case of any
such loss, theft, destruction or mutilation, upon cancellation of such the Note or other related agreement, the Borrower will issue, in lieu thereof, a replacement Note or other agreement in the same principal amount thereof and otherwise of like
tenor. The Note shall not be necessary to establish the indebtedness of the Borrower to the Bank on account of such loans, advances, and repayments. 
  
 The Bank may at any time pledge all or any portion of its rights hereunder including the Note or portion(s) thereof to any of the twelve (12) Federal
Reserve Banks organized under Section 4 of the Federal Reserve Act, 12 United States Code, Section 341; but no such pledge or enforcement thereof shall release the Bank from its obligations hereunder. 
  

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 The Bank shall not be required to marshal any present or future security for, or guarantees of, the
Obligations or to resort to any such security or guarantee in any particular order and the Borrower waives to the fullest extent that it lawfully can, (a) any right it might have to require the Bank to pursue any particular remedy before proceeding
against the Borrower, and (b) any right to the benefit of, or to direct the application of the proceeds of any collateral until the Obligations are paid in full. 
  
 The Borrower hereby waives diligence, demand, presentment for payment, notice of nonpayment, protest and notice of protest,
and notice of any renewals or extensions of this Note, and all rights under any statute of limitations, and agree that the time for payment of this Note may be changed and extended at Bank’s sole discretion, without impairing its liability
hereon, and further consents to the release of all or any part of the security for the payment hereof at the discretion of Bank, or the release of any party liable for this obligation without affecting the liability of the other parties hereto. Any
delay on the part of the Bank in exercising any right hereunder shall not operate as a waiver of any such right, and any waiver granted for one occasion shall not operate as a waiver in the event of any subsequent default. 
  
 The Borrower hereby waives such rights as they may have to notice and/or
hearing under any applicable federal or state laws pertaining to the exercise by the Bank of such rights as the Bank may have regarding the right to seek prejudgment remedies and/or deprive the Borrower or any guarantor of or affect the use of or
possession or enjoyment of the Borrower’s property prior to the rendition of a final judgment against the Borrower. The Borrower further waives any right it may have to require the Bank to provide a bond or other security as a precondition to
or in connection with any prejudgment remedy sought by the Bank, and waives any objection to the issuance of such prejudgment remedy based on any offsets, claims, defenses or counterclaims to any action brought by the Bank. 
  
 THE BORROWER AND THE BANK MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY RELATED AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF THE BANK RELATING TO THE ADMINISTRATION OF THE LOAN OR THE ENFORCEMENT OF THE RELATED AGREEMENTS, AND AGREE THAT NO
PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. EXCEPT AS PROHIBITED BY LAW, THE BORROWER HEREBY WAIVES ANY RIGHTS IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ANY
SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. THE BORROWER HEREBY CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE BANK HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE
BANK WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE BANK TO ACCEPT THIS AGREEMENT AND ESTABLISH THE CREDIT AGREEMENT AND LOAN. 
  

 9 

 This Note, the Loan Agreement and the rights and obligations of the parties hereunder and thereunder
shall be construed and interpreted in accordance with the laws of State of New Hampshire (excluding the laws applicable to conflicts or choice of law). The Borrower agrees that the execution of this Note, the Loan Agreement and the performance of
the Borrower’s obligations hereunder and thereunder shall be deemed to have a situs inthe State of New Hampshire, and the Borrower shall be subject to the personal jurisdiction of the courts of the State of New Hampshire with respect to any
action the Bank or its successors or assigns may commence hereunder or thereunder. Accordingly, the Borrower hereby specifically and irrevocably consents to the jurisdiction of the courts of the State of New Hampshire with respect to all matters
concerning this Note, the Credit Agreement, the Related Agreements, or the enforcement of any of the foregoing. 
  
 This Note shall bind the successors and assigns of the Borrower and shall inure to the benefit of the Bank, its successors and assigns. 
  
 <The remainder of this page is intentionally left blank.> 
  

 10 

 The Borrower has read all of the terms and conditions of this Note and acknowledges receipt of an exact
copy of it. 
  
 Signed as an instrument under seal as of the date
first written above. 
  

					
	 WITNESS:
	 	 BORROWER:

		
	 	 	 Brookstone Company, Inc.

			
	  

	 	 By:
	 	  

	 	 	 Name:
	 	 Philip W. Roizin

	 	 	 Title:
	 	 Executive Vice President

  

 11Mortgage and Security Agreements

 Exhibit 10.42 
  

			
	BANKNORTH, N.A.	 	 MORTGAGE AND
 SECURITY AGREEMENT

  
 This MORTGAGE AND
SECURITY AGREEMENT is granted as of the 24th day of August, 2004, to Banknorth, N.A. (hereinafter, the “Mortgagee”), a national banking association with a principal office at 7 New England Executive Park, Burlington, Massachusetts
01803, by Brookstone Company, Inc., a New Hampshire corporation (hereinafter, the “Mortgagor”), with a principal office at One Innovation Way, Merrimack, New Hampshire. In consideration of the mutual covenants contained herein and
benefits derived herefrom, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Mortgagor agrees to the following terms and conditions: 
  
 ARTICLE 1-GRANT OF MORTGAGE INTEREST 
  
 1-1. Mortgage Interest. To secure the Mortgagor’s prompt,
punctual, and faithful payment and performance of all and each of the Mortgagor’s present and future Liabilities (as that term is defined in Section 3-1 herein) to the Mortgagee, including, without limitation, those arising under (a) a certain
Real Estate Promissory Note of even date in the original principal amount of Eight Million Dollars ($8,000,000.00), and any extensions, renewals, substitutions, modifications, or replacements thereof (hereinafter, the “Note”), (b) a
certain Mortgage Loan Agreement of even date by and between the Mortgagor and the Mortgagee, and any extensions, renewals, substitutions, modifications, or replacements thereof (hereinafter, the “Loan Agreement”), (c) this Mortgage
and Security Agreement, and any extensions, renewals, substitutions, modifications or renewals thereof, and (d) a certain Oil and Hazardous Materials Indemnification Agreement of even date by the Mortgagor in favor of the Mortgagee relative to the
Mortgaged Premises (as hereinafter defined), and any substitutions, modifications, or replacements thereof (hereinafter, the “Indemnification”), the Mortgagor hereby grants, mortgages, assigns, and transfers to the Mortgagee with
MORTGAGE COVENANTS, the Collateral (as that term is defined in Section 3-3 herein). The Mortgagor intends to convey and hereby does convey to the Mortgagee with MORTGAGE COVENANTS (to be included within the Collateral) to secure the Liabilities as
aforesaid, the premises more particularly described on Exhibit A attached hereto and incorporated herein by this reference. 
  
 ARTICLE 2-GRANT OF SECURITY INTEREST 
  
 2-1. Security Interest. To secure the Mortgagor’s prompt, punctual, and faithful payment and performance of all and each of the present and
future Liabilities to the Mortgagee, including, without limitation, those arising under the Loan Documents (as hereinafter defined), the Mortgagor hereby grants to the Mortgagee a continuing security interest in and to, and assigns to the Mortgagee,
the Collateral (as that term is defined in Section 3-3 herein). 
  
 2-2. Financing Statement. This Agreement is intended to take effect as a security agreement and is to be filed with the Hillsborough County Registry of Deeds (New Hampshire) in lieu of a financing statement pursuant to State of New
Hampshire Revised Statutes Section 382-A (hereinafter the “UCC”). 

 2-3. Power of Attorney. The Mortgagor hereby irrevocably constitutes and appoints the Mortgagee as
the Mortgagor’s true and lawful attorney for the purpose of signing and filing or recording on behalf of the Mortgagor any financing or other statement in order to establish, perfect or protect the Mortgagee’s interest in the Collateral.

  
 ARTICLE 3-CERTAIN DEFINITIONS  
  
 As used herein, the following terms shall have the following meanings:

  
 3-1. “Liabilities” includes, without
limitation, any and all liabilities, debts, and obligations of the Mortgagor to the Mortgagee, now or hereafter arising under (i) the Note, (ii) the Loan Agreement, (iii) the Indemnification, (iv) this Mortgage, (v) any Hedging Obligations, and (vi)
any and all other documents, instruments, and agreements now or hereafter executed and delivered in connection with the loan arrangement evidenced by the foregoing items (i) through (v) (hereinafter singly and collectively, the “Loan
Documents”). “Liabilities” also includes, without limitation, all interest and other amounts which may be charged to the Mortgagor and/or which may be due from the Mortgagor to the Mortgagee from time to time under the Loan
Documents and all costs and expenses now or hereafter incurred or paid by the Mortgagee in connection with the Loan Documents, including, without limitation, Costs of Collection (as hereinafter defined). The Mortgagee’s books and records shall
be prima facie evidence of the Mortgagor’s indebtedness to the Mortgagee. 
  
 3-2. Costs of Collection. “Costs of Collection” includes without limitation, all attorneys’ fees, all out-of-pocket expenses incurred by the Mortgagee’s attorneys, and all costs and
expenses incurred by the Mortgagee, which costs and expenses are directly related to or in respect of the Mortgagee’s efforts to collect or enforce any of the Liabilities and/or to exercise or enforce any of the Mortgagee’s rights,
remedies, or powers against or in respect of the Mortgagor and/or any other guarantor or person liable in respect of the Liabilities (whether or not suit is instituted in connection with such efforts). The Costs of Collection shall be added to the
Liabilities of the Mortgagor to the Mortgagee, as if such had been lent, advanced, and credited by the Mortgagee to, or for the benefit of, the Mortgagor, and shall accrue interest at the highest rate of interest charged relative to any of the
Liabilities. 
  
 3-3. Collateral.
“Collateral” shall include all and each of the following, whether singly or collectively, whether real property, personal property, or a combination thereof, whether now owned or now due or now existing, or in which the Mortgagor
has an interest, or hereafter, at any time in the future, acquired, arising, or to become due, or in which the Mortgagor obtains an interest, and all proceeds, products, substitutions and accessions of or to any of the following: 
  
 (a) the land with buildings and improvements whether now existing or
hereafter constructed or located thereon, situated in Merrimack, New Hampshire as more particularly described on Exhibit A, known as One Innovation Drive, Merrimack, New Hampshire; 
  
 (b) all furnaces, ranges, heaters, plumbing goods, gas and electric fixtures,
screens, screen doors, mantels, shades, storm doors and windows, awnings, oil burners and tanks 
  

 2 

 or other equipment, gas or electric refrigerators and refrigerating systems, ventilating and air conditioning apparatus
and equipment, door bell and alarm systems, sprinkler and fire extinguishing systems, portable or sectional buildings, and all other fixtures of whatever kind or nature owned by the Mortgagor, now or in the future located and used in or on the
Mortgaged Premises, and any and all similar fixtures hereinafter installed in the Mortgaged Premises in any manner which renders such articles usable in connection therewith; 
  
 (c) all easements, covenants, agreements, and other rights which are appurtenant to or benefit the Mortgaged Premises;

  
 (d) all leases, contracts or agreements entered into, for the
lease, rental, hire or use by the Mortgagor of any property described in the foregoing Subparagraph (b) in connection with the construction, operation, maintenance or occupation of the Mortgaged Premises; 
  
 (e) all leases, tenancies, and occupancies whether written or not, regarding
all or any portion of the foregoing Subparagraphs (a) through (d) (hereinafter, the “Leases”), all guarantees and security relating thereto, together with all income and profit arising therefrom or from any of the foregoing
Subparagraphs (a) through (d), and all payments due or to become due thereunder (hereinafter, the “Rental Payments”), including, without limitation, all rent, additional rent, damages, insurance payments, taxes, insurance proceeds,
condemnation awards, or any payments with respect to options contained therein (including any purchase option); 
  
 (f) all contracts and agreements (together with the easements, covenants, agreements and rights referred to in Section 3-3(c), above, and the leases,
contracts, and agreements referred to in Section 3-3(d), above, hereinafter, the “Contracts”) licenses, permits and approvals (hereinafter, the “Licenses”) and warranties and representations, relative to the use,
operation, management, construction, repair or service of any of the foregoing Subparagraphs (a) through (d); 
  
 (g) all funds held by the Mortgagee as tax or insurance escrow payments; 
  
 (h) all proceeds received from the sale, exchange, collection or other disposition of any of the foregoing Subparagraphs (a)
through (g); all insurance proceeds relating to all or any portion of the foregoing Subparagraphs (a) through (g); and all awards, damages, proceeds, or refunds from any state, local, federal or other takings of, and all municipal tax abatements
relating to, all or any portion of the foregoing Subparagraphs (a) through (g); and 
  
 (i) all rights, remedies, representations, warranties, and privileges pertaining to any of the foregoing Subparagraphs (a) through (h). 
  
 3-4. Mortgaged Premises. “Mortgaged Premises” shall mean and refer to that portion of the Collateral
described in Sections 3-3(a) and 3-3(b) herein. 
  
 3-5.
Personal Property. “Personal Property” shall mean and refer to all of the Collateral other than that portion of the Collateral which is included within the definition of Mortgaged Premises. 
  

 3 

 3-6. Receivables Collateral. “Receivables Collateral” shall mean and refer to all
Rental Payments and all rights to payment now held, or in which the Mortgagor has an interest or hereafter acquired by the Mortgagor, or in which the Mortgagor obtains an interest, arising out of, constituting a part of, or relating to all or a
portion of the Collateral. 
  
 ARTICLE 4-REPRESENTATIONS, WARRANTIES AND
COVENANTS 
  
 4-1. Existence and Authority. The
Mortgagor is, and shall hereafter remain, in good standing as a corporation in that State indicated in the Preamble of this Agreement. The execution and delivery of this Agreement, and of any other instruments executed and delivered in connection
herewith, constitutes representations by the Mortgagor and the individual(s) signing this Agreement and said instruments that such execution and delivery has received all such authorization as may be necessary to permit such execution and delivery
to the Mortgagee, and that it binds the Mortgagor. 
  
 4-2.
Insurance. The Mortgagor hereby covenants and agrees to maintain public liability insurance, all risk insurance, builder’s risk insurance, flood insurance (if necessary) and such other insurance against such casualties or contingencies
with respect to the Mortgaged Presmises as may be required by the Mortgagee in sums and in companies satisfactory to the Mortgagee; provided, the property insurance on the Collateral shall be for no less than 100% of full replacement value thereof
(meeting all co-insurance requirements). All policies shall contain a provision requiring at least twenty (20) days advance notice to the Mortgagee before any cancellation. All insurance on the Collateral shall be for the benefit of and deposited
with the Mortgagee, shall be first payable to the Mortgagee, and shall include such endorsement in favor of the Mortgagee as the Mortgagee may specify. The endorsement shall provide that the insurance, to the extent of the Mortgagee’s interest
therein, shall not be impaired or invalidated, in whole or in part, by reason of any act or neglect of the Mortgagor, or failure by the Mortgagor to comply with any warranty or condition of the policies. The Mortgagor shall advise the Mortgagee of
each claim made by the Mortgagor under any policy of insurance which covers all or any portion of the Collateral and, at the Mortgagee’s option in each instance, will permit the Mortgagee, to the exclusion of the Mortgagor, to conduct the
adjustment of each such claim. The Mortgagor hereby appoints the Mortgagee as the Mortgagor’s attorney in fact, to obtain, adjust, settle, and cancel any insurance described in this section and to endorse in favor of the Mortgagee any and all
drafts and other instruments with respect to such insurance. The within appointment, being coupled with an interest, is irrevocable until this Agreement is terminated by a written instrument executed by a duly authorized officer of the Mortgagee.
The Mortgagee shall not be liable for any loss sustained on account of any exercise pursuant to said power unless such loss is caused by the willful misconduct or actual bad faith of the Mortgagee. The Mortgagee may, at its option, make any proceeds
available to the Mortgagor to repair or reconstruct the Collateral (subject to the disbursement procedures set forth in the Loan Agreement) or apply any proceeds of such insurance against the Liabilities, whether or not such have matured, in
accordance with Section 9-6 herein. 
  
 4-3. Statutory
Compliance. The Mortgagor shall comply with, shall not use any of the Collateral in violation of, and shall cause the Collateral to be in compliance with, each and every License, statute, regulation, ordinance, decision, directive, order,
by-law, or rule of any federal, state, municipal, and other governmental authority which has or claims jurisdiction over the 
  

 4 

 Mortgagor or any of the Collateral. The Mortgagor has obtained, and will maintain in full force and effect, the Licenses
and all licenses, permits and approvals necessary for the use, maintenance, construction and operation of the Collateral, and at the option of the Mortgagee, will do all things and execute all such documents as the Mortgagee may request to assign
the Mortgagor’s rights therein to the Mortgagee. 
  
 4-4.
Title to Collateral. The Mortgagor is, and shall hereafter remain, the owner of the Collateral free and clear of all voluntary or involuntary liens, encumbrances, attachments, security interests, purchase money security interests,
assignments, mortgages, charges or other liens or encumbrances of any nature whatsoever, with the exceptions of (a) the mortgage and security interest created herein, (b) liens for real estate taxes not yet due and payable, (c) those exceptions
reflected on the lender’s policy of title insurance delivered to the Mortgagee in connection herewith, and (d) sales or other dispositions of those items described in 3-3(b) which are no longer used or useful with respect to the Mortgaged
Premises. 
  
 4-5. Condition of Collateral. The Collateral
is, and shall hereafter remain, in good repair, well maintained and in good working order. The Mortgagor shall make all necessary repairs, replacements, additions and improvements to maintain the Collateral in good order and condition. The Mortgagor
shall not cause or permit to be suffered any waste, destruction or loss (whether or not such loss is insured against) to the Collateral or any part thereof, or use any of the Collateral in violation of any applicable statute, regulation, ordinance,
decision, directive, order, by-law, or rule, or any policy of insurance. 
  
 4-6. Inspection of Collateral. From time to time as the Mortgagee and the Mortgagee’s representatives may reasonably request, the Mortgagor shall accord the Mortgagee and such representatives access to the
Collateral and all books and records relating to the use, operation, construction, or management thereof, and in connection with such access, will permit the Mortgagee and such representatives to inspect the Collateral, verify any information
contained therein or relating thereto, and verify the Mortgagor’s compliance with the provisions of this Agreement or of any other agreement between the Mortgagor and the Mortgagee and any instrument to be furnished by the Mortgagor to the
Mortgagee. 
  
 4-7. Taxes and other Costs. The Mortgagor
shall pay when due all real and personal property taxes, assessments, charges, franchises, and other taxes assessed against it, and all insurance premiums relative to the Collateral. The Mortgagor shall deliver to the Mortgagee, upon request of
Mortgagee, evidence of the payment by the Mortgagor of all such items. The Mortgagor agrees that the Mortgagee may, at its option, and from time to time, pay any taxes or insurance premiums, the payment of which is then due, discharge any liens or
encumbrances on any of the Collateral, or take any other action that the Mortgagee may deem proper to repair, insure, maintain, or preserve any of the Collateral or the Mortgagee’s rights therein. The Mortgagor will pay to the Mortgagee on
demand all amounts so paid or incurred by the Mortgagee. The obligation of the Mortgagor to pay such amounts shall be included in the Liabilities of the Mortgagor to the Mortgagee and shall accrue interest at the highest rate of interest charged
relative to any of the Liabilities. 
  
 4-8. Property of Third
Parties. The Mortgagor shall not suffer or permit any item of property owned by a third party to be affixed, attached, or installed on, upon or within, or be 
  

 5 

 located at, the Mortgaged Premises, or any portion or unit thereof, which may be subject to any security interest, lien,
encumbrance or charge which is prior or superior to the interest granted herein. 
  
 4-9. Litigation. There is no suit, action, proceeding, or investigation presently pending or threatened against the Mortgagor, or any of the Collateral, which, if determined adversely, would have a material
adverse effect upon the Mortgagor or the Collateral. 
  
 4-10.
Future Action. The Mortgagor shall do all such things and execute all such documents from time to time hereafter as the Mortgagee may reasonably request in order to carry into effect the provisions and intent of this Agreement and to protect,
perfect, and maintain the Mortgagee’s interest in and to the Collateral. 
  
 (a) Additional Information. The Mortgagor shall furnish the Mortgagee with such financial information or other information pertaining to the the Collateral as is required pursuant to the Loan Agreement.

  
 4-11. Oil, Hazardous Materials, and Toxic Substances.

  
 (a) The Mortgagor represents and warrants that, to its
knowledge, no hazardous material or oil was ever, or is now, stored on (except in compliance with all laws, ordinances, and regulations pertaining thereto), transported, or disposed of on the Mortgaged Premises. 
  
 (b) The Mortgagor shall: 
  
 (i) not store (except in compliance with all laws,
ordinances, and regulations pertaining thereto), or dispose of any hazardous material or oil on the Mortgaged Premises 
  
 (ii) neither directly nor indirectly transport or arrange for the transport of any hazardous material or oil onto or from the Mortgaged
Premises (except in compliance with all laws, ordinances and regulations pertaining thereto); 
  
 (iii) provide the Mortgagee with immediate written notice upon: (x) the Mortgagor’s obtaining knowledge of any potential or known
release, or threat of release, of any hazardous material or oil on (the Mortgaged Premises) or from the Mortgaged Premises, (y) the Mortgagor’s receipt of any notice to such effect from any federal, state, or other governmental authority; and
(z) the Mortgagor’s obtaining knowledge of any incurrence of any expense or loss by such governmental authority in connection with the assessment, containment, or removal of any hazardous material or oil for which expense or loss the Mortgagor
may be liable with respect to the Mortgaged Premises or for which expense a lien may be imposed on the Mortgaged Premises; and 
  
 (iv) comply with all laws, judgments, decrees, orders, rules, and regulations pertaining to environmental matters relating to the use,
storage, containment, and removal of hazardous material or oil with respect to the Mortgaged Premises, including, without limitation, those arising under the applicable environmental statutes of The State of New Hampshire, and any other federal,
state or local statute, rule, regulation, ordinance, or decree. 
  

 6 

 (c) The Mortgagor shall indemnify, defend, and hold the Mortgagee harmless of and from any claim brought
or threatened against the Mortgagee by the Mortgagor, any guarantor or endorser of the liabilities, or any governmental agency or authority or any other person (as well as from attorneys’ reasonable fees and expenses in connection therewith) on
account of the presence of hazardous material or oil on the Mortgaged Premises, the release of hazardous material or oil on or from the Mortgaged Premises, or the failure by the Mortgagor to comply with the terms and provisions hereof (each of which
may be defended, compromised, settled, or pursued by the Mortgagee with counsel of the Mortgagee’s selection, but at the expense of the Mortgagor). This indemnification includes any costs and expenses that the Mortgagee may incur (i) in
defending or protecting its security interest or the priority thereof, or (ii) for assessment, containment and/or removal of any hazardous material or oil from all or any portion of the Mortgaged Premises or any surrounding areas. The within
indemnification shall survive payment of the Liabilities and/or any termination, release, or discharge executed by the Mortgagee in favor of the Mortgagor. 
  
 (d) All terms used in this Section are being used with the meanings given those terms in the applicable environmental statutes of the State of New
Hampshire. 
  
 4-12. Mortgage Conditions. This Mortgage and
Security Agreement is upon the STATUTORY CONDITIONS, upon breach of which or on any breach of this Mortgage and Security Agreement, the Mortgagee shall have the STATUTORY POWER OF SALE. 
  
 4-13. Compliance with Leases and Contracts. The Mortgagor is not in default under any terms and conditions of any
Lease or Contract and shall, during the term of this Agreement, perform all of the obligations of the Mortgagor under any such Lease or Contract within the period that such performance is required. The Mortgagor has entered into, and will maintain
in full force and effect, all Contracts necessary for the use, maintenance, construction and operation of the Collateral, and at the option of the Mortgagee, will do all things and execute all such documents as the Mortgagee may request to assign
the Mortgagor’s rights therein to the Mortgagee. 
  
 4-14.
Collection of Rents. The Mortgagor agrees not to collect or accept the payment of any Rental Payments, or other income or profit from, or on account of, any Lease or the use or occupation of the Collateral, in advance of the time when such
payment becomes due unless such amount is delivered to the Mortgagee to be applied toward the Liabilities in accordance with Section 10-6 hereof. 
  
 4-15. Modification of Leases and Contracts. The Mortgagor will not modify or consent to the modification of any provision of, or cancel, terminate
or accept the early cancellation or termination, of any material Lease or Contract. 
  
 4-16. Leases. The Mortgagor shall not enter into any Lease without the prior written consent of the Mortgagee which shall not be unreasonably withheld or delayed. Each such Lease shall be in form and substance
reasonably satisfactory to the Mortgagee and, without limiting the 
  

 7 

 generality of the foregoing, shall include a provision confirming that the Lease is subordinate to the lien of this
Agreement and consenting to the assignment provided for herein of the Lease to the Mortgagee. The Mortgagor shall furnish the Mortgagee, upon the request of the Mortgagee, with copies of each and every Lease and any other information relative to
each such Lease and the tenant thereunder. The Mortgagor will take all action as may be requested by the Mortgagee in furtherance of the rights of the Mortgagee hereunder, including, without limitation, obtaining estoppel certificates and agreements
(in form satisfactory to the Mortgagee) from each tenant subordinating the Lease to the lien of this Agreement and consenting to the assignment of the Lease provided for herein, and taking all appropriate action to lease any portions of the
Mortgaged Premises not occupied by the Mortgagor. 
  
 4-17.
Eminent Domain. The Mortgagor shall advise the Mortgagee of any proposed taking by any State, Federal or Local authority of all or a portion of the Collateral. The Mortgagor shall cooperate with the Mortgagee in connection with the
negotiation of any such taking and any awards or damages payable to the Mortgagor in connection therewith and shall take any action relating thereto reasonably requested by the Mortgagee. The Mortgagee shall apply any proceeds of such taking against
the Liabilities, whether or not such have matured, in accordance with Section 9-5 herein. 
  
 4-18. Junior Mortgage. In the event that the Mortgagee in its sole and absolute discretion hereafter permits a junior mortgage on the Mortgaged Premises, the Mortgagor does hereby covenant and agree to
faithfully and fully comply with and abide by each and every term, covenant, and condition of such junior mortgage or mortgages on the Mortgaged Premises. The Mortgagee is hereby expressly authorized, permitted, and directed, in its sole discretion,
and at its option, to advance all sums necessary to cure any default under any such mortgage. The Mortgagor further covenants and agrees not to modify, change, alter, or extend any of the terms or conditions of any such junior mortgage. 

 
 4-19. Material Occurrence. The Mortgagor shall promptly notify the
Mortgagee of the occurrence of any event which may have a material effect on the Collateral 
  
 4-20. Compliance with Covenants. The Mortgagor shall not indirectly do or cause to be done, any act which, if done directly by the Mortgagor, would breach any covenant contained herein, or in any other
agreement between the Mortgagor and the Mortgagee. 
  
 4-21.
Other Representations. The representations, covenants and warranties herein are in addition to any others, previously, presently, or hereafter made by the Mortgagor to or with the Mortgagee in any other instrument. 
  
 ARTICLE 5-MORTGAGOR’S USE OF COLLATERAL 
  
 Unless and until the occurrence of an Event of Default hereunder, the
Mortgagor shall be authorized to occupy, operate, manage, hold, lease, or otherwise use the Collateral in the ordinary and reasonable course of the Mortgagor’s business and collect, when due, the Receivables Collateral, subject, however, to the
terms and provisions hereof. 
  

 8 

 ARTICLE 6-EVENTS OF DEFAULT 
  
 Upon the occurrence of any one or more of the Events of Default as defined in the Loan Agreement, any and all Liabilities of
the Mortgagor to the Mortgagee shall become immediately due and payable, without notice or demand, at the option of the Mortgagee. 
  
 ARTICLE 7-RIGHTS AND REMEDIES UPON DEFAULT  
  
 7-1. Rights and Remedies Upon Default. Upon the occurrence of any Event of Default, or at any time thereafter, the Mortgagee shall have all the
rights of a mortgagee and a secured party under the State of New Hampshire Revised Statutes Annotated, in addition to which the Mortgagee shall have all of the following rights and remedies: 
  
 (a) with or without taking possession, to collect the Receivables
Collateral; 
  
 (b) to take possession of all or a portion of the
Collateral; 
  
 (c) with or without taking possession of the
Collateral, to sell, lease, or otherwise dispose of any or all of the Collateral in its then condition or following such preparation or processing as the Mortgagee deems advisable; 
  
 (d) with or without taking possession of the Collateral, and without assuming the obligations of the Mortgagor thereunder,
to exercise the rights of the Mortgagor under, to use, or to benefit from any of the Contracts, Leases, or Licenses; 
  
 (e) with or without taking possession of the Collateral and with or without bringing any action or proceeding, either directly, by agent, or by the
appointment of a receiver, construct improvements on the Mortgaged Premises and manage, lease, sublease, or operate the Collateral on such terms as the Mortgagee, in its sole discretion exercising reasonable business judgment, deems proper or
appropriate; 
  
 (f) to apply all or any portion of the
Collateral, or the proceeds thereof, towards (but not necessarily in complete satisfaction of) the Liabilities; 
  
 (g) to exercise the Statutory Power of Sale; 
  
 (h) to foreclose any and all rights of the Mortgagor in and to the Collateral, whether by sale, entry, or in any other manner provided for hereunder or
under the State of New Hampshire Revised Statutes Annotated; and 
  
 (i) to elect, upon the discretion of the Mortgagee, to treat any or all of the Leases as superior to the lien of the within Mortgage and Security Agreement. 
  
 7-2. Sale of Other Disposition of Collateral. Any sale or other disposition of the Collateral may be at public or
private sale, to the extent such private sale is authorized under the State of New Hampshire Revised Statutes Annotated, upon such terms and in such manner as the Mortgagee deems advisable. The Mortgagee may conduct any such sale or other
disposition of the Collateral upon the Mortgaged Premises, in which event the Mortgagee shall not be liable for any rent or charge for such use of the Mortgaged Premises. The Mortgagee may purchase the 
  

 9 

 Collateral, or any portion of it, at any sale held under this Article. With respect to any Collateral to be sold pursuant
to the UCC, the Mortgagee shall give the Mortgagor at least ten (10) days written notice of the date, time, and place of any proposed public sale, or such additional notice as may be required under the State of New Hampshire Revised Statutes
Annotated, and of the date after which any private sale or other disposition may be made. The Mortgagee may sell any of the Personal Property as part of the Mortgaged Premises, or any portion or unit thereof, at the foreclosure sale or sales
conducted pursuant hereto. The Mortgagor waives any right to require the marshalling of any of its assets in connection with any disposition conducted pursuant hereto. In the event all or part of the Collateral is included at any foreclosure sale
conducted pursuant hereto, a single total price for the Collateral, or such part thereof as is sold, may be accepted by the Mortgagee with no obligation to distinguish between the application of such proceeds amongst the property comprising the
Collateral. 
  
 7-3. Collection of Receivables Collateral.
In connection with the exercise by the Mortgagee of the rights and remedies provided herein: 
  
 (a) The Mortgagee may notify any of the Mortgagor’s debtors relating to the Receivables Collateral, either in the name of the Mortgagee or the Mortgagor, to make payment directly to the Mortgagee or such other
address as may be specified by the Mortgagee, may advise any person of the Mortgagee’s interest in and to the Receivables Collateral, and may collect directly from the obligors thereon all amounts due on account of the Receivables Collateral;

  
 (b) At the Mortgagee’s request, the Mortgagor will
provide written notification to any or all of said debtors concerning the Mortgagee’s interest in the Receivables Collateral and will request that such debtors forward payment thereof directly to the Mortgagee; 
  
 (c) The Mortgagor shall hold any proceeds and collections of any of the
Receivables Collateral in trust for Mortgagee and shall not commingle such proceeds or collections with any other funds of the Mortgagor; and 
  
 (d) The Mortgagor shall deliver all such proceeds to the Mortgagee immediately upon the receipt thereof by the Mortgagor in the identical form received,
but duly endorsed or signed on behalf of the Mortgagor to the Mortgagee. 
  
 7-4. Use and Occupation of Mortgaged Premises. In connection with the Mortgagee’s exercise of the Mortgagee’s rights under this Article, the Mortgagee may enter upon, occupy, and use all or any part
of the Collateral and may exclude the Mortgagor from the Mortgaged Premises or portion thereof as may have been so entered upon, occupied, or used. The Mortgagee shall not be required to remove any of the Collateral from the Mortgaged Premises upon
the Mortgagee’s taking possession thereof, and may render any Collateral unusable to the Mortgagor. In the event the Mortgagee manages the Mortgaged Premises in accordance with Section 7-1(e) herein, the Mortgagor shall pay to the Mortgagee on
demand a reasonable fee for the management thereof in addition to the Liabilities provided for herein. Further, the Mortgagee may construct such improvements on the Mortgaged Premises or make such alterations, renovations, repairs, and replacements
to the Collateral, as the Mortgagee, in its sole discretion, deems proper or appropriate. The obligation of the Mortgagor to pay such amounts and all 
  

 10 

 expenses incurred by the Mortgagee in the exercise of its rights hereunder shall be included in the Liabilities of the
Mortgagor to the Mortgagee and shall accrue interest at the highest rate of interest charged relative to any of the Liabilities. 
  
 7-5. Partial Sales. The Mortgagor agrees that, in case the Mortgagee in the exercise of the Power of Sale contained herein or in the exercise of
any other rights hereunder given, elects to sell in parcels, said sales may be held from time to time and that the power shall not be exhausted until all of the Collateral not previously released shall have been sold, notwithstanding that the
proceeds of such sales exceed, or may exceed, the Liabilities then secured thereby. 
  
 7-6. Assembly of Collateral. Upon the occurrence of any Event of Default, the Mortgagee may require the Mortgagor to assemble the Personal Property and make it available to the Mortgagee, at the
Mortgagor’s sole risk and expense, at a place or places which are reasonably convenient to both the Mortgagee and Mortgagor. 
  
 7-7. Power of Attorney. Upon the occurrence of any Event of Default, the Mortgagor hereby irrevocably constitutes and appoints the Mortgagee as the
Mortgagor’s true and lawful attorney, to take any action with respect to the Collateral to preserve, protect, or realize upon the Mortgagee’s interest therein, each at the sole risk, cost and expense of the Mortgagor, but for the sole
benefit of the Mortgagee. The rights and powers granted the Mortgagee by the within appointment include, but are not limited to, the right and power to (i) prosecute, defend, compromise, settle, or release any action relating to the Collateral; (ii)
endorse the name of the Mortgagor in favor of the Mortgagee upon any and all checks or other items constituting remittances or proceeds of Receivables Collateral; (iii) sign and endorse the name of the Mortgagor on, and to receive as secured party,
any of the Collateral; (iv) sign and file or record on behalf of the Mortgagor any financing or other statement in order to perfect or protect the Mortgagee’s security interest hereunder; (v) enter into leases or subleases relative to all or a
portion of the Mortgaged Premises; (vii) exercise the rights of the Mortgagor under any Contract, Leases, or License; or (viii) manage, operate, maintain, or repair the Mortgaged Premises. The Mortgagee shall not be obligated to perform any of such
acts or to exercise any of such powers, but if the Mortgagee elects so to perform or exercise, the Mortgagee shall not be accountable for more than it actually receives as a result of such exercise of power, and shall not be responsible to Mortgagor
except for the Mortgagee’s willful misconduct, or actual bad faith. All powers conferred upon the Mortgagee by this Agreement, being coupled with an interest, shall be irrevocable until terminated by a written instrument executed by a duly
authorized officer of the Mortgagee. 
  
 7-8. Rights and
Remedies. The rights, remedies, powers, privileges, and discretions of the Mortgagee hereunder (hereinafter the “Mortgagee’s Rights and Remedies”) shall be cumulative and not exclusive of any rights or remedies which it
would otherwise have. No delays or omissions by the Mortgagee in exercising or enforcing any of the Mortgagee’s Rights and Remedies shall operate as or constitute a waiver thereof. No waiver by the Mortgagee of any default hereunder or under
any other agreement shall operate as a waiver of any other default hereunder or under any other agreement. No single or partial exercise of the Mortgagee’s Rights or Remedies, and no other agreement or transaction, of whatever nature entered
into between the Mortgagee and the Mortgagor at any time, whether before, during, or after the date hereof, preclude any other or further exercise of the Mortgagee’s Rights and Remedies. No waiver or 
  

 11 

 modification on the Mortgagee’s part on any one occasion shall be deemed a waiver on any subsequent occasion, nor
shall it be deemed a continuing waiver. All of the Mortgagee’s Rights and Remedies under this Agreement or any other agreement or transaction shall be cumulative, and not alternative or exclusive, and may be exercised by the Mortgagee at such
time or times and in such order of preference as the Mortgagee in its sole discretion may determine. 
  
 ARTICLE 8- NOTICE 
  
 All
notices, demands and other communications made in respect to this Agreement shall be made to the following addresses (each of which may be changed upon seven (7) days written notice to all others) given by hand, by recognized overnight mail
delivery, or by certified or registered mail, return receipt requested, as follows: 
  

			
	 If to the Bank:
	 	 Banknorth, N.A.
 7 New England Executive
Park
 Burlington, Massachusetts 01803
 Attention: Mr. Jeffrey R.
Westling

		
	 With a copy to:
	 	 Seyfarth Shaw LLP
 World Trade Center East

Two Seaport Lane, Suite 300
 Boston, Massachusetts 02210
 Attention: Louis J. DiFronzo, Jr., Esquire

		
	 If to the Borrower:
	 	 Brookstone Company, Inc.
 17 Riverside
Drive
 Nashua, New Hampshire 03062
 Attention: Philip W.
Roizin

		
	 With a copy to:
	 	 Cook, Little, Rosenblatt & Manson, P.L.L.C.
 The
Center of New Hampshire
 650 Elm Street
 Manchester, New
Hampshire 03100
 Attention: Thomas P. Manson, Esquire

  
 Any such notice shall be deemed
received the earlier of (i) two (2) days after the mailing of such notice in accordance with the terms and conditions and to the addresses provided above, or (ii) the date of which the notice is delivered by hand or by recognized overnight mail
delivery to the address and to the individual provided above. 
  
 ARTICLE 9-
MISCELLANEOUS 
  
 9-1. Mortgagor. In the event that
the Mortgagor is more than one person or entity, all representations, covenants, warranties, defaults, rights, remedies, powers, privileges, and discretions shall be applicable to the Mortgagors individually, jointly, and severally, with the
exception of those which are made by their terms applicable to a specific Mortgagor. 
  

 12 

 9-2. Exhibits. Any and all Exhibits referred to herein shall be deemed annexed hereto prior to the
execution hereof and specifically incorporated by reference herein. 
  
 9-3. Headings. All section headings included within this Mortgage and Security Agreement shall be for reference only, and shall not limit or restrict, in any manner whatsoever, the breadth or nature of the provisions included within
each subject section. 
  
 9-4. Successors and Assigns. In
the event the ownership of the Collateral, or any part thereof, becomes vested in a person other than the Mortgagor, the Mortgagee may, without notice to the Mortgagor, deal with such successor or successors in interest with reference to this
Agreement and the Liabilities in the same manner as with the Mortgagor, without in any way waiving the default occasioned by such transfer of ownership or in any way vitiating or discharging the Mortgagor’s liability hereunder or upon the
Liabilities, and no compromise, settlement, release or sale of the Collateral, no forbearance on the part of the Mortgagee, and no alteration, amendment, cancellation, waiver or modification of any term or condition or extension of the time for
payment of the Liabilities given by the Mortgagee shall operate to release, discharge, modify, change or affect the original liability of the Mortgagor herein, either in whole or in part, notice of any action being waived. 
  
 9-5. Application of Proceeds. The proceeds of any collection, sale, or
disposition of the Collateral, or of any other payments received hereunder, shall be applied toward the Liabilities in such order and manner as the Mortgagee determines in its sole discretion subject to applicable law. The Mortgagor shall remain
liable to the Mortgagee for any deficiency remaining following such application. After payment of all liabilities, Mortgagee shall remit to Mortgagor the balance of said proceeds of any collection, sale, or disposition of the Collateral. 

 
 9-6. Waiver. 
  
 (a) The Mortgagor WAIVES notice of non-payment, demand, presentment, protest
and all forms of demand and notice, both with respect to the Liabilities and the Collateral. 
  
 9-7. Responsibility of Mortgagee. The Mortgagee shall not be liable for any loss sustained by the Mortgagor resulting from any action, omission, or failure to act by the Mortgagee with respect to the exercise
or enforcement of its rights under this Agreement or its relationship with the Mortgagor unless such loss was caused by the willful misconduct or actual bad faith of the Mortgagee. Unless and until Mortgagee assumes control of the Collateral, this
Agreement and the Mortgagee’s exercise of its rights hereunder shall not operate to place any responsibility upon the Mortgagee for the control, care, management, or repair of the Collateral, nor shall it operate to place any responsibility
upon the Mortgagee to perform the obligations of the Mortgagor under any Lease, License, or Contract, or to make the Mortgagee responsible or liable for any waste committed on the Mortgaged Premises, any damages or defective condition of the
Mortgaged Premises, or any negligence in the management, upkeep, repair, or control of the Mortgaged Premises. 
  
 9-8. Indemnification. The Mortgagor shall indemnify, defend, and hold the Mortgagee harmless of and from any claim brought or threatened against
the Mortgagee by any third party, (as well as from attorneys’ reasonable fees and expenses in connection therewith) on account of 
  

 13 

 the Collateral, including, without limitation, on account of the Mortgagee’s relationship with the Mortgagor or any
other guarantor or endorser of the Liabilities. The within indemnification shall survive payment of the Liabilities and/or any termination, release, or discharge executed by the Mortgagee in favor of the Mortgagor. 
  
 9-9. Binding on Successors. This Agreement shall be binding upon the
Mortgagor and the Mortgagor’s, representatives, successors, and assigns and shall inure to the benefit of the Mortgagee and the Mortgagee’s successors and assigns. This provision shall not in any way be deemed to be a waiver by the
Mortgagee of any Event of Default provided for herein. 
  
 9-10.
Severability. Any determination that any provision of this Agreement or any application thereof is invalid, illegal, or unenforceable in any respect in any instance shall not affect the validity, legality, and enforceability of such provision
in any other instance, nor the validity, legality, or enforceability of any other provision of this Agreement. 
  
 9-11. Modification.  
  
 (a) This Agreement and all other instruments executed in connection herewith incorporate all discussions and negotiations between the Mortgagor and the
Mortgagee concerning the matters included herein and in such other instruments. No such discussions or negotiations shall limit, modify, or otherwise affect the provisions hereof. No modification, amendment, or waiver of any provision of this
Agreement, or of any provisions of any other agreement between the Mortgagor and the Mortgagee, shall be effective unless executed in writing by the party to be charged with such modification, amendment, or waiver, and if such party be the
Mortgagee, then by a duly authorized officer thereof. 
  
 (b) The
Mortgagor may take any action herein prohibited, or omit to perform any act required to be performed by it, if the Mortgagor shall obtain the prior written content by a duly authorized officer of the Mortgagee for each such action, or omission to
action. 
  
 9-12. Payment of Costs. The Mortgagor shall pay
on demand all Costs of Collection and all reasonable expenses of the Mortgagee in connection with the preparation, execution, and delivery of this Agreement and of any other documents and agreements between the Mortgagor and the Mortgagee,
including, without limitation, attorneys’ reasonable fees and disbursements, and all reasonable expenses which the Mortgagee may hereafter incur in connection with the collection of the Liabilities or the protection or enforcement of any of the
Mortgagee’s right against the Mortgagor, any Collateral, and any guarantor or endorser of the Liabilities. The Mortgagor authorizes the Mortgagee to pay all such expenses and to charge the same to any account of the Mortgagor with the
Mortgagee. 
  
 9-13. Additional Advances. All amounts which
the Mortgagee may advance under any Sections of this Agreement shall be repayable to the Mortgagee with interest at the highest rate charged relative to any of the Liabilities, on demand, shall be a Liability, and may be charged by the Mortgagee to
any deposit account which the Mortgagor maintains with the Mortgagee. 
  
 9-14. Governing Law. This Agreement and all rights and obligations hereunder, including matters of construction, validity and performance, shall be governed by the laws of the State of New Hampshire. The Mortgagor submits itself to
the jurisdiction of the courts of the State of New Hampshire for all purposes with respect to this Agreement and the Mortgagor’s relationship with the Mortgagee. 
  

 14 

 9-15. Termination. Subject to applicable law, this Agreement shall remain in full force and effect
until specifically terminated in writing by a duly authorized officer of the Mortgagee. Such termination by the Mortgagee may be conditioned upon such further indemnifications provided to the Mortgagee by or on behalf of the Mortgagor as the
Mortgagee may request. No termination pursuant to this Section shall affect the indemnification provided for in this Article. 
  
 9-16. Specific Performance. The failure by the Mortgagor to perform all and singular the Mortgagor’s obligations hereunder will result in
irreparable harm to the Mortgagee for which the Mortgagee shall have no adequate remedy at law. Consequently, the Mortgagor agrees that such obligations specifically enforceable by the Mortgagee. 
  
 9-17. Waiver of Jury Trial. The Mortgagor (as well as all guarantors,
endorsers and sureties to the Mortgagee of the Liabilities) hereby makes the following waiver, knowingly, voluntarily, and intentionally, and understands that the Mortgagee, in entering into any loan arrangements or make any financial accommodations
to the Mortgagor, whether now or in the future, is relying on such waiver. THE MORTGAGOR (AS WELL AS ALL OFFICERS OF THE MORTGAGOR, AND ALL GUARANTORS, ENDORSERS AND SURETIES TO THE MORTGAGEE OF THE LIABILITIES) HEREBY IRREVOCABLY WAIVES ANY
PRESENT OR FUTURE RIGHT OF THE MORTGAGOR (OR OF SUCH GUARANTORS, ENDORSERS AND SURETIES, AS THE CASE MAY BE) TO A JURY IN ANY TRIAL OF ANY CASE OR CONTROVERSY IN WHICH THE MORTGAGEE IS OR BECOMES A PARTY (WHETHER SUCH CASE OR CONTROVERSY IS
INITIATED BY OR AGAINST THE MORTGAGEE OR IN WHICH THE MORTGAGEE IS JOINED AS A PARTY LITIGANT), WHICH CASE OR CONTROVERSY ARISES OUT OF OR IS IN RESPECT OF, ANY RELATIONSHIP BETWEEN THE MORTGAGOR OR ANY OTHER PERSON AND THE MORTGAGEE. 
  
 9-18. Intent. It is intended that: 
  
 (a) this Agreement take effect as a sealed instrument; and 
  
 (b) with the exception of the Mortgagee’s internal costs and expenses,
all costs and expenses incurred by the Mortgagee in connection with the Mortgagee’s relationship(s) with the Mortgagor shall be borne by the Mortgagor; and 
  

(c) the interests created by this Agreement secure all of the Liabilities of the Mortgagor to the Mortgagee, whether now existing or hereafter arising.

  
 9-19. Receipt of Copy. The Mortgagor acknowledges
having received a copy of this Mortgage. 
  
 9-20.
Integration. This Mortgage incorporates all discussions and negotiations between the Mortgagee and the Mortgagor, either express or implied, concerning the matters included herein, any custom, usage, or course of dealing to the contrary
notwithstanding. No such discussions, negotiations, custom, usage, or course of dealing shall limit, modify or otherwise 
  

 15 

 affect the provisions hereof. No modification, amendment or waiver of any provision of this Mortgage is effective unless
executed in writing by the party to be charged with such modification, amendment or waiver, and if such party be the Mortgagee, then by a duly authorized officer thereof. 
  
 9-21. Reference. This instrument may be referred to herein as the “Mortgage”, “Mortgage and Security
Agreement”, or “Agreement”, but no such reference shall limit the effectiveness of this instrument for any Mortgagee hereunder. 
  
 [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.] 
  

 16 

 IN WITNESS WHEREOF, the Mortgagor has executed this Agreement as a sealed instrument on the date first
above written. 
  

			
	 MORTGAGOR:

	
	 BROOKSTONE COMPANY, INC.

		
	 By:
	 	  

	 Name:
	 	 Philip W. Roizin

	 Title:
	 	 Executive Vice President

  
 STATE OF NEW
HAMPSHIRE 
  
 COUNTY OF HILLSBOROUGH 
  

			
	                 , ss.
	 	                , 2004

  
 On this
     day of                     , 2004, before me, the undersigned notary public, personally appeared
                                , proved to me through satisfactory evidence of
identification, which was a driver’s license, to be the person whose name is signed on the preceding or attached document, and acknowledged to me that he signed it voluntarily for its stated purpose, as
                 and Authorized Signatory for Brookstone Company, Inc. 
  

	
	

	 (official signature and seal of notary)

	 My Commission expires
                            

	 

  

 17 

 EXHIBIT A 
  
 LEGAL DESCRIPTION

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