Exhibit 10.2
 
AMENDMENT NO. 1 TO
FIRST AMENDED AND RESTATED DEVELOPMENT LINE OF CREDIT AGREEMENT

This Amendment No. 1 to First Amended and Restated Development Line of Credit
Agreement (this “Amendment”), dated effective as of April 2, 2012, is entered
into by and among the borrowing entities identified on Schedule 1 attached
hereto (jointly and severally, “Borrower”), DIVERSIFIED RESTAURANT HOLDINGS,
INC., a Nevada corporation, acting as “Borrowing Agent” for Borrower, and RBS
CITIZENS, N.A., a national banking association, and its successors and assigns
(“Lender”).

Capitalized terms used but not defined in this Amendment shall have the meanings
assigned to such terms in the DLOC Agreement (as defined below).

Recitals

A.           The parties entered into a loan transaction under the terms and
conditions set forth in that certain First Amended and Restated Development Line
of Credit Agreement dated June 7, 2011, by and among Borrower and Lender (the
“DLOC Agreement”) and the other Loan Documents (as such term is defined in the
DLOC Agreement);

B.           Lender and Borrower have agreed to amend certain terms of the DLOC
Agreement.

NOW, THEREFORE, in consideration of the mutual covenants contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties to this Amendment agree as follows:

1.           Amendments.
 
(a)           The following definitions in Section 11 of the DLOC Agreement are
hereby deleted in their entirety and replaced with the following:

“Debt Service Coverage Ratio” means for the period in question, on a
consolidated basis for Borrower and all Affiliates, the calculation described as
a ratio of (i) (a) EBITDA, plus (b) pre-opening costs, less (c) cash taxes, less
(d) maintenance capital expenditures ($10,000 per store), less (e) distributions
divided by (ii) Interest Expense and Principal Payments of the
Indebtedness.  For purposes of this calculation, “Interest Expense and Principal
Payments of the Indebtedness” shall include payments under all loan arrangements
between Borrower and all Affiliates and its members/shareholders, whether now
existing or hereafter arising and whether or not reflected on Borrower’s
internal financial statements.

“Florida Entities” shall include Buckeye Group, LLC, Buckeye Group II, LLC, MCA
Enterprises Brandon, Inc., AMC North Port, Inc., AMC Riverview, Inc., AMC Ft.
Myers, Inc., AMC Lakeland, Inc. and any future entities affiliated with Borrower
organized or conducting business in the State of Florida.
 
“Lease Adjusted Leverage Ratio” as of any date means the ratio of (a) the sum of
(i) Funded Debt, adjusted for New Unit Development and (ii) Third Party Rent for
the twelve (12) month period ending on such date multiplied by eight (8),
divided by (b) the sum of (i) EBITDA, plus (ii) pre-opening costs, plus (iii)
Third Party Rent for the twelve (12) month period ending on such date.
 
 
 

--------------------------------------------------------------------------------

 
 

“LA Margin” and LIBOR Rate Margin” means:      
If the Lease Adjusted Leverage Ratio is greater than or equal to 5.00
3.4%
   
If the Lease Adjusted Leverage Ratio is greater than or equal to 4.50 but less
than 5.00
3.1%
   
If the Lease Adjusted Leverage Ratio is greater than or equal to 4.00 but less
than 4.50
2.75%
   
If the Lease Adjusted Leverage Ratio is less than 4.00
2.5%

 
(b)           The following definition is hereby added to Section 11 of the DLOC
Agreement:

“New Unit Development” shall mean, with respect to a new unit (new restaurant
location open for less than 12 months), an amount equal to the product of (a)
1.00 minus a fraction, the numerator of which is the number of months such new
unit has been in operation and the denominator of which is 12, times (b) the
amount of the Funded Debt for such new unit.
 
(g)           Exhibit A and Exhibit D of the DLOC Agreement are hereby deleted
in their entirety and replaced with Exhibit A and Exhibit D attached hereto.
 
(h)           Schedule 1 of the DLOC Agreement is hereby deleted in its entirety
and replaced with Schedule 1 attached hereto.
 
2.           Representations and Warranties.  Each Borrower represents and
warrants that:

(a)           this Amendment has been duly authorized, executed and delivered on
behalf of Borrower, and this Amendment, together with each of the Loan Documents
constitutes the valid and legally binding agreement of Borrower, enforceable in
accordance with its terms, except as enforceability thereof may be limited by
bankruptcy, insolvency, reorganization or moratorium or other similar law
relating to creditors’ rights and by general equitable principles which may
limit the right to obtain equitable remedies (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
 
(b)           the representations and warranties by each Borrower contained in
the Loan Documents are true, correct and complete in all material respects on
and as of the date hereof as though made on and as of the date hereof, except to
the extent such representations and warranties relate solely to an earlier date;
and
 
(c)           no Event of Default exists under the Loan Documents.
 
 
 

--------------------------------------------------------------------------------

 
 
3.           Ratification.  Except as modified by this Amendment, the terms and
conditions of the DLOC Agreement remain unchanged and in full force and
effect.  The DLOC Agreement, the Loan Documents and all terms thereof and
obligations of Borrower thereunder shall remain in full force and effect and are
hereby ratified and confirmed.  Lender hereby preserves all of its rights
against Borrower, and Borrower hereby agrees that all such rights are ratified
for the benefit of Lender.  Nothing in this Amendment releases any right, claim,
lien, security interest or entitlement of Lender created by or contained in the
DLOC Agreement or any Loan Document nor is Borrower or any other Person released
from any covenant, warranty or obligation created by or contained therein.

4.           Entire Agreement.  This Amendment, together with the Loan
Documents, integrates all previous oral or written agreements, if any, between
the parties regarding the subject matter hereof and, together with the Loan
Documents, constitutes the complete and exclusive agreement between the parties
regarding the subject matter hereof.  The parties expressly agree that usage of
trade and course of dealing evidence may not be used to contradict, explain,
supplement, or in any way affect this Amendment and that no extrinsic evidence
may be offered to resolve an ambiguity in this Amendment or to introduce an
ambiguity into this Amendment.  This Amendment shall not create a course of
dealing between the parties.

5.           Counterparts.  This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Amendment.

[Remainder of page intentionally left blank.]
 
 
 

--------------------------------------------------------------------------------

 
 
IN WITNESS WHEREOF, the Lender and each Borrower has caused this Amendment to be
executed and delivered by an authorized officer as of the date first above
written.

LENDER:

RBS CITIZENS, N.A.,
a national banking association
 

By:   /s/   Christopher J. Wickles         Name: Christopher J. Wickles        
Title:  Sr. Vice President        

 

 
[Signatures continue on next page.]
 
 
 

--------------------------------------------------------------------------------

 
 
BORROWER:

FLYER ENTERPRISES, INC.
ANKER, INC.
TMA ENTERPRISES OF NOVI, INC.
AMC GRAND BLANC, INC.
AMC PETOSKEY, INC.
AMC TROY, INC.
AMC FLINT, INC.
AMC PORT HURON, INC.
AMC CHESTERFIELD, INC.
AMC MARQUETTE, INC.
MCA ENTERPRISES BRANDON, INC.
AMC NORTH PORT, INC.
AMC RIVERVIEW, INC.
BERKLEY BURGERS, INC.
TROY BURGERS, INC.
ANN ARBOR BURGERS, INC.
AMC TRAVERSE CITY, INC.
BRIGHTON BURGERS, INC.
CASCADE BURGERS REAL ESTATE, INC.
CASCADE BURGERS, INC.
EAST LANSING BURGERS, INC.
BEARCAT ENTERPRISES, INC.
each, a Michigan corporation

TMA ENTERPRISES OF FERNDALE, LLC,
AMC WARREN, LLC,
BUCKEYE GROUP, LLC,
BUCKEYE GROUP II, LLC,
each, a Michigan limited liability company

AMC LAKELAND, INC.
AMC SARASOTA, INC.
AMC FT. MYERS, INC.
each, a Florida corporation
 

By:   /s/    David G. Burke         Name: David G. Burke         Title:  Chief
Financial Officer        

 
 

BORROWING AGENT:

DIVERSIFIED RESTAURANT HOLDINGS, INC.,
a Nevada corporation
 

By:   /s/    David G. Burke         Name: David G. Burke         Title:  Chief
Financial Officer        

      
 
 

--------------------------------------------------------------------------------

 
 
Entity Guarantors:
Each of the undersigned guarantors (each, a “Guarantor”) hereby acknowledges and
agrees to the terms of this Amendment, reaffirms that certain Guaranty from such
Guarantor to Lender in connection with the Loan Documents, and agrees that such
Guaranty shall continue unchanged and in full force and effect to guarantee the
payment and performance of the obligations of Borrower to Lender under the Loan
Documents, as the same may be further extended, restated, amended or otherwise
modified from time to time.

Diversified Restaurant Holdings, Inc.,
a Nevada corporation
 
AMC Group, Inc.
AMC Wings, Inc.
AMC Burgers, Inc.
Bagger Dave’s Franchising Corporation
each, a Michigan corporation
 

By:   /s/     David G. Burke         Name: David G. Burke         Title:  Chief
Financial Officer        

 
       
Individual Guarantor:
The undersigned guarantor (“Guarantor”) hereby acknowledges and agrees to the
terms of this Amendment, reaffirms that certain Personal Guaranty from Guarantor
to Lender in connection with the Loan Documents, and agrees that such Personal
Guaranty shall continue unchanged and in full force and effect to guarantee the
payment and performance of the obligations of Borrower to Lender under the Loan
Documents, as amended of even date herewith, as the same may be further
extended, restated, amended or otherwise modified from time to time.

 

 /s/    Michael Ansley   T. Michael Ansley  

 
 
 

--------------------------------------------------------------------------------

 

Exhibit A
 
 
n
Flyer Enterprises, Inc.

 
n
Anker, Inc.

 
n
TMA Enterprises of Novi, Inc.

 
n
AMC Grand Blanc, Inc.

 
n
AMC Petoskey, Inc.

 
n
AMC Troy, Inc.

 
n
AMC Flint, Inc.

 
n
AMC Port Huron, Inc.

 
n
AMC Chesterfield, Inc.

 
n
AMC Marquette, Inc.

 
n
MCA Enterprises Brandon, Inc.

 
n
AMC North Port, Inc.

 
n
AMC Riverview, Inc.

 
n
Berkley Burgers, Inc.

 
n
Troy Burgers, Inc.

 
n
Ann Arbor Burgers, Inc.

 
n
AMC Traverse City, Inc.

 
n
Brighton Burgers, Inc.

 
n
Cascade Burgers Real Estate, Inc.

 
n
Cascade Burgers, Inc.

 
n
East Lansing Burgers, Inc.

 
n
Bearcat Enterprises, Inc.

 
n
TMA Enterprises of Ferndale, LLC

 
n
AMC Warren, LLC

 
n
Buckeye Group, LLC

 
n
Buckeye Group II, LLC

 
n
AMC Lakeland, Inc.

 
n
AMC Sarasota, Inc.

 
n
AMC Ft. Myers, Inc.

 
 
 

--------------------------------------------------------------------------------

 
 
Exhibit D
 
FORM OF
COMPLIANCE CERTIFICATE

This certificate is given by ________________, the ______________ of
_____________ (“Borrower”) pursuant to Section 2(d) of the First Amended and
Restated Development Line of Credit Agreement dated June 7, 2011, by and between
Borrower and RBS Citizens, N.A. (as may be amended from time to time, the “DLOC
Agreement”).  Capitalized terms used herein without definition shall have the
meanings set forth in the DLOC Agreement.

The undersigned hereby certifies to Lender as follows:

 
(a)
All representations and warranties of Borrower in the Loan Documents are true
and correct in all material respects as of the date hereof.

 
(b)
Borrower is in compliance in all material respects with all of its obligations,
duties and covenants under the Loan Documents.

 
(c)
No event has occurred which, with the passage of time and/or the giving of
notice, would constitute an Event of Default under the Loan Documents.

 
(d)
Since the Closing Date, no event has occurred that has had or could reasonably
be expected to have a Material Adverse Effect on Borrower, the Business, the
Guarantor or the Property.

 
(e)
Borrower is in compliance with the covenants contained in Section 6 of the
Credit Agreement as demonstrated by the calculation of such covenants below. In
calculating the covenants below, the Debt Service Coverage Ratio and the Lease
Adjusted Leverage Ratio will be modified so that calculation of such ratios will
not include results from Businesses open for a period of less than twelve (12)
months.  In addition all figures for Businesses in their second (2nd) year of
operation will be adjusted so that such figures are tested on annualized basis
rather than a trailing twelve (12) month basis.

 
 
 

--------------------------------------------------------------------------------

 
 
DEFINITIONS

Debt Service Covenant:

Borrower shall cause to be maintained as of the end of each fiscal quarter a
Debt Service Coverage Ratio for the trailing twelve (12) month period of greater
than or equal to 1.20 to 1.0.

Lease Adjusted Leverage Ratio Covenant (quarterly basis):

Borrower shall not cause the Lease Adjusted Leverage Ratio of Borrower on a
consolidated basis to be greater than the Applicable Ratio, said ratio to be
tested on a quarterly basis for the trailing twelve (12) month
period.  “Applicable Ratio” shall mean 5.75:1.00 for calculations made on or
before December 31, 2010; 5.50:1.00 for calculations made on or before
December 31, 2011; and 5.00:1.00 for calculations made thereafter.
 
 
 

--------------------------------------------------------------------------------

 
 
CALCULATIONS
 

Debt Service Coverage Ratio
 
 
 

(a)  EBITDA (on a consolidated basis, net of extraordinary gains and losses,
calculated on a trailing twelve (12) month period)        
(b)  PLUS:  pre-opening costs       (c)  LESS: cash taxes         (d)  LESS:
maintenance capital expenditures ($10,000 per store per year open more than 12
months)         (e)  LESS: distributions              (A)  Subtotal (a) plus (b)
minus (c) minus (d) minus (e)              (B) Interest Expense and Principal
Payments of Indebtedness                  Debt Service Coverage Ratio:  (A)
divided by (B)     

 

Maximum Lease Adjusted Leverage Ratio
 
 

(1) Total Funded Debt, adjusted for New Unit Development (including pro rata
advances under the DLOC Loan Inter-Affiliate Loans and Real Estate debt)       
    (2) Third Party Rent for the twelve (12) month period ending on such date
multiplied by eight (8)          (A) Subtotal (1) plus (2)          (B)
EBITDAR = EBITDA + Third Party Rent for the twelve (12) month period ending on
such date        Maximum Lease Adjusted Leverage Ratio:  (A) divided by
(B)        

 
 

          Date:        ,        a                       
By:
          Name:            Title:                 

 
 
 

--------------------------------------------------------------------------------

 

Schedule 1
 
FRANCHISE AGREEMENTS
 
Franchisee
Location
Effective Date
Initial
 Term
Renewal
Terms
Flyer Enterprises, Inc.
44671 Mount Road
Sterling Heights, MI 48314
 
Jan. 29, 2009
5
5
Anker, Inc.
3190 West Silver Lake Road
Fenton, MI 48430
 
Oct. 10, 2000
10
10
TMA Enterprises of Novi, Inc.
44375 12 Mile Road
Novi, MI 48375
 
Oct. 23, 2001
10
10
AMC Grand Blanc, Inc.
5251 Trillium Circle Avenue #102
Grand Blanc, MI 48439
 
March 26, 2007
20
10, 5
AMC Petoskey, Inc.
2180 Anderson Road, Suite 110
Petoskey, MI 49770
 
June 11, 2007
20
10, 5
AMC Troy, Inc.
1873 East Big Beaver Road
Troy, MI 48083
 
Nov. 5, 2007
20
10, 5
AMC Flint, Inc.
G-3192 South Linden Road
Flint, MI 48507
 
July 7, 2008
20
10, 5
AMC Port Huron, Inc.
4355 24th Avenue, Suite 1
Port Huron, MI 48059
 
July 7, 2008
20
10, 5
AMC Chesterfield, Inc.
51364 Gratiot Avenue
Chesterfield Township, MI 48051
 
Oct. 20, 2009
20
10, 5
AMC Marquette, Inc.
2492 US Highway 41 West
Marquette, MI 49855
 
Oct. 20, 2009
20
10, 5
MCA Enterprises Brandon, Inc.
2055 Badlands Drive
Brandon, FL 33511
 
July 18, 2003
20
10, 5
AMC North Port, Inc.
4301 Aiden Lane
North Port, FL 34287
 
Sept. 28, 2006
20
10, 5
AMC Riverview, Inc.
10607 Big Bend Road
Riverview, FL 33579
 
Sept. 28, 2006
20
10, 5
Berkley Burgers, Inc.
2972 Coolidge Highway
Berkley, MI  48072
 
NONE
   
Troy Burgers, Inc.
26062 Novi Road
Novi, MI  48375
 
NONE
   
Ann Arbor Burgers, Inc.
859 W. Eisenhower Parkway
Ann Arbor, MI  48103
 
NONE
   

 
 
 

--------------------------------------------------------------------------------

 
 
Franchisee
Location
Effective Date
Initial
Term
Renewal
Terms
AMC Traverse City, Inc.
3480 South Airport Road West
Garfield township, MI  49684
 
     
Brighton Burgers, Inc.
110 East Grand River
Brighton, MI  48116
 
NONE
   
Cascade Burgers Real Estate, Inc.
 
 
NONE
   
Cascade Burgers, Inc.
 
 
NONE
   
East Lansing Burgers, Inc.
 
       
Bearcat Enterprises, Inc.
 
       
TMA Enterprises of Ferndale, LLC
280 West Nine Mile Road
Ferndale, MI 48220
 
Sept. 29, 2004
15
10, 5
AMC Warren, LLC
29287 Mound Road
Warren, MI 48092
 
Feb. 13, 2006
20
10, 5
Buckeye Group, LLC
13416 Boyette Road
Lithia, FL
 
Oct. 18, 2004
15
10, 5
Buckeye Group II, LLC
4067 Clark Road
Sarasota, FL 34238
 
July 8, 2005
20
10, 5
AMC Lakeland, Inc.
 
       
AMC Sarasota, Inc.
 
       
AMC Ft. Myers, Inc.
9390 Dynasty Dr., #101
Ft. Myers, FL  33905