J. Alexander's Holdings, Inc. (Form: 8-K, Received: 06/09/2020 09:20:51)

J. Alexander’s Holdings, Inc.

Date: June 9, 2020

/s/ Jessica L. Hagler

Jessica L. Hagler

Vice President, Chief Financial Officer, Treasurer and Secretary

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 9, 2020 (June 5, 2020)

J. Alexander’s Holdings, Inc.

(Exact name of registrant as specified in its charter)


Tennessee	001-37473	47-1608715
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

3401 West End Avenue, Suite 260, P.O. Box 24300, Nashville, TN		37202
(Address of Principal Executive Offices)		(Zip Code)

(615) 269-1900

(Registrant’s telephone number, including area code)

Not applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol

Name of exchange

on which registered

Common Stock, par value $0.001 per share

JAX

New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Item 2.02.

Results of Operations and Financial Condition.

On June 9, 2020, J. Alexander’s Holdings, Inc. (the “Company”) issued a press release announcing earnings results for the Company and its subsidiaries for its fiscal first quarter ended March 29, 2020. A copy of the press release is being furnished as Exhibit 99.1.

The information in this Item 2.02 in this Current Report on Form 8-K, including Exhibit 99.1 hereto, shall not be deemed “filed” for purpose of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 2.03.

Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

On June 5, 2020, J. Alexander’s, LLC, an indirect subsidiary of the Company, entered into a Third Amended and Restated Loan Agreement with Pinnacle Bank (the “Third Amended and Restated Loan Agreement”), which provides for a $15,000,000 increase in the Revolving Line of Credit from $1,000,000 to $16,000,000 as described below. The Third Amended and Restated Loan Agreement amends and restates in its entirety the Second Amended and Restated Loan Agreement, dated May 20, 2015, as amended, with Pinnacle Bank (the “Prior Loan Agreement”).

The borrower under the Third Amended and Restated Loan Agreement is J. Alexander’s, LLC, and it is guaranteed by J. Alexander’s Holdings, LLC and certain of its subsidiaries. The indebtedness outstanding under the Third Amended and Restated Loan Agreement is secured by liens on certain personal property of the Company and its subsidiaries, subsidiary guarantees, and a mortgage lien on 17 of the Company’s restaurant locations. The Third Amended and Restated Loan Agreement, among other things, permits payments of tax dividends to members, restricts liens and encumbrances, restricts dividends, and contains certain other provisions customarily included in such agreements.

The Company currently has four separate notes under the Third Amended and Restated Loan Agreement, all of which mature on September 3, 2021:

•

A $16,000,000 revolving line of credit (“Revolving Line of Credit”).

•

A $5,000,001 term loan.

•

A $20,000,000 development line of credit.

•

A $10,000,000 term loan.

Under the Third Amended and Restated Loan Agreement, the Revolving Line of Credit includes an increase in $15,000,000 of capacity (the “Additional Capacity”) over the $1,000,000 available under the Prior Loan Agreement, with such Additional Capacity being available for general corporate purposes, including working capital and letters of credit. Access to the Additional Capacity is contingent upon the Company achieving certain minimum revenue amounts as set forth in the Third Amended and Restated Loan Agreement.

Pursuant to the terms of the Third Amended and Restated Loan Agreement, the borrowings under the Revolving Line of Credit bear interest at 30-day LIBOR plus a margin of 2.50%, with a minimum LIBOR of 1.50%. Interest rates for the remaining three notes remain unchanged.

Under the Third Amended and Restated Loan Agreement, consistent with the financial covenant waiver letter, dated May 6, 2020, by and between J. Alexander’s, LLC and Pinnacle Bank, beginning May 7, 2020 through the period ending July 4, 2021 (the “Initial Covenant Period”), the Company is required to comply with financial covenants that require (i) minimum revenue of (a) at least $99,755,000 for the Company’s fiscal year ending January 3, 2021, (b) at least $118,350,000 on a four quarter trailing basis by April 4, 2021, and (c) at least $166,812,000 on a four quarter trailing basis by July 4, 2021, and (ii) a maximum adjusted debt to tangible net worth ratio of 0.80 or less, measured quarterly beginning September 27, 2020 (collectively, the “Initial Financial Covenants”). Upon the expiration of the Initial Covenant Period, the Initial Financial Covenants will terminate and the Company will be required to comply with financial covenants that require (i) a fixed coverage charge ratio of not less than 1.25 to 1.0 and (ii) a maximum adjusted debt to EBITDAR ratio of not more than 4.0 to 1.0.

If an event of default shall occur and be continuing under the Third Amended and Restated Loan Agreement, the commitments under the Third Amended and Restated Loan Agreement may be terminated and any principal amount outstanding, together with all accrued unpaid interest and other amounts owing in respect thereof, may be declared immediately due and payable.

The foregoing description of the Third Amended and Restated Loan Agreement is not complete and is qualified in its entirety by the terms and provisions of the Third Amended and Restated Loan Agreement, a copy of which is filed herewith as Exhibit 10.1 and is incorporated herein by reference.

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits.


Exhibit No.		Description

10.1		Third Amended and Restated Loan Agreement, dated June 5, 2020, by and between J. Alexander’s, LLC and Pinnacle Bank.

99.1		Press Release issued by J. Alexander’s Holdings, Inc., dated June 9, 2020.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

Exhibit 10.1

THIRD AMENDED AND RESTATED LOAN AGREEMENT

THIS THIRD AMENDED AND RESTATED AGREEMENT (“Loan Agreement” or “Agreement”) is made and entered into as of this 5th day of June, 2020, by and between J. ALEXANDER’S, LLC, a Tennessee limited liability company ( “Borrower”) and PINNACLE BANK (“Lender”).

W I T N E S S E T H:

WHEREAS, Lender and Borrower are parties to a certain Second Amended and Restated Loan Agreement dated May 20, 2015, as amended, restated, modified or supplemented from time to time by Modification Agreement dated September 3, 2016, and by Modification Agreement dated January 2, 2019, and by Modification Agreement dated September 3, 2019 (collectively, the “Existing Loan Agreement”) wherein Lender loaned Borrower funds for the purposes therein stated, said indebtedness being currently evidenced by (i) that certain Amended and Restated Promissory Note dated September 3, 2019 in the original principal amount of $5,000,000.64, (together with any and all extensions, renewals and modifications thereof, the “Term Note”), (ii) a revolving promissory note dated September 3, 2019 in the maximum principal amount of $1,000,000.00, (together with any and all extensions, renewals and modifications thereof, the “Existing Revolving Note”), (iii) that certain Amended and Restated Revolving Promissory Note dated September 3, 2019 in the maximum principal amount of $20,000,000.00 (together with any and all extensions, renewals and modifications thereof, the “Development Note”), and (iv) that certain Amended and Restated Promissory Note dated September 3, 2019 in the original principal amount of $10,000,000.00 as amended by Amendment to Promissory Note dated April 15, 2020 (together with any and all extensions, renewals and modifications thereof, the “Second Term Note”), the Term Note, Existing Revolving Note, Development Note, and Second Term Note hereinafter being collectively referred to as the “Existing Notes”; and

WHEREAS, Borrower has applied to Lender for additional financing to provide additional working capital and general business purposes, including letters of credit, and Lender has agreed to provide such additional financing by increasing the Line of Credit, as hereinafter defined in Section 1.1.2. herein, from $1,000,000.00 to $16,000,000.00 (the “Loan Modification”), subject to the terms and conditions hereinafter contained; and

WHEREAS, the Borrower has requested and Lender has agreed to amend and restate the Existing Loan Agreement in its entirety, it being understood that nothing contained herein shall be deemed a satisfaction or novation of the indebtedness and obligations created or evidenced by the Existing Loan Agreement or the Existing Notes as of the date hereof.

NOW, THEREFORE, in consideration of the mutual covenants herein contained, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Lender and Borrower covenant and agree as follows:

I. THE LOANS

1.1

Loan. Subject to the terms and provisions of this instrument, Lender has made or agrees to make available to Borrower:

1.1.1.

A Term Loan in the principal amount of FIVE MILLION AND 64/100 ($5,000,000.64) DOLLARS, solely for the purposes specifically enumerated herein and certain costs and expenses related thereto (the “Term Loan”). The Term Loan has been fully funded prior to the date hereof. The Term Loan is evidenced by the Term Note.

1.1.2.

A revolving line of credit in the maximum principal amount of SIXTEEN MILLION AND NO/100 ($16,000,000.00) DOLLARS, to be used for general business purposes, including working capital needs of Borrower and its subsidiaries, by advancing said sum to Borrower on a revolving basis from time to time at Borrower’s request pursuant to the provisions herein contained (the “Line of Credit”). The Line of Credit shall be evidenced by the “Revolving Note”. The Revolving Note shall be deemed to refer to an Amended and Restated Revolving Promissory Note of even date herewith in the maximum principal amount of $16,000,000.00, together with any and all extensions, renewals and modifications thereof.

1.1.3.

A revolving line of credit in the maximum principal amount of TWENTY MILLION AND NO/100 ($20,000,000.00) DOLLARS, solely for the purposes specifically enumerated herein and to pay certain costs and expenses related thereto, by advancing said sum to Borrower on a revolving basis from time to time at Borrower’s request pursuant to the provisions herein contained (the “Development Loan”). The Development Loan is evidenced by the Development Note.

1.1.4.

A term loan in the original principal amount of TEN MILLION AND NO/100 ($10,000,000.00) DOLLARS, solely for the purposes of refinancing Borrower’s existing indebtedness owed to Fidelity National Financial Ventures, LLC and certain costs and expenses related thereto related thereto (the “Second Term Loan”). The Second Term Loan has been fully funded prior to the date hereof. The Second Term Loan is evidenced by the Second Term Note.

The Term Loan, the Line of Credit, the Development Loan, and the Second Term Loan are sometimes hereinafter collectively referred to as the “Loans”. The Term Note, the Revolving Note, the Development Note, and the Second Term Note are sometimes hereinafter collectively referred to as the “Notes.”

J. ALEXANDER’S HOLDINGS, LLC, a Delaware limited liability company (“Holdings”), J. ALEXANDER’S RESTAURANTS, LLC, a Tennessee limited liability company, J. ALEXANDER’S RESTAURANTS OF KANSAS, LLC, a Kansas limited liability company, J. ALEXANDER’S OF TEXAS, LLC, a Texas limited liability company, JAX REAL ESTATE, LLC, a Delaware limited liability company, JAX RE HOLDINGS, LLC, a Delaware limited liability company, JAX REAL ESTATE MANAGEMENT, LLC, a Delaware limited liability company, STONEY RIVER MANAGEMENT COMPANY, LLC, a Delaware limited liability company, SRLS LLC, a Delaware limited liability company, STONEY RIVER LEGENDARY MANAGEMENT, L.P., a Georgia limited partnership, and STONEY RIVER, LLC, a Delaware limited liability company (herein collectively referred to as the “Guarantors”), shall unconditionally guarantee payment of the Loans, and all indebtedness now or hereafter owing to Lender by Borrower, and shall execute instruments in such form as may be reasonably required by Lender to accomplish such guaranties. The Guarantors herein stated include wholly-owned subsidiaries of Borrower that own Collateral (as hereinafter defined).

1.2 Term. The term of the Loans shall be as set forth in the Notes, the deferral letter from Lender to Borrower dated April 3, 2020 pertaining to the Second Term Note (the “Deferral Letter”), and this Loan Agreement.

1.3 Interest. The Loans shall bear interest at annual rates as set forth in the Notes. Interest accruing under the Notes shall be computed on the basis of a three hundred sixty (360) day year. After default or maturity, interest and penalties shall accrue as set forth in the Note and this Loan Agreement. Notwithstanding anything herein to the contrary, in no event shall the interest rate exceed the maximum rate allowed by applicable law.

1.4 Repayment Schedule. Payment of all obligations arising under the Loans shall be made as set forth in the Notes and this Loan Agreement.

1.5 Commitment Fees; Non-Use Fee.

1.5.1.

Upon closing of the Loan Modification, Borrower shall pay to Lender an upfront commitment fee equal to $150,000.00 (1.00% of the increase in the maximum principal amount of indebtedness under the Line of Credit), payable in full in cash at closing.

1.5.2.

Borrower shall pay to Lender a non-use fee (the “Non-Use Fee”) for the unused portion of the Development Loan. The Non-Use Fee shall be 0.25% per annum of the average, unused portion of the Development Loan, subject to quarterly adjustments, payable quarterly in arrears until the termination of the Development Loan.

1.5.3.

Borrower shall pay to Lender a fee equal to either (a) 0.15% multiplied by the purchase price (“Purchase Price”) if Borrower is sold at a Purchase Price equal to or greater than $150,000,000.00, or (b) 0.10% multiplied by the Purchase Price if the Purchase Price is less than $150,000,000.00. This fee will remain in effect until September 3, 2021 or as extended by the Borrower and Lender.

1.6 Place of Payments. All payments of principal and interest shall be made at 150 Third Avenue South, Suite 800, Nashville, TN 37201, or at such other place, or places, as Lender may direct by notice in writing to Borrower from time to time.

1.7 Prepayment. Prepayment of principal due under the Loans may be made at any time without premium or other prepayment charge.

1.8 Pre-Closing Requirements. Prior to closing the Loan Modification, the following conditions shall have been met by the Borrower and/or Guarantors, as applicable:

(a) Borrower and Guarantors shall have provided to Lender certified resolutions appropriately authorizing the transactions contemplated herein and designating an authorized officer or other agent to execute all Loan Documents to which such entity is a party.

(b) Lender shall have received UCC-1 or UCC-3 financing statements in form acceptable to Lender to be filed with the Secretary of State of Tennessee, and such other locations as Lender may reasonably require, perfecting Bank’s security interest in the Collateral (as hereinafter defined), and any waivers or releases reasonably required by Lender.

(c) Lender shall have received a copy of certified articles of organization and certificates of existence of Borrower and Guarantors from the Secretaries of State for the states in which said entities are organized, together with copies of the operating agreements or limited partnership agreement of Borrower and Guarantors, as applicable.

(d) Lender shall have received UCC-11 searches issued by the Secretary of State of Tennessee and such other jurisdictions as Lender may reasonably require.

1.9 Disbursement of Loans. The Term Loan and Second Term Loan have been disbursed in full. Funds shall be disbursed by Lender under the Revolving Note and the Development Note for the purposes provided herein on a revolving basis from time to time at Borrower’s request, and subject to and in accordance with the conditions and requirements contained herein, as follows:

(a) Lender shall not be obligated to disburse any portion of the Line of Credit and the Development Loan other than closing costs of the Loans approved by Lender, unless and until, at Lender’s option, the following conditions precedent shall have been satisfied:

(i) Borrower shall be in material compliance with all covenants, warranties and representations to which Borrower is obligated under this Loan Agreement.

(ii) No Event of Default shall then be in existence hereunder or would be caused by any such disbursement.

(iii) Advances under the Line of Credit in excess of $1,000,000.00 may be requested in amounts up to and including $5,000,000.00 per fiscal month beginning with fiscal month 8, 2020 (with any amounts not borrowed during any particular period to be carried over to subsequent periods). Advances are contingent upon the Borrower generating at least the minimum revenue amounts as set forth on Schedule 1 attached hereto.

Interest shall accrue on sums advanced only from the date of disbursement of such sums.

(b) Advances under the Development Loan shall be subject to the following additional terms and conditions:

(i) Prior to advancing funds under the Development Loan, Borrower shall be in compliance with all the existing financial covenants.

(ii) Borrower may, at its option upon completion of any project financed under the Development Loan, request that Lender term-out advances made in respect of any such projects (a “Term-Out Option”). Thereafter, principal and interest payments in respect of such advances (a “Conversion Loan”) shall be due and payable monthly based upon a 180-month amortization for fee simple projects and a 60-month amortization for leasehold projects, with all amounts advanced in respect of a particular project being due and payable five (5) years from the beginning of principal and interest amortization (the “Conversion Date”).

(iii) Upon the Conversion Date for a particular project, all amounts advanced under Development Loan in respect of such project shall be available to be reborrowed under the Development Loan, provided Borrower has provided the documents described in Section 1.8 of this Agreement and further provided that no Event of Default has occurred and is continuing.

(iv) Borrower shall have paid all reasonable legal expense and recording cost/tax associated with perfecting Lender’s first priority security interest in the J. Alexander’s locations currently financed with Lender, in addition to paying any and all reasonable legal expense and recording cost/tax associated with perfecting Lender’s first priority security interest in the Collateral herein described.

(v) Borrower shall deliver or cause to be delivered to Lender a preliminary budget for operation of any new restaurant within thirty (30) days after the disbursement to Borrower of the initial disbursement to build said restaurant. In addition, in the event Borrower exercises a Term-Out Option with respect to a particular project, Borrower shall deliver to Lender or cause to be delivered to Lender, such documentation as Lender may reasonably request in respect of such project. Such documentation shall include but not be limited to a current appraisal, title commitment, landlords consents and estoppels (for leasehold projects) any environmental report and any other necessary reasonably required documents, all of which shall be provided to Lender in a timely manner but not less than thirty (30) days prior to the anticipated closing of the Conversion Loan. To clarify, upon the Conversion Date, the subject Conversion Loan shall no longer be secured by the Collateral, but shall be secured by a mortgage lien on the fee simple or leasehold interest in the subject restaurant, the construction of which was financed with the proceeds thereof. In addition, with respect to any permanent loan secured by real property, the original principal amount of such permanent loan will be the lesser of (a) Borrower’s total real estate costs, or (b) 80% of the appraised property value. As part of the condition to a permanent loan being made, the Guarantors shall agree to continue to guarantee any such permanent loan.

1.10 Collateral. As collateral for the Secured Obligations, as hereinafter defined, including the Loan, Borrower shall have executed and delivered, or caused to be executed and delivered to Lender, the following:

(a) Within sixty (60) days after the date hereof, a modification and continuation of those certain mortgages/deeds of trust liens on twelve (12) certain real estate assets owned by JAX Real Estate, LLC and J. Alexander’s, LLC, together with mortgages/deeds of trust, or deed to secure debt, as applicable, on five (5) additional real estate assets owned by Stoney River Legendary Management, LP, Stoney River Management Company, LLC and J. Alexander’s, LLC all as listed on Exhibit “A” attached hereto, upon which a J. Alexander’s Restaurant, Stoney River Restaurant, or a Redlands Grill Restaurant is located thereon (“Real Estate Collateral”). Except for Permitted Encumbrances (as hereinafter defined), the Real Estate Collateral will be free and clear of other liens, claims and encumbrances. As used herein “Permitted Encumbrances” shall mean (i) matters shown on the title insurance commitments delivered to Lender in connection herewith, (ii) subordinate judgment liens that are the subject of an ongoing appeal, (iii) liens in favor of Lender, (iv) liens securing purchase money indebtedness or capital lease obligations, and (v) liens for taxes not yet delinquent or being contested in good faith, (vi) claims of materialmen, mechanics, carriers, warehousemen, processors or landlords for labor, materials, supplies or rentals incurred in the ordinary course of business to the extent limited to the property or assets relating to such contract, and (vii) liens in favor of a landlord to secure Borrower’s or its subsidiaries’ obligations to pay rent. It is understood, however, that the Lender has an existing security interest in said properties as set forth in the Existing Loan Agreement, pursuant to which the Lender obtained a first priority lien on the Real Estate Collateral to secure the Existing Notes.

(b) Assignment and Security Agreement, assigning and granting a security interest to Lender in all items therein described and other rights and matters as provided therein arising from or with respect to the Collateral as defined therein, together with Financing Statements to evidence and perfect such assignment and security interest, all of which shall be in form and substance reasonably satisfactory to Lender in all respects, and which shall be first priority encumbrances upon the property, rights and interests which are the subject of such Assignment and Security Agreement and Financing Statements (subject to Permitted Encumbrances).

The foregoing instruments and documents, and any other instruments and documents now or hereafter securing the Secured Obligations pursuant to this Loan Agreement, are herein sometimes collectively called the “Security Instruments.” The Security Instruments, together with the Notes, this Loan Agreement, and any other instruments and documents now or hereafter evidencing, securing or regulating the Loans or Secured Obligations are herein sometimes collectively called the “Loan Documents.”

Without limiting any of the provisions thereof, the Security Instruments shall secure the following (the “Secured Obligations”):

(a) The full and timely payment of the indebtedness evidenced by the Notes, together with interest thereon, and all extensions, modifications and renewals thereof.

(b) The full and prompt performance of all the obligations of Borrower to Lender under the Loan Documents.

(c) The full and prompt payment of all costs and expenses of whatever kind or nature incident to the collection of any indebtedness evidenced by the Notes, the enforcement or protection of the Security Instruments, or the exercise by Lender or any rights or remedies of Lender with respect to any indebtedness evidenced by the Notes, including but not limited to reasonable attorney fees incurred by Lender in connection therewith, all of which Borrower agrees to pay upon demand.

(d) The full and prompt payment and performance of any and all other indebtedness and obligations of Borrower to Lender, whether direct, indirect, contingent or matured, and whether incurred as endorser, guarantor, maker, surety or otherwise, whether now existing or hereafter arising.

1.1 Collateral Substitution. In the event Borrower shall elect to close or dispose of a restaurant that is part of the Real Estate Collateral, Lender shall release its mortgage lien on said Real Estate Collateral and any related personal property, so long as Borrower shall provide Lender with a mortgage lien on a substitute property reasonably satisfactory to Lender (which shall be subject to terms, conditions, and documentation reasonably satisfactory to Lender).

1.12 Further Documents and Actions. Borrower and Guarantors shall execute such instruments as Lender may reasonably require from time to time (which shall be in such form and substance as Lender may reasonably require), and shall take such other actions as Lender may reasonably require from time to time, to assure the full realization by Lender of the security of all the Collateral.

II. REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants to Lender as follows:

(a) Neither this Loan Agreement, nor any document, financial statement, report, notice, schedule, certificate, statement or other writing which has, or shall be, furnished to Lender by or on behalf of Borrower hereunder contains any untrue statement of a material fact, or omits to state a fact material to this Loan Agreement, or the Loans to be made hereunder.

(b) Borrower has full power and authority to consummate the transactions contemplated hereby.

(c) Borrower and each Guarantor has, and shall have, the authority and capacity to execute and deliver the Loan Documents to which it is a party.

(d) As of the date hereof, there is no default, under any instrument or document to which Borrower or any Guarantor is a party, which default is reasonably likely to cause a material adverse effect upon Borrower and Guarantors’ financial condition taken as a whole (a “Material Adverse Effect”). Neither the execution nor delivery of this Loan Agreement, or any of the Loan Documents, nor compliance with their terms and provisions, will conflict with or be in violation of any applicable law, regulation, ordinance, court order, injunction, writ, or decree which conflict is reasonably likely to result in a Material Adverse Effect.

(e) As of the date hereof there is no pending or, to Borrower’s knowledge, threatened judicial, administrative, or arbitrational action or proceeding affecting Borrower, or any Guarantor, before any court, governmental agency, or arbitrator which relates in any adverse manner to any of the transactions contemplated by this Loan Agreement, or which if adversely determined, is reasonably likely to result in a Material Adverse Effect. Neither Borrower nor any Guarantor has any material contingent liability not disclosed in the financial information heretofore furnished to Lender, which is reasonably likely to result in a Material Adverse Effect.

(f) The funds disbursed under the Loans shall be used for no purpose other than the purposes stated above and for working capital needs and other general business purposes.

(g) The financial statements which have been heretofore delivered to Lender by or on behalf of Borrower and Guarantors, and all financial statements which shall be delivered hereunder by Borrower or Guarantors during the term of this Loan Agreement, and until payment of the Loans made hereunder, fairly present, and shall fairly present, in all material respects, the financial condition and results of operations of the Borrower as of and for the periods represented.

(h) Borrower is a Tennessee limited liability company, validly existing, and in good standing under the laws of the State of Tennessee and has the power to own its properties, to carry on its business as now conducted, and to enter into and perform its obligations under this Loan Agreement and the other Loan Documents. Borrower is duly qualified to do business and in good standing in any other state in which a failure to be so qualified could reasonably be expected to have a Material Adverse Effect. The parties executing the Loan Documents on behalf of Borrower are duly authorized to act on its behalf.

(i) Guarantors are validly existing and in good standing under the laws of the states of their organization and have the power to guarantee the indebtedness contemplated hereby, to carry on business as now conducted, and to enter into and perform obligations under this instrument and the other Loan Documents. Guarantors are duly qualified to do business and in good standing in any other state in which a failure to be so qualified could reasonably be expected to have a Material Adverse Effect. The parties executing the Loan Documents on behalf of Guarantors are duly authorized to act on behalf of such Guarantors.

(j) As of the date hereof, Borrower’s principal office and chief place of business is located at 3401 West End Avenue, Suite 260, Nashville, Tennessee 37203. Borrower will give Lender thirty (30) days’ notice of any change in its principal office or chief place of business.

III. COVENANTS OF BORROWER

3.1 Loan Documents. Borrower and Guarantors shall execute and deliver, or cause to be executed and delivered, to Lender for the Loans to be made hereunder, prior to disbursement thereof (or within the periods described in Section 1.9(c) above), all of the Loan Documents, including but not limited to this Loan Agreement, the Notes and Security Instruments, all in form and substance reasonably satisfactory to Lender in all respects.

3.2 Additional Documentation. Borrower shall deliver to Lender charters, bylaws, certifications, affidavits, good standing certificates, resolutions, opinions of counsel, and such other documentation as may be reasonably necessary in Lender’s judgment, to authorize the execution and delivery of any of the Loan Documents or to carry out the provisions of this Loan Agreement.

3.3 Liens. Borrower shall for the term of this Loan Agreement, and until payment of the Loan made hereunder, keep the Collateral free and clear of any and all liens except Permitted Encumbrances and shall pay all taxes (if any) which may be charged against any part or all of the Collateral, prior to the time such become delinquent. However, Borrower shall not be required to pay any such lien claim, tax or assessment deemed by Borrower to be excessive or invalid, or which may be otherwise contested by Borrower, for so long as Borrower shall in good faith object to or otherwise contest the validity of the same by appropriate legal proceeding, and provided further that Borrower, upon demand by Lender, as protection and indemnity against loss or damage resulting therefrom, shall deposit, either in cash, bond, or other collateral acceptable to Lender, an amount sufficient in Lender’s reasonable judgment to cover the claim for such unpaid amounts, together with any costs or penalties which may thereafter accrue. Borrower shall pay, in any event, any such items prior to any judicial or nonjudicial sale to enforce any such lien.

3.4 Financial Statements and Other Information. Borrower shall provide Lender with quarterly company prepared consolidating and consolidated financial statements and a quarterly loan covenant compliance report within 45 days after the end of the first three (3) fiscal quarters of each fiscal year. Borrower shall also provide Lender with an annual audited consolidated financial statement and a loan covenant compliance report within 120 days of Borrower’s fiscal year-end.

3.5 Additional Financial Covenants. Financial covenants will be calculated on a trailing four quarters basis (and for J. Alexander’s Holdings, LLC, and its subsidiaries on a consolidated basis) and will consist of:

(a) Initial Covenant Period. For the time period commencing on May 7, 2020 and extending through July 4, 2021 (the “Initial Covenant Period”), the following financial covenants shall apply:

(1)

Borrower shall attain at least $99,755,000.00 of revenue for Borrower’s fiscal year ending January 3, 2021, and shall attain at least $118,350,000.00 of revenue on a four quarter trailing basis by April 4, 2021, and shall attain at least $166,812,000.00 of revenue on a four quarter trailing basis by July 4, 2021.

(2)

Borrower shall maintain Maximum Adjusted Debt to Tangible Net Worth of 0.80 or less and defined as the ratio of Total Funded Debt to Tangible Net Worth. This covenant will be measured quarterly beginning September 27, 2020. “Tangible Net Worth” shall mean (i) total assets less any intangible assets (including right-of-use lease assets) minus (ii) total liabilities less any lease liabilities or other such liabilities that would be determined to be of an intangible nature, all determined in accordance with GAAP. “Total Funded Debt” shall mean the outstanding principal amount of all obligations for borrowed money.

(b) Remaining Covenant Period. For the time period commencing July 5, 2021 and extending through the Maturity Date (as defined in each Note):

(1)

Fixed Charge Coverage Ratio. Borrower shall maintain a Fixed Charge Coverage ratio of not less than 1.25 to 1.0. Fixed Charge Coverage Ratio shall be measured at quarter-end based on a four-quarter trailing basis. Fixed Charge Coverage Ratio shall be defined as the ratio of (A) the sum of Net Income (excluding the effect of any extraordinary or non-recurring gains or losses including any asset impairment charges, restaurant closing expenses (including lease buy-out expenses), changes in valuation allowance for deferred tax assets and non-cash deferred income tax benefits and expenses and up to $1,000,000.00 (in the aggregate for the 5-year term of the Development Loan) in uninsured losses) plus depreciation and amortization plus interest expenses plus rent payments plus non-cash FASB 123R items, i.e. stock based compensation and non-cash expenses related to a profits interest plan, plus other non-cash expenses or charges, and plus expenses associated with the public offering/spin-off process, regardless of whether the public offering/spin-off occurs or is delayed, minus the greater of i) actual total store maintenance capital expenditures (excluding major remodeling or image enhancements), or ii) the total number of Borrower’s stores operating for at least 18 months multiplied by $40,000.00, to (B) the sum of interest expense plus rent payments plus current maturities of long term debt and capital leases.

(2)

Maximum Adjusted Debt to EBITDAR Ratio. Borrower shall maintain an Adjusted Debt to EBITDAR Ratio of not more than 4.0 to 1.0. Maximum adjusted Debt to EBITDAR shall be measured at quarter-end based on a four quarter trailing basis. Maximum Adjusted Debt to EBITDAR Ratio is defined as the ratio of (A) Total Funded Debt minus invested Funds plus rent payments multiplied by 7, to (B) EBITDAR. Invested Funds is defined as short term, liquid investments such as money markets with maturities of less than one year in length, and cash and cash equivalents; provided that investments into any joint venture or any endeavor not consistent with Borrower’s core restaurant operating business without consent of Lender shall be excluded. EBITDAR shall be defined as the sum of: Net Income for such period (excluding the effect of any extraordinary or non-recurring gains or losses including any asset impairment charges, restaurant closing expenses (including lease buy-out expenses), changes in valuation allowance for deferred tax assets and non-cash deferred income tax benefits and expenses and up to $1,000,000.00 (in the aggregate for the five year term of the Development Loan) in uninsured losses) plus an amount which, in the determination of Net Income for such period has been deducted for (i) interest expense for such period; (ii) total federal, state foreign or other income taxes for such period; (iii) all depreciation and amortization for such period; (iv) rent payments; and (v) non-cash FASB 123R items, i.e. stock based compensation, and non-cash expense related to a profits interest plan, plus any other non-cash expenses or charges, and plus expenses associated with the public offering/spin-off process, regardless of whether the public offering/spin-off process occurs or is delayed, all as determined with GAAP.

“GAAP” shall mean generally accepted accounting principles consistently applied, provided that, notwithstanding any changes in such generally accepted accounting principles, any leases now existing or hereafter entered into that would have been treated as operating leases under generally accepted accounting principles as of December 30, 2018, will continue to not be treated as indebtedness for all purposes under this Agreement, including this Section 3.5.

3.6 Notice of Claims. Borrower shall promptly notify Lender of any litigation exceeding $500,000.00 by any third party which may arise with respect to the Collateral, not covered by insurance subject to customary deductibles.

3.7 Insurance. If such insurance is obtainable, Borrower shall furnish to Lender insurance policies with companies, and coverage and amounts, reasonably satisfactory to Lender insuring the Collateral against loss or damage by fire and other casualty, and such other risks as may be reasonably requested by Lender, said policies to insure the full replacement cost of such Collateral. Each such policy shall be maintained in full force and effect until the Loans have been paid in full.

3.8 Ownership of Collateral. Except as set forth herein and the other Loan Documents, Borrower shall at all times until final payment of the Loans be the true and lawful owner of all the Collateral.

3.9 Assignments and Participations. Lender shall have the right at any time to sell and assign interests and to sell participations in the Loans in accordance with customary terms, including prior consent of the Borrower (not to be unreasonably withheld), which consent shall not be required if any Event of Default exists.

3.10 Deposit Accounts. Borrower agrees to maintain the vast majority of its treasury management depository accounts and treasury management account balances with Lender.

3.11 Dividends.

(a) Any direct or indirect subsidiary of Borrower may pay dividends to another direct or indirect subsidiary of Borrower or to Borrower.

(b) Borrower shall be permitted to pay dividends to Holdings.

(d) Borrower shall be prohibited from issuing or declaring cash dividends without Lender’s written permission until the Loans are fully repaid or expired, except as otherwise noted in (a), (b) and (c) above. Amounts paid to an affiliate of Borrower pursuant to a management agreement or similar arrangement are not considered a dividend.

3.12 Reimbursement. Upon receiving the reported Maximum Adjusted Debt to EBITDAR Ratio for the preceding quarter determined by Borrower’s quarterly loan compliance report, and determining the applicable interest rate and non-use fee, Lender and Borrower agree that Lender shall reimburse Borrower for any interest and non-use fee overpaid and Borrower shall reimburse Lender for any interest and non-use fee owed within thirty (30) days of such determination.

IV. EVENTS OF DEFAULT

Each of the following shall constitute an Event of Default hereunder:

(a) If Borrower shall fail to pay any installment under the Loans within five (5) days of Lender’s written notice to Borrower; or

(b) If Borrower shall fail to pay sums due under the Loans at maturity; or

(c) If Borrower or any of the Guarantors shall fail to keep and perform any other covenant or provision contained in this Loan Agreement, or in any of the Loan Documents, or if at any time any representation or warranty made by Borrower or any of the Guarantors, herein or otherwise in connection with the Loans made hereunder, shall be materially incorrect, and such failure shall continue unremedied for a period of thirty (30) days following the earlier of the date an executive officer of Borrower first has actual knowledge of such breach or failure, or the date Borrower is given written notice from Lender to Borrower specifying such breach or failure. If such failure cannot be cured by Borrower with reasonable diligence within such thirty (30) day period, then such period shall be extended to a total of forty-five (45) days provided that within such thirty (30) day period Borrower shall commence to cure such breach or failure and shall continue to proceed thereafter with reasonable diligence; or

(d) If Borrower or any of the Guarantors (i) shall generally not pay or shall be unable to pay its or their debts as such debts become due; or (ii) shall make a general assignment for the benefit of creditors or petition or apply to any tribunal for the appointment of a custodian, receiver or trustee for such party, the Collateral or a substantial part of such party’s assets; or (iii) shall commence any proceeding under bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, whether now or hereafter in effect; or (iv) shall have had any petition or application filed or commenced against it or them in which an order for relief is entered or an adjudication or appointment is made; or (v) shall indicate, by any act or omission, such party’s consent to, approval of or acquiescence in any such petition, application, proceeding, or order for relief or the appointment of a custodian, receiver or trustee for such party, the Collateral or a substantial part of such party’s assets; or (vi) shall suffer any custodianship, receivership or trusteeship to continue undischarged for a period of thirty (30) days or more; or

(e) If Borrower or any of the Guarantors shall be liquidated or dissolved (provided, however, any Guarantor may be liquidated, dissolved or merged into another Guarantor or Borrower); or

(f) If there is a material default in any other indebtedness or obligations now or hereafter owing by Borrower or Guarantors to Lender, subject to applicable cure provisions.

In any such event, Lender may, in addition to all remedies available to Lender under the terms of any of the Loan Documents, or otherwise by applicable law, take any or all of the following actions, concurrently or successively: (i) declare the indebtedness evidenced by the Notes delivered pursuant to this Loan Agreement to be immediately due and payable without presentment, demand, or other notice, all of which are expressly waived, unless notice is specifically provided herein, or elsewhere in the Loan Documents, (ii) terminate the obligation of Lender to extend credit of any kind hereunder, whereupon the obligation of Lender to make additional advances hereunder shall terminate, and/or (iii) acquire possession of the Collateral.

Borrower shall be liable to Lender for all sums paid or expended by Lender during the occurrence of an Event of Default in connection with the Collateral or otherwise in connection with this Loan Agreement, and all such payments made or liabilities incurred by Lender hereunder, of any kind whatsoever, shall be payable upon demand, and all of the foregoing, shall be deemed to constitute advances under this Loan Agreement, and the Notes, and shall be additional indebtedness secured by the Security Instruments.

V. GENERAL PROVISIONS

5.1 Setoff. In addition to all rights of setoff, Lender shall have upon the occurrence of an Event of Default hereunder the right to appropriate and apply to the payment of the Loans outstanding hereunder, any and all balances, credits, deposits, accounts, money, or other property of Borrower or Guarantors then or thereafter held by or deposited with Lender.

5.2 Attorney Fees and Costs. Borrower shall be liable to Lender for all sums reasonably paid or incurred by Lender in connection with this Loan Agreement, the Loans made hereunder, the Collateral, whether paid or incurred by reason of any default hereunder, or in any of the Loan Documents, or otherwise, and such shall include, but shall not be limited to, the payment of all reasonable attorneys’ fees so paid or incurred. All such sums shall be payable by Borrower to Lender upon demand, and all of the foregoing shall constitute advances under this Loan Agreement. Borrower shall further pay to Lender all costs and expenses incurred by Lender, including, but not limited to, reasonable attorneys’ fees, in the preparation and consummation of this Loan Agreement, and the Loan made hereunder.

Borrower will pay all reasonable outside legal fees and UCC recording cost and search expenses incurred by the Lender relative to negotiation and document preparation (whether or not the contemplated transaction is closed and funded), and any and all reasonable legal fees and expenses incurred by Lender after the closing for any and all ongoing administrative, enforcement and collection expenses related to the Loans.

5.3 Remedies Cumulative. All remedies provided for in this Loan Agreement, or in any of the Loan Documents, shall be cumulative, and shall be in addition to all other remedies available to Lender by applicable law.

5.4 Inspection. Upon reasonable prior notice, Lender, its representatives and designees, shall have reasonable access to the books and records of Borrower with respect to the Collateral, and shall be entitled to copies of such records upon request. Borrower shall make such books and records available to Lender upon reasonable request. Upon reasonable prior notice, Lender shall be entitled to access to the Collateral for the purpose of inspecting the same, and in order to otherwise carry out the provisions of this Loan Agreement, or of any of the Loan Documents.

5.5 No Waiver. The failure of Lender to exercise any right or remedy granted under this Loan Agreement, any of the Loan Documents, or by applicable law, shall not be a waiver of Lender’s right or rights to exercise any such right or remedy upon any subsequent default.

5.6 Captions. Captions used herein are for convenience only, and shall not be construed as limiting the construction of the provisions of this Loan Agreement.

5.7 Notice. Any and all notices permitted or required under this Loan Agreement, or any of the Loan Documents, shall be deemed given if hand-delivered, or mailed by United States registered or certified mail, postage prepaid, return receipt requested, to the following addresses:


If to Borrower, as follows:		J. Alexander’s, LLC
		Attn: Mark Parkey, CFO (or Jessica Hagler)
		3401 West End Avenue, Suite 260 Nashville, Tennessee 37203
with a copy to:		Bass, Berry & Sims PLC
		Attn: Felix R. Dowsley, III
		150 Third Avenue S., Suite 2800
		Nashville, TN 37201
and in the case of Lender:		Pinnacle Bank
		Attn: William W. DeCamp, Senior Vice President
		150 Third Avenue S., Suite 800
		Nashville, Tennessee 37201
with a copy to:		Gullett, Sanford, Robinson & Martin PLLC
		Attn: Catherine H. Gwyn
		150 Third Avenue S., Suite 1700
		Nashville, Tennessee 37201

or to such other address, or addresses, as either party may request in writing to the other from time to time. No notice to or demand on Borrower hereunder, in itself shall entitle Borrower to any other or further notice or demand in similar or other circumstances, or shall constitute a waiver of the rights of Lender to any other or further action in any circumstances without notice or demand.

5.8 Interest. Notwithstanding anything herein to the contrary, in no event shall interest charged under the Loans hereunder exceed the maximum rate allowed by applicable law. Interest shall be calculated on the basis of a three hundred sixty (360) day year.

5.9 No Liability. Except to the extent caused by Lender’s negligence or willful misconduct, Borrower shall indemnify and hold harmless Lender from and against any and all liability, loss, and damage incurred by Lender in connection with this Loan Agreement.

5.10 Successors and Assigns. This Loan Agreement shall be binding upon the parties hereto, and their respective successors and assigns. However, no rights of Borrower hereunder may be assigned without the express prior written consent of Lender.

5.11 Severability. The invalidity or unenforceability of any provision hereof shall not affect the validity or enforceability of the remaining provisions.

5.12 Entire Agreement, Amendment. This Loan Agreement, and the Loan Documents executed pursuant hereto shall constitute the entire agreement of the parties. Any additional provisions contained in the Loan Documents not contained herein shall be supplemental and in addition to the provisions hereof. This Loan Agreement may be modified or amended only by an instrument in writing executed by all parties hereto.

5.13 Applicable Law. The construction and validity of this Loan Agreement, and the Loans made hereunder, shall be governed by the law of the State of Tennessee, except to the extent that such may be pre-empted by applicable law or regulation of the United States of America governing the charging or receiving of interest.

5.14 Time of the Essence, Gender, Number. Time is of the essence with respect to this Loan Agreement, and all provisions and obligations hereof. As used herein, the singular shall refer to the plural, the plural to the singular, and the use of any gender shall be applicable to all genders.

5.15 Further Assurances. Borrower shall execute and deliver such additional instruments and documents and take such further actions, as may be reasonably requested by Lender from time to time to further evidence or perfect the rights of and obligations owing to Lender hereunder and to correct any errors or mistakes in the transactions evidenced hereby.

5.16 Counterparts. This Loan Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument.

5.17 Guarantors. The Guarantors join in the execution of this Agreement for the purpose of acknowledging Guarantors’ respective obligations with respect to this Agreement, the Notes, and in addition any other instrument or document evidencing or securing all or any part of the Loans, to the extent applicable to each Guarantor.

5.18 Amendment and Restatement. This Third Amended and Restated Loan Agreement constitutes an amendment and restatement of that certain Second Amended and Restated Loan Agreement, dated May 20, 2015, as subsequently modified, by and among the Borrower, the Lender and the within named Guarantors.

5.19 Jury Waiver. BORROWER AND GUARANTORS HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION, WHETHER IN CONTRACT OR TORT, AT LAW OR IN EQUITY, BASED HEREON OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF ANY PARTY HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER ENTERING INTO OR ACCEPTING THIS AGREEMENT. FURTHER, BORROWER AN GUARANTORS HEREBY CERTIFY THAT NO REPRESENTATIVE OR AGENT OF LENDER, OR LENDER’S COUNSEL, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT LENDER WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION. ANY ACTION BROUGHT HEREUNDER OR WITH RESPECT TO THE SUBJECT MATTER HEREOF MUST BE BROUGHT IN THE STATE COURTS SITTING IN DAVIDSON COUNTY, TENNESSEE OR IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF TENNESSEE WHICH SHALL HAVE EXCLUSIVE JURISDICTION AND VENUE OF ANY SUCH MATTERS. PROVIDED THAT FOR ANY ACTION FOR WHICH IN REM JURISDICTION IS REQUIRED, ANY SUCH ACTION MAY BE BROUGHT IN THE STATE COURTS SITTING IN COUNTY AND STATE IN WHICH THE ACTION ARISES, OR IN THE FEDERAL DISTRICT COURT, AS MAY BE NECESSARY.

The remainder of this page is left intentionally blank.

IN WITNESS WHEREOF, the parties have executed this Amended and Restated Loan Agreement as of the date first above written.


BORROWER:
J. ALEXANDER’S, LLC, a Tennessee limited liability company
By:		/s/ Mark A. Parkey
Name:		Mark A. Parkey
Title:		Executive Vice President, Chief Financial Officer and Treasurer

LENDER:

PINNACLE BANK

By:		/s/ William W. DeCamp
		William W. DeCamp, Senior Vice President


GUARANTORS:

J. ALEXANDER’S HOLDINGS, LLC,
a Delaware limited liability company

By:		/s/ Mark A. Parkey
Name:		Mark A. Parkey
Title:		Executive Vice President, Chief Financial Officer and Treasurer

J. ALEXANDER’S RESTAURANTS, LLC,
a Tennessee limited liability company

By:		/s/ Mark A. Parkey
Name:		Mark A. Parkey
Title:		Executive Vice President, Chief Financial Officer and Treasurer


J. ALEXANDER’S RESTAURANTS OF
KANSAS, LLC, a Kansas limited liability company

By:		/s/ Mark A. Parkey
Name:		Mark A. Parkey
Title:		Executive Vice President, Chief Financial Officer and Treasurer

J. ALEXANDER’S OF TEXAS, LLC,
a Texas limited liability company

By:		/s/ Mark A. Parkey
Name:		Mark A. Parkey
Title:		Executive Vice President, Chief Financial Officer and Treasurer

JAX REAL ESTATE, LLC,
a Delaware limited liability company

By:		/s/ Mark A. Parkey
Name:		Mark A. Parkey
Title:		Executive Vice President, Chief Financial Officer and Treasurer

JAX RE HOLDINGS, LLC,
a Delaware limited liability company

By:		/s/ Mark A. Parkey
Name:		Mark A. Parkey
Title:		Executive Vice President, Chief Financial Officer and Treasurer

JAX REAL ESTATE MANAGEMENT, LLC,
a Delaware limited liability company

By:		/s/ Mark A. Parkey
Name:		Mark A. Parkey
Title:		Executive Vice President, Chief Financial Officer and Treasurer


STONEY RIVER MANAGEMENT COMPANY, LLC,
a Delaware limited liability company

By:		/s/ Mark A. Parkey
Name:		Mark A. Parkey
Title:		Executive Vice President, Chief Financial Officer and Treasurer

SRLS LLC,
a Delaware limited liability company

By:		/s/ Mark A. Parkey
Name:		Mark A. Parkey
Title:		Executive Vice President, Chief Financial Officer and Treasurer

STONEY RIVER LEGENDARY MANAGEMENT, L.P.,
a Georgia limited partnership

By:		/s/ Mark A. Parkey
Name:		Mark A. Parkey
Title:		Executive Vice President, Chief Financial Officer and Treasurer

STONEY RIVER, LLC,
a Delaware limited liability company

By:		/s/ Mark A. Parkey
Name:		Mark A. Parkey
Title:		Executive Vice President, Chief Financial Officer and Treasurer

Schedule 1

Applicable Revenue Thresholds

Such Advances are contingent on the Borrower generating at least the following levels of revenue on a trailing three fiscal month basis:

As of the end of:


fiscal month 7 2020	$	19,652,290
fiscal month 8 2020	$	23,440,000
fiscal month 9 2020	$	27,040,000
fiscal month 10 2020	$	30,080,000
fiscal month 11 2020	$	34,880,000
fiscal month 12 2020	$	45,360,000
fiscal month 1 2021	$	49,516,260
fiscal month 2 2021	$	51,432,520
fiscal month 3 2021	$	47,827,850
fiscal month 4 2021	$	47,445,030
fiscal month 5 2021	$	47,062,220
fiscal month 6 2021	$	46,583,700
fiscal month 7 2021	$	45,970,470
fiscal month 8 2021	$	45,357,250

EXHIBIT “A”

17 Restaurant Locations:

1.	1721 Galleria Blvd., Franklin, Williamson County, TN 37064

2.	2215 Hamilton Place Blvd., Chattanooga, Hamilton County, TN 37421

3.	2670 No. Germantown Pkwy., Memphis, Shelby County TN 38133

4.	1410 16^th Street, Oak Brook, DuPage County, IL 60523

5.	3320 Galleria Circle, Hoover, Jefferson County, AL 35244

6.	7970 Washington Village Drive, Dayton, Montgomery County OH 45459

7.	7550 Vantage Drive, Columbus, Franklin County, OH 43235

8.	19200 Haggerty Road, Livonia, Wayne County, MI 48152

9.	11471 Metcalf Avenue, Overland Park, Johnson County, KS 66210

10.	8550 West Broward Blvd., Plantation, Broward County, FL 33324

11.	913 Dale Mabry Highway, Tampa, Hillsborough County, FL 33609

12.	5245 Peachtree Parkway, Peachtree Corners, Gwinnett County, GA 30092

13.	9709 East County Line Road, Englewood, Arapahoe County, CO 80112

14.	4077 Lake Cook Road, Northbrook, Cook County, IL 60062

15.	5800 State Bridge Road, Johns Creek, Fulton County, GA 30097

16.	20504 North Rand Road, Deer Park, Lake County, IL 60010

17.	3900 Summit Plaza Drive, Louisville, Jefferson County, KY 40241

Exhibit 99.1

LOGO

FOR IMMEDIATE RELEASE

J. ALEXANDER’S HOLDINGS, INC. REPORTS RESULTS

FOR FIRST QUARTER ENDED MARCH 29, 2020

NASHVILLE, TN, June 9, 2020 -- J. Alexander’s Holdings, Inc. (NYSE: JAX) (the “Company”), owner and operator of J. Alexander’s, Redlands Grill, Stoney River Steakhouse and Grill and other restaurants, today reported results for the first quarter ended March 29, 2020.

Business Update and 2020 Outlook

Average weekly same store sales¹ for fiscal 2020 compared to monthly periods of 2019 are as follows:


	January			February			March			April			May
	(4 weeks)			(4 weeks)			(5 weeks)			(4 weeks)			(4 weeks)
J. Alexander’s/Grill Restaurants		+3.0	%		+1.3	%		(37.0	)%		(81.0	)%		(61.5	)%
Stoney River Steakhouse and Grill		+0.5	%		(3.1	)%		(37.2	)%		(78.3	)%		(62.0	)%

When governmental restrictions on dine-in service began during March 2020 as a result of the novel coronavirus (“COVID-19”) pandemic, the Company quickly shifted its service model to a carry-out platform, under which management projected that average weekly sales would likely range between 10-20% of historical volumes. During the period from mid-March 2020 through the end of April 2020, prior to the reopening of dining rooms on a limited basis in certain markets, the Company experienced sales volumes that were approximately 18% of the sales recorded during the same period in the prior year, with sales growing steadily on a weekly basis during that timeframe. Since the week beginning April 27, 2020 when the Company has been able to begin to reopen dining rooms with limited capacities in Tennessee, Georgia, Florida, Texas, Ohio, and other markets, sales volumes have continued to increase, and for the week ended May 31, 2020 totaled approximately 61% of sales recorded during the same period in the prior year.

As of June 9, 2020, the Company has reopened dining rooms on a limited capacity basis at all of its restaurant locations while continuing to also offer carry-out service at all of its locations. Off-premise sales have grown significantly since the Company began operating on the new service model in March 2020. Specifically, off-premise sales only during the week ended May 31, 2020 totaled approximately 29% of total sales and were up approximately 35% over the week ended March 29, 2020, which was the first full week of primarily carry-out only sales. This increase is being driven by increased digital marketing and email campaigns to drive guest awareness, the addition of curbside service, investments that the Company has made in its online ordering platform partnership with ChowNow, and through menu innovation to include family-style meals (offering a complete meal for larger parties including salad, entrée, side items and dessert) and butcher shop sales of cook-at-home, hand-cut steaks. The Company is also offering bottles of wine to-go in most markets and is testing delivery in a limited number of markets.

The Company is not providing guidance for fiscal 2020 in light of the current uncertain consumer environment and unprecedented global market and economic conditions.

First Quarter 2020 Highlights Compared To The First Quarter Of 2019

•

Restaurant dining room closures started on March 16, 2020, with all restaurants moved to a carry-out only model by March 24, 2020.

•

Net sales for the first quarter of 2020 were $56,972,000, down from $64,734,000 reported in the first quarter of 2019.

•

Loss from continuing operations before income taxes totaled $18,979,000 for the first quarter of 2020, which included a goodwill impairment charge of $15,737,000, a fixed asset impairment charge associated with the planned closure of one of the Company’s restaurants of $689,000, and the impact of transaction expenses of $689,000 related to the ongoing evaluation of strategic alternatives. This compares to income from continuing operations before income taxes of $4,146,000 in the first quarter of 2019.

•

Results for the first quarter of 2020 included an income tax benefit of $1,387,000 compared to income tax expense of $239,000 in the first quarter of 2019.

•

Net loss for the first quarter of 2020 totaled $17,644,000 compared to net income of $3,848,000 in the first quarter of 2019.

•

Basic and diluted loss per share were $1.20 for the first quarter of 2020 compared to basic and diluted earnings per share of $0.26 for the first quarter of 2019.

•

Average weekly same store sales per restaurant⁽¹⁾ for the first quarter of 2020 were down 12.8% to $102,300 for the J. Alexander’s/Grill restaurants and down 14.6% to $72,200 for the Stoney River Steakhouse and Grill restaurants compared to the first quarter of 2019.

•

Adjusted EBITDA ⁽²⁾ was $1,964,000, or 3.4% of net sales, in the first quarter of 2020, compared to $7,712,000, or 11.9% of net sales, in the first quarter of 2019.

•

Restaurant Operating Profit Margin ⁽³⁾ was 5.3% in the most recent quarter compared to 14.0% for the first quarter of 2019.

•

Cost of sales as a percentage of net sales in the first quarter of 2020 was 32.6% compared to 31.7% in the first quarter of 2019.

In March 2020, the Company implemented its Emergency Sick Leave Policy (“ESLP”) for hourly team members which provided for up to two weeks of paid leave for hourly team members who are either infected by COVID-19 or employed at a restaurant that closed its dining rooms in response to the COVID-19 pandemic. During the first quarter of 2020, the Company incurred approximately $2,050,000 in pre-tax charges related to continuing benefits and ESLP pay for its furloughed staff members as a result of the COVID-19 pandemic. Additionally, the impact of COVID-19 on the Company’s business has resulted in the need to perform impairment assessments of the Company’s long-lived assets, goodwill and other intangible assets. As a result, the Company determined it was necessary to record a non-cash impairment charge for the first quarter of 2020 of $15,737,000, representing the entire balance of the Company’s goodwill. Additionally, the Company has determined that it will not reopen one of its locations which closed in March 2020 due to the COVID-19 pandemic, and in the first quarter of 2020 the Company recorded an impairment charge of $689,000 in order to present the related long-lived assets at this location at their estimated fair value. The Company has subsequently entered into an agreement to sell this location for an amount equivalent to the fair value of the property, and the sale is expected to close in the third quarter of 2020, subject to customary closing conditions. Neither of these impairment charges had an impact on the Company’s cash flows or debt covenants for the first quarter of 2020. See “Other Financial and Performance Data” at the end of this release for additional information on guest counts and other metrics.

Liquidity

As of March 29, 2020, the Company’s cash and cash equivalents totaled $24,818,000, and total outstanding indebtedness equaled $25,722,000, including $21,000,000 outstanding on the Company’s lines of credit facilities. On June 5, 2020, the Company entered into the Third Amended and Restated Loan Agreement with its lender, which increased availability under the existing $1,000,000 revolving credit facility to a maximum of $16,000,000 by adding an accordion feature, subject to compliance with minimum revenue requirements. The Company pledged additional collateral under this agreement, including mortgages on five additional restaurant properties which were previously unencumbered by the Company’s debt obligations. In April 2020, the Company also entered into certain letter agreements and a modification agreement with its lender to defer interest and principal payments for April, May and June 2020.

Additionally, effective May 6, 2020, the Company obtained a waiver of its existing credit facility financial covenants through the period ending July 4, 2021, the end of the Company’s second quarter of fiscal 2021. This waiver also implemented new financial covenants, as previously disclosed in the Company’s Current Report on Form 8-K filed on May 8, 2020, requiring minimum revenues and maximum debt ratios. The Company was in compliance with the existing financial covenants for the period ended March 29, 2020, and expects to be in compliance with the new financial covenants through the waiver period.

Further, the Company has undertaken various measures to preserve liquidity in the current economic environment, including engaging in ongoing negotiations with landlords to restructure rental obligations, securing delayed payment terms with certain vendors, and delaying or cancelling significant capital expenditure projects for the balance of fiscal 2020.

As of June 1, 2020, the Company had cash on hand of approximately $14,600,000. During April 2020, the Company used cash of approximately $7,600,000, for a weekly cash burn rate of approximately $1,900,000. As most of the Company’s vendors are on 30-day payment terms, many payments funded in April 2020 were for March 2020 purchases which were more consistent with historical volumes, which negatively impacted the April 2020 cash burn rate. The Company has undertaken significant steps to reduce expenses since March 2020, and these steps, coupled with the growth in sales levels, have allowed the Company to reduce its weekly cash burn rate to approximately $480,000 during the month of May 2020. The Company continues to work to maximize restaurant operating margin at reduced sales levels and to negotiate agreements with certain landlords to abate or defer rental payments beginning in June 2020. The Company is currently forecasting the weekly cash burn rate to be approximately $550,000 to $580,000 under the current operating model commencing in June 2020 through the end of the third quarter. This amount includes capital expenditure commitments including the construction of one new location expected to open in the fourth quarter of 2020.

Chief Executive Officer’s Comments

“We entered fiscal 2020 with high expectations,” stated Mark A. Parkey, President and Chief Executive Officer of J. Alexander’s Holdings, Inc. “ Same store sales during the first two months of the year were encouraging and then we encountered the COVID-19 pandemic, which required us to close our dining rooms at all of our restaurants. Unlike a lot of restaurant concepts, we buy all of our beef fresh and pay a premium to have it aged for us. When the pandemic hit, we had a surplus of fresh beef at various stages in our supply chain

that we needed to work through. Thus, after almost 30 years of resisting carry-out dining in favor of maximizing the in-person dining experience, we found ourselves pivoting to an off-premise only operating platform at 46 restaurant locations. In an effort to market our premium fresh beef and, at the same time, provide value to our loyal guests, we not only featured some attractively priced beef-centered entrees, but we also offered ‘family packs’ utilizing our beef products and sold ‘butcher-shop’ cuts of cook-at-home steaks and whole loins. While the margins we realized from these beef offerings were lower, we were able to cover our input costs and work through the pipeline of beef in our distribution system and, in the process, make a lot of our guests happy since many of the grocery stores were depleted of beef and other proteins.

“As we look ahead, we are optimistic that our guests will be out in force and eager to resume their traditional routines,” Parkey stated. “We are already seeing a strong level of pent up demand in various restaurants, with one of our locations recording sales of $186,000 during Mother’s Day week 2020 with only 50% of the seats open to the public and no pub seating available. We are closely monitoring the various government guidelines for reopening our dining rooms and will do our best to provide meaningful safety measures to protect our guests as well as our employees, including by observing social-distancing protocols, employing the use of personal protective equipment, checking temperatures of employees daily, routinely sanitizing high-touch surface areas, and other measures. We are also encouraged by the strong continued response to our carry-out offerings over the past couple of months. One of our restaurants generated $35,000 of off-premise revenue on Mother’s Day 2020, which is a phenomenal amount for a concept that wasn’t offering such an option three months ago. As such, we are actively exploring various platforms which will allow us to continue to meet this demand without sacrificing the guest experience in our dining rooms that has been foundational to our success for the past 29 years.”

On the beef front, Parkey noted that the Company is currently encountering limited supply and higher than normal input costs relative to all of its beef offerings. “We have a great relationship with our primary beef supplier and are working closely with them to get the aging pipeline up and running again as we open more and more seats in our dining rooms. Unfortunately, there are operational hurdles at all levels of the supply chain and our focus is on procuring beef loins from all available sources to the extent they meet our specifications and, at least for the next several weeks, doing our best to ensure an ample inventory of other protein offerings is available for our guests.”

Parkey went on to note that the Company had decided not to reopen its restaurant in Lyndhurst, Ohio. “We had an incredibly loyal and talented team at the Lyndhurst Grill,” Parkey noted, “which was the most difficult part of our decision to close this location. Unfortunately, we determined that the financial performance at this restaurant was not adequate to justify its continued operation.”

Restaurant Development

The Company has plans to open a new Redlands Grill in San Antonio, TX, during the fourth quarter of 2020, as previously announced. The Company is continuing construction of this new Redlands Grill location at a slower pace than previously anticipated, but still expects to be able to open for business in San Antonio before the Holiday season of 2020.

Early in the first quarter of 2020, the Company signed a lease to build and operate a new J. Alexander’s Restaurant in Madison, AL, one of the fastest growing markets in that state. Although the Company originally planned to open this location in the fourth quarter of 2020 as well, construction on this location has been delayed in an effort to conserve cash resources, and the Company now expects to open the Madison, AL, restaurant in the second half of fiscal 2021.

Strategic Alternatives Evaluation

As part of the Company’s Board of Directors’ (the “Board”) previously announced review of strategic alternatives, the Company retained the investment banking firm of Piper Sandler in August 2019 to assist the Company in its evaluation of strategic alternatives, with a particular focus on a sale of the entire Company. The Board believed, and took into account the views of shareholders, that the small size of the Company made it inefficient to be a standalone publicly traded company. Piper Sandler ultimately contacted over 125 potential interested parties, and through an exhaustive process, three interested parties emerged as serious potential acquirers. One of those parties was in advanced negotiations with the Company for an acquisition at a premium to the then-current market price. The initial impacts of the COVID-19 pandemic led the potential acquirer to reduce its proposed purchase price twice and to insist on conditions relating to the performance of the Company. Ultimately, when government entities mandated the closure of the Company’s restaurants, except for limited carry-out, the Board determined that no transaction at a price that reflected the long-term value of the Company would be able to be consummated until the resolution of uncertainties about the COVID-19 pandemic and the return of the Company’s business to satisfactory levels. For the near term, the Company intends to focus on rebuilding its sales base as its restaurants are able to reopen and increase capacity by providing an outstanding dining experience for its guests. The Board currently believes it will be sometime in 2021 before the Company can conclude its evaluation of strategic alternatives, focusing on the potential sale of the Company.

(1)Average weekly same store sales per restaurant is computed by dividing total restaurant same store sales for the period by the total number of days all same store restaurants were open for the period to obtain a daily sales average. The daily same store sales average is then multiplied by seven to arrive at average weekly same store sales per restaurant. Days on which restaurants are closed for business for any reason other than scheduled closures on Thanksgiving and Christmas are excluded from this calculation. Sales and sales days used in this calculation and amounts of other “same store” figures in this release include only those for restaurants in operation at the end of the period which have been open for more than 18 months. Revenue associated with reduction in liabilities for gift cards, which is recognized in proportion to guest redemptions based on historical redemption rates and commonly referred to as gift card breakage, is not included in the calculation of average weekly same store sales per restaurant. Average weekly same store sales are computed from sales amounts that have been determined in accordance with U.S. generally accepted accounting principles (GAAP).

(2)Please refer to the financial information accompanying this release for our definition of the non-GAAP financial measure Adjusted EBITDA and a reconciliation of net income (loss) to Adjusted EBITDA. Management uses Adjusted EBITDA to evaluate operating performance and the effectiveness of its business strategies.

(3)“Restaurant Operating Profit Margin” is the ratio of Restaurant Operating Profit, a non-GAAP financial measure, to net sales. Please refer to the financial information accompanying this release for our definition of the non-GAAP financial measure Restaurant Operating Profit and a reconciliation of operating income (loss) to Restaurant Operating Profit. Management uses Restaurant Operating Profit to measure operating performance at the restaurant level.

About J. Alexander’s Holdings, Inc.

J. Alexander’s Holdings, Inc. is a collection of restaurants that focus on providing high-quality food, outstanding professional service and an attractive ambiance. The Company presently operates 46 restaurants in 16 states. The Company has its headquarters in Nashville, TN.

For additional information, visit www.jalexandersholdings.com

Forward-Looking Statements

This press release issued by J. Alexander’s Holdings, Inc. contains forward-looking statements, which include all statements that do not relate solely to historical or current facts, such as statements regarding our expectations, intentions or strategies regarding the

future, including the impact of the COVID-19 pandemic and the Company’s plans to continue its review of strategic alternatives and its efforts to enhance shareholder value. These forward-looking statements are based on management’s beliefs, as well as assumptions made by, and information currently available to, management. Because such statements are based on expectations as to future financial and operating results and other events and are not statements of fact, actual results may differ materially from those projected and are subject to a number of known and unknown risks and uncertainties, including the health and financial effects of the COVID-19 pandemic; the Company’s ability to reopen its restaurants for in-person dining, and thereafter to reestablish and maintain satisfactory guest count levels and maintain or increase sales and operating margin in its restaurants under varying economic conditions; the effect of higher commodity prices, unemployment and other economic factors on consumer demand; increases in food input costs or product shortages and the Company’s response to them; the Company’s ability to obtain access to additional capital as needed; the Company’s ability to comply with new financial covenants under its loan agreement with its lender; the impact of any impairment of our long-lived assets, including tradename; the Company’s ability to defer lease or contract payments or otherwise obtain concessions from landlords, vendors and other parties in light of the impact of the COVID-19 pandemic; the number and timing of new restaurant openings and the Company’s ability to operate them profitably; competition within the casual dining industry and within the markets in which our restaurants are located; adverse weather conditions in regions in which the Company’s restaurants are located; factors that are under the control of third parties, including government agencies; the Company’s evaluation of strategic alternatives; as well as other risks and uncertainties described under the headings “Forward-Looking Statements,” “Risk Factors” and other sections of the Company’s Annual Report on Form 10-K filed with the SEC on March 13, 2020, as amended on April 17, 2020, and subsequent filings, including under the heading “Risk Factor” in its Current Report on Form 8-K filed with the SEC on May 8, 2020. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Contact:

J. Alexander’s Holdings, Inc.

Jessica Hagler

Chief Financial Officer

(615) 269-1900

J. Alexander’s Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited in thousands, except per share amounts)


	Quarter Ended
	March 29, 2020			March 31, 2019
Net sales	$	56,972		$	64,734
Costs and expenses: Cost of sales		18,567			20,528
Restaurant labor and related costs		20,338			19,550
Depreciation and amortization of restaurant property and equipment		3,094			2,929
Other operating expenses		11,954			12,684

Total restaurant operating expenses		53,953			55,691
Transaction expenses		689			—
General and administrative expenses		4,740			4,756
Goodwill impairment charge		15,737			—
Long-lived asset impairment charges and restaurant closing costs		689			—
Pre-opening expense		19			21

Total operating expenses		75,827			60,468

Operating (loss) income		(18,855	)		4,266
Other income (expense): Interest expense		(116	)		(186	)
Other, net		(8	)		66

Total other expense		(124	)		(120	)

(Loss) income from continuing operations before income taxes		(18,979	)		4,146
Income tax benefit (expense)		1,387			(239	)
Loss from discontinued operations, net		(52	)		(59	)

Net (loss) income	$	(17,644	)	$	3,848

Basic (loss) earnings per share:
(Loss) income from continuing operations, net of tax	$	(1.20	)	$	0.27
Loss from discontinued operations, net		(0.00	)		(0.00	)

Basic (loss) earnings per share	$	(1.20	)	$	0.26

Diluted (loss) earnings per share:
(Loss) income from continuing operations, net of tax	$	(1.20	)	$	0.27
Loss from discontinued operations, net		(0.00	)		(0.00	)

Diluted (loss) earnings per share	$	(1.20	)	$	0.26

Weighted average common shares outstanding:
Basic		14,695			14,695
Diluted		14,695			14,695

Note: Per share amounts may not sum due to rounding.

J. Alexander’s Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations Data

as a Percentage of Net Sales (Unaudited)


	Quarter Ended
	March 29, 2020			March 31, 2019
Net sales		100.0	%		100.0	%
Costs and expenses: Cost of sales		32.6			31.7
Restaurant labor and related costs		35.7			30.2
Depreciation and amortization of restaurant property and equipment		5.4			4.5
Other operating expenses		21.0			19.6

Total restaurant operating expenses		94.7			86.0
Transaction expenses		1.2			—
General and administrative expenses		8.3			7.3
Goodwill impairment charge		27.6			—
Long-lived asset impairment charges and restaurant closing costs		1.2			—
Pre-opening expense		0.0			0.0

Total operating expenses		133.1			93.4

Operating (loss) income		(33.1	)		6.6
Other income (expense): Interest expense		(0.2	)		(0.3	)
Other, net		(0.0	)		0.1

Total other expense		(0.2	)		(0.2	)

(Loss) income from continuing operations before income taxes		(33.3	)		6.4
Income tax benefit (expense)		2.4			(0.4	)
Loss from discontinued operations, net		(0.1	)		(0.1	)

Net (loss) income		(31.0	)%		5.9	%

Note: Certain percentage totals do not sum due to rounding.

J. Alexander’s Holdings, Inc. and Subsidiaries

Other Financial and Performance Data (Unaudited)


	Quarter Ended
	March 29, 2020			March 31, 2019
Other Financial and Performance Data:
Adjusted EBITDA⁽¹⁾(in thousands)	$	1,964		$	7,712
As a % of net sales		3.4	%		11.9	%
*All Stores Basis Operating Metrics:*
Average weekly sales per restaurant:
J. Alexander’s / Grill Restaurants	$	101,400		$	117,300
Percent change		(13.6	)%
Stoney River Steakhouse and Grill	$	72,400		$	85,200
Percent change		(15.0	)%
Average weekly guest counts:
J. Alexander’s / Grill Restaurants		(15.5	)%		(2.3	)%
Stoney River Steakhouse and Grill		(15.3	)%		3.1	%
Average guest check per restaurant (including alcoholic beverages):
J. Alexander’s / Grill Restaurants	$	33.09		$	32.40
Percent change		2.1	%
Stoney River Steakhouse and Grill	$	42.67		$	42.67
Percent change		0.0	%
Estimated menu pricing impact:⁽²⁾
J. Alexander’s / Grill Restaurants		1.9	%		0.3	%
Stoney River Steakhouse and Grill		2.5	%		0.3	%
Estimated inflation:
J. Alexander’s / Grill Restaurants (total food costs)		(1.1	)%		1.9	%
J. Alexander’s / Grill Restaurants (beef costs)		(0.4	)%		5.7	%
Stoney River Steakhouse and Grill (total food costs)		(0.8	)%		3.2	%
Stoney River Steakhouse and Grill (beef costs)		(1.2	)%		7.2	%
*Same Store Basis Operating Metrics:*
Average weekly same store sales per restaurant:
J. Alexander’s / Grill Restaurants	$	102,300		$	117,300
Percent change		(12.8	)%
Stoney River Steakhouse and Grill	$	72,200		$	84,500
Percent change		(14.6	)%
Average weekly same store guest counts:
J. Alexander’s / Grill Restaurants		(14.6	)%		(1.1	)%
Stoney River Steakhouse and Grill		(15.0	)%		1.2	%
Average same store guest check per restaurant (including alcoholic beverages):
J. Alexander’s / Grill Restaurants	$	33.02		$	32.40
Percent change		1.9	%
Stoney River Steakhouse and Grill	$	43.18		$	43.10
Percent change		0.2	%

⁽¹⁾	See definitions and reconciliation attached.

⁽²⁾	Menu pricing impact for quarter ended March 29, 2020 reflects first 11 weeks of activity only.

J. Alexander’s Holdings, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited in thousands)


	March 29, 2020		December 29, 2019
Assets
Current assets:
Cash and cash equivalents	$	24,818	$	8,803
Other current assets		5,835		9,289

Total current assets		30,653		18,092
Other assets		5,661		5,698
Deferred income taxes, net		4,230		2,918
Property and equipment, net		106,868		109,303
Right-of-use lease assets, net		74,241		70,277
Goodwill		—		15,737
Tradename and other indefinite-lived intangibles		25,648		25,648
Deferred charges, net		224		239

	$	247,525	$	247,912

Liabilities and Stockholders’ Equity
Current liabilities	$	26,313	$	31,226
Long-term debt, net of portion classified as current and unamortized deferred loan costs		20,411		2,845
Long-term lease liabilities		80,182		75,883
Deferred compensation obligations		6,968		7,103
Other long-term liabilities		123		138
Stockholders’ equity		113,528		130,717

	$	247,525	$	247,912

J. Alexander’s Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited in thousands)


	Quarter Ended
	March 29,			March 31,
	2020			2019
Cash flows from operating activities:
Net (loss) income	$	(17,644	)	$	3,848
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization of property and equipment		3,146			2,993
Equity-based compensation expense		455			296
Asset impairment charges		16,426			—
Other, net		(1,241	)		(394	)
Changes in assets and liabilities, net		688			(5,874	)

Net cash provided by operating activities		1,830			869
Cash flows from investing activities:
Purchase of property and equipment		(1,416	)		(1,614	)
Other investing activities		(149	)		(90	)

Net cash used in investing activities		(1,565	)		(1,704	)
Cash flows from financing activities:
Proceeds from borrowings under debt agreement		17,000			—
Payments on long-term debt		(1,250	)		(1,250	)
Other financing activities		—			(6	)

Net cash provided by (used in) financing activities		15,750			(1,256	)

Increase (decrease) in cash and cash equivalents		16,015			(2,091	)
Cash and cash equivalents at beginning of the period		8,803			8,783

Cash and cash equivalents at end of the period	$	24,818		$	6,692

Supplemental disclosures:
Property and equipment obligations accrued at beginning of the period	$	1,116		$	819
Property and equipment obligations accrued at end of the period		1,145			869
Cash paid for interest		93			171
Cash paid for income taxes		30			27

J. Alexander’s Holdings, Inc. and Subsidiaries

Non-GAAP Financial Measures and Reconciliations

(Unaudited in thousands)

Non-GAAP Financial Measures

Within this press release, we present the following non-GAAP financial measures which we believe are useful to investors as key measures of our operating performance:

We define Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization, or “Adjusted EBITDA”, as net (loss) income before interest expense, income tax expense (benefit), depreciation and amortization, and adding asset impairment charges and restaurant closing costs, loss on disposals of fixed assets, transaction expenses, non-cash compensation, loss from discontinued operations, and pre-opening costs.

Adjusted EBITDA is a non-GAAP financial measure that we believe is useful to investors because it provides information regarding certain financial and business trends relating to our operating results and excludes certain items that are not indicative of our operations. Adjusted EBITDA does not fully consider the impact of investing or financing transactions as it specifically excludes depreciation and interest charges, which should also be considered in the overall evaluation of our results of operations.

We define “Restaurant Operating Profit” as net sales less restaurant operating costs, which are cost of sales, restaurant labor and related costs, depreciation and amortization of restaurant property and equipment, and other operating expenses. Restaurant Operating Profit is a non-GAAP financial measure that we believe is useful to investors because it provides a measure of profitability for evaluation that does not reflect corporate overhead and other non-operating or unusual costs. “Restaurant Operating Profit Margin” is the ratio of Restaurant Operating Profit to net sales.

Our management uses Adjusted EBITDA and Restaurant Operating Profit to evaluate the effectiveness of our business strategies. We caution investors that amounts presented in accordance with the above definitions of Adjusted EBITDA or Restaurant Operating Profit may not be comparable to similar measures disclosed by other companies, because not all companies calculate these non-GAAP financial measures in the same manner. Adjusted EBITDA and Restaurant Operating Profit should not be assessed in isolation from, or construed as a substitute for, net (loss) income, operating (loss) income or other measures presented in accordance with GAAP.

A reconciliation of these non-GAAP financial measures to the closest GAAP measure is set forth in the following tables:


	Quarter Ended
	March 29,			March 31,
	2020			2019
Net (loss) income	$	(17,644	)	$	3,848
Income tax (benefit) expense		(1,387	)		239
Interest expense		116			186
Depreciation and amortization		3,160			3,008

EBITDA		(15,755	)		7,281
Transaction expenses		689			—
Loss on disposal of fixed assets		46			23
Asset impairment charges and restaurant closing costs		16,426			—
Non-cash compensation		487			328
Loss from discontinued operations, net		52			59
Pre-opening expense		19			21

Adjusted EBITDA	$	1,964		$	7,712

J. Alexander’s Holdings, Inc. and Subsidiaries

Non-GAAP Financial Measures and Reconciliations

(Unaudited in thousands)


	Quarter Ended
	March 29, 2020						March 31, 2019
	Amount			Percent of Net Sales			Amount		Percent of Net Sales
Operating (loss) income	$	(18,855	)		(33.1	)%	$	4,266		6.6	%
General and administrative expenses		4,740			8.3	%		4,756		7.3	%
Transaction expenses		689			1.2	%		—		0.0	%
Goodwill impairment charge		15,737			27.6	%		—		0.0	%
Long-lived asset impairment charges and restaurant closing costs		689			1.2	%		—		0.0	%
Pre-opening expense		19			0.0	%		21		0.0	%

Restaurant Operating Profit	$	3,019			5.3	%	$	9,043		14.0	%

Note: Certain percentage totals do not sum due to rounding.