J. Alexander's Holdings, Inc. (Form: 10-Q, Received: 11/09/2015 18:34:33)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For quarterly period ended September 27, 2015

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________.

Commission file number: 1-37473

J. Alexander’s Holdings, Inc.

(Exact name of registrant as specified in its charter)

Tennessee		47-1608715
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

3401 West End Avenue, Suite 260
Nashville, Tennessee		37203
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (615) 269-1900

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes o No þ

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer”, “non-accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (check one):

Large accelerated filer	o		Accelerated filer	o

Non-accelerated filer	þ	(Do not check if a smaller reporting company)	Smaller reporting company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

As of November 9, 2015, 15,000,235 shares of the registrant’s Common Stock, $0.001 par value, were outstanding.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION		2

Item 1. Financial Statements of J. Alexander’s Holdings, LLC The financial statements of J. Alexander’s Holdings, Inc. have been omitted from this presentation because through September 27, 2015, the entity had not commenced operations, and had no activities except in connection with its formation. The issuer was incorporated in the State of Tennessee on August 15, 2014, for the initial purpose of engaging in an initial public offering, and has engaged only in activities in contemplation of such offering and the distribution transactions described in Note 9 – Subsequent Events to the Financial Statements of J. Alexander’s Holdings, LLC included herein. Upon its formation, 1,000 shares of common stock were issued to Fidelity National Financial Ventures, LLC in exchange for a nominal cash purchase price equal to the par value of such shares.		2

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		12

Item 3. Quantitative and Qualitative Disclosures About Market Risk		24

Item 4. Controls and Procedures		24

PART II. OTHER INFORMATION		25

Item 1. Legal Proceedings		25

Item 1A. Risk Factors		25

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		25

Item 3. Defaults Upon Senior Securities		25

Item 4. Mine Safety Disclosures		25

Item 5. Other Information		25

Item 6. Exhibits		25

Signatures		26

Index to Exhibits		27

PART I. FINANC IAL INFORMATION

Item 1. Financial Statements

J. Alexander’s Holdings, LLC

Condensed Consolidated Balance Sheets

(Unaudited in thousands)

	September 27		December 28
	2015		2014
Assets
Current assets:
Cash and cash equivalents	$	12,765	$	13,301
Accounts and notes receivable		244		250
Accounts receivable from related party		26		-
Inventories		2,100		2,306
Prepaid expenses and other current assets		2,553		3,003
Total current assets		17,688		18,860
Other assets		4,094		4,405
Property and equipment, at cost, less accumulated depreciation and amortization of $23,650 and $17,662 as of September 27, 2015 and December 28, 2014, respectively		86,815		86,263
Goodwill		15,737		15,737
Tradename and other indefinite-lived assets		25,155		25,155
Deferred charges, less accumulated amortization of $199 and $104 as of September 27, 2015 and December 28, 2014, respectively		581		488
Total assets	$	150,070	$	150,908


Liabilities and Membership Equity
Current liabilities:
Accounts payable	$	5,096	$	5,719
Accrued expenses and other current liabilities		10,766		12,014
Accrued expenses due to related party		-		92
Unearned revenue		2,191		3,466
Current portion of long-term debt and obligations under capital leases		1,667		1,671
Total current liabilities		19,720		22,962
Long-term debt and obligations under capital leases, net of portion classified as current		20,000		11,250
Long-term debt due to related party		-		10,000
Deferred compensation obligations		5,745		5,555
Other long-term liabilities		4,362		4,252
Total liabilities		49,827		54,019
Membership equity		100,243		96,889
Total liabilities and membership equity	$	150,070	$	150,908

See accompanying notes to condensed consolidated financial statements.

J. Alexander’s Holdings, LLC

Condensed Consolidated Statements of Operations

(Unaudited in thousands)

	Quarter Ended						Nine Months Ended
	September 27			September 28			September 27			September 28
	2015			2014			2015			2014
Net sales	$	49,335		$	46,725		$	158,610		$	148,921
Costs and expenses:
Cost of sales		15,581			15,101			50,177			47,440
Restaurant labor and related costs		15,819			15,032			48,455			45,743
Depreciation and amortization of restaurant property and equipment		2,088			1,926			6,128			5,703
Other operating expenses		10,516			9,839			32,066			30,330
Total restaurant operating expenses		44,004			41,898			136,826			129,216
Transaction and integration expenses		4,197			224			6,311			326
General and administrative expenses		3,377			3,734			11,240			10,271
Asset impairment charges and restaurant closing costs		1			-			2			4
Pre-opening expenses		21			141			23			162
Total operating expenses		51,600			45,997			154,402			139,979
Operating income (loss)		(2,265	)		728			4,208			8,942
Other income (expense):
Interest expense		(193	)		(732	)		(970	)		(2,223	)
Other, net		21			20			68			96
Total other income (expense)		(172	)		(712	)		(902	)		(2,127	)
Income (loss) from continuing operations before income taxes		(2,437	)		16			3,306			6,815
Income tax (expense) benefit		66			(124	)		45			(161	)
Loss from discontinued operations, net		(106	)		(107	)		(317	)		(331	)
Net income (loss)	$	(2,477	)	$	(215	)	$	3,034		$	6,323

See notes to condensed consolidated financial statements.

J. Alexander’s Holdings, LLC

Condensed Consolidated Statements of Cash Flows

(Unaudited in thousands)

	Nine-Month Period Ended
	September 27			September 28
	2015			2014
Cash flows from operating activities:
Net income	$	3,034		$	6,323
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and equipment		6,356			5,920
Equity-based compensation expense		388			-
Other, net		403			951
Changes in operating assets and liabilities:
Accounts and notes receivable		(20	)		282
Prepaid expenses and other current assets		450			(837	)
Accounts payable		(469	)		23
Accrued expenses and other current liabilities		(1,385	)		1,398
Other assets and liabilities, net		(506	)		(1,627	)
Net cash provided by operating activities		8,251			12,433

Cash flows from investing activities:
Purchase of property and equipment		(7,287	)		(6,062	)
Other investing activities		(58	)		(120	)
Net cash used in investing activities		(7,345	)		(6,182	)

Cash flows from financing activities:
Proceeds from borrowing under long-term debt agreement		10,000			-
Payments on long-term debt and obligations under capital leases		(11,255	)		(1,289	)
Other financing activities		(187	)		(67	)
Net cash used in financing activities		(1,442	)		(1,356	)
(Decrease) increase in cash and cash equivalents		(536	)		4,895
Cash and cash equivalents at beginning of period		13,301			18,069
Cash and cash equivalents at end of period	$	12,765		$	22,964

Supplemental disclosures:
Property and equipment obligations accrued at beginning of period	$	1,444		$	808
Property and equipment obligations accrued at end of period		1,290			2,213
Cash paid for interest		952			312
Cash paid for income taxes		343			84

See notes to condensed consolidated financial statements.

J. Alexander’s Holdings, LLC

Notes to Condensed Consolidated Financial Statements

(Unaudited, dollars in thousands)

Note 1 – Organization and Business

Acquisition and Ownership by FNF

On September 26, 2012 (the “J. Alexander’s Acquisition Date”), Fidelity National Financial, Inc. (“FNF”) acquired substantially all of the outstanding common stock of J. Alexander’s Corporation, a publicly traded company, in a tender offer, followed by a merger (the “J. Alexander’s Acquisition”), after which FNF owned all of the outstanding common stock of J. Alexander’s Corporation. The outstanding shares of common stock were delisted and deregistered from the NASDAQ Global Select Market, and J. Alexander’s Corporation was subsequently converted from a corporation to a limited liability company, J. Alexander’s, LLC (the “Operating Company”), on October 30, 2012. The J. Alexander’s Acquisition was treated as an acquisition for accounting purposes with FNF as the acquirer and J. Alexander’s Corporation as the acquiree, and resulted in FNF owning a 100% interest in the Operating Company. Purchase accounting was applied as of October 1, 2012, as the four days between the purchase transaction and the beginning of the fourth quarter were not considered significant. FNF thereafter contributed the ownership of the Operating Company to Fidelity National Special Opportunities, Inc. (“FNSO”), a wholly owned subsidiary of FNF, subsequent to the J. Alexander’s Acquisition. FNSO was subsequently converted to Fidelity National Financial Ventures, LLC (“FNFV”). For purposes of these Condensed Consolidated Financial Statements, FNSO, FNFV and FNF are collectively referred to as “FNF”.

On February 6, 2013, J. Alexander’s Holdings, LLC was formed as a Delaware limited liability company, and on February 25, 2013 (the “Contribution Date”), 100% of the membership interests of the Operating Company were contributed by FNF to J. Alexander’s Holdings, LLC in exchange for a 72.1% membership interest in J. Alexander’s Holdings, LLC. Additionally, on February 25, 2013, 100% of the membership interests of Stoney River Management Company, LLC and subsidiaries (“Stoney River”) were contributed by Fidelity Newport Holdings, LLC (“FNH”), a majority-owned subsidiary of FNF, to J. Alexander’s Holdings, LLC in exchange for a 27.9% membership interest in J. Alexander’s Holdings, LLC (the “Contribution”). J. Alexander’s Holdings, LLC then contributed Stoney River to the Operating Company. References herein to operations and assets of J. Alexander’s Holdings, LLC may also refer to its consolidated subsidiaries.

On May 6, 2014, FNF converted FNSO to FNFV. Other than certain tax consequences, this change in the organization of the entity holding a majority of the membership interests had no effect on the operations of J. Alexander’s Holdings, LLC. On August 18, 2014, FNH distributed its 27.9% membership interest in J. Alexander’s Holdings, LLC on a pro rata basis to the owners of the FNH membership interests. The distribution resulted in FNFV holding an 87.4% membership interest in J. Alexander’s Holdings, LLC. Also after the distribution, Newport Global Opportunities Fund AIV-A LP (“Newport”) held a 10.9% membership interest in J. Alexander’s Holdings, LLC, and the remaining 1.7% membership interests were held by other minority investors.

On January 1, 2015, J. Alexander’s Holdings, LLC adopted an Amended and Restated LLC Agreement (the “LLC Agreement”) and established a profits interest management incentive plan. The LLC Agreement established two classes of membership units, Class A Units and Class B Units. The existing membership interests held by FNFV, Newport, and other minority investors were converted to Class A Units on a pro rata basis on the effective date of the LLC Agreement, resulting in FNFV holding 13,929,987 Class A Units, Newport holding 1,728,899 Class A Units, and the remaining minority investors holding a total of 271,114 Class A Units. The total Class A Units outstanding at September 27, 2015 is 15,930,000.

Additionally, profits interest grant awards were issued to certain members of management pursuant to the incentive plan in the form of Class B Units on the effective date of the LLC Agreement. A total of 1,770,000 Class B Units were authorized under the profits interest plan and, as of September 27, 2015, a total of 885,000 Class B Units were issued and outstanding.

Separation from FNF

On August 15, 2014, J. Alexander’s Holdings, Inc., an affiliate of J. Alexander’s Holdings, LLC, was incorporated in the state of Tennessee. On October 28, 2014, J. Alexander’s Holdings, Inc. filed a registration statement on Form S-1 with the United States Securities and Exchange Commission relating to a proposed initial public offering of its common stock and a restructuring pursuant to which J. Alexander’s Holdings, Inc. would become the managing member of J. Alexander’s Holdings, LLC. On February 18, 2015, FNF announced its intentions to pursue a spin-off of J. Alexander’s Holdings, LLC to shareholders of FNFV as an alternative to the structure in the proposed initial public offering of the J. Alexander’s Holdings, Inc. common stock. On June 24, 2015, J. Alexander’s Holdings, Inc. filed a request for the withdrawal of the registration statement on Form S-1 and subsequently filed a registration statement on Form 10 on the same date in connection with the aforementioned spin-off.

On September 16, 2015, J. Alexander’s Holdings, Inc. entered into a separation and distribution agreement with FNF, pursuant to which FNF agreed to distribute one hundred percent of its shares of J. Alexander’s Holdings, Inc. common stock, par value $0.001, on a pro rata basis, to the holders of FNFV common stock, FNF’s tracking stock traded on The New York Stock Exchange (“The NYSE”). Holders of FNFV common stock received, as a distribution from FNF, approximately 0.1727 2 shares of J. Alexander’s Holdings, Inc. common stock for every one share of FNFV common stock held at the close of business on September 22, 2015, the record date for the distributio n (the “Distribution”). Concurrent with the Distribution, certain reorganization changes were made resulting in J. Alexander’s Holdings, Inc. becoming the sole managing member of J. Alexander’s Holdings, LLC. The Distribution was completed on September 28 , 2015. As a result of the Distribution, J. Alexander’s Holdings, Inc. is an independent public company and its common stock is listed under the symbol “JAX” on The NYSE, effective September 29, 2015.

Business of J. Alexander’s

From its inception, J. Alexander’s has gone to great lengths to avoid operating as, or being perceived as, a chain concept. The objective from the beginning has been to operate as a collection of restaurants dedicated to providing guests with the highest quality of food, levels of professional service and ambiance in each of the markets being served. In an effort to further this vision, and also to allow selected locations to expand feature menu offerings available to guests on a seasonal or rotational basis, a number of locations previously operated as J. Alexander’s restaurants are being converted to restaurants operating under the name Redlands Grill. During the first nine months of 2015, 12 locations formerly operated as J. Alexander’s restaurants began the transition to Redlands Grill locations. Management anticipates that use of the Redlands Grill name will also allow for expansion into certain markets which may currently have a J. Alexander’s and/or Stoney River Steakhouse and Grill restaurant that might not otherwise have been considered viable for expansion opportunities. Assuming the initial transitions are successfully completed, management anticipates a total of 12 to 15 Redlands Grill locations will be operational by the end of fiscal 2016.

J. Alexander’s Holdings, LLC, through the Operating Company and its subsidiaries, owns and operates full service, upscale restaurants under the J. Alexander’s, Redlands Grill and Stoney River Steakhouse and Grill concepts. At September 27, 2015 and December 28, 2014, restaurants operating within the J. Alexander’s concept consisted of 19 and 31 restaurants, in nine and 12 states, respectively, and restaurants operating within the Stoney River Steakhouse and Grill concept consisted of 10 locations within six states. As noted above, during the first nine months of fiscal 2015, 12 locations within eight states formerly operated as J. Alexander’s restaurants began the transition to Redlands Grill locations. Each concept’s restaurants are concentrated primarily in the East, Southeast, and Midwest regions of the United States. J. Alexander’s Holdings, LLC does not have any restaurants operating under franchise agreements.

Note 2 – Basis of Presentation

(a)

Interim Financial Statements

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and rules of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnote disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the quarter and nine-month period ended September 27, 2015, are not necessarily indicative of the results that may be expected for the fiscal year ending January 3, 2016. For further information, refer to the Consolidated Financial Statements and footnotes thereto for the fiscal year ended December 28, 2014 included in the Information Statement filed as an exhibit to Amendment No. 2 to Form 10 of J. Alexander’s Holdings, Inc. filed with the SEC on September 9, 2015.

Total comprehensive income or loss is comprised solely of net income or net loss for all periods presented.

(b)

Principles of Consolidation

The Condensed Consolidated Financial Statements include the accounts of J. Alexander’s Holdings, LLC as well as the accounts of its wholly-owned subsidiaries. All intercompany profits, transactions, and balances between J. Alexander’s Holdings, LLC and its subsidiaries have been eliminated.

(c)

Fiscal Year

The J. Alexander’s Holdings, LLC fiscal year ends on the Sunday closest to December 31, and each quarter typically consists of 13 weeks. The quarters and nine-month periods ended September 27, 2015 and September 28, 2014, respectively, each included 13 and 39 weeks of operations, respectively. Fiscal year 2015 will include 53 weeks of operations, and fiscal year 2014 included 52 weeks of operations.

(d)

Discontinued Operations

During the 2013 fiscal year, three underperforming J. Alexander’s restaurants were closed. The decision to close these restaurants was the result of an extensive review of the J. Alexander’s restaurant portfolio that examined each restaurant’s recent and historical financial and operating performance, its position in the marketplace, and other operating considerations. Two of these restaurants were considered to be discontinued operations. The $106 and $107 losses from discontinued operations for the quarters ended September 27, 2015 and September 28, 2014, respectively, and losses for the nine-month periods ended September 27, 2015 and September 28, 2014 of $317 and $331, respectively, consist solely of exit and disposal costs which are primarily related to continuing obligations under leases for closed locations. There were no related assets reclassified as held for sale related to these closures, as there were no significant remaining assets related to these locations subsequent to the asset impairment charges being recorded at the time of closure in fiscal 2013.

(e)

Use of Estimates

Management has made certain estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the periods presented to prepare these Condensed Consolidated Financial Statements in conformity with GAAP. Significant items subject to such estimates and assumptions include those related to the accounting for gift card breakage, estimates of useful lives of property and equipment and leasehold improvements, the carrying amount of intangible assets, fair market valuations, determination of lease terms, and accounting for impairment losses, contingencies, and litigation. Actual results could differ from these estimates.

(f)

Segment Reporting

J. Alexander’s Holdings, LLC owns and operates full-service, upscale restaurants under three concepts exclusively in the United States that have similar economic characteristics, products and services, class of customer and distribution methods. J. Alexander’s Holdings, LLC believes it meets the criteria for aggregating its operating segments into a single reportable segment.

Note 3 – Significant Transactions

(a)

Transaction and Integration Costs and Deferred Offering Costs

As discussed in the footnotes to the Consolidated Financial Statements for the year ending December 28, 2014, transaction and integration costs were incurred in fiscal 2014 as indirect costs related to the offering transaction discussed in Note 1 above. Additionally, deferred offering costs, which primarily consisted of direct, incremental legal and accounting fees relating to the pursuit of an initial public offering, were capitalized in 2014 within other current assets with the expectation that such costs would be offset against proceeds of the offering. However, as the offering was abandoned during the second quarter of 2015, the deferred offering costs were expensed as transaction costs in the second quarter. Additionally, during the third quarter and first nine months of fiscal 2015, transaction costs associated with the spin-off transaction were incurred. Such transaction costs, including the write-off of deferred offering costs, totaled $4,197 and $224 for the third quarter of 2015 and 2014, respectively, and $6,311 and $326 for the first nine months of 2015 and 2014, respectively. Transaction costs typically consist primarily of legal and consulting costs, accounting fees, and to a lesser extent other professional fees and miscellaneous costs. Integration costs typically consist primarily of consulting and legal costs.

(b)

Profits Interest Plan

As discussed in Note 1 above, on January 1, 2015, a profits interest management incentive plan was adopted, and grants related to 885,000 Class B Units were issued to certain members of management. The applicable hurdle rate for these Class B Units is $180,000, and the grants vest over a three-year period beginning on January 1, 2015, with 50% becoming vested after two years and the remaining 50% vesting at the end of the third year. As a result of the grants made on January 1, 2015, approximately $1,554 of noncash compensation expense will be recognized based on the awards’ estimated grant date fair value over the three year vesting period, with an offsetting credit to membership equity. During the third quarter and first nine months of 2015, the noncash compensation expense related to these grants totaled $129 and $388, respectively, and is included as a component of general and administrative expense on the Condensed Consolidated Statements of Operations.

(c)

Debt

On May 20, 2015, J. Alexander’s, LLC entered into a financing arrangement with the financial institution that is the lender on its existing term loan and lines of credit. Under the terms of the new credit facility, the existing Development Line of Credit was increased from $15,000 to $20,000, with no other significant changes in terms. Further, a new $10,000 term loan was put into place, which refinanced the remaining $10,000 principal balance of an existing promissory note payable to FNF which was scheduled to mature on January 31, 2016. The new $10,000 term loan bears interest at a rate of 30-day

LIBOR plus 220 basis points on a floating rate basis, and requires interest only payments for the first two years and then combined principal and interest payments beginning in month 25 with a final payment due on the 60-month maturity date. Additionally, three restaurant properties were added as collateral in this refinancing, bringing the to tal of the collateral package to the personal and real property of 12 locations for all of J. Alexander’s, LLC’s term loans and revolving lines of credit. Maturities of long-term debt for the next five fiscal years giving effect to this refinancing are as follows:

2015 *	$	417
2016	$	1,667
2017	$	3,889
2018	$	5,000
2019	$	5,000
Thereafter	$	5,694

*2015 maturities due in the remaining three months.

Note 4 – Income Taxes

J. Alexander’s Holdings, LLC is a limited liability company. For federal and most state and local taxing jurisdictions in which J. Alexander’s Holdings, LLC operates, the revenues, expenses, and credits of a limited liability company are allocated to its members, and therefore, no provision, assets or liabilities have been recorded in the accompanying Condensed Consolidated Financial Statements for these specific jurisdictions since the conversion of the Operating Company and subsidiaries to limited liability companies.

Although partnership returns for J. Alexander’s Holdings, LLC are filed in most jurisdictions, effectively passing the tax liability to the partners, there are a small number of jurisdictions, Tennessee being one of them, that do not recognize limited liability companies structured as partnerships as disregarded entities for state and local income tax purposes. In those jurisdictions, J. Alexander’s Holdings, LLC is liable for any applicable state or local income tax. J. Alexander’s Holdings, LLC is also liable for franchise taxes in the various jurisdictions in which it operates. A provision for the income tax liability related to these limited state and local jurisdictions has been provided for in the Condensed Consolidated Financial Statements for the quarters and nine-month periods ended September 27, 2015 and September 28, 2014.

The tax years 2010 to 2014 remain open to examination by various taxing jurisdictions.

The LLC Agreement adopted on January 1, 2015 established the requirement to make tax distributions to the members of J. Alexander’s Holdings, LLC beginning in fiscal 2015. Such distributions will have no impact on net income and are not expected to be a significant use of cash in fiscal 2015. As a result of the reorganization and distribution transactions that took place on September 28, 2015 as discussed in Note 9 below, J. Alexander’s Holdings, Inc. will be subject to applicable federal and certain state and local income taxes with respect to its share of allocable taxable income of J. Alexander’s Holdings, LLC.

Note 5 – Commitments and Contingencies

(a)

Contingent Leases

As a result of the disposition of J. Alexander’s Corporation’s Wendy’s operations in 1996, subsidiaries of J. Alexander’s, LLC may remain secondarily liable for certain real property leases with remaining terms of one to five years. The total estimated amount of lease payments remaining on these six leases at September 27, 2015 was approximately $1,400. In connection with the sale of J. Alexander’s Corporation’s Mrs. Winner’s Chicken & Biscuit restaurant operations in 1989 and certain previous dispositions, subsidiaries of J. Alexander’s, LLC also may remain secondarily liable for a certain real property lease. The total estimated amount of lease payments remaining on this one lease at September 27, 2015 was approximately $200. Additionally, in connection with the previous disposition of certain other Wendy’s restaurant operations, primarily the southern California restaurants in 1982, subsidiaries of J. Alexander’s, LLC may remain secondarily liable for certain real property leases with remaining terms of one to five years. The total estimated amount of lease payments remaining on these four leases as of September 27, 2015 was approximately $510. There have been no payments by subsidiaries of J. Alexander’s, LLC of such contingent liabilities in the history of J. Alexander’s, LLC. Management does not believe any significant loss is likely.

(b)

Tax Contingencies

J. Alexander’s Holdings, LLC is subject to real property, personal property, business, franchise and income, and sales and use taxes in various jurisdictions within the United States and is regularly under audit by tax authorities. This is believed to be common for the restaurant industry. Management believes the ultimate disposition of these matters will not have a material adverse effect on the consolidated financial position or results of operations for J. Alexander’s Holdings, LLC.

(c)

Litigation Contingencies

J. Alexander’s Holdings, LLC and its subsidiaries are defendants from time to time in various claims or legal proceedings arising in the ordinary course of business, including claims relating to workers’ compensation matters, labor-related claims, discrimination and similar matters, claims resulting from guest accidents while visiting a restaurant, claims relating to lease and contractual obligations, federal and state tax matters, and claims from guests or employees alleging illness, injury or other food quality, health or operational concerns, and injury or wrongful death under “dram shop” laws that allow a person to sue J. Alexander’s Holdings, LLC based on any injury caused by an intoxicated person who was wrongfully served alcoholic beverages at one of its restaurants.

Management does not believe that any of the legal proceedings pending against it as of the date of this report will have a material adverse effect on its liquidity or financial condition. J. Alexander’s Holdings, LLC may incur liabilities, receive benefits, settle disputes, sustain judgments, or accrue expenses relating to legal proceedings in a particular fiscal year, which may adversely affect its results of operations, or on occasion, receive settlements that favorably affect its results of operations.

Note 6 – Fair Value Measurements

As of September 27, 2015 and December 28, 2014, the fair value of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other current liabilities approximated their carrying value due to their short-term nature. The carrying amounts of the long-term debt approximate fair value as interest rates and negotiated terms and conditions are consistent with current market rates, because of the close proximity of recent refinancing transactions to the dates of these Condensed Consolidated Financial Statements.

There were no assets and liabilities measured at fair value on a nonrecurring basis during the nine-month periods ended September 27, 2015 and September 28, 2014.

Note 7 – Recent Accounting Pronouncements

In April 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity . ASU No. 2014-08 changes the definition of discontinued operations by limiting discontinued operations reporting to disposals of components of an entity that represent strategic shifts that have (or will have) a major effect on an entity’s operations and financial results. Under current GAAP, many disposals, some of which may be routine in nature and not a change in an entity’s strategy, are reported in discontinued operations. Additionally, the amendments in this ASU require expanded disclosures for discontinued operations. The amendments in this ASU also require an entity to disclose the pretax profit or loss of an individually significant component of an entity that does not qualify for discontinued operations reporting. The ASU is effective for annual financial statements with years that begin on or after December 15, 2014. J. Alexander’s Holdings, Inc. will adopt this guidance in fiscal year 2015 and does not expect a significant impact on its Condensed Consolidated Financial Statements and related disclosures.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers . The core principle of the standard is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU will replace most existing revenue recognition guidance in GAAP. New qualitative and quantitative disclosure requirements aim to enable financial statement users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The effective dates for ASU 2014-09 have been updated by ASU-2015-14, Deferral of the Effective Date . The requirements are effective for annual and interim periods in fiscal years beginning after December 15, 2017 for public business entities. Earlier application is permitted for annual and interim reporting periods in fiscal years beginning after December 15, 2016. The ASU permits the use of either the retrospective or cumulative effect transition method. J. Alexander’s Holdings, Inc. has not yet selected a transition method or determined the effect, if any, that this ASU will have on its Condensed Consolidated Financial Statements and related disclosures.

In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs . ASU 2015-03 requires that debt issuance costs related to a recognized liability be presented on the balance sheet as a direct reduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected. ASU 2015-03 is effective for reporting periods beginning after December 15, 2015. J. Alexander’s Holdings, Inc. will adopt this guidance in fiscal year 2016 and does not expect a significant impact on its Condensed Consolidated Financial Statements and related disclosures.

In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory . ASU 2015-11 states that entities should measure inventory that is not measured using last-in, first-out (LIFO) or the retail inventory method, including inventory

that is measured using first-in, first-out (FIFO) or average cost, at the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable c osts of completion, disposal and transportation. ASU 2015-11 is effective for reporting periods beginning after December 15, 2016 and is to be applied prospectively. J. Alexander’s Holdings, Inc. will adopt this guidance in fiscal year 201 7 and does not ex pect a significant impact on its Condensed Consolidated Financial Statements and related disclosures .

Note 8 – Related Party Transactions

In connection with the Contribution discussed in Note 1 above, J. Alexander’s Holdings, LLC assumed from FNFV a promissory note payable to FNF in the principal amount of $20,000 (the “FNF Note”), which was accounted for as a distribution of capital. The $20,000 FNF Note accrued interest at 12.5% annually, and the interest and principal were payable in full on January 31, 2016. Under the terms of J. Alexander’s, LLC’s term loan dated September 3, 2013, the FNF Note was subordinated to the term debt. The Amended and Restated Loan Agreement dated December 9, 2014, included a provision whereby, as long as there were no outstanding events of default, the entire FNF Note could be repaid with proceeds from the ongoing offering transaction and up to $10,000 of the debt associated with the FNF Note could be repaid regardless of whether the offering transaction were to occur. On December 15, 2014, a payment of $14,569, representing $10,000 of principal on the FNF Note and $4,569 of accrued interest, was made to FNF. Further, as discussed in Note 3(c), on May 20, 2015, J. Alexander’s, LLC entered into a financing arrangement with the financial institution that is the lender on its existing term loan and lines of credit. Under the terms of the new credit facility, a new $10,000 term loan was put into place, the purpose of which was to refinance the remaining $10,000 principal balance of the existing FNF Note. On May 20, 2015, J. Alexander’s Holdings, LLC paid the remaining principal balance of $10,000 as well as accrued interest of $542 to FNF which resulted in the FNF Note being paid in full.

During the quarter and nine-month period ended September 27, 2015, interest expense of $0 and $493, respectively, was recorded relative to the FNF Note. During the quarter and nine-month period ended September 28, 2014, interest expense of $632 and $1,896, respectively, was recorded relative to the FNF Note. At September 27, 2015 and December 28, 2014, a liability of $0 and $48, respectively, associated with such interest has been reported in the “Accrued expenses due to related party” line item on the Condensed Consolidated Balance Sheet.

FNF also billed J. Alexander’s Holdings, LLC for expenses incurred or payments made on its behalf by FNF, primarily related to third party consulting fees, travel expenses for employees and the board of managers, and franchise tax payments. These expenses totaled $0 and $3 for the quarter and nine-month period ended September 27, 2015, respectively, and $6 and $14 for the quarter and nine-month period ended September 28, 2014, respectively. An accrual of $0 and $42 was needed for such costs at September 27, 2015 and December 28, 2014, respectively.

Note 9 – Subsequent Events

On September 28, 2015, the reorganization and distribution transactions contemplated in the Information Statement filed as an exhibit to Amendment No. 2 to Form 10 for J. Alexander’s Holdings, Inc. on September 9, 2015 were completed. As a result of the Distribution, J. Alexander’s Holdings, Inc. became an independent public company, and its common stock is now listed under the symbol “JAX” on The NYSE. As of September 28, 2015, a total of 15,000,235 shares of J. Alexander’s Holdings, Inc. common stock, par value $0.001, are outstanding.

As a result of the reorganization transactions on September 28, 2015, J. Alexander’s Holdings, Inc. now owns all of the outstanding Class A Units and became the sole managing member of J. Alexander’s Holdings, LLC. Further, as evidenced in the executed Second Amended and Restated LLC Agreement of J. Alexander’s Holdings, LLC, entered into in connection with the reorganization transactions, the membership equity of J. Alexander’s Holdings, LLC was recapitalized such that the total outstanding Class A Units decreased on September 28, 2015 from 15,930,000 to 15,000,235, in order to mirror the number of outstanding shares of common stock of J. Alexander’s Holdings, Inc. Additionally, the total Class B Units granted to certain members of management as discussed in Note 3(b) above was reduced from 885,000 to 833,346.

On September 28, 2015, immediately prior to the Distribution, J. Alexander’s Holdings, LLC entered into a Management Consulting Agreement with Black Knight Advisory Services, LLC (“Black Knight”), pursuant to which Black Knight will provide corporate and strategic advisory services to J. Alexander’s Holdings, LLC. The principal member of Black Knight is William P. Foley, II, Senior Managing Director of FNFV and Executive Chairman of the Board of FNF. The other members of Black Knight consist of Lonnie J. Stout II, our President, Chief Executive Officer and one of our directors, and other officers of FNFV and FNF.

Knight for its direct out-of-pocket costs incurred for management services provided to J. Alexander’s Holdings, LLC. Under the Ma nagement Consulting Agreement, “Adjusted EBITDA” means J. Alexander’s Holdings, Inc.’s net income (loss) 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 and integration costs, non-cash compensation, loss from discontinued operations, gain on debt extinguishment, pre-opening costs and certain unusual items.

The Management Consulting Agreement will continue in effect for an initial term of seven years and be renewed for successive one-year periods thereafter unless earlier terminated (i) by J. Alexander’s Holdings, LLC upon at least six months’ prior notice to Black Knight or (ii) by Black Knight upon 30 days’ prior notice to us. In the event that the Management Consulting Agreement is terminated by J. Alexander’s Holdings, LLC prior to the tenth anniversary thereof, or Black Knight terminates the Management Consulting Agreement within 180 days after a change of control, J. Alexander’s Holdings, LLC will be obligated to pay to Black Knight an early termination payment equal to the product of (i) the annual base fee for the most recent fiscal year and (ii) the difference between ten and the number of years that have elapsed under the Management Consulting Agreement, provided that in the event of such a termination following a change of control event, the multiple of the annual base fee to be paid shall not exceed three.

A grant of an additional 1,500,024 Class B Units in J. Alexander’s Holdings, LLC was made to Black Knight on October 6, 2015 in accordance with the terms of the Management Consulting Agreement (the “Black Knight Grant”). The Black Knight Grant has a hurdle rate of approximately $151,052, which was calculated as the product of the number of shares of J. Alexander’s Holdings, Inc. common stock issued and outstanding and $10.07, which represents the volume weighted average of the closing price of J. Alexander’s Holdings, Inc. common stock over the five (5) trading days following the distribution date of September 28, 2015. The Class B Units granted to Black Knight will vest in equal installments on the first, second, and third anniversaries of the grant date, and will be subject to acceleration upon a change in control of J. Alexander’s Holdings, Inc. or J. Alexander’s Holdings, LLC, the termination of the Management Consulting Agreement by J. Alexander’s Holdings, LLC without cause or the termination of the Management Consulting Agreement by Black Knight as a result of J. Alexander’s Holdings, LLC’s breach of the Management Consulting Agreement. The Black Knight Grant will be measured at fair value at each reporting date through the date of vesting, and will be recognized as a component of continuing income in future financial statements of J. Alexander’s Holdings, Inc. Management currently estimates the initial valuation of the Black Knight Grant will be approximately $7,000, and this fair value will be reevaluated at the end of fiscal 2015. Vested Class B Units held by Black Knight may be exchanged for shares of common stock of J. Alexander’s Holdings, Inc. However, upon termination of the Management Consulting Agreement for any reason, Black Knight must exchange its Class B Units within 90 days or such units will be forfeited for no consideration.

Pursuant to the J. Alexander’s Holdings, Inc. 2015 Equity Incentive Plan adopted on September 14, 2015 (the “Equity Incentive Plan”), on October 13, 2015, J. Alexander’s Holdings, Inc. issued 467,000 stock options to purchase its common stock to certain members of management, the Board of Directors, and an outside consultant. The stock options have a term of seven years, and vest in equal installments on the first, second, third, and fourth anniversaries of the grant date, and will be subject to acceleration upon a change in control as defined under the Equity Incentive Plan. The strike price of the stock options is $10.39, which was the closing price of J. Alexander’s Holdings, Inc. common stock on the grant date. Management currently estimates that the grant date valuation of these stock options will be approximately $1,300.

Due to the Distribution, FNF no longer retains a beneficial ownership of at least 40% of J. Alexander’s Holdings, LLC, and as such, the Distribution triggered the obligation of J. Alexander’s, LLC, the operating subsidiary of J. Alexander’s Holdings, LLC, to establish and fund a “rabbi trust” (the “Trust”) under the Amended and Restated Salary Continuation Agreements with each of the named executive officers and one former executive officer. On October 19, 2015 the Trust was funded with a total of $4,304, which was comprised of $2,415 in cash and $1,889 in cash surrender values of whole life insurance policies. These assets will be classified as noncurrent within the Company’s financial statements. The Company may be required in the future to make additional contributions to the Trust in order to maintain the required level of funding called for by the agreements.

On October 29, 2015, the J. Alexander’s Holdings, Inc. Board of Directors authorized a share repurchase program for up to 1,500,000 shares of the Company’s outstanding common stock over the next three years. Repurchases will be made in accordance with applicable securities laws and may be made from time to time in the open market. The timing, prices, and sizes of repurchases will depend upon prevailing market prices, general economic and market conditions and other considerations. The repurchase program does not obligate the Company to acquire any particular amount of stock.

Item 2. Management's Discussion and Analysis o f Financial Condition and Results of Operations

Cautionary Statement

We caution that certain information contained or incorporated by reference in this report and our other filings with the Securities and Exchange Commission, in our press releases and in statements made by or with the approval of authorized personnel is forward-looking information that involves risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements contained herein. Forward-looking statements discuss our current expectations and projections relating to our financial conditions, results of operations, plans, objectives, future performance and business. Forward-looking statements are typically identified by words or phrases such as “may,” “will,” “would,” “can,” “should,” “likely,” “anticipate,” “potential,” “estimate,” “pro forma,” “continue,” “expect,” “project,” “intend,” “seek,” “plan,” “believe,” “target,” “outlook,” “forecast,” the negatives thereof and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. Forward-looking statements include statements regarding our intentions, beliefs, or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate. We disclaim any intent or obligation to update these forward-looking statements. Other risks, uncertainties and factors which could affect actual results include, but are not limited to:

the impact of, and our ability to adjust to, general economic conditions and changes in consumer preferences;

our ability to open new restaurants and operate them profitably, including our ability to locate and secure appropriate sites for restaurant locations, obtain favorable lease terms, attract customers to our restaurants or hire and retain personnel;

our ability to successfully develop and improve our Stoney River concept;

our ability to successfully transition certain of our existing J. Alexander’s locations to Redlands Grill locations;

our ability to obtain financing on favorable terms, or at all;

the strain on our infrastructure caused by the implementation of our growth strategy;

the significant competition we face for customers, real estate and employees;

the impact of economic downturns or other disruptions in markets in which we have revenue or geographic concentrations within our restaurant base;

our ability to increase sales at existing J. Alexander’s, Redlands Grill and Stoney River restaurants and improve our margins at existing Stoney River restaurants;

the impact of increases in the price of, and/or reductions in the availability of, commodities, particularly beef;

the impact of negative publicity or damage to our reputation, which could arise from concerns regarding food safety and foodborne illnesses or other matters;

the impact of proposed and future government regulation and changes in healthcare, labor and other laws;

our expectations regarding litigation or other legal proceedings;

our inability to cancel and/or renew leases and the availability of credit to our landlords and other retail center tenants;

operating and financial restrictions imposed by our credit facility, our level of indebtedness and any future indebtedness;

the impact of the loss of key executives and management-level employees;

our ability to enforce our intellectual property rights;

the impact of information technology system failures or breaches of our network security;

the impact of any future impairment of our long-lived assets, including goodwill;

the impact of any future acquisitions, joint ventures or other initiatives;

the impact of shortages, interruptions and price fluctuations on our ability to obtain ingredients from our limited number of suppliers;

our expectations regarding the seasonality of our business;

the impact of hurricanes and other weather-related disturbances;

the other matters found under “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business” discussed in the Information Statement included as an exhibit to Amendment No. 2 to Form 10 filed with the SEC on September 9, 2015.

These factors should not be construed as exhaustive and should be read with the other cautionary statements in the aforementioned Information Statement. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations, or cautionary statements, are disclosed under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and elsewhere in the aforementioned Information Statement. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. You should evaluate all forward-looking statements made in this Form 10-Q in the context of these risks and uncertainties.

Overview

J. Alexander's Holdings, LLC (the “Company”) owns and operates three complementary upscale dining restaurant concepts: J. Alexander’s, Redlands Grill and Stoney River Steakhouse and Grill (“Stoney River”). For more than 20 years, J. Alexander’s guests have enjoyed a contemporary American menu, polished service and an attractive ambiance. In February 2013, our team brought our quality and professionalism to the steakhouse category with the addition of the Stoney River concept. Stoney River provides “white tablecloth” service and food quality in a casual atmosphere at a competitive price point. Our newest concept, Redlands Grill, offers customers a different version of our contemporary American menu and a distinct architectural design and feel.

Our business plan has evolved over time to include a collection of restaurant concepts dedicated to providing guests with what we believe to be the highest quality food, high levels of professional service and a comfortable ambiance. By offering multiple restaurant concepts and utilizing unique non-standardized architecture and specialized menus, we believe we are positioned to continue to scale and grow our overall restaurant business in an efficient manner in urban and affluent suburban areas. We want each of our restaurants to be perceived by our guests as a locally managed, stand-alone dining experience. This differentiation permits us to successfully operate each of our concepts in the same geographic market. If this strategy continues to prove successful, we may expand beyond our current three concept model in the future.

While each concept operates under a unique trade name, each of our restaurants is identified as a “J. Alexander’s Holdings” restaurant. As of September 27, 2015, we operated a total of 41 locations across 14 states. During 2015, we began a plan of transitioning a total of between 12 and 15 of our J. Alexander’s restaurants to Redlands Grill restaurants. Other restaurant locations may be added or converted in the future as we determine how best to position our multiple concepts in a given geographic market.

We believe our concepts deliver on our guests’ desire for freshly-prepared, high quality food and high quality service in a restaurant that feels “unchained” with architecture and design that varies from location to location. As a result, we have delivered strong growth in same store sales, average weekly sales, net sales and Adjusted EBITDA. Through our combination with Stoney River, we have grown from 33 restaurants across 13 states in 2008 to 41 restaurants across 14 states as of September 27, 2015. Our growth in same store sales since 2008 has allowed us to invest significant amounts of capital to drive growth through the continuous improvement of existing locations, the development of plans to open new restaurants, and the hiring of personnel to support our growth plans.

We plan to execute the following strategies to continue to enhance the awareness of our concepts, grow our revenue and improve our profitability by:

Pursuing new restaurant development;

Expanding beyond our current three restaurant concepts;

Increasing our same store sales through providing high quality food and service; and

Improving our margins and leverage infrastructure.

We believe there are opportunities to open four to five new restaurants annually starting in 2016. We are actively pursuing development opportunities within all of our concepts and we are currently evaluating approximately 30 locations in approximately 20 separate markets in order to meet our stated growth objectives. The next new restaurant opening will be a Stoney River restaurant, which is scheduled to open during the first quarter of 2016.

In addition, the Company has executed leases for development of new J. Alexander’s restaurants in Raleigh, North Carolina and Lexington, Kentucky, with anticipated opening dates during the second and fourth quarters of 2016, respectively.

Recent Transactions and Basis of Presentation

The historical results of operations discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are those of J. Alexander’s Holdings, LLC and its consolidated subsidiaries. Through a series of reorganization transactions, on September 28, 2015, J. Alexander’s Holdings, Inc. became the sole managing member of J. Alexander’s Holdings, LLC, and now controls its business and affairs. Therefore, J. Alexander’s Holdings, Inc. will consolidate the financial results of J. Alexander’s Holdings, LLC beginning on September 28, 2015, which corresponds to the first day of the fourth quarter of fiscal 2015. It should also be noted that on September 28, 2015, J. Alexander’s Holdings, Inc. became an independent, publicly-held company through a distribution transaction whereby FNF distributed to holders of its FNFV Group common stock one hundred percent of its shares of J. Alexander’s Holdings, Inc. common stock.

The locations that began the transition from a J. Alexander’s restaurant to a Redlands Grill restaurant during 2015 have been included in the J. Alexander’s results of operations, average weekly same store sales calculations and all other applicable disclosures.

The following events had an impact on the presentation of our historical results of operations over the past three years:

In September 2012, FNF acquired J. Alexander’s Corporation (“JAC”). JAC was subsequently converted from a corporation to a limited liability company, J. Alexander’s, LLC, on October 30, 2012. The acquisition was treated as an acquisition for accounting purposes with FNF as the acquirer and JAC as the acquiree. In February 2013, the operations of Stoney River were contributed to J. Alexander’s by FNH. Additionally, in February 2013, J. Alexander’s Holdings, LLC assumed the $20,000,000 FNF Note, which was accounted for as a distribution of capital. The note accrued interest at 12.5%, and the interest and principal were payable in full on January 31, 2016. During the nine-month periods ended September 27, 2015 and September 28, 2014, $493,000 and $1,896,000 of interest expense payable to FNF was recorded related to this note. In May 2015, this note was repaid in full.

During 2013, we closed three underperforming J. Alexander’s restaurants:

Chicago, Illinois – closed February 2013

Orlando, Florida – closed April 2013

Scottsdale, Arizona – closed April 2013

For financial reporting purposes, the Orlando and Scottsdale locations were deemed to represent discontinued operations while results related to the Chicago location are reflected as a component of continuing operations.

Performance Indicators

We use the following key metrics in evaluating our performance:

Same Store Sales . We include a restaurant in the same store restaurant group starting in the first full accounting period following the eighteenth month of operations. Our same store restaurant base consisted of 40 restaurants at each of September 27, 2015 and September 28, 2014. Changes in same store restaurant sales reflect changes in sales for the same store group of restaurants over a specified period of time. This measure highlights the performance of existing restaurants, as the impact of new restaurant openings is excluded.

Measuring our same store restaurant sales allows us to evaluate the performance of our existing restaurant base. Various factors impact same store sales including:

•

consumer recognition of our concepts and our ability to respond to changing consumer preferences;

•

overall economic trends, particularly those related to consumer spending;

•

our ability to operate restaurants effectively and efficiently meet guest expectations;

•

pricing;

•

guest customer traffic;

•

spending per guest and average check amounts;

•

local competition;

•

trade area dynamics; and

•

introduction of new menu items.

Average Weekly Sales . Average weekly sales per restaurant is computed by dividing total restaurant sales for the period by the total number of days all restaurants were open for the period to obtain a daily sales average. The daily sales average is then multiplied by seven to arrive at average weekly 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. Revenue associated with reduction in liabilities for gift cards which are considered to be only remotely likely to be redeemed (based on historical redemption rates) is not included in the calculation of average weekly sales per restaurant.

Average Weekly Same Store Sales . 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 include only those for restaurants in operation at the end of the period which have been open for more than eighteen months. Revenue associated with reduction in liabilities for gift cards which are considered to be only remot ely likely to be redeemed (based on historical redemption rates) is not included in the calculation of average weekly same store sales per restaurant.

Average Check . Average check is calculated by dividing total restaurant sales by guest counts for a given time period. Total restaurant sales includes food, alcohol and beverage sales. Average check is influenced by menu prices and menu mix. Management uses this indicator to analyze trends in customers’ preferences, the effectiveness of menu changes and price increases and per guest expenditures.

Average Unit Volume . Average unit volume consists of the average sales of our restaurants over a certain period of time. This measure is calculated by multiplying Average Weekly Sales by the relevant number of weeks for the period presented. This indicator assists management in measuring changes in customer traffic, pricing and development of our concepts.

Cost of Sales . Cost of sales is an important metric to management because it is the only truly variable component of cost relative to the sales volume while other components of cost can vary significantly due to the ability to leverage fixed costs at higher sales volumes.

Guest Counts . Guest counts are measured by the number of entrees ordered at our restaurants over a given time period.

Our business is subject to seasonal fluctuations. Historically, the percentage of our annual revenues earned during the first and fourth quarters has been higher due, in part, to increased gift card redemptions and increased private dining during the year-end holiday season. In addition, we operate on a 52- or 53-week fiscal year that ends on the Sunday closest to December 31. Each quarterly period has 13 weeks, except for a 53-week year when the fourth quarter has 14 weeks. As many of our operating expenses have a fixed component, our operating income and operating income margins have historically varied from quarter to quarter. Accordingly, results for any one quarter are not necessarily indicative of results to be expected for any other quarter, or for the full fiscal year.

Results of Operations

The following tables set forth, for the periods indicated, (i) the items in the Company’s Condensed Consolidated Statements of Operations, including our results expressed as a percentage of net sales, and (ii) other selected operating data:

	Quarter Ended									Nine Months Ended
	September 27			September 28			Percent Change			September 27			September 28			Percent Change
(Dollars in thousands)	2015			2014			2015 vs. 2014			2015			2014			2015 vs. 2014
	(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)
Net sales	$	49,335		$	46,725			5.6	%	$	158,610		$	148,921			6.5	%
Costs and Expenses:
Cost of sales		15,581			15,101			3.2			50,177			47,440			5.8
Restaurant labor and related costs		15,819			15,032			5.2			48,455			45,743			5.9
Depreciation and amortization of restaurant property and equipment		2,088			1,926			8.4			6,128			5,703			7.5
Other operating expenses		10,516			9,839			6.9			32,066			30,330			5.7
Total restaurant operating expenses		44,004			41,898			5.0			136,826			129,216			5.9
Transaction and integration expenses		4,197			224		NCM				6,311			326		NCM
General and administrative expenses		3,377			3,734			(9.6	)		11,240			10,271			9.4
Asset impairment charges and restaurant closing costs		1			-		NA				2			4			(50.0	)
Pre-opening expenses		21			141			(85.1	)		23			162			(85.8	)
Total operating expenses		51,600			45,997			12.2			154,402			139,979			10.3
Operating income		(2,265	)		728			(411.1	)		4,208			8,942			(52.9	)
Other income (expense):
Interest expense		(193	)		(732	)		(73.6	)		(970	)		(2,223	)		(56.4	)
Other, net		21			20			5.0			68			96			(29.2	)
Total other expense		(172	)		(712	)		(75.8	)		(902	)		(2,127	)		(57.6	)
Income from continuing operations before income taxes		(2,437	)		16		NCM				3,306			6,815			(51.5	)
Income tax (expense) benefit		66			(124	)		(153.2	)		45			(161	)		(128.0	)
Loss from discontinued operations, net		(106	)		(107	)		(0.9	)		(317	)		(331	)		(4.2	)
Net income (loss)	$	(2,477	)	$	(215	)	NCM			$	3,034		$	6,323			-52.0	%

Note: NA means not applicable. NCM means not considered meaningful.

As a Percentage of Net Sales	Quarter Ended						Nine Months Ended
	September 27			September 28			September 27			September 28
	2015			2014			2015			2014
Net sales		100.0	%		100.0	%		100.0	%		100.0	%
Costs and Expenses:
Cost of sales		31.6			32.3			31.6			31.9
Restaurant labor and related costs		32.1			32.2			30.5			30.7
Depreciation and amortization of restaurant property and equipment		4.2			4.1			3.9			3.8
Other operating expenses		21.3			21.1			20.2			20.4
Total restaurant operating expenses		89.2			89.7			86.3			86.8
Transaction and integration expenses		8.5			0.5			4.0			0.2
General and administrative expenses		6.8			8.0			7.1			6.9
Asset impairment charges and restaurant closing costs		0.0			-			0.0			0.0
Pre-opening expenses		0.0			0.3			0.0			0.1
Total operating expenses		104.6			98.4			97.3			94.0
Operating income		(4.6	)		1.6			2.7			6.0
Other income (expense):
Interest expense		(0.4	)		(1.6	)		(0.6	)		(1.5	)
Other, net		0.0			0.0			0.0			0.1
Total other expense		(0.3	)		(1.5	)		(0.6	)		(1.4	)
Income from continuing operations before income taxes		(4.9	)		0.0			2.1			4.6
Income tax (expense) benefit		0.1			(0.3	)		0.0			(0.1	)
Loss from discontinued operations, net		(0.2	)		(0.2	)		(0.2	)		(0.2	)
Net income (loss)		-5.0	%		-0.5	%		1.9	%		4.2	%

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

Restaurants open at end of period:
J. Alexander's Restaurant / Redlands Grill		31			30
Stoney River Steakhouse and Grill		10			10

Average weekly sales per restaurant:
J. Alexander's Restaurant / Redlands Grill	$	102,800		$	100,500		$	110,200		$	106,000
Percent increase		2.3	%					4.0	%

Average weekly same store sales per restaurant:
J. Alexander's Restaurant / Redlands Grill	$	103,500		$	100,500		$	110,800		$	106,000
Percent increase		3.0	%					4.5	%
Stoney River Steakhouse and Grill ⁽¹⁾	$	60,800		$	57,900		$	67,600		$	64,000
Percent increase		5.0	%					5.6	%

(1) The Company includes restaurants in the same store sales base after they have been in operation for more than 18 months. Because no new restaurants have been opened during the 18 months preceding the comparable periods, average weekly same store sales per restaurant are the same as average weekly sales per restaurant for the periods presented.

Net Sales

Net sales increased by $2,610,000, or 5.6%, in the third quarter of 2015 compared to the third quarter of 2014 due to an increase in same store sales at Stoney River of $369,000, an increase in same store sales at J. Alexander’s and Redlands Grill restaurants of $1,175,000, and the impact of a new J. Alexander’s restaurant which opened in Columbus, Ohio during November 2014. Net sales increased by $9,689,000, or 6.5%, in the first nine months of 2015 compared to the first nine months of 2014 due to an increase in same store sales at Stoney River of $1,398,000, an increase in same store sales at J. Alexander’s and Redlands Grill restaurants of $5,190,000, and the impact of the new J. Alexander’s restaurant. Due to atypically severe winter weather conditions during the first quarter of both periods, our concepts lost 32 days of revenue due to weather-related restaurant closures during the first quarter of 2015, compared to 36 revenue days during the first quarter of 2014. In addition, one of the J. Alexander’s restaurants was closed for 35 days during the first quarter of 2015 while undergoing a major remodel. Further, during the second quarter of 2014, the Company recorded a change in estimate related to the Stoney River gift card program which resulted in additional breakage of $373,000 being recognized in revenue. No similar adjustments were recorded during 2015.

Average weekly same store sales at J. Alexander’s and Redlands Grill restaurants for the third quarter of 2015 increased by 3.0% to $103,500, compared to $100,500 in the third quarter of 2014. For the first nine months of 2015, J. Alexander’s and Redlands Grill restaurants average weekly same store sales totaled $110,800, a 4.5% increase from $106,000 in the first nine months of 2014. Average weekly same store sales at Stoney River restaurants for the third quarter of 2015 increased by 5.0% to $60,800, compared to $57,900 in the third quarter of 2014. For the first nine months of 2015, Stoney River restaurants average weekly same store sales totaled $67,600, a 5.6% increase from $64,000 in the first nine months of 2014.

At J. Alexander’s / Redlands Grill, the average check per guest, including alcoholic beverage sales, increased by 4.1% to $30.63 in the third quarter of 2015 from $29.42 in the third quarter of 2014 and by 4.1% to $30.67 for the first nine months of 2015 from $29.45 for the first nine months of 2014. Management estimates that the effect of menu price increases was approximately 2.8% and 3.3% in the third quarter and first nine months of 2015, respectively, compared to the corresponding periods of 2014. Management estimates that weekly average guest counts decreased by approximately 1.2% in the third quarter of 2015 and increased by 0.4% in the first nine months of 2015, respectively, compared to the same periods of 2014.

At Stoney River, the average check per guest, including alcoholic beverage sales, increased by 0.7% to $45.89 in the third quarter of 2015 from $45.55 in the third quarter of 2014 and by 1.9% to $45.54 for the first nine months of 2015 from $44.71 for the first nine months of 2014. Management estimates that the effect of menu price increases was approximately 1.9% and 3.1% in the third quarter and first nine months of 2015, respectively, compared to the corresponding periods of 2014. Management estimates that weekly average guest counts increased by approximately 4.3% in the third quarter of 2015 and by 3.7% in the first nine months of 2015 compared to the same periods of 2014.

Restaurant Costs and Expenses

Total restaurant operating expenses decreased to 89.2% of net sales in the third quarter of 2015 from 89.7% in the third quarter of 2014 and to 86.3% of net sales in the first nine months of 2015 from 86.8% of net sales in the first nine months of 2014. The decreases in the 2015 periods were due primarily to the effect of higher sales in the same store base of restaurants combined with favorable trends in cost of sales and certain other operating expenses such as utilities.

Cost of sales, which includes the cost of food and beverages, decreased to 31.6% of net sales in the third quarter of 2015 from 32.3% of net sales in the corresponding period of 2014 and decreased to 31.6% of net sales for the first nine months of 2015 from 31.9% of net sales in the first nine months of 2014. These decreases are due primarily to the effect of higher menu prices and decreases in costs for pork, poultry and seafood which more than offset the increases in prices paid for beef. Management estimates that inflation for the third quarter for Stoney River was approximately 4.5%, but that the J. Alexander’s / Redlands Grill concepts experienced slight deflation of approximately 0.5% during the third quarter of 2015. Management estimates that inflation totaled 2.9% within the J. Alexander’s / Redlands Grill concepts and 5.6% at the Stoney River concept for the first nine months of 2015.

Beef purchases represent the largest component of consolidated cost of sales and comprise approximately 32.4% of this expense category. We purchase beef at weekly market prices. Prices paid for beef within the J. Alexander’s / Redlands Grill restaurants were higher in the first nine months of 2015 than in the corresponding period of 2014 by approximately 9.1%, and at Stoney River, prices paid for beef were up 8.2% in the first nine months of 2015 compared to the same period of 2014. Our beef purchases currently remain subject to variable market conditions and we anticipate that prices for beef over the remainder of 2015 will exceed those paid in previous comparable periods, perhaps substantially. We continually monitor the beef market and if there are significant changes in market conditions or attractive opportunities to contract at fixed prices arise, we will consider entering into a fixed price purchasing agreement.

Restaurant labor and related costs totaled 32.1% and 32.2% of net sales in the third quarter of 2015 and 2014, respectively, and decreased slightly to 30.5% of net sales for the first nine months of 2015 compared to 30.7% for the corresponding period of 2014 due primarily to the effect of higher average weekly same store sales in each concept.

Depreciation and amortization of restaurant property and equipment increased by $162,000 in the third quarter of 2015 and $425,000 for the first nine months of 2015 compared to the corresponding periods of 2014 primarily due to additional depreciation expense related to capital expenditures within each concept, including an extensive remodel of one J. Alexander’s l ocation in the first quarter of 2015 , and the impact of the new J. Alexander’s restaurant opene d in the fourth qua rter of 2014 .

Other operating expenses, which include restaurant level expenses such as china and supplies, laundry and linen costs, repairs and maintenance, utilities, credit card fees, rent, property taxes and insurance, increased to 21.3% of net sales in the third quarter of 2015 from 21.1% of net sales in the third quarter of 2014 due primarily to increased repairs and maintenance expense incurred during the third quarter of 2015. Other operating expenses decreased to 20.2% of net sales for the first nine months of 2015 from 20.4% in the comparable period of 2014 due to the favorable effect of higher average weekly same store sales and decreases in utilities, advertising expense associated with Stoney River and property insurance expense.

General and Administrative Expenses

Total general and administrative expenses, which include all supervisory costs and expenses, management training and relocation costs, and other costs incurred above the restaurant level, decreased by $357,000, or 1.2% of net sales, in the third quarter of 2015 compared to the third quarter of 2014 due primarily to the impact of a $250,000 refund received from the Ohio Bureau of Worker’s Compensation related to the settlement of a class action lawsuit that was recorded as a reduction of general and administrative expense in the third quarter of 2015.

General and administrative expenses increased by $969,000, or 0.2% of net sales, for the first nine months of 2015 compared to the corresponding periods of 2014. The more significant components of the increase during 2015 include non-cash compensation expense associated with the profits interest plan implemented on January 1, 2015, as well as increases in employee relocation costs, rent expense, incentive compensation accruals, franchise tax expense, salaries and wages, and legal, accounting, auditing and other professional fees, which more than offset the favorable effect of higher average weekly same store sales per restaurant and the legal settlement discussed above.

Transaction and Integration Expenses

We incurred non-recurring transaction and integration expenses totaling $4,197,000 and $224,000 during the quarters ended September 27, 2015 and September 28, 2014, respectively, and $6,311,000 and $326,000 for the nine-month periods ended September 27, 2015 and September 28, 2014, respectively. Transaction costs typically consist primarily of legal and consulting costs, accounting fees, and, to a lesser extent, other professional fees and miscellaneous costs. Integration costs consist primarily of consulting and legal costs. During the first nine months of 2015, we incurred transaction costs related to the spin-off transaction totaling $5,018,000, which included the payment of an event bonus and related payroll taxes of $2,537,000, legal fees of approximately $900,000, and various other professional consulting, accounting and other miscellaneous costs. Further, due to the abandonment of the initial public offering in the second quarter of 2015, deferred offering costs totaling $1,293,000 previously capitalized as other current assets were expensed during the second quarter of 2015.

Pre-opening Expenses

Pre-opening expense consists of expenses incurred prior to opening a new restaurant and include principally manager salaries and relocation costs, payroll and related costs for training new employees, travel and lodging expenses for employees who assist with training new employees, and cost of food and other expenses associated with practice of food preparation and service activities. Pre-opening expense also includes rent expense for leased properties for the period of time between taking control of the property and the opening of the restaurant. For the third quarter and nine-month periods in 2014, the Company incurred pre-opening costs related to the opening of a new J. Alexander’s in Columbus, Ohio in November of 2014. In the 2015 third quarter and nine-month periods presented, certain pre-opening costs were recorded related to the new Stoney River restaurant scheduled to open in the first quarter of 2016 in Germantown, Tennessee.

Other Income (Expense)

Interest expense decreased by $539,000 and $1,253,000 in the third quarter and first nine months of 2015, respectively, compared to the corresponding periods in 2014, primarily as a result of our prepayment of $10,000,000 of the 12.5%, $20,000,000 FNF Note payable during December 2014, and the refinancing of the remaining $10,000,000 of the FNF Note on May 20, 2015 at a substantially lower interest rate.

Income Taxes

Discontinued Operations

During 2013, three underperforming J. Alexander’s restaurants were closed and two of these locations were considered to be discontinued operations. Losses from discontinued operations totaling $106,000 and $107,000 for the quarters ended September 27, 2015 and September 28, 2014, respectively, and $317,000 and $331,000 for the nine-month periods ended September 27, 2015 and September 28, 2014, respectively, consist solely of exit and disposal costs which are primarily related to continuing obligations under leases.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

J. Alexander’s Holdings, Inc. was incorporated in the State of Tennessee on August 15, 2014. Following the consummation of the reorganization and distribution transactions on September 28, 2015, we became a holding company and the sole managing member of J. Alexander’s Holdings, LLC. As such, we control the business and affairs of J. Alexander’s Holdings, LLC and its subsidiaries and will consolidate J. Alexander’s Holdings, LLC and subsidiaries into our financial statements. There are currently no restrictions on our ability to obtain cash from our subsidiaries present in current credit facilities, subsidiary operating agreements or other material agreements. Our principal sources of cash are cash and cash equivalents on hand, cash flow from operations and available borrowings under our credit facility. As of September 27, 2015 , cash and cash equivalents totaled $12,765,000 . Our capital needs are primarily for the development and construction of new restaurants, maintenance of and improvements to our existing restaurants, and meeting debt service requirements and operating lease obligations. Based on our current growth plans, we believe our cash on hand, expected cash flows from operations and available borrowings under our credit facility will be sufficient to finance our planned capital expenditures and other operating activities for the next twelve months.

Consistent with many other restaurant companies, we use operating lease arrangements for many of our restaurants. We believe that these operating lease arrangements provide appropriate leverage for our capital structure in a financially efficient manner.

Our liquidity may be adversely affected by a number of factors, including a decrease in guest traffic or average check per customer due to changes in economic conditions, as described in detail in the information statement filed as an exhibit to Amendment No. 2 to Form 10 on September 9, 2015, under the heading “Risk Factors.”

Cash Flows

The table below shows our net cash flows from operating, investing and financing activities for the nine-month periods ended September 27, 2015 and September 28, 2014:

	Nine Months Ended
	September 27			September 28
(Dollars in thousands)	2015			2014
	(unaudited)			(unaudited)
Net cash provided by (used in):
Operating activities	$	8,251		$	12,433
Investing activities		(7,345	)		(6,182	)
Financing activities		(1,442	)		(1,356	)
Net increase (decrease) in cash and cash equivalents	$	(536	)	$	4,895

Operating Activities. Net cash flows provided by operating activities decreased to $8,251,000 for the first nine months of 2015 from $12,433,000 for the corresponding period of 2014, a decrease of $4,182,000. Our operations generate receipts from customers in the form of cash and cash equivalents, with receivables related to credit card payments considered cash equivalents due to their relatively short settlement period, and the majority of our expenses are paid within a 30-day pay period. Therefore, increases in restaurant operating profit generally increase our cash flows from operations. While restaurant operating income did increase by $2,079,000 in the first nine months of 2015 compared to the corresponding period of 2014, the payment of incentive compensation related to fiscal 2014 during the first quarter of 2015 was approximately $995,000 higher than corresponding payments during the first quarter of 2014. Additionally, during the first nine months of 2015, we have made payments related to transaction costs totaling $4,282,000 as compared to payments of approximately $154,000 made related to such costs in the first nine months of 2014. An additional use of cash in 2015 has been interest totaling $952,000 compared to interest payments in the first nine months of 2014 totaling $312,000, an increase of $640,000. We have also paid $259,000 more in income taxes during the first nine months of 2015 as compared to the same period in 2014.

Investing Activities. Net cash used in investing activities for the first nine months of 2015 totaled $7,345,000 compared to $6,182,000 in the corresponding period of 2014, with the increase in 2015 being attributed primarily to capital expenditures related to the completion of the J. Alexander’s restaurant which opened in Columbus, Ohio during November 2014 and a major remodel of a J. Alexander’s restaurant which took place during the first quarter of 2015.

Financing Activities. Net cash used in financing activities for the first nine months of 2015 totaled $1,442,000 compared to $1,356,000 in the corresponding period of 2014. The amounts for both periods primarily relate to servicing of the outstanding debt. Additionally, in the first nine months of 2015, we paid debt issuance costs associated with our refinancing on May 20, 2015 of $118,000.

Capital Resources

Long-term Capital Requirements

Our capital requirements are primarily dependent upon the pace of our growth plan and resulting new restaurants. Our growth plan is dependent on many factors, including economic conditions, real estate markets, restaurant locations and nature of lease agreements. Our capital expenditure outlays are also dependent on costs for maintenance in our existing restaurants as well as information technology and other general corporate capital expenditures.

The capital resources required for a new restaurant depend on the concept, the size of the building and whether the restaurant is a ground-up build-out or a conversion. We estimate development costs, net of landlord contributions and excluding pre-opening costs, will range from $4,500,000 to $5,500,000 for a new J. Alexander’s or Redlands Grill, and $3,500,000 to $4,500,000 for a new Stoney River. In addition, we expect to spend approximately $625,000 per restaurant for pre-opening expenses and pre-opening rent expense.

In addition to new store development, we will have completed remodels of two of our Stoney River restaurants and five of our J. Alexander’s restaurants during 2015. During 2014, we remodeled two J. Alexander’s restaurants and three Stoney River restaurants at an average cost of $357,000 per location. We expect to complete four to five J. Alexander’s or Redlands Grill remodels each year at an average cost of $250,000 to $300,000 per location.

For 2015, we currently estimate capital expenditure outlays will range between $11,000,000 and $13,000,000, net of any tenant incentives and excluding pre-opening costs. These estimates anticipate the commencement of construction of both a new Stoney River restaurant in Germantown, Tennessee, and a new J. Alexander’s restaurant in Raleigh, North Carolina, as well as capital expenditures to improve our existing restaurants and for general corporate purposes.

We believe that we can fund our growth plan with cash on hand, cash flows from operations and, if necessary, by the use of our credit facility, depending upon the timing of expendit ures.

One additional long-term capital requirement relates to the funding of the Amended and Restated Salary Continuation Agreements in place with certain current and former officers of the Company. Due to the distribution transaction, FNF no longer retains a beneficial ownership of at least 40% of J. Alexander’s Holdings, LLC, and as such, the distribution transaction triggered the obligation of J. Alexander’s, LLC, the operating subsidiary of J. Alexander’s Holdings, LLC, to establish and fund a “rabbi trust” (the “Trust”) under the Amended and Restated Salary Continuation Agreements. On October 19, 2015, the Trust was established and funded with a total of $4,304,000, which was comprised of $2,415,000 in cash and $1,889,000 in cash surrender values of whole life insurance policies. These assets will be classified as noncurrent within the Company’s financial statements. The Company may be required in the future to make additional contributions to the Trust in order to maintain the required level of funding called for by the agreements.

Additionally, on September 28, 2015, immediately prior to the distribution transaction, J. Alexander’s Holdings, LLC entered into a Management Consulting Agreement with Black Knight Advisory Services, LLC (“Black Knight”), pursuant to which Black Knight will provide corporate and strategic advisory services to J. Alexander’s Holdings, LLC. The principal member of Black Knight is William P. Foley, II, Senior Managing Director of FNFV and Executive Chairman of the Board of FNF. The other members of Black Knight consist of Lonnie J. Stout II, our President, Chief Executive Officer and one of our directors, and other officers of FNFV and FNF.

Under the Management Consulting Agreement, J. Alexander’s Holdings, LLC is required to issue Black Knight non-voting Class B Units, and pay Black Knight an annual fee equal to 3% of J. Alexander’s Holdings, Inc.’s Adjusted EBITDA for each fiscal year during the term of the Management Consulting Agreement. J. Alexander’s Holdings, LLC will also reimburse Black Knight for its direct out-of-pocket costs incurred for management services provided to J. Alexander’s Holdings, LLC. Under the Management Consulting Agreement, “Adjusted EBITDA” means J. Alexander’s Holdings, Inc.’s net income (loss) 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 and integration costs, non-cash compensation, loss from discontinued operations, gain on debt extinguishment, pre-opening costs and certain unusual items. Future cash outlays associated with the Management Consulting Agreement could be significant.

Short-term Capital Requirements

Our operations have not required significant working capital. Many companies in the restaurant industry operate with a working capital deficit. Guests pay for their purchases with cash or by credit card at the time of the sale while restaurant operations do not require significant inventories or receivables. In addition, trade payables for food and beverage purchases and other obligations related to restaurant operations are not typically due for approximately 30 days after the sale takes place. Since requirements for funding accounts receivable and inventories are relatively insignificant, virtually all cash generated by operations is available to meet current obligations. We had a working capital deficit of $2,032,000 at September 27, 2015 compared to a deficit of $4,102,000 at December 28, 2014. Management does not believe a low working capital position or working capital deficits impair our overall financial condition.

Credit Facility

On September 3, 2013, we obtained a $16,000,000 credit facility with Pinnacle Bank that provided for two loans. The borrower under this credit facility was J. Alexander’s, LLC, and the credit facility was guaranteed by J. Alexander’s Holdings, LLC and all of its significant subsidiaries. The credit facility consisted of a three-year $1,000,000 revolving line of credit which may be used for general corporate purposes, and a seven-year $15,000,000 mortgage loan (the “Mortgage Loan”). On December 9, 2014, we executed an Amended and Restated Loan Agreement which encompasses the two existing loans discussed above dated September 3, 2013 and also included a five-year, $15,000,000 development line of credit. On May 20, 2015, we executed a Second Amended and Restated Loan Agreement (the “Loan Agreement”), which increased the development line of credit to $20,000,000 over a five-year term and also included a five-year, $10,000,000 term loan (the “Term Loan”), the proceeds of which were used to repay in full the $10,000,000 outstanding under a note to FNF which was scheduled to mature January 31, 2016. The indebtedness outstanding under these facilities is secured by liens on certain personal property of J. Alexander’s Holdings, LLC and its subsidiaries, subsidiary guaranties, and a mortgage lien on certain real property.

In connection with the 2013, 2014 and 2015 refinancing transactions, lender and legal fees in the amount of $123,000, $175,000 and $163,000, respectively were incurred, which were capitalized as deferred loan costs and are being amortized over the respective lives of the loans under the credit facility.

Any amount borrowed under the 2013 revolving line of credit bears interest at an annual rate of 30 day LIBOR plus a margin equal to 2.50%, with a minimum interest rate of 3.25% per annum. The Mortgage Loan bears interest at an annual rate of 30 day LIBOR plus a margin equal to 2.50%, with a minimum and maximum interest rate of 3.25% and 6.25% per annum, respectively. Both the development line of credit and the Term Loan bear interest at LIBOR plus 220 basis points. The Term Loan is structured on an interest only basis for the first 24 months of the term, followed by a 36 month amortization. The Loan Agreement, among other things, permits payments of tax dividends to members, limits capital expenditures, asset sales and liens and encumbrances, and contains certain other provisions customarily included in such agreements.

The Loan Agreement also includes certain financial covenants. A fixed charge coverage ratio of at least 1.25 to 1 as of the end of any fiscal quarter based on the four quarters then ending must be maintained. The fixed charge coverage ratio is defined in the loan agreement as the ratio of (a) the sum of net income for the applicable period (excluding the effect on such period of any extraordinary or nonrecurring gains or losses, including any asset impairment charges, restaurant closing expenses, changes in valuation allowance for deferred tax assets, and non-cash deferred income tax benefits and expenses and up to $1,000,000 (in the aggregate for the term of the loans) in uninsured losses) plus depreciation and amortization plus interest expense plus rent payments plus noncash share based compensation expense minus the greater of either actual store maintenance capital expenditures (excluding major remodeling or image enhancements) or the total number of stores in operation for at least 18 months multiplied by $40,000 to (b) the sum of interest expense during such period plus rent payments made during such period plus payments of long term debt and capital lease obligations made during such period, all determined in accordance with GAAP.

In addition, the maximum adjusted debt to EBITDAR ratio must not exceed 4.0 to 1 at the end of any fiscal quarter. Under the Loan Agreement, EBITDAR is measured based on the then ending four fiscal quarters and is defined as the sum of net income for the applicable period (excluding the effect on such period of any extraordinary or nonrecurring gains or losses, including any asset impairment charges, restaurant closing expenses, changes in valuation allowance for deferred tax assets and non-cash deferred income tax benefits and expenses and up to $1,000,000 (in the aggregate for the term of the loans) in uninsured losses) plus an amount that in the determination of net income for the applicable period has been deducted for (i) interest expense; (ii) total federal, state, foreign, or other income taxes; (iii) all depreciation and amortization; (iv) rent payments; and (v) non-cash share based compensation, all as determined in accordance with GAAP. Adjusted debt is (i) funded debt obligations net of any short-term investments, cash and cash equivalents plus (ii) rent payments multiplied by seven. The $20,000,000 FNF Note was subordinated to borrowings outstanding under the credit facility and, for purposes of calculating the financial covenants, this note and related interest expense were excluded from the calculations.

If an event of default shall occur and be continuing under the Loan Agreement, the commitment under the 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. J. Alexander’s, LLC was in compliance with these financial covenants as of December 28, 2014 and all periods subsequent to that date through September 27, 2015.

No amounts were outstanding under the revolving line of credit or the development line of credit at December 28, 2014, or subsequent to that time through September 27, 2015. At September 27, 2015, $11,667,000 was outstanding under the Mortgage Loan and an additional $10,000,000 was outstanding under the Term Loan. The Second Amended and Restated Loan Agreement in place at September 27, 2015 is secured by the real estate, equipment and other personal property of six of the J. Alexander’s restaurant locations and six Redlands Grill locations with an aggregate net book value of $33,267,000 at September 27, 2015 .

OFF BALANCE SHEET ARRANGEMENTS

As of September 27, 2015, we had no financing transactions, arrangements or other relationships with any unconsolidated affiliated entities. Additionally, we are not a party to any financing arrangements involving synthetic leases or trading activities involving commodity contracts.

CONTINGENT OBLIGATIONS

From 1975 through 1996, JAC operated restaurants in the quick-service restaurant industry. The discontinuation of these quick-service restaurant operations included disposals of restaurants that were subject to lease agreements which typically contained initial lease terms of 20 years plus two additional option periods of five years each. In connection with certain of these dispositions, the Operating Company may remain secondarily liable for ensuring financial performance as set forth in the original lease agreements. The Operating Company can only estimate its contingent liability relative to these leases, as any changes to the contractual

arrangements between the current tenant and the landlord subsequent to the assignment are not required to be disclosed to the Operating Company . A summary of our estimated co ntingent liability as of September 27, 2015 , is as follows (in thousands) :

Wendy's restaurants (ten leases)	$	1,910
Mrs. Winner's Chicken & Biscuits restaurants (one lease)		200
Total contingent liability related to assigned leases	$	2,110

The Operating Company has never been required to pay any such contingent liabilities.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Critical accounting policies are those that management believes to be the most significant judgments and estimates used in the preparation of the Company’s Condensed Consolidated Financial Statements. Judgments or uncertainties regarding the application of these policies could potentially result in materially different amounts being reported under different assumptions and conditions. There have been no material changes to the critical accounting policies previously reported in the Consolidated Financial Statements and footnotes thereto for the fiscal year ended December 28, 2014 included in the Information Statement as an exhibit to Amendment No. 2 to Form 10 filed with the SEC on September 9, 2015.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to the Company’s exposure to market risks as described in the Company’s Information Statement included as an exhibit to Amendment No. 2 to Form 10 filed with the SEC on September 9, 2015.

Item 4. Controls and Procedures

(a)

Evaluation of disclosure controls and procedures. The Company’s principal executive officer and principal financial officer have conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) as of the end of the period covered by this quarterly report. Based on that evaluation, the Company’s principal executive officer and principal financial officer concluded that, as of the end of the period covered by this quarterly report, the Company’s disclosure controls and procedures were effective.

(b)

Changes in internal controls. There were no changes in the Company’s internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHE R INFORMATION

Item 1. Legal Proceedings

The information required by this Item is incorporated by reference to Part I, Item 1, Note – 5 Commitments and Contingencies – Litigation Contingencies.

Item 1A. Risk Factors

There have been no material changes with respect to the risk factors disclosed in our Information Statement filed as an exhibit to Amendment No. 2 to Form 10 filed with the SEC on September 9, 2015.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In August 2014, in connection with our formation, we issued 1,000 shares of common stock to FNFV for an aggregate consideration of $1.00. These securities were issued in reliance on the exemption contained in Section 4(2) of the Securities Act on the basis that the transaction did not involve a public offering. No underwriters were involved in the sale.

In connection with the reorganization transaction, prior to the distribution, we issued to FNFV, Newport Holdings and each other person holding membership interests of J. Alexander’s Holdings, LLC, approximately 15 million shares of common stock in consideration of the delivery to us of all of the outstanding limited liability company membership interest of J. Alexander’s Holdings, LLC held by such persons. These shares of common stock were issued in reliance on the exemption contained in Section 4(2) of the Securities Act on the basis that the transaction did not involve a public offering. No underwriters were involved in this transaction.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

The Exhibit Index on page 27 of this Quarterly Report on Form 10-Q lists the exhibits that are filed or furnished, as applicable, as part of this Quarterly Report on Form 10-Q.

SIGNA TURES

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 thereunto duly authorized.

		J. ALEXANDER’S HOLDINGS, INC.

Date: November 9, 2015		/s/ Lonnie J. Stout II
		Lonnie J. Stout II
		President and Chief Executive Officer (Principal Executive Officer)

Date: November 9, 2015		/s/ Mark A. Parkey
		Mark A. Parkey
		Executive Vice President and Chief Financial Officer (Principal Financial Officer)

J. ALEXANDER’S HOLDINGS, INC. AND SUBSIDIARIES

INDEX TO EXHIBITS

Exhibit No.

2.1		Separation and Distribution Agreement between Fidelity National Financial, Inc. and J. Alexander’s Holdings, Inc., dated September 16, 2015 (Exhibit 10.1 of Current Report on 8-K filed September 17, 2015 (File No. 1-37473), is incorporated herein by reference).

3.1		Amended and Restated Charter of J. Alexander’s Holdings, Inc., dated September 14, 2015 (Exhibit 3.1 of Current Report on 8-K filed September 17, 2015 (File No. 1-37473), is incorporated herein by reference).

3.2		Articles of Correction to Amended and Restated Charter of J. Alexander’s Holdings, Inc., dated September 22, 2015 (Exhibit 3.2 of Form S-8 filed November 3, 2015 (File No. 1-37473), is incorporated herein by reference).


3.3		Amended and Restated Bylaws of J. Alexander’s Holdings, Inc., dated September 14, 2015 (Exhibit 3.2 of Current Report on Form 8-K filed September 17, 2015 (File No. 1-37473), is incorporated herein by reference).


3.4		Second Amended and Restated LLC Agreement of J. Alexander’s Holdings, LLC, dated September 28, 2015

10.1		Management Consulting Agreement between Black Knight Advisory Services, LLC and J. Alexander’s Holdings, LLC, dated September 28, 2015


10.2		Management Company Unit Grant Agreement, dated October 6, 2015

10.3		Tax Matters Agreement between Fidelity National Financial, Inc. and J. Alexander’s Holdings, Inc., dated September 16, 2015 (Exhibit 10.2 of Current Report on 8-K filed September 17, 2015 (File No. 1-37473), is incorporated herein by reference).


31.1		Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		XBRL (Extensible Business Reporting Language) The following materials from the Quarterly Report on Form 10-Q for the quarter ended September 27, 2015, formatted in XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Cash Flows and (iv) Notes to Condensed Consolidated Financial Statements.

Exhibit 3.4

SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
J. ALEXANDER’S HOLDINGS, LLC,
A DELAWARE LIMITED LIABILITY COMPANY

Dated September 28, 2015

by and among

J. ALEXANDER’S HOLDINGS, LLC

AND THE

OTHER PARTIES HERETO

THE MEMBERSHIP INTERESTS AND UNITS ISSUED PURSUANT TO THIS SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (COLLECTIVELY, THE “LLC INTERESTS”) HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER APPLICABLE SECURITIES LAWS. THE LLC INTERESTS MAY NOT BE SOLD, ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF AT ANY TIME WITHOUT EFFECTIVE REGISTRATION UNDER SUCH ACT AND LAWS OR EXEMPTION THEREFROM, AND COMPLIANCE WITH THE OTHER SUBSTANTIAL RESTRICTIONS ON TRANSFER SET FORTH HEREIN.

THE LLC INTERESTS ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER SPECIFIED IN THIS AGREEMENT, AND IN CERTAIN CASES, THE 2015 MANAGEMENT INCENTIVE PLAN OF THE COMPANY, AND THE COMPANY RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH INTERESTS UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO ANY TRANSFER. A COPY OF THIS AGREEMENT SHALL BE PROMPTLY FURNISHED BY THE COMPANY TO A HOLDER OF ANY LLC INTERESTS UPON WRITTEN REQUEST AND WITHOUT CHARGE.

TABLE OF CONTENTS

ARTICLE I REPRESENTATIONS AND WARRANTIES OF THE PARTIES		2

1.1	Representations and Warranties of the Company.	2

1.2	Representations and Warranties of the Members.	2

ARTICLE II ORGANIZATION		3

2.1	Formation of Company.	3

2.2	Name.	3

2.3	Office; Agent for Service of Process.	3

2.4	Term	3

2.5	Purpose and Scope.	3

2.6	Authorized Acts.	4

2.7	Fiscal Year.	5

2.8	Qualification to do Business.	5

ARTICLE III MEMBERS; CONTRIBUTIONS		5

3.1	Capital Contributions.	5

3.2	Interest Payments.	5

3.3	Ownership and Issuance of Units.	5

3.4	Profits Interests.	6

3.5	Forfeiture of Management Company Class B Units	7

3.6	Forfeiture of Management Units	8

3.7	Voting Rights.	10

3.8	Withdrawals.	10

3.9	Liability of the Members Generally	10

3.10	Capital Accounts	11

ARTICLE IV MANAGEMENT		11

4.1	Management and Control of the Company.	11

4.2	Indemnification.	12

4.3	Officers.	14

ARTICLE V DISTRIBUTIONS		14

5.1	Distributions Generally	14

5.2	Regular Distributions.	15

5.3	Tax Distributions.	15

5.4	Distributions of Securities	16

5.5	Restricted Distributions.	16

5.6	Withholding Tax Payments and Obligations.	16

5.7	Indemnity.	16

ARTICLE VI ALLOCATIONS		17

6.1	General Application.	17

6.2	Certain Matters	17

6.3	Special Allocations.	17

6.4	Transfer of Interest	19

6.5	Tax Allocations	19

ARTICLE VII ACCOUNTING AND TAX MATTERS		20

7.1	Tax Returns	20

7.2	Tax Matters Member	20

7.3	Accounting Methods; Elections; Information	20

7.4	Partnership Status	21

ARTICLE VIII TRANSFERS OF UNITS		21

8.1	Restrictions on Transfers of Units.	21

8.2	Transfers in Violation of Agreement.	22

ARTICLE IX INFORMATION RIGHTS, CONFIDENTIALITY AND ADDITIONAL		22

AGREEMENTS		22

9.1	Information Rights.	22

9.2	Confidentiality.	22

ARTICLE X AMENDMENT AND TERMINATION		22

10.1	Amendment or Modification; Waiver	22

10.2	Amendments by the Managing Member	23

10.3	Termination of Agreement	23

10.4	Termination as to a Party.	23

ARTICLE XI DISSOLUTION; LIQUIDATION			23

11.1	Dissolution.		23

11.2	Final Accounting		24

11.3	Liquidation		24

11.4	Cancellation of Certificate of Formation.		25

ARTICLE XII EXCHANGE PROCEDURES			25

12.1	Exchanges of Units.		25

12.2	Common Stock to be Issued.		26

ARTICLE XIII MISCELLANEOUS			26

13.1	Certain Defined Terms		26

13.2	Severability.		36

13.3	Entire Agreement.		36

13.4	Successors and Assigns		36

13.5	Counterparts		36

13.6		Remedies	36

13.7		Notices.	36

13.8		Governing Law.	37

13.9		Interpretation	38

13.10		Descriptive Headings.	38

13.11		Business Opportunities.	38

13.12		Transactions with Interested Persons; Standards of Conduct.	38

13.13		Appointment of Managing Member as Attorney-in-Fact.	39

13.14		Limited Authorization of Managing Member	39

13.15		Loans to the Company.	40

13.16		No Third Party Beneficiaries.	40

13.17		Further Assurances	40

13.18		Construction	40

13.19		Waiver of Action for Partition.	40

13.20		Relations with Members.	40

13.21		Accounting Considerations	41

iii

Schedules				1

SCHEDULE I LIST OF MEMBERS				1

Exhibits				1

Exhibit A COMPANY INCENTIVE PLAN				1

Exhibit B FORM OF ELECTION OF EXCHANGE				1

SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
J. ALEXANDER’S HOLDINGS, LLC
A DELAWARE LIMITED LIABILITY COMPANY

THIS SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”) is entered into as of September 28, 2015, by and among (i) J. ALEXANDER’S HOLDINGS, LLC, a Delaware limited liability company (the “Company”), (ii) J. ALEXANDER’S HOLDINGS, INC., a Tennessee corporation (“J. Alexander’s”), (iii) JAX Investments, Inc., a Delaware corporation (“JAX Investments”), (iv) each member of management who has previously been granted Class B Units pursuant to the Company Incentive Plan (each, a “Management Member”), and (v) BLACK KNIGHT ADVISORY SERVICES, LLC, a Delaware limited liability company (the “Management Company”). The Managing Member, JAX Investments, the Management Members and the Management Company are sometimes referred to herein collectively as the “Members” and individually as a “Member.” Certain capitalized terms used herein are defined in Section 13.1.

WHEREAS , the Company was formed as a Delaware limited liability company under the name “J. Alexander’s Holdings, LLC” effective as of February 6, 2013, by the filing of a Certificate of Formation with the Delaware Secretary of State;

WHEREAS , the Company initially adopted a limited liability company agreement dated as of February 25, 2013;

WHEREAS , the Company adopted an amended and restated limited liability company agreement dated as of January 1, 2015 (the “Prior Agreement”);

WHEREAS , the Company issued Class B Units to the Management Members on January 1, 2015 pursuant to the Company Incentive Plan;

WHEREAS , on or prior to the date hereof, in accordance with the terms and provisions of the Prior Agreement (i) the former members of the Company, other than the Management Members, transferred and assigned their Interests in the Company to J. Alexander’s in exchange for shares of common stock of J. Alexander’s, and (ii) a former member of the Company assigned a portion of its Interest in the Company to JAX Investments;

WHEREAS , the Company wishes to grant Class B Units to the Management Company outside of the Company Incentive Plan, subject to the terms set forth herein and in an Award Agreement to be entered into with the Management Company; and

WHEREAS , the parties hereto desire to amend and restate the Prior Agreement in its entirety.

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

Article I
REPRESENTATIONS AND WARRANTIES OF THE PARTIES

Representations and Warranties of the Company .

The Company hereby represents and warrants to each Member that as of the date of this Agreement:

(a) it is a limited liability company duly formed, validly existing and in good standing under the laws of the state of its formation, it has full power and authority to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby, and the execution, delivery and performance by it of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary limited liability company action;

(b) this Agreement has been duly and validly executed and delivered by it and (assuming the due execution hereof by the Members) constitutes a legal and binding obligation of the Company, enforceable against it in accordance with its terms; and

(c) the execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby will not, with or without the giving of notice or lapse of time, or both, violate any provision of law, statute, rule or regulation to which the Company is subject, (ii) violate any order, judgment or decree applicable to the Company or (iii) conflict with, or result in a breach or default under, any term or condition of the Company’s organizational documents or any agreement or instrument to which the Company is a party or by which it is bound.

Representations and Warranties of the Members .

Each Member (as to himself or itself only) represents and warrants to the Company and each other Member that, as of the time such Member becomes a party to this Agreement:

(a) he or she is a natural person, or it is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation, or it is a limited partnership or a limited liability company duly formed, validly existing, and in good standing under the laws of its state of formation, as the case may be, it has full power and authority to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby, and the execution, delivery and performance by it of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate, partnership or limited liability company action, as the case may be;

(b) this Agreement has been duly and validly executed and delivered by such Member, and this Agreement constitutes a legal and binding obligation of such Member, enforceable against such Member in accordance with its terms; and

(c) the execution, delivery and performance by such Member of this Agreement and the consummation by such Member of the transactions contemplated hereby (and thereby, if applicable) will not, with or without the giving of notice or lapse of time, or both, (i) violate any provision of law, statute, rule or regulation to which such Member is subject, (ii) violate any order, judgment or decree applicable to such Member or (iii) conflict with, or result

in a breach or default under, any term or condition of any agreement or other instrument to which such Member is a party or by which such Member is bound.

Article II
ORGANIZATION

Formation of Company .

The Certificate of Formation has heretofore been duly filed with the Secretary of State of the State of Delaware. Upon the execution of this Agreement, J. Alexander’s shall be the sole Managing Member and shall be designated as an authorized person within the meaning of the Act. The rights, powers, duties, obligations and liabilities of the Members shall be determined pursuant to the Act and this Agreement. To the extent that the rights, powers, duties, obligations and liabilities of any Member are different by reason of any provision of this Agreement than they would be in the absence of such provision, this Agreement shall, to the extent permitted by the Act, control.

Name .

The name of the Company is J. Alexander’s Holdings, LLC. The Company Business shall be conducted under such name or under such other names as the Managing Member may deem appropriate in compliance with applicable law.

Office; Agent for Service of Process .

The address of the Company’s registered office in Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, DE 19801, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. The Managing Member may change the registered office and the registered agent of the Company from time to time. The principal office and place of business of the Company shall be located in Nashville, Tennessee. The Managing Member may change the principal office or place of business of the Company at any time and may cause the Company to establish other offices or places of business.

Term .

The term of the Company shall continue until the dissolution of the Company in accordance with the provisions of Article XI or as otherwise provided by law.

2.5 Purpose and Scope .

(a) The purpose and business of the Company (the “Company Business”) is to pursue, directly or indirectly through its Subsidiaries or other Persons, business opportunities in the restaurant industry and engage in any lawful act or activity for which limited liability companies may be organized under the Act and to engage in any and all activities necessary or incidental thereto. Notwithstanding anything to the contrary in this Agreement, all matters material to the affairs and business of the Company shall be determined by the Managing Member.

(b) The Company shall have the power to do any and all acts reasonably necessary, appropriate, proper, advisable, incidental or convenient to or for the furtherance of the Company Business and for the protection and benefit of the Company, and shall have, without limitation, any and all of the powers that may be exercised on behalf of the Company by the Managing Member pursuant to this Agreement, including pursuant to Section 2.6.

Authorized Acts .

In furtherance of the Company Business, but subject to all other provisions of this Agreement, the Managing Member, on behalf of the Company, is hereby authorized and empowered:

(a) To do any and all things and perform any and all acts necessary or incidental to the Company Business and otherwise in accordance with law;

(b) To enter into, and take any action under, any contract, agreement or other instrument as the Managing Member shall determine to be necessary or desirable to further the objects and purposes of the Company, including contracts or agreements with any Member or prospective Member;

(c) To open, maintain and close bank accounts and draw checks or other orders for the payment of money and open, maintain and close brokerage, money market fund and similar accounts;

(d) To hire, for usual and customary payments and expenses, employees, consultants, brokers, attorneys, accountants and such other agents for the Company as it may deem necessary or advisable, and authorize any such agent to act for and on behalf of the Company;

(e) To incur expenses and other obligations on behalf of the Company in accordance with this Agreement, and, to the extent that funds of the Company are available for such purpose, pay all such expenses and obligations;

(f) To borrow money or guarantee any obligation, which borrowing or guarantee shall be on such terms as the Managing Member shall determine;

(g) To make loans to and investments in Subsidiaries or other Persons;

(h) To merge or consolidate with or convert into another limited liability company (organized under the laws of Delaware or any other state), a corporation (organized under the laws of Delaware or any other state) or any other “business entity” (as defined in Section 18-209(a) of the Act), regardless of whether the Company is the survivor of such merger or consolidation;

(i) To bring and defend actions and proceedings at law or in equity and before any governmental, administrative or other regulatory agency, body or commission;

(j) To establish reserves in accordance with this Agreement or the Act for contingencies and for any other purpose of the Company;

(k) To prepare and file all necessary returns and statements, pay all taxes, assessments and other impositions applicable to the assets of the Company, and withhold amounts with respect thereto from funds otherwise distributable to any Member;

(l) To determine the accounting methods and conventions to be used in the preparation of any accounting or financial records of the Company; and

(m) To act for and on behalf of the Company in all matters incidental to the foregoing.

Fiscal Year .

Unless otherwise determined by the Managing Member, the fiscal year (the “Fiscal Year “) of the Company shall end on the Sunday closest to December 31st unless, for Federal income tax purposes, another Fiscal Year is required. The Company shall have the same Fiscal Year for United States Federal income tax purposes and for accounting purposes.

Qualification to do Business .

Except as the Managing Member shall otherwise determine, the Company shall be qualified or registered under applicable laws of any jurisdiction in which the Company transacts business and may authorize any Person to execute, deliver and file any certificates and documents necessary to effect such qualification or registration, including without limitation, the appointment of agents for service of process in such jurisdictions.

Article III
MEMBERS; CONTRIBUTIONS

Capital Contributions .

The Capital Accounts of the Members as of the date hereof shall be equal to the Capital Contributions reflected on Schedule I hereto as of date hereof and on the register of the Company, maintained by the Company in accordance with Article VII hereof (the “Company Register”). Schedule I shall be amended from time to time in accordance with Article XI to reflect any additional Capital Contribution made by the Members.

Interest Payments .

No interest shall be paid to any Member on any Capital Contributions. The value of all Capital Contributions shall be denominated in U.S. dollars.

3.3 Ownership and Issuance of Units .

(a) (i) As of the date hereof the Company has issued units (the “Class A Units”) to each Class A Member in respect of the Class A Interest of such Member. Each Class A Member owns that number of Class A Units as appears next to its name on the Company Register.

(ii) The Company has issued/will issue units (the “Class B Units”) to each Class B Member in respect of the Class B Interest of such Member, consisting of the Class B Units issued to the Management Members on January 1, 2015, and the Class B Units issued to the Management Company on October 6, 2015. Each Class B Member owns that number of Class B Units as appears next to its name on the Company Register as of October 6, 2015.

(iii) Any Class B Units issued to the Management Members (whether as of the date hereof or hereafter) are governed by (A) this Agreement, (B) the respective Unit Grant Agreements between the Company and the Management Members, which set forth, among other things, vesting provisions and the Hurdle Amount with respect to such Class B Units, and (C) the Company Incentive Plan.

(iv) The Class B Units to be issued to the Management Company are governed by (A) this Agreement, and (B) the Unit Grant Agreement between the Company and the Management Company, which sets forth, among other things, vesting provisions and the Hurdle Amount with respect to such Class B Units in an amount sufficient, in the determination of the Managing Member, to cause such Class B Units to be properly treated as Profits Interests.

(b) The ownership of issued and outstanding Class A Units and Class B Units as of October 6, 2015, shall initially be set forth on Schedule I hereto, which schedule shall be amended from time to time to reflect any changes to the ownership of issued and outstanding Class A Units and Class B Units.

(c) The Managing Member may cause the Company to issue Units in addition to those issued as of the date hereof (including, without limitation, Units which are denominated as Profits Interests and/or subject to vesting or other risks of forfeiture, if applicable).

3.4 Profits Interests .

(a) The Company and each Member agree to treat each Member’s Class B Interest (each such interest, a “Profits Interest”) as a separate “profits interest” within the meaning of Rev. Proc. 93-27, 1993-2 C.B. 343. Notwithstanding anything to the contrary herein, distributions to each Class B Member pursuant to Section 5.2 shall be limited to the extent necessary so that the Profits Interest of such Class B Member qualifies as a “profits interest” under Rev. Proc. 93-27, and this Agreement shall be interpreted accordingly. In accordance with Rev. Proc. 2001-43, 2001-2 C.B. 191, the Company shall treat a Member holding a Profits Interest as the owner of such Profits Interest from the date it is granted, and shall file its IRS Form 1065, and issue an appropriate Schedule K-1 to such Member allocating to such Member its distributive share of all items of income, gain, loss, deduction and credit associated with such Profits Interest as if it were fully vested. Each Class B Member agrees to take into account such distributive share in computing its federal income tax liability for the entire period during which it holds the Profits Interest. The Company and each Member agree not to claim a deduction (as wages, compensation or otherwise) for the fair market value of such Profits Interest issued to a Class B Member, either at the time of grant of the Profits Interest or at the time the Profits Interest becomes substantially vested. The undertakings contained in this Section 3.4(a) shall be construed in accordance with Section 4 of Rev. Proc. 2001-43. The provisions of this Section 3.4(a) shall apply regardless of whether or not the holder of a Profits Interest files an election pursuant to Section 83(b) of the Code.

(b) Safe Harbor Election.

(i) The Managing Member is hereby authorized and directed to cause the Company to make an election (the “Safe Harbor Election”) to value the Profits Interests issued by the Company as compensation for services to the Company on the date of the issuance, at the liquidation value of such Profits Interests (i.e., a value equal to the amount that would be distributed under Section 5.2 with respect to such Profits Interests in a Hypothetical Liquidation occurring immediately after the issuance of such Profits Interests and assuming for purposes of such Hypothetical Liquidation that all assets of the Company are sold for their fair market values (as reasonably determined by the Managing Member) instead of their values as reflected for

capital account purposes), as the same may be permitted pursuant to or in accordance with the finally promulgated successor rules to Proposed Regulations Section 1.83-3(1) and IRS Notice 2005¬43 (collectively, the “Proposed Rules”). The Managing Member shall cause the Company to make any allocations of items of income, gain, deduction, loss or credit (including forfeiture allocations and elections as to allocation periods) necessary or appropriate to effectuate and maintain the Safe Harbor Election.

(ii) Any such Safe Harbor Election shall be binding on the Company and on all of its Members with respect to all transfers of Profits Interests thereafter made by the Company while a Safe Harbor Election is in effect. A Safe Harbor Election once made may be revoked by the Managing Member as permitted by the Proposed Rules or any applicable rule.

(iii) Each Member (including any Person to whom a Profits Interest is transferred in connection with the performance of services), by signing this Agreement or by accepting such transfer, hereby agrees to comply with all requirements of the Safe Harbor Election with respect to all Profits Interests transferred while the Safe Harbor Election remains effective.

(iv) The Managing Member shall file or cause the Company to file all returns, reports and other documentation as may be required to perfect and maintain the Safe Harbor Election with respect to transfers of Profits Interests covered by such Safe Harbor Election.

(v) The Managing Member is hereby authorized and empowered, without further vote or action of the Members, to amend this Agreement as necessary to comply with the Proposed Rules or any rule, in order to provide for a Safe Harbor Election and the ability to maintain or revoke the same, and shall have the authority to execute any such amendment by and on behalf of each Member. Any undertakings by the Members necessary to enable or preserve a Safe Harbor Election may be reflected in such amendments and to the extent so reflected shall be binding on each Member, respectively.

(vi) Each Member agrees to cooperate with the Managing Member to perfect and maintain any Safe Harbor Election, and to timely execute and deliver any documentation with respect thereto reasonably requested by the Managing Member.

Forfeiture of Management Company Class B Units .

Upon the termination of the Management Agreement by the Company pursuant to Section 10(a)(i) or 10(a)(ii) thereof, or by the Management Company pursuant to Section 10(b) (iii) thereof, all unvested Class B Units held by the Management Company or any transferee thereof shall be immediately and automatically cancelled and forfeited for no consideration. In addition, in the event the Management Company or any transferee thereof fails to effect an Exchange of its Class B Units within 90 days following the termination of the Management Agreement (for any reason or no reason), all Class B Units held by the Management Company or any transferee thereof shall be immediately and automatically cancelled and forfeited for no consideration.

3.6 Forfeiture of Management Units .

(a) (i) When used in this Agreement, the term “Employment” or “Employed” refers to the employment of the Management Members. Employment will be deemed to continue so long as a Management Member is employed by, or otherwise is providing services to, the Company or its Subsidiaries in any capacity. If a Management Member’s Employment is with a Subsidiary of the Company and that entity ceases to be a Subsidiary of the Company, the Management Member’s Employment will be deemed to have terminated when the entity ceases to be a Subsidiary of the Company unless the Management Member transfers his or her Employment to the Company or one of its remaining Subsidiaries. For the avoidance of doubt, it is intended that the Employment status of a Management Member that is referred to in this Agreement will continue to refer to the Employment status of the original Management Member even if such Management Member’s Class B Units have been transferred to another holder (a “Management Units Transferee”). Upon any Management Member ceasing to be Employed by the Company or one of its Subsidiaries (a “Terminated Employee”) for any reason (a “Termination Event”), subject to the provisions of Sections 3.6(a)(ii), 3.6(a)(iii) and 3.6 (b), except as may be mutually agreed in writing between the Company and such Terminated Employee pursuant to the Terminated Employee’s Award Agreement, employment agreement or otherwise, the Company may, but shall not be required to, elect to purchase (or elect to have one or more designee(s) purchase, as provided in Section 3.6(a)(iii) below) and, if such option is exercised, such Terminated Employee or the Management Units Transferee shall sell to the Company (or the designee(s), if the Company so elects) all or any portion of the vested Management Units owned by such Management Member or the Management Units Transferee (the “Termination Securities”) on the date of the occurrence of such Termination Event (the “Termination Date”) at a price per Termination Security equal to the Termination Price (as determined pursuant to Section 3.6(c) below) and in connection with such repurchase shall execute a general release in favor of the Company, its officers, employees, and Members (which such release shall be in a form reasonably acceptable to the Company) and such Members’ respective Affiliates, equityholders, managers, partners, directors, officers and employees.

(ii) Upon the termination of Employment of any Management Member with the Company or any of its Subsidiaries for any reason, all unvested Management Units held by such Management Member or the Management Units Transferee shall be immediately and automatically cancelled and forfeited for no consideration. Upon the termination of Employment of any Management Member with the Company or any of its Subsidiaries for Cause, all vested and unvested Management Units held by such Management Member or the Management Units Transferee shall be immediately and automatically cancelled and forfeited for no consideration.

(iii) The Company may exercise its right to purchase the Termination Securities pursuant to this Section 3.6 at any time after the Termination Date, provided, that the Calculation Date and the date of closing of such purchase shall not occur earlier than the date that is six (6) months and one (1) day after the date the Termination Securities became vested, unless the Company determines that such delay is not necessary for the award pursuant to which such Management Units were granted to be classified as an equity award under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718, Stock Compensation (or any applicable successor standards). If the Company chooses to exercise its right to purchase any Termination Security pursuant to this Section 3.6, it shall choose the

Calculation Date and date of closing of such purchase and shall notify the Terminated Employee in writing at least thirty (30) days before the date of closing of the purchase. The Company shall have the option to assign its right to purchase all or any portion of the Termination Securities under this Section 3.6 to the Class A Members, pro rata (provided that if one or more Class A Members elects not to purchase any Termination Securities, the other Class A Members shall have the right to purchase such Termination Securities pro rata), and such Class A Members may exercise the Company’s rights under this Section 3.6 in the same manner in which the Company could exercise such rights.

(b) The closing of the purchase by the Company of Termination Securities pursuant to Section 3.6(a) shall take place at the principal office of the Company on the date chosen by the Company, which date shall in no event be more than thirty (30) days after determination of the Termination Price. If such date is not a business day, such purchase shall occur on the next succeeding business day. At such closing, (i) the Company shall pay the Terminated Employee or the Management Units Transferee the aggregate Termination Price and (ii) the Terminated Employee or the Management Units Transferee shall transfer the Termination Securities to the Company, free and clear of any lien or encumbrance, with any documentation reasonably requested by the Company to evidence such transfer, which documentation shall require the Terminated Employee or the Management Units Transferee to make the representations and warranties in the final sentence of this 3.6(b). If the Terminated Employee or the Management Units Transferee fails to execute and deliver all documentation required by the Company on the scheduled closing date of such repurchase, the Company may elect to defer such closing or deposit the consideration representing the Termination Price with a bank or financial institution as escrow holder pending delivery of such documentation. In the event of the foregoing election to deposit the Termination Price into escrow, (i) such Management Units shall be deemed for all purposes to have been transferred to the purchasers thereof on the date such deposit is made; (ii) to the extent that such Management Units are evidenced by certificates, such certificates shall be deemed canceled and the Company shall issue new certificates in the name of the purchaser(s) thereof; (iii) the Company shall make an appropriate notation in its records to reflect the transfer of such Management Units to the purchaser(s) thereof; and (iv) the Person obligated to sell such Management Units shall merely be a creditor with respect to such Management Units with the right only to receive payment of the Termination Price, without interest, from the escrow funds. If, following the one year anniversary of the scheduled closing date for the purchase of such Termination Securities, the proceeds of sale have not been claimed by the Terminated Employee or the Management Units Transferee, the escrow deposit (and any interest earned thereon) shall, subject to the application of any applicable escheat laws, be returned to the Person originally depositing the same, and the Transferors whose Management Units were so purchased shall look solely to the purchaser(s) thereof for payment of the purchase price (subject to reduction for any payments made pursuant to any applicable escheat laws). The transfer of the Termination Securities and acceptance of the aggregate Termination Price by any Person selling such Termination Securities pursuant to this Section 3.6 shall be deemed accompanied with a representation and warranty by such Person that: (1) such Person has full right, title and interest in and to such Termination Securities; (2) such Person has all necessary power and authority and has taken all necessary action to sell such Termination Securities as contemplated hereby; (3) such Termination Securities are free and clear of any and all liens or encumbrances; and (4) there is no adverse claim with respect to such Termination Securities.

(c) For purposes of this Section 3.6, unless otherwise provided in an Award Agreement, the “Termination Price” shall be an amount per Termination Security equal to the Fair Market Value of such Termination Security as of the Calculation Date.

(d) The Company (or any designee(s) or assignee(s) of the Company, as the case may be) shall pay the Termination Price in a lump-sum cash payment, by wire transfer or by Company check; provided, however, if the Managing Member determines that (i) such cash payment would result in a violation of any law, statute, rule, regulation, policy, order, writ, injunction, decree or judgment promulgated or entered by any federal, state, local or foreign court or governmental authority applicable to the Company or any of its Subsidiaries, or (ii) after giving effect thereto such payment would result in a default of a financing covenant, then such payment shall be made by delivery of an unsecured promissory note bearing interest at the Prime Rate and payable in two equal installments, plus interest, on the first and second anniversaries of the date of repurchase; provided, that such promissory note shall be subject to mandatory prepayment in full upon a Sale of the Company; provided, further, that at such times as any payment under such promissory note is prohibited under any credit agreement or bond indenture that applies to the Company, no such payment shall be made, and any such payment shall accrue and shall be paid promptly following the date and time that such prohibition no longer exists.

Voting Rights .

Except as otherwise provided in the Act or as otherwise provided herein, but subject to Section 10.1(b), Members holding Class A Units shall be entitled to one vote or consent right in respect of each Class A Unit with respect to any matters of the Company on which the holders of Class A Units are entitled to vote. Notwithstanding any other provision of this Agreement, the Class B Members shall have no right to vote or consent on any matter under this Agreement or the Act, including the merger, consolidation, conversion or dissolution of the Company.

Withdrawals .

Except as explicitly provided elsewhere herein, no Member shall have any right to (a) withdraw as a Member from the Company, (b) withdraw from the Company all or any part of such Member’s Capital Contributions, (c) receive property other than cash in return for such Member’s Capital Contributions or (d) receive any distribution from the Company, without the consent of the other Members except in accordance with Article V and Article XI.

Liability of the Members Generally .

Except as otherwise provided in the Act, no Member of the Company (and none of such Member’s directors, officers, employees, partners, Affiliates, agents or representatives) shall be obligated personally for any debt, obligation or liability of the Company or any other Member, whether arising in contract, tort or otherwise, solely by reason of being a Member of the Company. Each of the Members acknowledges that its Capital Contributions are subject to the claims of any and all creditors of the Company to the extent provided by the Act and other applicable law. The failure of the Company to observe any formalities or requirements relating to the exercise of its powers or the management of its business or affairs under this Agreement or the Act shall not be grounds for making its Members (or any of such Members’ directors, officers, employees, partners, Affiliates, agents or representatives) responsible for the liabilities of the Company.

Capital Accounts .

There shall be established and maintained for each Member a separate capital account (“Capital Account”). There shall be added to the Capital Account of each Member (a) such Member’s Capital Contributions, (b) such Member’s distributive share of Net Income and any item in the nature of income or gain that is specially allocated to the Member pursuant to Section 6.3, and (c) the amount of any Company liabilities assumed by such Member or which are secured by any property distributed to such Member. There shall be subtracted from the Capital Account of each Member (a) the amount of any money, and the Gross Asset Value of any other property, distributed to such Member, (b) such Member’s distributive share of Net Loss and any item in the nature of loss or expense that is specially allocated to such Partner pursuant to Section 6.3 , and (c) to the extent not duplicative of any liabilities calculated pursuant to the definition of “Capital Contribution”, the amount of any liabilities of such Member assumed by the Company or which are secured by any property contributed by such Member to the Company. The foregoing provision and other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulations Section 1.704-1(b) and shall be interpreted and applied in a manner consistent with such Regulations. In determining the amount of any liability for purposes of this Section 3.10, there shall be taken into account Section 752(c) of the Code and any other applicable provisions of the Code and Regulations. In the event of a Transfer in accordance with Article VIII, the transferee shall succeed to the Capital Account of the Transferor to the extent that it relates to the transferred interest.

Article IV
MANAGEMENT

4.1 Management and Control of the Company .

(a) Except as otherwise provided herein, the management, control and operation of the business and affairs of the Company shall be vested exclusively with the Managing Member. The Managing Member shall have the authority to exercise all powers necessary and convenient for the purposes of the Company, including those set forth in Section 2.6, on behalf, and in the name, of the Company, subject to compliance with the restrictions and other provisions of this Agreement. Subject to the rights and powers of the Managing Member and the limitations thereon contained in this Agreement, the Managing Member may delegate to any Person any or all of its powers, rights and obligations under this Agreement and may appoint, contract or otherwise deal with any Person to perform any acts or services for the Company as the Managing Member may reasonably determine. Notwithstanding any delegation made by the Managing Member, the Managing Member shall oversee any Person so appointed or contracted to perform any acts or services for the Company on the Managing Member’s behalf and the Managing Member shall be liable for any breaches of this Agreement caused by the foregoing. Unless the authority of an agent designated as an officer is limited in the document appointing such officer or is otherwise specified by the Managing Member, any officer so appointed shall, subject to this Article IV, have the same authority to act for the Company as a corresponding officer of a Tennessee corporation would have to act for a Tennessee corporation in the absence of a specific delegation of authority. The officers of the Company shall have the same fiduciary duties to the Company as an officer of a Tennessee corporation has under Tennessee law. The Managing Member may, in its sole discretion, by vote or resolution thereof ratify any act previously taken by an officer or agent acting on behalf of the Company. The

Managing Member is specifically authorized to execute, sign, seal and deliver in the name of and on behalf of the Company any and all agreements, certificates, instruments or other documents requisite to carrying out the intentions and purposes of this Agreement and of the Company.

(b) Unless expressly provided to the contrary in this Agreement, any action, consent, approval, election, decision or determination to be made by the Managing Member under or in connection with this Agreement (including any act by the Managing Member within its “discretion” under this Agreement and the execution and delivery of any documents or agreements on behalf of the Company) shall be in the sole and absolute discretion of the Managing Member.

(c) Each Member hereby consents to the exercise by the Managing Member of the powers conferred upon the Managing Member by the Act and this Agreement with respect to the management and control of the Company. The Members shall not have any authority or right, in their capacities as Members of the Company, to act for or bind the Company. Any Person dealing with the Company or any Member may rely upon a certificate signed by the Managing Member or a duly authorized officer appointed by the Managing Member, as applicable, as to (a) the identity of any Members; (b) any factual matters relevant to the affairs of the Company; (c) the Persons who are authorized to execute and deliver any document on behalf of the Company; or

(d) any action taken or omitted by the Company, the Managing Member or any Member.

(e) The Managing Member as of the date hereof shall serve in such capacity until the earliest of its dissolution, termination, resignation or bankruptcy. Upon the dissolution, termination, resignation or bankruptcy of the Managing Member, the holders of a Majority in Interest of the Class A Members may select a new Managing Member.

4.2 Indemnification .

(a) Indemnification of Members and Officers. The Company shall indemnify, to the fullest extent permitted by the Act as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Company to provide broader indemnification rights than said law permitted the Company to provide prior to such amendment), any Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of the fact that such Person (or any of its Affiliates, directors, officers, employees, agents and representatives) is or was a Member, the Managing Member, an officer of the Company, or is or was serving at the request of the Company as a director, officer, manager or trustee of another corporation, limited liability company, partnership, joint venture, trust or other enterprise from and against all expenses and disbursements (including attorneys’ fees), judgments, damages, fines and amounts paid in settlement (collectively, “Costs”) actually and reasonably incurred by such Person in connection with such suit, action or proceeding. Notwithstanding the foregoing, indemnification shall not be paid to any Person pursuant to this Section 4.2(a) if it is determined by a final, nonappealable order of a court of competent jurisdiction that such Person’s actions giving rise to the Costs for

which indemnification is sought constituted bad faith or willful misconduct, or, with respect to any criminal action or proceeding, such Person had reasonable cause to believe such Person’s conduct was unlawful. Any Person may consult with legal or other professional counsel, and any actions taken by such Person in good faith reliance on, and in accordance with, the written opinion of such counsel shall be deemed to be fully protected and justified and made in good faith.

(b) Indemnification of Employees and Agents. The Managing Member, in its discretion, may authorize the Company to indemnify any Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of the fact that such Person is or was an employee or agent of the Company, or is or was serving at the request of the Company as an employee or agent of another corporation, limited liability company, partnership, joint venture, trust or other enterprise, against all Costs actually and reasonably incurred by him in connection with such action, suit or proceeding. Notwithstanding the foregoing, indemnification shall not be paid to any Person pursuant to this Section 4.2(b) if it is determined by a final, nonappealable order of a court of competent jurisdiction that such Person’s actions giving rise to the Costs for which indemnification is sought constituted bad faith or willful misconduct, or, with respect to any criminal action or proceeding, such Person had reasonable cause to believe such Person’s conduct was unlawful. Any Person may consult with legal or other professional counsel, and any actions taken by such Person in good faith reliance on, and in accordance with, the written opinion of such counsel shall be deemed to be fully protected and justified and made in good faith.

(c) Advance Payments. Except as limited by law, expenses incurred by the indemnified Person in defending any proceeding, including a proceeding by or in the right of the Company, shall be paid by the Company to the indemnified Person in advance of final disposition of the proceeding upon receipt of a written undertaking to repay such amount if the indemnified Person is determined pursuant to this Section 4.2 or adjudicated to be ineligible for indemnification, which undertaking need not be secured and shall be accepted.

(d) Non-Exclusivity. The indemnification and advancement of expenses provided by, or granted pursuant to, the other provisions of this Section 4.2 shall not be deemed exclusive of any other rights to which those Persons provided indemnification or advancement of expenses may be entitled under any bylaw, agreement (including the Management Agreement or any employment agreement between an employee on the one hand and the Company or any of its subsidiaries on the other hand), vote of Members or the Managing Member or otherwise, both as to action in such Person’s official capacity and as to action in another capacity while holding such office.

(e) Insurance. The Company may purchase and maintain insurance on behalf of any Person who is or was a Member, Managing Member, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, manager, trustee, employee or agent of another corporation, limited liability company, partnership, joint venture, trust or other enterprise, against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Company would have the power to indemnify him or her against such liability under the

provisions of the Act (as presently in effect or hereafter amended) or this Agreement. The Company’s indemnification under Section 4.2 of any Person who is or was a Member, Managing Member, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, manager, trustee, employee or agent of another corporation, limited liability company, partnership, joint venture, trust or other enterprise, shall be reduced by any amounts such Person receives as indemnification under any policy of insurance purchased and maintained on such Person’s behalf.

(f) Amendment. This Section 4.2 may be amended pursuant to Article X to decrease the Company’s obligations to any indemnitee pursuant to this Section 4.2 only with respect to actions or omissions occurring after the date of such amendment.

4.3 Officers .

(a) Enumeration. The officers of the Company may consist of a Chief Executive Officer, a President, a Treasurer, a Chief Financial Officer, a Secretary, and such other officers, including one or more Vice Presidents, Assistant Treasurers and Assistant Secretaries, as the Managing Member may determine.

(b) Appointment. The officers of the Company shall be appointed from time to time by the Managing Member.

(d) Tenure. Except as otherwise provided by the Act or by this Agreement, each of the officers of the Company shall hold his or her office until his or her successor is elected or until his or her earlier resignation or removal. Any officer may resign by delivering his or her written resignation to the Company, and such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event.

(e) Removal. The Managing Member may remove any officer with or without cause.

(f) Vacancies. Any vacancy in any office may be filled for the unexpired portion of the term by the Managing Member.

(g) Other Powers and Duties. Subject to this Agreement, each officer of the Company shall have in addition to the duties and powers specifically set forth in this Agreement, such duties and powers as are customarily incident to his or her office, and such duties and powers as may be designated from time to time by the Managing Member or the President.

Article V
DISTRIBUTIONS

Distributions Generally .

The Members shall be entitled to receive (a) Regular Distributions when and as determined by the Managing Member, out of funds of the Company

legally available therefor, net of any Reserves, payable on such payment dates to Members on such record date as shall be determined by the Managing Member, and (b) Tax Distributions as set forth in Section 5.3. All determinations made pursuant to this Article V shall be made by the Managing Member in its sole discretion. To the extent that the Managing Member determines that any distributions shall be made to the Members, such distributions shall be made in accordance with the provisions of this Article V.

Regular Distributions .

Subject to Section 3.4(b), Regular Distributions shall be made as follows:

(a) first, to the Class A Members, pro rata in accordance with their respective Unreturned Capital Contributions, until the amount of each Class A Member’s Unreturned Capital Contributions has been reduced to zero; and

(b) thereafter, 100% to the Class A Members and the Class B Members in respect of their vested Class B Units, pro rata, in accordance with their respective number of outstanding Class A Units and vested Class B Units.

Notwithstanding the foregoing, no holder of a Class B Unit shall be entitled to receive any distributions (other than Tax Distributions) with respect to such Class B Unit unless and until the aggregate amount of distributions made after the issuance of such Class B Unit to the Members in respect of the Units outstanding at the time of the issuance of such Class B Unit equals the Hurdle Amount with respect to such Class B Unit.

For purposes of determining the amount of distributions under this Section 5.2, each Member holding a Unit shall be treated as having received any amounts received by any prior Member holding such Unit in connection with any prior distributions made under this Section 5.2 or Section 5.4.

Tax Distributions .

Notwithstanding the foregoing distribution provisions of this Article V, each Member shall be entitled to a Tax Distribution equal to the Tax Rate multiplied by the cumulative taxable income allocated to the Member for all previous years pursuant to this Agreement plus an estimate for current year to date taxable income (after taking into account cumulative taxable losses allocated to the Member), taking into account capital losses only when, on a standalone basis, they can be deducted for U.S. federal income tax purposes against capital gains allocated to the Member under this Agreement, and reduced by prior Tax Distributions. If the Tax Rate in effect for the current year differs from the Tax Rate in effect for any prior year(s), appropriate adjustments shall be made to the amount of Tax Distributions calculated pursuant to the preceding sentence so as to take into account such varying rates such that, a change in the Tax Rate will not be applied for purposes of the calculations set forth in this Section 5.3 in respect of any year for which such changed Tax Rate was not in effect. Tax Distributions shall be made subject to restrictions under the financing arrangements of the Company and its Subsidiaries, and shall be made as an advance against distributions under Section 5.2(b) and shall have the effect of reducing such distributions. Tax Distributions will be timed in such a manner as to provide the direct or indirect holders of Units with such distributions prior to the due date for their respective estimated tax and actual tax payment obligations.

Distributions of Securities .

Other than with respect to Tax Distributions pursuant to Section 5.3, which shall be paid in cash, the Managing Member is authorized, in its sole discretion, to make distributions to the Members in the form of Securities or other property received or otherwise held by the Company; provided, however, that, in the event of any such non-cash distribution, such Securities or other property shall be valued at the Fair Market Value thereof and shall be distributed to the Members in the same proportion that cash received upon the sale of such Securities or other property at such Fair Market Value would have been distributed pursuant to Sections 5.2 or 5.3.

Restricted Distributions .

Notwithstanding anything to the contrary contained herein, the Company, and the Managing Member on behalf of the Company, shall not make a distribution to any Member if such distribution would violate the Act or other applicable law.

Withholding Tax Payments and Obligations .

In the event that withholding taxes are paid or required to be paid in respect of amounts distributed, or distributive share allocated, by the Company, such payments or obligations shall be treated as follows:

(a) Payments by the Company. The Company is authorized to withhold from any payment made to, or any distributive share of, a Member, any taxes required by law to be withheld, and in such event, such taxes shall be treated as if an amount equal to such withheld taxes had been paid to the Member rather than paid over to the taxing authority.

(b) Over-withholding. Neither the Company nor the Managing Member shall be liable for any excess taxes withheld in respect of any Member’s interest in the Company, and, in the event of over withholding, a Member’s sole recourse shall be to apply for a refund from the appropriate taxing authority. Any refunds of withheld taxes received by the Company shall be allocated and distributed in the manner, as reasonably determined by the Managing Member, that will as closely as practicable put the Members in the position that they would have been in had the Company not withheld such refunded tax.

(c) Certain Withheld Taxes Treated as Demand Loans. Any taxes withheld pursuant to Section 5.6(a) shall be treated as if distributed to the relevant Member to the extent an amount equal to such withheld taxes would then be distributable to such Member and, to the extent in excess of such distributable amounts, as a demand loan payable by the Member to the Company with interest at the lesser of (a) the Prime Rate per annum, and (b) the highest rate per annum permitted by law. The Managing Member may, in its discretion, either demand payment of the principal and accrued interest on such demand loan at any time, and enforce payment thereof by legal process, or may withhold from one or more distributions to a Member amounts sufficient to satisfy such Member’s obligations under any such demand loan.

Indemnity.

In the event that the Company, or the Managing Member or any Affiliate thereof, becomes liable as a result of a failure to withhold and remit taxes in respect of any Member, then such Member (or, if applicable, former Member) shall indemnify and hold harmless the Company, or the Managing Member, as the case may be, in respect of all taxes, including interest and penalties, and any reasonable expenses incurred in any examination, determination, resolution and payment of such liability. The provisions contained in this Section 5.6(d) shall survive the termination of the Company and the withdrawal of any Member.

Article VI
ALLOCATIONS

General Application .

The rules set forth below in this Article VI shall apply for the purpose of determining each Member’s allocable share of the items of income, gain, loss and expense of the Company comprising Net Income or Net Loss of the Company for each Fiscal Year, determining special allocations of other items of income, gain, loss and expense, and adjusting the balance of each Member’s Capital Account to reflect the aforementioned general and special allocations. For each Fiscal Year, the special allocations in Section 6.3 shall be made immediately prior to the general allocations of Section 6.2.

6.2 Certain Matters .

(a) Hypothetical Liquidation. Except as explicitly provided elsewhere herein, the items of income, gain, loss or deduction of the Company comprising Net Income or Net Loss for a Fiscal Year shall be allocated among the Persons who were Members during such Fiscal Year in a manner such that the Capital Account of each Member, immediately after making such allocation, is, as nearly as possible, equal (proportionately) to (1) the distributions that would be made to such Member pursuant to Article XI if, on the last day of the Fiscal Year, the Company were dissolved, its affairs wound up and its assets sold for cash equal to their Gross Asset Values, all Company liabilities were satisfied (limited in the case of each Nonrecourse Liability to the Gross Asset Value of the assets securing such liability) and the net proceeds of the Company were distributed in accordance with Section 11.3(c)(ii) to the Members immediately after making such allocations, minus (ii) such Member’s share of Company Minimum Gain, Member Nonrecourse Debt Minimum Gain and the amount such Member would be obligated to contribute to the capital of the Company, all computed immediately prior to the hypothetical sale of the assets described in clause (i) above.

(b) Loss Limitation. Notwithstanding anything to the contrary in Section 6.2(a) but subject to the last sentence of this Section 6.2(b), the amount of items of Company expense and loss allocated pursuant to Section 6.2(a) to any Member shall not exceed the maximum amount of such items that can be so allocated without causing such Member to have an Adjusted Capital Account Deficit at the end of any Fiscal Year, unless each Member would have an Adjusted Capital Account Deficit. All such items in excess of the limitation set forth in this Section 6.2(b) shall be allocated first, to Members who would not have an Adjusted Capital Account Deficit pro rata in proportion to their Capital Account balances, adjusted as provided in clauses (a) and (b) of the definition of “Adjusted Capital Account Deficit,” until no Member would be entitled to any further allocation, and thereafter to the Members in a manner determined in good faith by the Managing Member taking into account the relative economic interests of the Members of the Company.

Special Allocations .

The following special allocations shall be made in the following order and immediately prior to the general allocations of Section 6.2(a):

(a) Minimum Gain Chargeback. In the event that there is a net decrease during a Fiscal Year in either Company Minimum Gain or Member Nonrecourse Debt Minimum Gain, then notwithstanding any other provision of this Article VI, each Member shall receive

such special allocations of items of Company income and gain as are required in order to conform to Regulations Section 1.704-2.

(b) Qualified Income Offset. Notwithstanding any other provision of this Article VI, items of income and gain shall be specially allocated to the Members in a manner that complies with the “qualified income offset” requirement of Regulations Section 1.704-1(b)(2)(ii)(d)(3), provided that any allocation under this Section 6.3(b) shall be made only if and to the extent that a Member would have a deficit Capital Account balance in excess of such sum after all allocations provided for in this Article VI have been tentatively made as if this Section 6.3(b) were not in this Agreement.

(c) Deficit Capital Accounts Generally. In the event that a Member has a deficit Capital Account balance at the end of any Fiscal Year which is in excess of the sum of (i) the amount such Member is then obligated to restore pursuant to this Agreement, and (ii) the amount such Member is then deemed to be obligated to restore pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), respectively, such Member shall be specially allocated items of Company income and gain in an amount of such excess as quickly as possible, provided that any allocation under this Section 6.3(c) shall be made only if and to the extent that a Member would have a deficit Capital Account balance in excess of such sum after all allocations provided for in this Article VI have been tentatively made as if Section 6.3(b) and this Section 6.3(c) were not in this Agreement.

(d) Deductions Attributable to Member Nonrecourse Debt. Any item of Company loss or expense that is attributable to Member Nonrecourse Debt shall be specially allocated to the Members in the manner in which they share the economic risk of loss (as defined in Regulations Section 1.752-2) for such Member Nonrecourse Debt.

(e) Allocation of Nonrecourse Deductions. Each Nonrecourse Deduction of the Company shall be specially allocated to the Members in a manner determined in good faith by the Managing Member taking into account the relative economic interests of the Members of the Company.

(f) Section 754 Adjustments. To the extent an adjustment to the adjusted tax basis of any Company asset, pursuant to Section 734(b) or Section 743(b) of the Code is required, pursuant to Regulations Section 1.704-1(b)(2)(iv) (m), to be taken into account in determining Capital Accounts, the amount of such adjustment to Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members in accordance with Regulations Section 1.704-1(b)(2)(iv) (m).

(g) Regulatory Allocations. The allocations set forth in Sections 6.3(a) to 6.3(f) (the “Regulatory Allocations”) are intended to comply with certain requirements of the Regulations. It is the intent of the Members that, to the extent possible, the Regulatory Allocations will be offset with special allocations of other items of Company income, gain, loss or deduction pursuant to this Section 6.3. Therefore, notwithstanding any other provision of this Article VI (other than the Regulatory Allocations), the Managing Member shall make such offsetting special allocations of Company income, gain, loss or deduction in whatever manner it

determines appropriate so that, after the offsetting allocations are made, each Member’s Capital Account balance is, to the extent possible, equal to the Capital Account balance such Member would have had if the Regulatory Allocations were not part of this Agreement and all Company items were allocated pursuant to Section 6.2(a). In exercising its discretion pursuant to this Section 6.3(g), the Managing Member shall take into account future Regulatory Allocations that, although not yet made, are likely to offset other Regulatory Allocations previously made.

Transfer of Interest .

In the event of a transfer of all or part of an Interest (in accordance with the provisions of this Agreement) or the admission of an additional Member (in accordance with the provisions of this Agreement) the Company’s taxable year shall close with respect to the transferring Member, and such Member’s distributive share of all items of profits, losses and any other items of income, gain, loss or deduction shall be determined using the interim closing of the books method under Section 706 of the Code and Regulations Section 1.706-1(c)(2)(i) unless the Managing Member determines that there would be no substantial difference between the results under closing of the books and a pro rata method as described in proposed Regulation Section 1.706-4(d). Except as otherwise provided in this Section 6.4, in all other cases in which it is necessary to determine the profits, losses, or any other items allocable to any period, profits, losses, and any such other items shall be determined on a daily, monthly, or other basis, as determined by the Managing Member using any permissible method under Section 706 of the Code and the Regulations thereunder.

6.5 Tax Allocations .

(a) Section 704(b) Allocations.

(i) Except as provided in Section 6.5(b) below, each item of income, gain, loss, deduction or credit for U.S. federal income tax purposes that corresponds to an item of income, gain, loss or expense that is either taken into account in computing Net Income or Net Loss or is specially allocated pursuant to Section 6.3 (a “Book Item”) shall be allocated among the Members in the same proportion as the corresponding Book Item.

(A) If the Company recognizes Depreciation Recapture in respect of the sale of any Company asset,

1. the portion of the gain on such sale which is allocated to a Member pursuant to Section 6.1 or Section 6.3 shall be treated as consisting of a portion of the Company’s Depreciation Recapture on the sale and a portion of the balance of the Company’s remaining gain on such sale under principles consistent with Regulations Section 1.1245-1, and

2. if, for U.S. federal income tax purposes, the Company recognizes both “unrecaptured Section 1250 gain” (as defined in Section 1(h) of the Code) and gain treated as ordinary income under Section 1250(a) of the Code in respect of such sale, the amount treated as Depreciation Recapture under Section 6.5(a)(ii)(2)(B) shall be comprised of a proportionate share of both such types of gain.

(B) For purposes of this Section 6.5(a)(ii), “Depreciation Recapture” means the portion of any gain from the disposition of an asset of the Company

which, for U.S. federal income tax purposes, (1) is treated as ordinary income under Section 1245 of the Code, (2) is treated as ordinary income under Section 1250 of the Code, or (3) is “unrecaptured Section 1250 gain” as such term is defined in Section 1(h) of the Code.

(b) Section 704(c) Allocations. In the event that any property of the Company is credited to the Capital Account of a Member at a value other than its tax basis (whether as a result of a contribution of such property or a revaluation of such property pursuant to clause (b) of the definition of “Gross Asset Value”), then allocations of taxable income, gain, loss and deductions with respect to such property shall be made using any method provided for in Regulation Section 1.704-3.

(c) Credits. All tax credits shall be allocated among the Members as determined by the Managing Member in its reasonable discretion, consistent with applicable law.

(d) Capital Accounts. The tax allocations made pursuant to this Section 6.5 shall be solely for tax purposes and shall not affect any Member’s Capital Account or share of non-tax allocations or distributions under this Agreement.

Article VII
ACCOUNTING AND TAX MATTERS

Tax Returns .

The Managing Member, at the expense of the Company, shall endeavor to cause the preparation and timely filing (including extensions) of all tax returns required to be filed by the Company pursuant to the Code as well as all other required tax returns in each jurisdiction in which the Company owns property or does business. Within ninety (90) days after the end of each Fiscal Year, the Managing Member will cause to be delivered to each Person who was a Member at any time during such Fiscal Year, information with respect to the Company as may be necessary for the preparation of such Person’s Federal, state and local income tax returns for such Fiscal Year.

Tax Matters Member .

The Managing Member shall have the power to make elections and prepare and file returns regarding any federal, state or local tax obligations of the Company, and to designate one of the Members to serve as the “Tax Matters Member” of the Company for purposes of Section 6231(a)(7) of the Code, with power to manage and represent the Company in any administrative proceeding of the Internal Revenue Service; provided, however, that the Tax Matters Member shall not make decisions in a manner that would adversely affect the Class A Members without the consent of such other Class A Members, which consent shall not be unreasonably withheld or delayed.

Accounting Methods; Elections; Information .

The Managing Member shall determine the accounting methods and conventions to be used in the preparation of the Company’s tax returns and shall make any and all elections under the tax laws of the United States (including under Section 754 of the Code) and any other relevant jurisdictions as to the treatment of items of income, gain, loss, deduction and credit of the Company, or any other method or procedure related to the preparation of the Company’s tax returns.

Partnership Status .

The Members intend, and the Company shall take no position inconsistent with, treating the Company as a partnership for United States federal, state and local income and franchise tax purposes.

Article VIII
TRANSFERS OF UNITS

8.1 Restrictions on Transfers of Units .

(a) The Class B Members may not Transfer any Class B Units except (i) in an Exempt Transfer, or (ii) with the prior written approval of the Managing Member, in each case, in accordance with the applicable terms of this Agreement. To the extent that any Class B Member Transfers any or all of its Class B Units pursuant to an Exempt Transfer, such Transferee shall have the same rights and restrictions with respect to such Class B Units as the Class B Member that Transferred such Units.

(b) No Transfer of any Units by any Member shall become effective unless and until the Transferee (unless such Transferee already is party to this Agreement) executes and delivers to the Company a counterpart to this Agreement, agreeing to be treated in the same manner as the transferring Member. Upon such Transfer and such execution and delivery, the Transferee acquiring Transferred Units shall be bound by, and entitled to the benefits of, this Agreement in the same manner as the transferring Member.

(c) In addition to any other restrictions on Transfer imposed by this Agreement, no Member may Transfer any Unit (i) if the Managing Member determines that the Company could, as a result of such Transfer, be treated as a “publicly traded partnership” within the meaning of Section 7704(b) of the Code and (ii) without first delivering to the Managing Member, if requested, an opinion of nationally recognized tax counsel or consultant (reasonably acceptable in form and substance to the Managing Member) that such Transfer will not cause the Company to be deemed a “publicly traded partnership” as such term is defined in Section 7704(b) of the Code or otherwise cease to be taxable as a partnership for federal income tax purposes.

(d) Any Member who effectively Transfers any Units pursuant to this Article VIII shall cease to be a Member with respect to such Units and shall no longer have any rights or privileges of a Member with respect to such Units (it being understood, however, that the applicable provisions of Section 4.2 shall continue to inure to such Person’s benefit). Nothing contained herein shall relieve any Member who Transfers any Units from any liability or obligation of such Member to the Company or the other Members with respect to such Units that may exist on the date of such Transfer or that is otherwise specified in the Act and incorporated into this Agreement or for any liability to the Company or any other Person for any breaches of any representations, warranties or covenants by such Member (in its capacity as such) contained herein or in other agreements with the Company.

(e) Notwithstanding anything to the contrary herein, without the prior written approval of the Managing Member, no Management Member shall Transfer any Management

Units to any Competitive Business (as defined below) or any direct or indirect Affiliate thereof. “Competitive Business” shall mean the business competitors of the Company.

Transfers in Violation of Agreement .

Any Transfer or attempted Transfer of any Units in violation of any provision of this Agreement shall be void, and the Company shall not record such Transfer on its books or treat any purported transferee of such Units as the owner of such Units for any purpose. Without limitation of any other provision herein, no Transfer of any interest in any Class B Unit by a Class B Member shall be effective unless prior to such Transfer the transferee, assignee or intended recipient of such interest shall have agreed in writing to be bound by the provisions of Section 3.4(b), in form reasonably satisfactory to the Managing Member.

Article IX
INFORMATION RIGHTS, CONFIDENTIALITY AND ADDITIONAL AGREEMENTS

Information Rights .

Members shall have the right to receive from the Company, upon request, a copy of the Certificate of Formation (and any amendment thereto) and of this Agreement, as amended from time to time, and such other information regarding the Company as is required by the Act or this Agreement.

Confidentiality .

Each Member agrees that it will hold, and will use all commercially reasonable efforts to cause its officers, directors, members, managers, partners, employees, accountants, counsel, consultants, advisors, financial sources, financial institutions, and agents (the “Representatives”) to hold, in confidence all confidential information and documents regarding the Company and its Subsidiaries pursuant to or received by such Member or its Representatives in connection with this Agreement or any transaction contemplated hereby (except as required by applicable law, regulation or legal process, including any rule or regulation of a self-regulatory organization to which such Member or its Representatives are subject); provided, that each Member shall be entitled to disclose such confidential information and documents to its investors who are subject to confidentiality obligations owed to such Members.

Article X
AMENDMENT AND TERMINATION

Amendment or Modification; Waiver .

This Agreement may be amended only with the written approval of the Managing Member and such amendment must be in writing; provided, however, that (a) an amendment or modification increasing any liability or obligation of a Member to the Company, or adversely affecting the limitation of the liability of a Member with respect to the Company, shall be effective only with that Member’s consent, and (b) any amendment that affects holders of Class B Interests as a class adversely and/or disproportionately from Class A Members as a class, shall require the consent of a Majority in Interest of holders of vested Class B Interests; provided, that, if at the applicable time, there are no holders of vested Class B Interests, such amendment shall require the consent of a Majority in Interest of all holders of unvested Class B Interests. The failure of any Member to insist upon strict performance of a covenant hereunder or of any obligation hereunder, irrespective of the length of time for which such failure continues, shall not be a waiver of such Member’s right to

demand strict compliance herewith in the future. No consent or waiver, express or implied, to or of any breach or default in the performance of any obligation hereunder, shall constitute a consent or waiver to or of any other breach or default in the performance of the same or any other obligation hereunder.

Amendments by the Managing Member .

The Managing Member, without the consent or approval at any time of any Member (each Member, by acquiring its Interests, being deemed to consent to any such amendment), may amend any provision of this Agreement or the Certificate of Formation, and may execute, swear to, acknowledge, deliver, file and record all documents required or desirable in connection therewith, to reflect:

(a) Qualification to do Business. A change that is necessary to qualify the Company as a limited liability company or a Company in which the Members have limited liability; and

(b) Changes Which are Inconsequential, Curative or Required. A change that is:

(i) Of an inconsequential nature and does not adversely affect any Member in any respect; or

(ii) Necessary to reflect the addition or removal of any Member or the current Capital Contributions and number or class of Units held by each Member on the Company Register, following any change to such items in accordance with the provisions of this Agreement.

Termination of Agreement .

This Agreement will terminate in respect of all Members (a) with the written consent of the Company; or (b) upon the dissolution, liquidation or winding-up of the Company.

Termination as to a Party .

Any Member who ceases to hold any Units shall cease to be a Member and, except as provided herein, shall have no further rights or obligations under this Agreement.

Article XI
DISSOLUTION; LIQUIDATION

Dissolution .

The Company shall be dissolved and its affairs wound up on the first to occur of any of the following events:

(a) the written consent of all of the Class A Members;

(b) the decision to sell all or substantially all of the assets of the Company; or

The Company shall not dissolve or be terminated upon the death, retirement, resignation, expulsion, bankruptcy or dissolution of any Member other than the only Member of the Company, if the Company has only one Member remaining. The Managing Member shall promptly notify the Members of the dissolution of the Company.

Final Accounting .

Upon the dissolution of the Company, a proper accounting shall be made from the date of the last previous accounting to the date of dissolution.

11.3 Liquidation .

(a) Dissolution of the Company shall be effective as of the date on which the event occurs giving rise to the dissolution and all Members shall be given prompt notice thereof in accordance with Section 13.7, but the Company shall not terminate until the assets of the Company have been distributed as provided for in Section 11.3(c). Notwithstanding the dissolution of the Company, prior to the termination of the Company, the business, assets and affairs of the Company shall continue to be governed by this Agreement.

(b) Upon the dissolution of the Company, the Managing Member, or, if there is no Managing Member, a Person selected by Class A Members holding 66 2/3% in Interest of the Class A Interests shall act as the liquidator (the “Liquidator”) of the Company to wind up the Company. The Liquidator shall have full power and authority to sell, assign and encumber any or all of the Company’s assets and to wind up and liquidate the affairs of the Company in an orderly and business-like manner. A reasonable amount of time shall be allowed for the orderly liquidation of assets of the Company and the discharge of liabilities to creditors so as to enable the Members to minimize the normal losses attendant upon a liquidation. The costs of dissolution and liquidation shall be an expense of the Company.

(i) first, to creditors of the Company (including creditors who are Members) in satisfaction of the liabilities of the Company (whether by payment or the making of reasonable provision for payment thereof); and

(ii) second, to the Members in the same manner in which distributions are made pursuant to Article V, which distributions shall be deemed to be made pursuant to Article V.

The Liquidator shall determine whether any assets of the Company shall be liquidated through sale or shall be distributed in kind. A distribution in kind of an asset to a Member shall be considered, for the purposes of this Article XI, a distribution in an amount equal to the fair market value of the assets so distributed as determined by the Liquidator in its reasonable discretion. As promptly as possible after dissolution and again after final liquidation, the liquidating trustee shall cause an accounting by a firm of independent public accountants of the Company’s assets, liabilities, operations and liquidating distributions to be given to the Members.

Cancellation of Certificate of Formation .

Upon the completion of the distribution of Company assets as provided in Section 11.3, the Company shall be terminated and the Person acting as Liquidator shall cause the cancellation of the Certificate of Formation and shall take such other actions as may be necessary or appropriate to terminate the Company, including filing the certificate of cancellation with the Secretary of State of the State of Delaware.

Article XII
EXCHANGE PROCEDURES

12.1 Exchanges of Units .

(a) Elective Exchanges of Units.

(i) Upon the terms and subject to the conditions of this Agreement, a Class B Member may effect an Exchange by (A) delivering to J. Alexander’s and the Company an Exchange Notice and (B) surrendering (or in the absence of a surrender, be deemed to surrender) to the Company the Class B Units relating to such Exchange at the principal office of the Company, free and clear of all liens, encumbrances, rights of first refusal and the like, in consideration for, at the option of the Managing Member, with such consideration to be delivered as promptly as practicable following such delivery and surrender or deemed surrender (as applicable), but in any event within two (2) business days after the Date of Exchange specified in such Exchange Notice, (x) a cash payment by the Company in accordance with the instructions provided in the Exchange Notice in an amount equal to the Class B Unit Exchange Price for each Class B Unit subject to such Exchange, in which event such exchanged Units shall automatically be deemed cancelled concurrently with such payment, without any action on the part of any Person, including J. Alexander’s or the Company, or (y) the issuance by J. Alexander’s to such Class B Member of a number of shares of Common Stock equal to the quotient obtained by dividing (A) the product of the Class B Unit Exchange Price for such Units multiplied by the number of Class B Units subject to such Exchange, by (B) the VWAP Price as of the date of the delivery of the Exchange Notice. Notwithstanding the foregoing or any other provision of this Agreement, an Exchange of Class B Units by the Management Company or any transferee thereof may only be effected for shares of Common Stock pursuant to clause (y) above. If J. Alexander’s elects or is required (in the case of the Management Company) to issue Common Stock in an Exchange, J. Alexander’s shall (A) deliver or cause to be delivered at the offices of the then-acting registrar and transfer agent of the Common Stock the number of shares of Common Stock deliverable upon such Exchange, registered in the name of such Class B Member (or in such other name as is requested in writing by such Class B Member), in certificated form, as may be requested in writing by such Class B Member or, (B) if the Common Stock is settled through the facilities of The Depository Trust Company, upon the written instruction of such Class B Member set forth in the Exchange Notice, deliver to such Class B Member through the facilities of The Depository Trust Company, to the account of the participant of The Depository Trust Company designated by such Class B Member in the Exchange Notice.

(ii) An Exchange pursuant to Section 12.1(a) of Units for Common Stock will be deemed to have been effected immediately prior to the close of business on the

Date of Exchange, and the Class B Member effecting such Exchange will be treated as a holder of record of Common Stock as of the close of business on such date.

(b) Expenses. J. Alexander’s, the Company and the Class B Member effecting an Exchange Member shall each bear its own expenses in connection with any Exchange, whether or not any such Exchange is ultimately consummated. For the avoidance of doubt, (i) neither J. Alexander’s nor the Company shall bear any transfer taxes, stamp taxes or duties, or other similar taxes in connection with, or arising by reason of, any Exchange, and (ii) the Class B Member effecting an Exchange shall bear any and all income or gains taxes imposed on gain realized by it as a result of any such Exchange.

12.2 Common Stock to be Issued .

(a) In connection with any Exchange, J. Alexander’s shall have the right to provide shares of Common Stock that are registered pursuant to the Securities Act, unregistered shares of Common Stock or any combination thereof, as it may determine in its sole discretion.

(b) J. Alexander’s shall at all times reserve and keep available out of its authorized but unissued Common Stock, solely for the purpose of issuances upon any Exchange, such number of shares of Common Stock as shall from time to time be sufficient to effect the Exchange of all Class B Units that may be outstanding from time to time. J. Alexander’s shall take any and all actions necessary or desirable to give effect to the foregoing. If the shares of Common Stock required to be reserved pursuant to the foregoing sentence require listing on any national securities exchange, J. Alexander’s shall, at its expense, use its commercially reasonable efforts to cause such shares to be listed or duly approved for listing on the same exchange on which the Common Stock shall otherwise be listed.

(c) J. Alexander’s shall use its reasonable best efforts to timely file all reports and other documents required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations promulgated by the Securities and Exchange Commission thereunder to enable a holder of shares of Common Stock received upon an Exchange to sell such shares without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 or Regulation S under the Securities Act. Upon the written request of a Class B Member, J. Alexander’s shall deliver to such holder a written statement that it has complied with such requirements.

(d) Any Common Stock to be issued by J. Alexander’s in accordance with this Agreement shall be validly issued, fully paid and non-assessable.

Article XIII
MISCELLANEOUS

Certain Defined Terms .

As used in this Agreement, the following terms shall have the meanings set forth or as referenced below.

“ Act ” has the meaning given such term in the definition of Certificate of Formation.

“ Adjusted Capital Account Deficit ” means, with respect to any Member, the deficit balance, if any, in such Member’s Capital Account as of the end of the relevant Fiscal Year, after giving effect to the following adjustments:

(a) credit to such Capital Account any amounts that such Member is obligated to restore pursuant to any provision of this Agreement or is deemed obligated to restore pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and

(b) debit to such Capital Account the items described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b) (2)(i i)(d)(5) and 1.704-1(b)(2)(ii)(d)(6).

The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

“ Affiliate ” of any particular Person means any other Person Controlling, Controlled by or under common Control with such particular Person or, in the case of a natural Person, any other member of such Person’s Family Group.

“ Agreement ” has the meaning given such term in the Preamble.

“ Award Agreement ” means each award agreement pursuant to which Class B Units have been issued and granted to a Management Member or the Management Company, as applicable.

“ Book Item ” has the meaning given such term in Section 6.5(a)(i).

“ Capital Account ” has the meaning given such term in Section 3.10.

“ Calculation Date ” means the date selected by the Company as of which the Fair Market Value of a Termination Security is determined, which date shall be (a) not more than thirty (30) days before the closing date of the purchase of the Termination Security and (b) at least six (6) months and one (1) day after the date the Termination Security became vested (unless the Company determines that such six (6) month delay is not necessary for the award pursuant to which such Class B Units were made to be classified as an equity award under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718, Stock Compensation (or any applicable successor standards) with respect to any Termination Security the valuation on the date that is 181 days following the Termination Date with respect to such Terminated Employee.

“ Capital Contribution ” means, with respect to any Member, the amount of cash and the initial Gross Asset Value of any property (other than cash) contributed to the Company by such Member at such time with respect to the Interests held by such Member reduced by the amount of any liability of such Member assumed by the Company or the amount of any liability to which any property contributed by such Member is subject; “Capital Contributions” means, with respect to any Member, the aggregate amount of cash and the aggregate value of any property (other than cash) as determined by reference to the initial Gross Asset Value of such property contributed to the Company by such Member (or its predecessors in interest) with respect to the

Interests held by such Member reduced by the amount of any liability of such Member assumed by the Company or the amount of any liability to which any property contributed by such Member is subject.

“ Cause ”, with respect to any Management Member, has the meaning for such term (or an analogous term) set forth in the applicable employment agreement (or similar agreement) of such Person, and in the absence of such definition, means (i) such Person’s indictment, pleading of nolo contendere or conviction of a felony or a crime involving embezzlement, conversion of property or moral turpitude, (ii) a final non-appealable finding of such Person’s breach of any applicable fiduciary duties to the Company or its members, (iii) such Person’s willful and continual neglect to discharge his or her duties, responsibilities or obligations under any agreement between the such Person and the Company, (iv) such Person’s habitual drunkenness or substance abuse which materially interferes with such Person’s ability to discharge his or her duties, responsibilities and obligations under any agreement between such Person and the Company, provided that such Person has been given notice and thirty (30) days from such notice fails to cure such drunkenness or abuse, (v) the material breach by such Person of any agreement between such Person and the Company, provided, that such Person has been given notice and fails to cure such breach within thirty (30) days from such notice, (vi) commission of fraud, embezzlement or misappropriation of funds against the Company or (vii) gross negligence or willful misconduct in the performance of duties that causes a material harm to the Company.

“ Certificate of Formation ” means the Certificate of Formation of the Company as filed with the Secretary of State of the State of Delaware on February 6, 2013 pursuant to the Delaware Limited Liability Company Act (6 Del. C. Section 18-101, et seq., as amended and in effect from time to time) (the “Act”), as it may be amended or restated from time to time.

“ Class A Interest ” means the limited liability company interest represented by the Class A Units owned by a Class A Member in the Company at any particular time, including the right of such Class A Member to any and all benefits to which such Class A Member may be entitled as provided in the Act, this Agreement, or otherwise, together with the obligations of such Class A Member to comply with all terms and provisions of this Agreement and the Act.

“ Class A Member ” means each Person admitted to the Company as a Class A Member whose name is set forth on Schedule I hereto as a Class A Member with respect to Class A Units held by such Person, and any other Person admitted as an additional or substitute Class A Member, so long as such Person remains a Class A Member.

“ Class A Units ” has the meaning given such term in Section 3.3(a)(i).

“ Class B Interest ” means the limited liability company interest represented by the Class B Units owned by a Class B Members in the Company at any particular time, including the right of such Class B Members to any and all benefits to which such Class B Member may be entitled as provided in the Act, this Agreement, or otherwise, together with the obligations of such Class B Member to comply with all terms and provisions of this Agreement and the Act.

“ Class B Member ” means each Person admitted to the Company as a Class B Member whose name is set forth on Schedule I hereto as a Class B Member with respect to Class B Units

held by such Person, and any other Person admitted as an additional or substitute Class B Member, so long as such Person remains a Class B Member.

“ Class B Unit Exchange Price ” means, for each vested Class B Unit, the aggregate amount that would be distributed with respect to such vested Class B Unit in accordance with Section 5.2 (assuming for this purpose that all unvested Units are vested) if the aggregate amount to be distributed to all Members pursuant to Section 5.2 were equal to the sum of (i) the implied valuation of J. Alexander’s, as calculated by reference to J. Alexander’s Market Capitalization, plus (ii) the Fair Market Value of any liabilities directly owed by J. Alexander’s, minus (iii) the Fair Market Value of any assets directly held by J. Alexander’s (in each of clauses (ii) and (iii), to the extent such assets and/or liabilities are not assets or-liabilities of the Company or any of its Subsidiaries).

“ Class B Units ” has the meaning given such term in Section 3.3(a)(ii).

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Combination ” means any combination of stock, by reverse split, reclassification, recapitalization or otherwise.

“ Common Stock ” means the Common Stock, par value $0.001 per share, of J. Alexander’s.

“ Company ” has the meaning given such term in the Preamble.

“ Company Business ” has the meaning given such term in Section 2.5(a).

“ Company Incentive Plan ” means the 2015 Management Incentive Plan of the Company, in the form attached hereto as Exhibit B, as the same may be amended, restated, modified or supplemented from time to time.

“ Company Minimum Gain ” has the meaning given such term in Regulations Sections 1.704-2(b)(2) and 1.704-2(d). “Company Register” has the meaning given such term in Section 3.1.

“ Control” (including, with correlative meaning, all conjugations thereof) means with respect to any Person, the ability of another Person to control or direct the actions or policies of such first Person, whether by ownership of voting Units, by contract or otherwise.

“ Costs ” has the meaning set forth in Section 4.2(a).

“ Date of Exchange ” means with respect to an Exchange pursuant to Article XII, the date identified in the respective Exchange Notice.

“ Depreciation ” means, for each fiscal year, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable with respect to an asset for such fiscal year, except that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such fiscal year, Depreciation shall be an amount which

bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization, or other cost recovery deduction for such fiscal year bears to such beginning adjusted basis; provided, however, that if the adjusted basis for federal income tax purposes of an asset at the beginning of such fiscal year is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the Managing Member.

“ Depreciation Recapture ” has the meaning given such term in Section 6.5(a)(ii)(B).

“ Employed ” has the meaning given such term in Section 3.6(a)(i).

“ Employment ” has the meaning given such term in Section 3.6(a)(i).

“ Exchange ” means an exchange of Class B Units for cash or shares of Common Stock pursuant to the terms, and subject to the conditions, of Section 12.1(a).

“ Exchange Act ” means the Securities Exchange Act of 1934 and the rules and regulation promulgated thereunder, all as the same have been or may be amended from time to time.

“ Exchange Notice ” means a written election of Exchange substantially in the form of Exhibit B attached hereto, duly executed by the exchanging Member.

“ Exempt Transfer ” means a Transfer of Units (a) with respect to any Member who is a natural person, to a member of such Member’s immediate family, which shall include such Member’s spouse, children or grandchildren, or a trust, corporation, partnership or limited liability company all of the beneficial interests of which shall be held by such Member or one or more members of such Member’s immediate family, and shall include such Member’s heirs, successors, administrators and executors; (b) with respect to any Member that is an entity, (i) to any Affiliate of such Member (but only as long as such entity remains an Affiliate of such Member) and (ii) to any of such Member’s shareholders, members, partners or other equity holders to which such Member Transfers all of such Member’s Units; and (c) to the Managing Member; provided, that, in each case any transferee in an Exempt Transfer shall have (if not already a party to this Agreement) agreed in writing, in form and substance satisfactory to the Managing Member, to become a party to, and be bound by, all of the terms of this Agreement (in the absence of which such transfer shall be deemed not to be an Exempt Transfer).

“ Fair Market Value ” means the fair market value reasonably determined by the Managing Member. “Fiscal Year” has the meaning given such term in Section 2.7.

“ Family Group ” means, with respect to any individual, such individual’s spouse and descendants (whether natural or adopted) and any trust, partnership, limited liability company or similar vehicle established and maintained solely for the benefit of (or the sole members or partners of which are) such individual, such individual’s spouse and/or such individual’s descendants.

“ Gross Asset Value ” means, with respect to any asset, the asset’s adjusted basis for U.S. federal income tax purposes, except as follows:

(a) the Gross Asset Value of any asset (other than a promissory note described in Treasury Regulation Section 1.704-1(b)(iv)(d)(2)) contributed by a Member to the Company is the gross fair market value of such asset as reasonably determined by the contributing Member and the Managing Member at the time of contribution;

(b) the Gross Asset Value of all Company assets shall be adjusted to equal their respective gross fair market values, as reasonably determined by the Managing Member, as of the following times: (i) the acquisition of any additional interest in the Company by any new or existing Member in exchange for more than a de minimis Capital Contribution; (ii) the distribution by the Company to a Member of more than a de minimis amount of property as consideration for an interest in the Company; (iii) the grant of an interest in the Company (other than a de minimis interest) as consideration for the provision of services to or for the benefit of the Company by an existing Member acting in its capacity as a Member, or by a new Member acting in its capacity as a Member or in anticipation of becoming a Member; and (iv) the liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g); provided, however, that the adjustments pursuant to clauses (i), (ii) and (iii) above shall be made only if the Managing Member reasonably determines that such adjustments are necessary or appropriate to reflect the relative economic interests of the Members in the Company;

(c) the Gross Asset Value of any Company asset distributed to any Member shall be adjusted to equal the gross fair market value of such asset on the date of distribution as reasonably determined by the Managing Member; and

(d) the Gross Asset Values of all Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Section 734(b) or Section 743(b) of the Code, but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m) and clause (f) of the definition of “Net Income” and “Net Loss” or Section 6.3(f); provided, however, that such Gross Asset Values shall not be adjusted pursuant to this clause (d) to the extent the Managing Member reasonably determines that an adjustment pursuant to clause (b) above is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this subparagraph.

If the Gross Asset Value of a Company asset has been determined or adjusted pursuant to clause (a), (b) or (d) above, such Gross Asset Value shall thereafter be adjusted by Depreciation taken into account with respect to such asset for purposes of computing Net Income or Net Loss.

“ Hurdle Amount ” means, in respect of a Class B Unit, a specified amount, which shall be (i) with respect to the Class B Units issued as of the date hereof (if any), the amount set forth on Schedule I hereto, and (ii) with respect to each subsequent issuance of Class B Units, the amount determined by the Managing Member at the time of such subsequent issuance and set forth both in an Award Agreement and on Schedule I hereto. To the extent necessary, the Hurdle Amount for each outstanding Class B Unit shall be increased by the aggregate amount of all Capital Contributions made to the Company subsequent to the issuance of such Class B Unit so as to maintain the treatment of such Class B Units as Profits Interests.

“ Hypothetical Liquidation ” means as of any date, a hypothetical liquidation of the Company as of such date, assuming (i) that a sale of all the assets of the Company occurs at prices equal to their respective fair market values (as reasonably determined by the Managing Member), (ii) the net proceeds of such sale are distributed to the Members pursuant to Section 5.2, and after payment of all actual Company indebtedness, and any other liabilities related to the Company’s assets, limited, in the case of the hypothetical payment of non-recourse liabilities, to the collateral securing or otherwise available to satisfy such liabilities.

“ Interests ” means the Class A Interests and the Management Interests.

“ J. Alexander’s ” has the meaning given such term in the Preamble.

“ J. Alexander’s Market Capitalization ” means, as of a Date of Exchange, an amount equal to the product of (x) the number of shares of Common Stock actually outstanding on such date and (y) the VWAP Price.

“ Liquidator ” has the meaning given such term in Section 11.3(b).

“ Majority in Interest ” means, with respect to Units of a particular class, vested Units of such class representing more than 50% of the aggregate number of vested Units of such class.

“ Management Agreement ” means that certain Management Consulting Agreement between the Company and the Management Company, dated as of the date hereof.

“ Management Company ” has the meaning given such term in the Preamble.

“ Management Member ” has the meaning given such term in the Preamble.

“ Management Units ” means the Class B Units held by the Management Members.

“ Management Units Transferee ” has the meaning given such term in Section 3.6(a)(i).

“ Managing Member ” means J. Alexander’s, in its capacity as the sole manager of the Company in accordance with Section 18-402 of the Act.

“ Member Loan ” has the meaning given such term in Section 13.14.

“ Member Nonrecourse Debt ” has the meaning given such term in Regulations Section 1.704-2(b)(4) for “partner nonrecourse debt.”

“ Member Nonrecourse Debt Minimum Gain ” means an amount, with respect to each Member Nonrecourse Debt, equal to the Company Minimum Gain that would result if the Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Regulations Section 1.704-2(i)(3).

“ Member ” and “ Members ” have the meaning given such terms in the Preamble.

“ Net Income ” and “ Net Loss ” means, for each Fiscal Year or other period, an amount equal to the Company’s taxable income or loss for such Fiscal Year or other period, determined

in accordance with Section 703(a) of the Code (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Section 703(a)(1) of the Code shall be included in taxable income or loss) with the following adjustments (without duplication):

(a) any income of the Company that is exempt from U.S. federal income tax and not otherwise taken into account in computing Net Income or Net Loss pursuant to this paragraph, shall be added to such income or loss;

(b) any expenditures of the Company described in Section 705(a)(2)(B) of the Code or treated as Section 705(a) (2)(B) of the Code expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Net Income or Net Loss, shall be subtracted from such taxable income or loss;

(c) in the event the Gross Asset Value of any Company asset is adjusted pursuant to clauses (b) or (c) of the definition of “Gross Asset Value”, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Net Income or Net Loss;

(d) gain or loss resulting from any disposition of Company property with respect to which gain or loss is recognized for U.S. federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value;

(e) in lieu of depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such Fiscal Year, computed based on the Gross Asset Value of the property;

(f) to the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Section 734(b) or Section 743(b) of the Code is required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m) to be taken into account in determining Capital Accounts, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis of the asset) from the disposition of the asset and shall be taken into account for purposes of computing Net Income or Net Loss; and

(g) any items which are specially allocated pursuant to the provisions of Section 6.3 shall not be taken into account in computing Net Income or Net Loss.

“ Nonrecourse Deductions ” has the meaning given such term in Regulations Sections 1.704-2(b)(1) and 1.704-2(c). “Nonrecourse Liability” has the meaning given such term in Regulations Section 1.704-2(b)(3).

“ Person ” means an individual, a partnership, a joint venture, a corporation, an association, a joint stock company, a limited liability company, a trust, an unincorporated organization or a government or any department or agency or political subdivision thereof.

“ Prime Rate ” means the highest U.S. prime rate of interest published by The Wall Street Journal as the “base rate” on corporate loans at large money center commercial banks.

“ Prior Agreement ” has the meaning given such term in the Recitals.

“ Profits Interest ” has the meaning given such term in Section 3.4(b).

“ Proposed Rules ” has the meaning given such term in Section 3.4(c)(i).

“ Regular Distributions ” means all distributions other than Tax Distributions.

“ Regulations ” means the Income Tax Regulations promulgated under the Code, as amended.

“ Regulatory Allocations ” has the meaning given such term in Section 6.3(g).

“ Representatives ” has the meaning given such term in Section 9.2.

“ Reserves ” means the amount of proceeds that the Managing Member determines in good faith and in its reasonable discretion is necessary to be maintained by the Company for the purpose of paying reasonably anticipated expenses, liabilities and obligations of the Company regardless of whether such expenses, liabilities and obligations are actual or contingent.

“ Safe Harbor Election ” has the meaning given such term in Section 3.4(b)(i).

“ Securities ” means securities of every kind and nature, including stock, notes, bonds, evidences of indebtedness, options to acquire any of the foregoing, and other business interests of every type, including interests in any Person.

“ Securities Act ” means the Securities Act of 1933, as amended.

“ Subdivision ” means any subdivision of stock, by any split, dividend, reclassification, recapitalization or otherwise.

“ Subsidiary ” means, with respect to any specified Person, any other Person in which such specified Person, directly or indirectly through one or more Affiliates or otherwise, beneficially owns at least fifty percent (50%) of either the ownership interest (determined by equity or economic interests) in, or the voting control of, such other Person.

“ Tax Distribution ” means a distribution under Section 5.3.

“ Tax Matters Member ” has the meaning given such term in Section 7.2.

“ Tax Rate ” means the highest combined marginal U.S. federal, state and local tax rate (including for the avoidance of doubt the net investment income tax imposed by Code Section 1411 and corresponding provisions of state and local law) for an individual residing in New York City, New York.

“ Terminated Employee ” has the meaning given such term in Section 3.6(a)(i).

“ Termination Date ” has the meaning given such term in Section 3.6(a)(i).

“ Termination Event ” has the meaning given such term in Section 3.6(a)(i).

“ Termination Securities ” has the meaning given such term in Section 3.6(a)(i).

“ Trading Day ” means a day on which (i) the Common Stock at the close of regular way trading (not including extended or after hours trading) is not suspended from trading on any national securities exchange or association or over-the-counter market that is the primary market for trading the Common Stock at the close of business, (ii) the Common Stock has traded at least once regular way on the national securities exchange or association or over-the-counter market that is the primary market for the trading of the Common Stock, and (iii) there has been no “market disruption event.” For purposes of this definition, “market disruption event” means the occurrence or existence for more than one half-hour period in the aggregate on any scheduled trading day for the Common Stock of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the stock exchange or otherwise) in the Common Stock, and such suspension or limitation occurs or exists at any time before 1:00 p.m., New York City time.

“ Transfer ” means (in either the noun or the verb form, including with respect to the verb form, all conjugations thereof within their correlative meanings) with respect to any security, the gift, sale, assignment, transfer, pledge, hypothecation or other disposition (whether for or without consideration, whether directly or indirectly, and whether voluntary, involuntary or by operation of law) of such security or any interest therein; provided, however, that transfers of all or any portion of stock, partnership interests (general or limited), membership interests or other similar securities or any securities convertible into or exercisable or exchangeable therefor in J. Alexander’s shall not constitute a “Transfer”.

“ Transferee ” means any Person to whom a Member may Transfer Units.

“ Transferor ” means the transferor in a Transfer.

“ Units ” means the Class A Units, the Class B Units and any other class or series of authorized units of the Company.

“ Unreturned Capital Contributions ” means, with respect to each Class A Member, at any time of determination, the aggregate amount of such Class A Member’s Capital Contributions less the amount of distributions received by such Class A Member (or its predecessors in interest) under Section 5.2(a).

“ VWAP ” means the daily per share volume-weighted average price of the Common Stock as displayed under the heading Bloomberg VWAP on the Bloomberg page designated for the Common Stock (or its equivalent successor if such page is not available) in respect of the period from the open of trading on such day until the close of trading on such day (or if such volume-weighted average price is unavailable, (x) the per share volume-weighted average price of such Common Stock on such day (determined without regard to afterhours trading or any other trading outside the regular trading session or trading hours), or (y) if such determination is not feasible, the market price per share of Common Stock, in either case as determined by a nationally recognized independent investment banking firm retained for this purpose by J. Alexander’s).

“ VWAP Price ” means, as of any date, the average of the daily VWAP of a share of Common Stock for the five (5) Trading Days immediately prior to such date; provided that in calculating such average (i) the VWAP for any Trading Day during the five (5) Trading Day period prior to the date of any extraordinary distributions made on the Common Stock during the five (5) Trading Day period shall be reduced by the value of such distribution per share of Common Stock, and (ii) the VWAP for any Trading Day during the five (5) Trading Day period prior to the date of a Subdivision or Combination of Common Stock during the five (5) Trading Day period shall automatically be adjusted in inverse proportion to such Subdivision or Combination.

Severability .

Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

Entire Agreement .

Except as otherwise expressly set forth herein, this document (including the Company Incentive Plan and the other exhibits and schedules hereto), together with any applicable terms of any Award Agreement between a Class B Member, on the one hand, and the Company, on the other hand, embodies the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

Successors and Assigns .

Except as otherwise provided herein, this Agreement shall bind and inure to the benefit of and be enforceable by the Company and its successors and assigns and the Members and any subsequent holders of Units and the respective successors and assigns of each of them, so long as they hold Units.

Counterparts .

This Agreement may be executed in any number of counterparts with the same effect as if all parties had signed the same document, and all counterparts shall be construed together and shall constitute the same instrument.

Remedies .

The Company and the Members shall be entitled to enforce their rights under this Agreement specifically, to recover damages by reason of any breach of any provision of this Agreement (including costs of enforcement) and to exercise all other rights existing in their favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that the Company or any Member may in its, his or her sole discretion apply to any court of law or equity of competent jurisdiction for specific performance or injunctive relief (without posting a bond or other security) in order to enforce or prevent any violation of the provisions of this Agreement.

Notices .

Except as expressly set forth to the contrary in this Agreement, all notices, requests, or consents required or permitted to be given under this Agreement must be in writing and shall be deemed to have been given: (a) three (3) days after the date mailed by

registered or certified mail, addressed to the recipient, with return receipt requested, (b) upon delivery to the recipient in person or by courier, or (c) upon receipt of a facsimile transmission by the recipient. Such notices, requests and consents shall be given (i) to Members at their addresses or fax numbers set forth on Schedule I attached hereto, or such other address or fax numbers as a Member may specify by written notice to the Company, the Managing Member and all of the other Members, or (ii) to the Company or the Managing Member at the address specified in this Section 13.7, or at such other location as the Company shall have specified in writing to the Members as its principal office. Whenever any notice is required to be given by law, the Certificate of Formation or this Agreement, a written waiver thereof, signed by the Person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Notices to the Company will be sent to:

J. Alexander’s Holdings, LLC
3401 West End Avenue, Suite 260
Nashville, Tennessee 37203
Attention: Chief Financial Officer
Facsimile: (615)-269-1999

with copies (which shall not constitute notice) to:

J. Alexander’s Holdings, Inc.
3401 West End Avenue, Suite 260
Nashville, Tennessee 37203
Attention: Chief Financial Officer
Facsimile: (615)-269-1999

Notices to any Member will be sent to the address set forth opposite such Member’s name on Schedule I attached hereto.

Governing Law .

The Act shall govern all questions arising under this Agreement concerning the relative rights of the Company and its Members. All other questions concerning the construction, validity and interpretation of this Agreement shall be governed by and construed in accordance with the domestic laws of the State of Delaware applicable to contracts made and to be performed in the State of Delaware. The parties hereto hereby irrevocably and unconditionally submit to the exclusive jurisdiction of any State or Federal court sitting in Nashville, TN over any suit, action or proceeding arising out of or relating to this Agreement. The parties hereby agree that service of any process, summons, notice or document by U.S. registered mail addressed to any such party shall be effective service of process for any action, suit or proceeding brought against a party in any such court. The parties hereto hereby irrevocably and unconditionally waive any objection to the laying of venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. The parties hereto agree that a final judgment in any such suit, action or proceeding brought in any such court shall be conclusive and binding upon any party and may be enforced in any other courts to whose jurisdiction any party is or may be subject, by suit upon such judgment.

Interpretation .

Any references to an agreement or organizational document herein shall mean such agreement or organizational document, as may be amended, modified and/or supplemented (and/or as any provision thereunder may be waived) from time to time in accordance with its terms.

Descriptive Headings .

The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

Business Opportunities .

Except to the extent otherwise agreed between any Member, on the one hand, and the Company or any of its Affiliates, on the other hand, any Member and any Affiliate of such Member may engage in or possess an interest in other investments, business ventures or entities of any nature or description, independently or with others, similar or dissimilar to, or that compete with, the investments or business of the Company, and may provide advice and other assistance to any such investment, business venture or entity, and the Company and the Members shall have no rights by virtue of this Agreement in and to such investments, business ventures or entities or the income or profits derived therefrom, and the pursuit of any such investment or venture, even if competitive with the business of the Company, shall not be deemed wrongful or improper. No Member nor any Affiliate thereof (other than an employee of the Company or a Subsidiary of the Company) shall be obligated to present any particular investment or business opportunity to the Company even if such opportunity is of a character that, if presented to the Company, could be taken by the Company, and any Member or any Affiliate thereof (other than an employee of the Company or a Subsidiary of the Company) shall have the right to take for its own account (individually or as a partner or fiduciary) or to recommend to others any such particular investment opportunity.

Transactions with Interested Persons; Standards of Conduct .

Unless entered into in bad faith, no contract or transaction between the Company and one or more of its Members, or between the Company and any other corporation, partnership, association or other organization in which one or more of its Members or their Affiliates, have a financial interest or are shareholders, members, directors, partners, directors or officers, shall be voidable solely for this reason or solely because said Member or their Affiliates were present or participated in the authorization of such contract or transaction if (a) the material facts as to the relationship or interest of such Member or their Affiliates and as to the contract or transaction were disclosed or known to the Managing Member, and (b) the contract or transaction was authorized and approved by the Managing Member and any other Members required in accordance with the provisions of this Agreement, and, if such conditions have been satisfied, no Member or their Affiliates interested in such contract or transaction, because of such interest, shall be considered to be in breach of this Agreement or liable to the Company, any Member or their Affiliates, or any other Person or organization for any loss or expense incurred by reason of such contract or transaction or shall be accountable for any gain or profit realized from such contract or transaction; provided, however, that the Managing Member shall approve any such contract or transaction contemplated by this Section 13.12 only if it has reasonably determined in good faith that such contract or transaction is on terms that are fair and reasonable and no less favorable to the Company than the Managing Member would expect to obtain in a comparable arms-length transaction with a Person which is not an Affiliate.

Appointment of Managing Member as Attorney-in-Fact .

Each Member hereby irrevocably constitutes, appoints and empowers the Managing Member and its duly authorized officers, managers, agents, successors and assignees, with full power of substitution and resubstitution, as its true and lawful attorneys-in-fact, in its name, place and stead and for its use and benefit, to execute, certify, acknowledge, file, record and swear to all instruments, agreements and documents necessary or advisable to carrying out the following:

(a) any and all amendments to this Agreement that may be permitted or required by this Agreement or the Act, including amendments required to effect the admission of a Member pursuant to and as permitted by this Agreement or to revoke any admission of a Member which is prohibited by this Agreement;

(b) any certificate of cancellation of the Certificate of Formation that may be necessary upon the termination of the Company;

(c) any business certificate, certificate of formation, amendment thereto, or other instrument or document of any kind necessary to accomplish the Company Business;

(d) all conveyances and other instruments or documents that the Managing Member deems appropriate or necessary to effectuate or reflect the dissolution, termination and liquidation of the Company pursuant to the terms of this Agreement;

(e) all conveyances and other instruments or documents that the Managing Member deems appropriate or necessary to effectuate or reflect the conversion, contribution or other actions contemplated by this Agreement; and

(f) all other instruments that may be required or permitted by law to be filed on behalf of the Company and that are not inconsistent with this Agreement. The Managing Member shall not take action as attorney-in-fact for any Member which would in any way increase the liability of the Member beyond the liability expressly set forth in this Agreement or which would diminish the substantive rights of such Member.

Limited Authorization of Managing Member .

Each Member authorizes such attorneys-in-fact to take any further action which such attorneys-in-fact shall consider necessary or advisable in connection with any of the foregoing, hereby giving such attorneys-in-fact full power and authority to do and perform each and every act or thing whatsoever necessary or advisable to be done in and about the foregoing as fully as such Member might or could do if personally present, and hereby ratifying and confirming all that such attorneys-in-fact shall lawfully do or cause to be done by virtue hereof. The appointment by each such Member of the Managing Member and its duly authorized officers, agents, successors and assigns with full power of substitution and resubstitution, as aforesaid, as attorneys-in-fact shall be deemed to be a power coupled with an interest in recognition of the fact that each of the Members under this Agreement shall be relying upon the power of the Managing Member and such officers, managers, agents, successors and assigns to act as contemplated by this Agreement in such filing and other action by it on behalf of the Company. The foregoing power of attorney shall survive the assignment by any Member of the whole or any part of its Interest hereunder. The foregoing power of attorney may be exercised by such attorneys-in-fact by listing all of such Members

executing any agreement, certificate, instrument or document with the signatures of such attorneys-in-fact acting as attorneys-in-fact for all of them.

Loans to the Company .

Subject to the terms of this Agreement, the Company may borrow from Members to finance its working capital (a “Member Loan”) on commercially reasonable terms; provided, that any Member Loan shall carry interest at the prime interest rate in effect at the time of the Member Loan (as reported by Bank of America, N.A. or any successor thereto), non-compounding, and shall have no prepayment penalty or premium; provided, further, that the Company shall only borrow the amount that is necessary for its reasonable working capital needs and shall pay off any such Member Loan as soon as cash becomes available to the Company.

No Third Party Beneficiaries .

It is understood and agreed among the parties that this Agreement and the covenants made herein are made expressly and solely for the benefit of the parties hereto, and that no other Person, other than an indemnified Person pursuant to Section 4.1(a) shall be entitled or be deemed to be entitled to any benefits or rights hereunder, nor be authorized or entitled to enforce any rights, claims or remedies hereunder or by reason hereof. Notwithstanding any contrary provision of this Agreement, no such creditor or Person shall obtain any rights under this Agreement or shall, by reason of this Agreement, be permitted to make any claim against the Company or any Member or Managing Member.

Further Assurances .

In connection with this Agreement and the transactions contemplated hereby, each Member shall execute and deliver any additional documents and instruments and perform any additional acts that may be necessary or appropriate to effectuate and perform the provisions of this Agreement and those transactions, as requested by the Managing Member.

Construction .

Definitions in this Agreement shall be equally applicable to both the singular and plural forms of the terms defined, and references to the masculine, feminine or neuter gender shall include each other gender. Where used herein, the term “Federal” shall refer to the U.S. Federal government. As used herein, (a) “or” shall mean “and/or” and (b) “including” or “include” shall mean “including without limitation.” It is the intention of the parties that every covenant, term, and provision of this Agreement shall be construed simply according to its fair meaning and not strictly for or against any party (notwithstanding any rule of law requiring an Agreement to be strictly construed against the drafting party), it being understood that the parties to this Agreement are sophisticated and have had adequate opportunity and means to retain counsel to represent their interests and to otherwise negotiate the provisions of this Agreement.

Waiver of Action for Partition .

Each of the Members irrevocably waives during the term of the Company any right that such Member may have to maintain an action for partition with respect to the property of the Company.

Relations with Members .

Unless named in this Agreement as a Member, or unless admitted to the Company as a Member as provided in this Agreement, no Person shall be considered a Member. Subject to Article VIII, the Company and the Managing Member owe duties only to the Company and its Members and the provisions of this Agreement applicable to

Members (other than Section 4.1(a) which is enforceable by the Persons specified therein) are only enforceable by Persons so named or admitted as Members.

Accounting Considerations .

Notwithstanding anything contained herein or in any Award Agreement to the contrary, the sale or other disposition (whether pursuant to a call right, put right or otherwise) of Class B Units shall be delayed (and the terms upon which such sale or disposition occurs shall be modified) to the extent the Company determines that such delay or modification is necessary for the award pursuant to which such Class B Units were made to be classified as an equity award under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718, Stock Compensation (or any applicable successor standards).

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have executed this Second Amended and Restated Limited Liability Company Agreement on the day and year first above written.


	THE COMPANY:

	J. ALEXANDER’S HOLDINGS, LLC By: J. Alexander’s Holdings, Inc., its Managing Member

	By: /s/ Lonnie J. Stout II
	Name: Lonnie J. Stout II
	Title: President and Chief Executive Officer

	CLASS A MEMBERS:

	J. ALEXANDER’S HOLDINGS, INC.

	By: /s/ Lonnie J. Stout II
	Name: Lonnie J. Stout II
	Title: President and Chief Executive Officer

	JAX INVESTMENTS, INC.

	By: /s/ Lonnie J. Stout II
	Name: Lonnie J. Stout II
	Title: President and Chief Executive Officer

	CLASS B MEMBERS:

	BLACK KNIGHT ADVISORY SERVICES, LLC

	By: /s/ Gregory S. Lane
	Name: Gregory S. Lane
	Title: Member

	/s/ Lonnie J. Stout II
	Lonnie J. Stout II

	/s/J. Michael Moore
	J. Michael Moore

	/s/ Mark A. Parkey
	Mark Parkey

	/s/ Goodloe Partee
	Goodloe Partee


	/s/ Ralph Carnevale
	Ralph Carnevale

	/s/ Chris Conlon
	Chris Conlon

	/s/ Jessica H. Root
	Jessica H. Root

	/s/ Robert Miles
	Robert Miles

	/s/ Jim Filaroski
	Jim Filaroski

	/s/ Ian Dodson
	Ian Dodson

	/s/ Shannon Hall
	Shannon Hall

	/s/ Jason Parks
	Jason Parks

	/s/ Tim Landrey
	Tim Landrey

	/s/ Derek Gordon
	Derek Gordon

[Signature Page to Second Amended and Restated LLC Agreement of J. Alexander’s holdings, LLC]

SCHEDULE I

LIST OF MEMBERS AS OF OCTOBER 6, 2015

Name of Member		Address	Units	Capital Account	Hurdle Amount
Class A Members :
	J. Alexander’s Holdings, Inc.	3401 West End Avenue, Ste 260 Nashville, TN 37203	14,850,233	$[*]	N/A
	JAX Investments	3401 West End Avenue, Ste 260 Nashville, TN 37203	150,002	$[*]	N/A

Class B Members :
Black Knight Advisory Services, LLC		601 Riverside Avenue Jacksonville, FL 32204	1,500,024	$0.00	$ 151,052,366
	Lonnie J. Stout II	3401 West End Avenue, Ste 260 Nashville, TN 37203	416,673	$0.00	$180,000,000
	J. Michael Moore	3401 West End Avenue, Ste 260 Nashville, TN 37203	125,002	$0.00	$180,000,000
	Mark Parkey	3401 West End Avenue, Ste 260 Nashville, TN 37203	125,002	$0.00	$180,000,000
	Goodloe Partee	3401 West End Avenue, Ste 260 Nashville, TN 37203	20,834	$0.00	$180,000,000
	Ralph Carnevale	3401 West End Avenue, Ste 260 Nashville, TN 37203	20,834	$0.00	$180,000,000
	Chris Conlon	3401 West End Avenue, Ste 260 Nashville, TN 37203	20,834	$0.00	$180,000,000
	Jessica H. Root	3401 West End Avenue, Ste 260 Nashville, TN 37203	20,834	$0.00	$180,000,000
	Robert Miles	3401 West End Avenue, Ste 260 Nashville, TN 37203	16,667	$0.00	$180,000,000
	Jim Filaroski	3401 West End Avenue, Ste 260 Nashville, TN 37203	12,500	$0.00	$180,000,000
	Ian Dodson	3401 West End Avenue, Ste 260 Nashville, TN 37203	12,500	$0.00	$180,000,000
	Shannon Hall	3401 West End Avenue, Ste 260 Nashville, TN 37203	12,500	$0.00	$180,000,000
	Jason Parks	3401 West End Avenue, Ste 260 Nashville, TN 37203	12,500	$0.00	$180,000,000
	Tim Landrey	3401 West End Avenue, Ste 260 Nashville, TN 37203	8,333	$0.00	$180,000,000
	Derek Gordon	3401 West End Avenue, Ste 260 Nashville, TN 37203	8,333	$0.00	$180,000,000

* To be confirmed upon the filing of the Company’s 2015 short-period tax returns through September 28, 2015.


	SCHEDULE I - 1

Exhibit A

COMPANY INCENTIVE PLAN

Exhibit A - 1

Exhibit B

FORM OF
ELECTION OF EXCHANGE

J. Alexander’s Holdings, LLC

Reference is hereby made to the Second Amended and Restated Limited Liability Company Agreement of J. Alexander’s Holdings, LLC, dated as of September 28, 2015 (as may be amended, modified and/or supplemented from time to time in accordance with its terms, the “ Agreement ”), made by and among J. Alexander’s Holdings, LLC, a Delaware limited liability company (including any successor, the “ Company ”), J. Alexander’s Holdings, Inc., a Tennessee corporation (including any successor, “ J. Alexander’s ” ), and each of the other holders of Units (as defined therein) from time to time party thereto (each, a “ Member ” and, collectively, the “ Members ”). Capitalized terms used but not defined herein shall have the meanings given to them in the Agreement.

The undersigned Class B Member hereby transfers to the Company the number of Class B Units set forth below in Exchange for [a Cash Exchange Payment to the account set forth below or for]* shares of Common Stock to be issued in its name as set forth below, as set forth in Article XII of the Agreement, effective [in the case of an Exchange for shares of Common Stock]* as of the close of business on the Date of Exchange set forth below. The undersigned hereby acknowledges that this Election of Exchange is revocable (without J. Alexander’s consent) only by a written notice of revocation delivered to J. Alexander’s at least ten (10) business days prior to the Date of Exchange.

Legal Name of Member:

Address of Member:

Number of Class B Units to be Exchanged:

Date of Exchange:

[Cash Exchange Payment instructions: ]*

* Delete bracketed provisions if Exchange is being effected by the Management Company

Exhibit B - 1

Exhibit 10.1

MANAGEMENT CONSULTING AGREEMENT

TABLE OF CONTENTS

		Page

1.	Engagement	1

2.	Term	1

3.	Services	2

4.	Independent Contractor; Use of Subcontractors	2

5.	Other Activities of Advisor; Investment Opportunities	2

6.	Compensation	3

7.	Out-of-Pocket Expenses	4

8.	Standard of Care; Disclaimer; Limitation of Liability.	4

9.	Indemnification	5

10.	Termination	6

11.	Accuracy of Information	8

12.	Representations and Warranties	8

13.	General Provisions.	8

MANAGEMENT CONSULTING AGREEMENT

This MANAGEMENT CONSULTING AGREEMENT (this “ Agreement ”) is made and entered into as of September 28, 2015, by and between Black Knight Advisory Services, LLC, a Delaware limited liability company (“ Advisor ”), and J. Alexander’s Holdings, LLC, a Delaware limited liability company (the “ Company ”). Advisor and the Company are collectively referred to herein as the “Parties”.

RECITALS

WHEREAS, Advisor has expertise in the areas of finance, strategy, investment, acquisitions and other matters relating to the Company and its business; and

WHEREAS, in accordance with the terms of this Agreement the Company desires to retain Advisor to provide certain consulting services to the Company, and Advisor desires to perform such services for the Company, on the terms and conditions hereinafter provided.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and other consideration the receipt and sufficiency of which are expressly acknowledged hereby, the Parties hereby agree as follows:

1. Engagement . The Company agrees to retain Advisor, and Advisor agrees to be retained, to perform certain services for the Company as set forth in Section 3 of this Agreement. The Parties acknowledge that the Services (as defined herein) will be performed by officers, employees or consultants of the Advisor, who may also serve, from time to time, as officers, employees or consultants of other companies or entities.

2. Term . The term of this Agreement (the “ Initial Term ”) shall begin on the date hereof (the “ Effective Date ” and continue for an initial term expiring on the seventh (7th) anniversary of the Effective Date unless earlier terminated pursuant to Section 10 hereof. Each one-year period during the Initial Term or any extended term that ends on an anniversary date of the Effective Date is referred to herein as an “ Agreement Year ”.

At the expiration of the Initial Term, this Agreement shall be renewed automatically for additional one-year terms (each, a “ Renewal Term ”) unless the Advisor or the Company terminates this Agreement pursuant to Section 10 hereof. Notwithstanding anything in this Agreement to the contrary,

(a)

the provisions of Section 9 shall survive the termination of this Agreement and

(b)

no termination of this Agreement will affect the Company’s obligation to promptly pay all and any fees accrued, or to reimburse any cost or expense incurred, pursuant to the terms of this Agreement before the effective date of termination.

3. Services . Advisor or any of its affiliates shall provide the Company and its subsidi aries and affiliates with the services set forth on Exhibit A hereto (the “ Services ”).

The Company shall use the Services of Advisor and Advisor shall make itself available for the performance of the Services upon reasonable notice. Advisor shall perform the Services to reasonably meet the Company’s material requirements as identified by the Company, taking into account other engagements that Advisor may have. Advisor shall have the right to identify such employees and agents of Advisor to perform the Services as Advisor shall deem appropriate in its discretion.

The Services are intended to be those services and functions that are appropriate to provide guidance and advice for the operation and management of the Company and are not intended to be duplicative of services and functions for the operating subsidiaries of the Company that are to be performed by officers, employees and consultants of those companies.

4. Independent Contractor; Use of Subcontractors . To the maximum extent permitted by law, Advisor shall be deemed an independent contractor in the performance of Services under this Agreement. This Agreement does not nor shall at any time be deemed to create any fiduciary or other implied duties or obligations whatsoever between Advisor and the Company, other than the duties and obligations expressly set forth herein.

Nothing in this Agreement shall prevent Advisor from rendering or performing services similar to those provided to the Company under this Agreement to or for itself or other persons, firms or companies. Advisor may hire or engage one or more subcontractors to perform any or all of its obligations under this Agreement; provided, however that, subject to Sections 8(c) and 9 of this Agreement, as between Advisor and any such subcontractor, Advisor will in all cases remain primarily responsible to the Company for all obligations undertaken by it under this Agreement.

Nothing contained herein shall create, or shall be construed as creating, a partnership or joint venture of any kind or as imposing upon any Party any partnership duty, obligation or liability to any other Party.

5. Other Activities of Advisor; Investment Opportunities . The Company expressly acknowledges and agrees that neither Advisor nor any of Advisor’s employees, officers, directors, affiliates or associates (collectively, the “ Advisor Group ”) shall be required to devote its full time and business efforts to the duties of Advisor specified in this Agreement. Advisor shall devote only so much of its time and efforts as Advisor reasonably deems necessary to perform the Services.

The Company expressly acknowledges and agrees that members of the Advisor Group are engaged in the business of investing in, acquiring and/or managing businesses for their own account, for the account of their affiliates and associates and for the account of other unaffiliated parties, and understands that Advisor will continue to be engaged in such business (and other business or investment activities) during the term of this Agreement. Advisor makes no representations or warranties, express or implied, in respect of the Services to be provided by the Advisor Group. Except as Advisor may otherwise agree in writing after the date hereof:

(a)

each member of the Advisor Group shall have the right to, and shall have no duty (contractual or otherwise) whatsoever not to, directly or indirectly

(i)

engage in the same or similar business activities or lines of business as the Company, or

(ii)

do business with any client or customer of the Company;

(b)

no member of the Advisor Group shall be liable to the Company for breach of any duty (contractual or otherwise) by reason of any such activities or of such member’s participation therein; and

(c)

in the event that any member of the Advisor Group acquires knowledge of a potential transaction or matter that may be a corporate opportunity for the Company, on the one hand, and such member of the Advisor Group, on the other hand, or any other person or entity, no member of the Advisor Group shall have any duty (contractual or otherwise) to communicate or present such corporate opportunity to the Company, and, notwithstanding any provision of this Agreement to the contrary, no member of the Advisor Group shall be liable to the Company for breach of any duty (contractual or otherwise) by reason of the fact that any member of the Advisor Group directly or indirectly pursues or acquires such opportunity for itself, directs such opportunity to another person or entity, or does not present such opportunity to the Company.

In no event will any member of the Advisor Group be liable to the Company for any indirect, special, incidental or consequential damages, including lost profits or savings, whether or not such damages are foreseeable, or in respect of any liabilities relating to any third party claims (whether based in contract, tort or otherwise) other than for third-party claims relating to the services which may be provided by Advisor hereunder.

6. Compensation . In consideration of the Services to be rendered by Advisor hereunder, during the term of this Agreement, the Company shall compensate Advisor as follows:

(a)

The Company shall issue the Advisor Class B Units of the Company pursuant to a separate Unit Grant Agreement between the Company and the Advisor dated as of the date hereof (the “ Incentive Compensation Units ”).

(b)

The Company shall pay Advisor an annual incentive fee (the “ Base Fee ”) equal to the product of

(1)

three percent (3%), multiplied by

(2)

the Adjusted EBITDA (as defined below) of J. Alexander’s Holdings, Inc.(“ J. Alexander’s ”) for the most recently completed fiscal year of J. Alexander’s, calculated as of the end of each such fiscal year.

For purposes hereof, “Adjusted EBITDA” means, for the applicable period, the net income (loss) of J. Alexander’s and its now existing or future subsidiaries for such period on a consolidated basis, 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 and integration costs, non-cash compensation, loss from discontinued operations, gain on debt extinguishment, pre-opening costs and certain unusual items, as calculated from J. Alexander’s financial statements.

The calculation of Adjusted EBITDA and the Base Fee payable with respect thereto with respect to any fiscal year will be made in good faith by the Compensation Committee of the Board of Directors of J. Alexander’s (or if there is then no such Committee, by the entire Board of Directors of J. Alexander’s), based on the audited financial statements of J. Alexander’s for such fiscal year and, if applicable, consistent with J. Alexander’s calculation of Adjusted EBITDA for such fiscal year as set forth in its public reports. The Base Fee will be paid within ten (10) business days following the completion of such audit, but in any event no later than 90 days following the end of such fiscal year.

With respect to the fiscal year of J. Alexander’s ending January 3, 2016 and the fiscal year of J. Alexander’s in which this Agreement is terminated (if other than on the last day of such fiscal year), the Advisor shall be entitled to a pro-rated Base Fee determined by multiplying the Base Fee the Advisor would have otherwise been entitled receive for such full fiscal year, by a fraction, the numerator of which is the number of days during such fiscal year that this Agreement was in effect, and the denominator of which is the actual of days in such fiscal year).

7. Out-of-Pocket Expenses . All obligations or expenses incurred by Advisor in the performance of its obligations hereunder shall be for the account of, on behalf of, and at the expense of the Company, and all such expenses shall be promptly reimbursed by the Company. Advisor shall not be obligated to make any advance to or for the account of the Company or to pay any sums, except out of funds held in accounts maintained by the Company, nor shall Advisor be obligated to incur any liability or obligation for the account of the Company. The Company shall reimburse Advisor by wire transfer of immediately available funds for any amount paid by Advisor, which shall be in addition to any other amount payable to Advisor under this Agreement.

8. Standard of Care; Disclaimer; Limitation of Liability.

(a)

Advisor will perform, or cause its employees, subcontractors or consultants to perform the Services in conformity with this Agreement, in

good faith and in a manner Advisor reasonably believes to be in accordance with reasonably prudent industry practice.

(b)

Other than as set forth in clause (a) above, Advisor makes no representations or warranties, express or implied, in respect of the Services to be provided by it hereunder.

(c)

Neither Advisor nor any of its officers, directors, managers, principals, members, employees, agents, representatives, agents or affiliates (each a “ Related Party ” and, collectively, the “ Related Parties ”) shall be liable to the Company or any of its affiliates for any loss, liability, damage or expense arising out of or in connection with the performance of any Services contemplated by this Agreement, unless such loss, liability, damage or expense shall be proven and confirmed by a non-appealable final judgment to result directly from the gross negligence or willful misconduct of such person. In no event will Advisor or any of its Related Parties be liable to the Company for special, indirect, punitive or consequential damages, including, without limitation, loss of profits or lost business, even if Advisor has been advised of the possibility of such damages. Under no circumstances will the liability of Advisor and Related Parties exceed, in the aggregate, the fees actually paid to Advisor hereunder.

9. Indemnification . To the fullest extent permitted by law, the Company shall indemnify and hold harmless Advisor and each of its Related Parties (each, an “ Indemnified Party ”) from and against any and all losses, claims (whether or not litigated), actions, damages and liabilities, joint or several, and expenses (including amounts paid in satisfaction of judgments, in compromises and settlements, as fines and penalties and reasonable attorneys’ fees and other legal or other costs and expenses of investigating or defending against any claim or alleged claim but excluding any liabilities for taxes of any Indemnified Party), known or unknown, liquidated or unliquidated, to which such Indemnified Party may become subject under any applicable statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment or decree, made by any third party or otherwise, relating to or arising out of the Services or other matters referred to in or contemplated by this Agreement or the engagement of such Indemnified Party pursuant to, and the performance by such Indemnified Party, of the Services or other matters referred to or contemplated by this Agreement, and the Company will reimburse any Indemnified Party for all costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses) as they are incurred in connection with the investigation of, preparation for or defense of any pending or threatening claim, or any action or proceeding arising therefrom, whether or not such Indemnified Party is a party thereto. The termination of any proceeding by settlement, judgment, order or upon a plea of nolo contendre or its equivalent shall not, of itself, create a presumption that an Indemnified Party was engaged in willful misconduct or bad faith.

The Company will not be liable under the foregoing indemnification provision to the extent that any loss, claim, damage, liability, cost or expense is determined by a court, in a final

judgment from which no further appeal may be taken, to have resulted solely from the gross negligence or willful misconduct of such Indemnified Party.

The reimbursement and indemnity obligations of the Company, under this Section 9 shall be in addition to any liability which the Company may otherwise have, shall extend upon the same terms and conditions to any Related Party or controlling persons (if any), as the case may be, of Advisor and any Related Party and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Company, Advisor, any such affiliate and any such Related Party or other person. The provisions of this Section 9 shall survive the termination of this Agreement.

10. Termination . This Agreement may be terminated by the Parties as set forth in this Section 10 as follows:

(a)

At any time during the Term, the Company will be entitled to terminate this Agreement:

(i)

if Advisor fails in any material respect to perform any material Services in accordance with the “Standard of Care” set forth in Section 8(a) above, and such failure has a material adverse effect on the Company or its rights and obligations under this Agreement;

(ii)

if Advisor fails in any material respect to perform any material Services, which failure would result in liability of Advisor to the Company (after giving effect to Section 8(c) of this Agreement), and such failure has a material adverse effect on the Company or its rights and obligations under this Agreement; or

(iii)

on written notice to Advisor, delivered at least six (6) months before the expiration of the Initial Term or any Renewal Term then-in-effect, with such termination to be effective as of the expiration of the Initial Term or any Renewal Term then-in-effect, as applicable; provided, that in the event of a termination pursuant to this clause (iii) that is to be effective before expiration of the tenth (10th) Agreement Year, then (x) all unvested Incentive Compensation Units shall become fully vested, and (y) as a condition to the effectiveness of such termination, Advisor shall be paid in a lump sum the Early Termination Amount. The “Early Termination Amount” shall be an amount equal to the product of (a) the Base Fee for the most recently completed fiscal year of the Company, multiplied by (b) the sum of 10 minus the number of Agreement Years (and any fraction thereof) that has elapsed since the Effective Date (provided, that such sum may not be less than zero), adjusted to the net present value of such fees calculated using a discount rate equal to the ten-year treasury rate (at the close of business on the business day immediately preceding the date of such termination); provided, however, that in the event the

Company terminates this Agreement following a Sale of the Company (as defined below), the factor in clause (b) above to be multiplied by the Base Fee shall not exceed three (3).

For purposes hereof “Sale of the Company” means the consummation of a transaction, whether in a single transaction or in a series of related transactions that are consummated contemporaneously (or consummated pursuant to contemporaneous agreements), with any other person or group of persons on an arm’s-length basis, pursuant to which such person or group of persons (a) acquire (whether by merger, unit or stock purchase, recapitalization, reorganization, redemption, issuance of units or stock or otherwise), directly or indirectly, more than fifty-percent (50%) of the voting power of J. Alexander’s or the Company or (b) acquire assets constituting all or substantially all of the assets of J. Alexander’s or the Company and its subsidiaries on a consolidated basis; provided , however , that in no event shall a Sale of the Company be deemed to include any transaction effected for the purpose of changing, directly or indirectly, the domicile, form of organization or the organizational structure of J. Alexander’s or the Company.

(b)

At any time during the Term, Advisor will be entitled to terminate this Agreement:

(i)

if the Company fails to pay any amounts due thereunder within five (5) business days following notice from Advisor of such failure;

(ii)

if the Company breaches in any material respect any material term of this Agreement, which breach is not cured within five (5) business days of notice thereof from Advisor; or

(iii)

on 30 calendar days written notice to the Company; provided, however, that in the event Advisor provides such notice within 180 days following a Sale of the Company, Advisor shall be paid in a lump sum the Early Termination Amount upon such termination of this Agreement, and provided further that in calculating the Early Termination Amount in such event, the factor in clause (b) of the definition of Early Termination Amount to be multiplied by the Base Fee shall not exceed three (3).

(c)

This Agreement shall terminate automatically if either party files a petition for bankruptcy, reorganization or arrangement, makes an assignment for the benefit of creditors or otherwise becomes insolvent.

11. Accuracy of Information . The Company and its subsidiaries shall furnish or cause to be furnished to Advisor such information as Advisor believes reasonably appropriate to its Services hereunder. The Company and its subsidiaries recognize and confirm that Advisor (a)

will use and rely primarily on the information provided by the Company and on information available from g enerally recognized public sources (all such information so furnished to Advisor, the “ Information ”) in performing the Services contemplated by this Agreement without having independently verified the same; (b) does not assume responsibility for the accuracy or completeness of the Information; and (c) is entitled to rely upon the Information without independent verification.

12. Representations and Warranties . Each of the Parties represents and warrants to the other that:

(a)

Such Party is duly organized and validly existing under the laws of the jurisdiction of its formation.

(b)

Such Party has all requisite corporate power and authority to enter into this Agreement and to perform its obligations provided for in this Agreement.

(c)

This Agreement has been duly authorized, executed and delivered by such Party and constitutes a valid and binding obligation enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

(d)

All authorizations and government approvals which are necessary for the execution and delivery of this Agreement and the performance of such Party’s obligations hereunder have been obtained and are in full force and effect, and no other action by, and no notice or filing with, any governmental authority or other individual or entity is required for such execution, delivery or performance.

(e)

The execution, delivery and performance of this Agreement does not and will not (i) violate any provision of its organizational documents, any authorization, any government rule or any government approval or, (ii) conflict with, result in a breach of or constitute a default under any mortgage, indenture, loan, credit agreement or other agreement to which such Party is a party or by which such Party or its property may be bound or affected in any material respect.

13. General Provisions.

(a)

Entire Agreement; Amendment . This Agreement contains the entire agreement of the Parties hereto relating to the subject matter hereof, and that there exists no further agreement between the Parties with respect to any aspect of the subject matter hereof. No amendment, waiver or modification of this Agreement shall be valid or binding unless made in writing and duly executed by each of the Parties hereto.

(b)

Notices . All notices which may be or are required to be given pursuant to this Agreement shall be

(i)

either delivered in person or sent via postage prepaid, certified or registered mail, return receipt requested, and

(ii)

addressed to the party to whom sent or given at the address set forth on the signature page hereof or to such other address as any party hereto may have given to the party hereto in such manner.

If delivered, such notice shall be deemed given when received; if mailed, such notice shall be deemed made or given five (5) days after such notice has been mailed, as provided above.

(c)

Confidential Information . Each Party shall use at least the same standard of care in the protection of Confidential Information of the other Party as it uses to protect its own confidential or proprietary information; provided that such Confidential Information shall be protected in at least a reasonable manner. For purposes of this Agreement, with respect to each Party, “Confidential Information” includes all confidential or proprietary information and documentation of the other Party, and all of the other Party’s software, data, financial information all reports, exhibits and other documentation prepared by any of the other Party’s subsidiaries or affiliates, in each case, to the extent provided or made available under, or in furtherance of, this Agreement.

(d)

Miscellaneous .

(i)

This Agreement and the rights and obligations of the Parties hereunder shall be governed by the laws of the State of Tennessee without regard to choice or conflict of laws.

(ii)

This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns.

(iii)

No delay or failure by any party in exercising any of their rights, remedies, powers, or privileges hereunder, at law or in equity, and no course of dealing among the Parties or any other person shall be deemed to be a waiver by any party of any such rights, remedies, powers, or privileges, even if such delay or failure is continuous or repeated nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise thereof by any party.

(iv)

If any term or provision of this Agreement or any portion of a term or provision hereof or the application thereof to any individual or entity or circumstance shall, to any extent, be invalid or

unenforceable, the remainder of this Agreement, or the application of such term or provision or portion thereof to individuals or entities or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Agreement and each portion thereof shall be valid and enforced to the fullest extent permitted by law.

(v)

The headings in this Agreement are for convenience only and shall not affect its construction.

(vi)

This Agreement may be executed in any number of counterparts, each of which shall be an original and all of which, when taken together, shall constitute one agreement.

(vii)

This Agreement may be executed and delivered by electronic means including but not limited to scanning as a “.pdf” or telefacsimile with the same force and effect as if it were a manually executed and delivered counterpart.

(viii)

Each Party upon the request of the other Party agrees to perform such further acts and execute and deliver such further documents as may be reasonably necessary to carry out the terms and intent of this Agreement.

[Signature Page Follows.]

IN WITNESS WHEREOF, the duly authorized representatives of the Parties hereto have executed this Agreement as of the day and year first above written.


J. ALEXANDER’S HOLDINGS, LLC

By:J. ALEXANDER’S HOLDINGS, INC., its Managing Member

By:	/s/ Lonnie J. Stout II
	Name: Lonnie J. Stout II
	Title: President and Chief Executive Officer

BLACK KNIGHT ADVISORY SERVICES, LLC

By:	/s/ Gregory S. Lane
	Name: Gregory S. Lane
	Title: Member

Exhibit A

Description of Services

As requested by the Company:

·	Assist in developing and implementing corporate strategy, including providing advice with respect to business planning, compensation and benefits and the development and implementation of strategies for improving the operating, marketing and financial performance of the Company;

·	Assist in identifying locations for restaurant expansion;

·	Assist in the negotiation of leases and lease renewals for restaurant locations;

·	Assist in budgeting future corporate investments;

·	Assist in developing acquisition and divestiture strategies and making available in-house, legal, finance, tax and other necessary disciplines to execute on such strategies; and

·	Advising on debt and equity financings and making available in-house, legal, finance, tax and other necessary disciplines in connection therewith.

Exhibit 10.2

j. alexander’s holdings, llc

UNIT GRANT AGREEMENT

This Unit Grant Agreement (this “ Agreement ”) is made as of October 6, 2015 (the “ Grant Date ”) by J. Alexander’s Holdings, LLC, a Delaware limited liability company (the “ Company ”), with Black Knight Advisory Services, LLC, a Delaware limited liability company (the “ Grantee ”). Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Second Amended and Restated Limited Liability Company Agreement of the Company dated as of September 28, 2015, as it may be amended from time to time, or any successor agreement thereto (the “ LLC Agreement ”).

1. Grant of Units; Hurdle Amount . The Company hereby grants to the Grantee, in connection with the Grantee’s performance of services to or for the benefit of the Company, 1,868,333 Class B Units (the “ Units ”), subject to the terms and conditions of this Agreement (the “ Award ”), and the LLC Agreement. The Hurdle Amount applicable to the Units as of the date hereof is $151,052,366. ¹ The Hurdle Amount will be increased by the aggregate amount of all Capital Contributions made to the Company after the Grant Date.

2. Vesting; Service Termination; Forfeiture .

(a) Vesting . Subject to the Grantee’s continued service to the Company through the applicable vesting date, the Grantee shall vest in its Units at the rate of one-third of the Units on each of the first, second and third anniversaries of the Grant Date.

(b) Accelerated Vesting . Notwithstanding the foregoing, all of the Units will become vested 100% immediately upon the (i) consummation of a Sale of the Company, or (ii) the termination of the Management Agreement other than by the Company pursuant to Section 10(a)(i) or 10(a)(ii) thereof or by the Grantee pursuant to Section 10(b)(iii) thereof. For purposes hereof “ Sale of the Company ” means the consummation of a transaction, whether in a single transaction or in a series of related transactions that are consummated contemporaneously (or consummated pursuant to contemporaneous agreements), with any other Person or group of Persons on an arm’s-length basis, pursuant to which such Person or group of Persons (a) acquire (whether by merger, Unit or stock purchase, recapitalization, reorganization, redemption, issuance of Units or stock or otherwise), directly or indirectly, more than fifty-percent (50%) of the voting power of J. Alexander’s or the Company or (b) acquire assets constituting all or substantially all of the assets of J. Alexander’s or the Company and its Subsidiaries on a consolidated basis; provided , however , that in no event shall a Sale of the Company be deemed to include any transaction effected for the purpose of changing, directly or indirectly, the domicile, form of organization or the organizational structure of J. Alexander’s or the Company.

(c) Termination of Service - Unvested Units . Consistent with Section 3.5 of the LLC Agreement, upon the termination of the Management Agreement by the Company pursuant to Section 10(a)(i) or 10(a)(ii) thereof, or by the Grantee pursuant to Section 10(b)(iii) thereof, all unvested Units shall be immediately and automatically cancelled and forfeited for no consideration.

(d) Termination of Service - Vested Units . Upon any termination of the Management Agreement (for any reason or for no reason), the Grantee shall have 90 days within which to effect an Exchange of the Vested Units for Common Stock pursuant to Article XII of the LLC Agreement. In the event the Grantee fails to effect such Exchange within 90 days following the termination of the Management Agreement, all vested Units shall be immediately and automatically cancelled and forfeited for no consideration.

The Hurdle amount is the product of (i) the number of shares of J. Alexander’s Holdings, Inc. (“ JAX ”) common stock issued and outstanding and (ii) $10.07, which represents the volume weighted average closing price of the JAX common stock over the five (5) trading days following the distribution of all of the shares of JAX common stock held by Fidleity National Financial, Inc. (“ FNF ”) to holders of FNFV common stock, the tracking stock of FNF listed on The New York Stock Exchange, on a pro rata basis, on September 28, 2015.

3. Allocations, Distributions; Puts, Calls and other rights . The Grantee’s entitlement to allocations, distributions and other rights with respect to the vested and unvested Units, as applicable, are set forth in the LLC Agreement. In no event shall the Units be sold or otherwise disposed of within the six-month period (or such other period as may be specified by the Company) following the date the Units vest (the “ Holding Period ”) to the extent such disposition of the Units during the Holding Period would cause the Award not to be classified as an equity award under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718, Stock Compensation (or any applicable successor standards).

4. Subject to Terms of LLC Agreement . As a further condition to the issuance of the Units pursuant to this Agreement, the Grantee shall execute and deliver to the Company a copy of the LLC Agreement evidencing the Grantee’s status as a Class B Member. The Grantee acknowledges receipt of the LLC Agreement.

5. Grantee’s Representations and Warranties . In connection with the grant of the Units hereunder, the Grantee hereby represents and warrants to the Company that:

(a) The Grantee is acquiring the Units hereunder for the Grantee’s own account with the present intention of holding such securities for investment purposes and that the Grantee has no intention of selling such securities in a public distribution in violation of the federal securities laws or any applicable state or foreign securities laws. The Grantee acknowledges that the Units have not been registered under the Securities Act or applicable state or foreign securities laws and that the Units will be issued to the Grantee in reliance on exemptions from the registration requirements of the Securities Act and applicable state and foreign statutes and in reliance on the Grantee’s representations and agreements contained herein.

(b) The Grantee acknowledges that the Units are subject to the terms and provisions of the LLC Agreement, and acknowledges and consents to be bound by such terms and provisions with respect to the Units, including, without limitation, the applicable provisions set forth in Article VIII (including the restrictions on transfers).

(c) The Grantee has had an opportunity to ask the Company and its representatives questions and receive answers thereto concerning the terms and conditions of the Units to be acquired by the Grantee hereunder and has had full access to such other information concerning the Company as the Grantee may have requested in making the Grantee’s decision to acquire the Units being issued hereunder.

(d) The Grantee will not sell or otherwise transfer, assign, convey, exchange, mortgage, pledge, grant or hypothecate any Units without registration under the Securities Act (and any applicable federal, state and foreign securities laws) or an exemption therefrom, and provided there exists such a registration or exemption, any such transfer of Units by the Grantee or subsequent holders of Units will be in compliance with the provisions of this Agreement and the LLC Agreement.

(e) The Grantee has all requisite legal capacity to carry out the transactions contemplated by this Agreement and the LLC Agreement, and the execution, delivery and performance by the Grantee of this Agreement and the LLC Agreement and all other agreements contemplated hereby and thereby to which the Grantee is a party have been duly authorized by the Grantee.

(f) The Grantee has only relied on the advice of, or has consulted with, the Grantee’s own legal, financial and tax advisors, and the determination of the Grantee to acquire the Units pursuant to this Agreement has been made by the Grantee independent of any statements or opinions as to the advisability of such acquisition or as to the properties, business, prospects or condition (financial or otherwise) of the Company which may have been made or given by any other Person (including all Persons acquiring Units on the date hereof) or by any agent or employee of such Person and independent of the fact that any other Person has decided to become a holder of Units.

6. Certificates; Legends . To the extent that the Units are certificated, the Managing Member or such other escrow holder as the Managing Member may appoint shall retain physical custody of any certificate representing the Units issued hereunder until all of the restrictions imposed under this Agreement and the LLC Agreement with respect to such Units expire or shall have been removed. In order to enforce the restrictions imposed upon the Units under this Agreement and the LLC Agreement, the Managing Member shall cause a legend or legends to be placed on any certificates representing

the Units that are still subject to restrictions under this Agreement or the LLC Agreement, which legend or legends shall make appropriate reference to the conditions imposed thereby. Nothing contained herein shall require the Managing Member or the Company to certificate the fully vested Units.

7. Adjustments . If there shall occur any change with respect to the outstanding Units by reason of any recapitalization, reclassification, unit split, reverse unit split or any merger, reorganization, consolidation, combination, spin-off or other similar change affecting the Units, the Managing Member shall, in the manner and to the extent that it deems appropriate and equitable in its discretion, cause an adjustment to be made in the number of Units granted hereunder, the Hurdle Amount and any other terms hereunder that are affected by the event to the extent necessary to prevent dilution or enlargement of the Grantee’s rights hereunder.

8. Administration . The Managing Member shall have the power to interpret this Agreement and to adopt such rules for the administration, interpretation and application of this Agreement as are consistent therewith and to interpret, amend or revoke any such rules. All actions taken and all interpretations and determinations made by the Managing Member in good faith shall be final and binding upon the Grantee, the Company and all other interested persons.

9. Taxes .

(a) Tax Election . The Grantee shall make an election with the United States Internal Revenue Service under Section 83(b) of the Code not later than 30 days after the Grant Date. A Section 83(b) election form is attached hereto as Exhibit A . The Grantee shall deliver a copy of any such Section 83(b) election to the Company.

(b) No Guarantee of Tax Treatment . Each Unit will be treated as a separate “profits interest” within the meaning of Rev. Proc. 93-27, 1993-2 C.B. 343 (such interest, a “ Profits Interest ”). Notwithstanding anything to the contrary, distributions to the Grantee pursuant to Section 5.2 and 5.3 of the LLC Agreement shall be limited to the extent necessary so that the Profits Interest of the Grantee qualifies as a “profits interest” under Rev. Proc. 93-27, Award and LLC Agreement shall be interpreted accordingly. In accordance with Rev. Proc. 2001-43, 2001-2 CB 191, the Company shall treat the Grantee as the owner of the Units underlying this Award from the Grant Date, and shall file its IRS Form 1065, and issue appropriate Schedule K-1s to the Grantee allocating to the Grantee the Grantee’s distributive share of all items of income, gain, loss, deduction and credit associated with such Profits Interest as if it were fully vested. The Grantee agrees to take into account such distributive share in computing the Grantee’s federal income tax liability for the entire period during which the Grantee holds the Award and/or Units. The Company and the Grantee will not claim a deduction (as wages, compensation or otherwise) for the fair market value of the Profits Interest issued to the Grantee, either at the time of grant of the Award or at the time the Units becomes substantially vested. The undertakings contained in Section 3.4(a) of the LLC Agreement shall be construed in accordance with Section 4 of Rev. Proc. 2001-43. The provisions of Section 3.4(a) of the LLC Agreement shall apply regardless of whether or not the Grantee files an election pursuant to Section 83(b) of the Code.

10. Transferability . The Grantee may not transfer or assign, directly or indirectly, this Agreement or any Units other than as provided under the LLC Agreement. Any purported assignment, transfer or grant by the Grantee, directly or indirectly, of this Agreement or any Units in contravention of this Agreement and the LLC Agreement shall be null and void.

11. Remedies . The parties hereto shall be entitled to enforce their rights under this Agreement specifically, to recover damages by reason of any breach of any provision of this Agreement (including costs of enforcement) and to exercise all other rights existing in their favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that either party may in its sole discretion apply to any court of law or equity of competent jurisdiction for specific performance or injunctive relief (without posting a bond or other security) in order to enforce or prevent any violation of the provisions of this Agreement.

12. Governing Law . The Act shall govern all questions arising under this Agreement concerning the relative rights of the parties hereto. All other questions concerning the construction, validity and interpretation of this Agreement shall be governed by and construed in accordance with the domestic laws of the State of Delaware applicable to contracts made and to be performed in the State of Delaware. The parties hereto hereby irrevocably and unconditionally submit to the exclusive jurisdiction of any State or Federal court sitting in Nashville, TN over any suit, action or proceeding arising out of

or relating to this Agreement. The parties hereby agree that service of any process, summons, notice or document by U.S. registered mail addressed to any party shall be effective service of process for any action, suit or proceeding brought against a party in any such court. The parties hereto hereby irrevocably and unconditionally waive any objection to the laying of venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. The parties hereto agree that a final judgment in any such suit, action or proceeding brought in any such court shall be conclusive and binding upon any party and may be enforced in any other courts to whose jurisdiction any party is or may be subject, by suit upon such judgment.

13. Counterparts . This Agreement may be executed in any number of multiple counterparts, each of which shall be deemed to be an original copy and all of which shall constitute one agreement, binding on all parties hereto.

14. Successors and Assigns . Subject to the limitations set forth in this Agreement, this Agreement shall be binding upon, and inure to the benefit of the Company and its successors and assigns, the Grantee and any subsequent holder of the Units granted pursuant to this Agreement, and the respective successors and assigns of each of them, so long as they hold the Units granted pursuant to this Agreement.

15. Entire Agreement; Amendments and Waivers . This Agreement, together with the LLC Agreement constitutes the entire agreement between the parties hereto pertaining to the Units and fully supersedes any and all prior or contemporaneous agreements or understandings between the parties hereto pertaining to the Units. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. This Agreement may not be amended except in an instrument in writing signed on behalf of each of the parties hereto and approved by the Managing Member. No amendment, supplement, modification or waiver of this Agreement shall be binding unless executed in writing by the party to be bound thereby. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly provided.

16. Severability . Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

17. Descriptive Headings . The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

18. No Right to Continued Service . Nothing in this Agreement shall confer upon the Grantee any right to continue to provide services to or for the benefit of the Company or any of its Subsidiaries, or shall interfere with or restrict in any way the rights of the Company or any of its Subsidiaries, which are hereby expressly reserved, to terminate the services of the Grantee, at any time for any reason whatsoever, with or without cause, except to the extent expressly provided otherwise in a written agreement between the Company or any of its Subsidiaries, and the Grantee.

19. Conformity to Securities Laws . The Grantee acknowledges that this Agreement and the grant of the Units hereunder is intended to conform to the extent necessary with applicable federal and state securities laws and regulations. Notwithstanding anything herein to the contrary, the Units are granted only in such a manner as to conform to such laws, rules and regulations. To the extent permitted by applicable law, this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

20. Conflict between this Agreement and the LLC Agreement . In the event of a conflict between any term or provision contained herein and a term or provision of the LLC Agreement, the applicable term and provision of the LLC Agreement will govern and prevail.

[ Signature Page Follows ]

Executed as of the Grant Date.


THE COMPANY:

J. ALEXANDER’S HOLDINGS, LLC By: J. Alexander’s Holdings, Inc., its Managing Member

By:	/s/ Lonnie J. Stout II
Name: Lonnie J. Stout II
Title: President and Chief Executive Officer


GRANTEE:

BLACK KNIGHT ADVISORY SERVICES, LLC

By:	/s/ Gregory S. Lane
Name: Gregory S. Lane
Title: Member

[Signature Page to Unit Grant Agreement]

Exhibit A

Section 83(b) Election

The undersigned taxpayer elects, pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended (the “ Code ”), to include in gross income as compensation for services the excess (if any) of the fair market value of the property described below over the amount paid for such property.

The name, taxpayer identification number, address of the undersigned, and the taxable year for which this election is being made are:

TAXPAYER’S NAME: Black Knight Advisory Services, LLC

TAXPAYER’S SOCIAL SECURITY NUMBER:

ADDRESS:

TAXABLE YEAR: Calendar Year 2015

The property that is the subject of this election is a limited liability company membership interest (the “ Membership Interest ”) consisting of 1,868,333 Class B Units of J. Alexander’s Holdings, LLC (the “ Company ”). The Membership Interest is intended to be treated for federal income tax purposes by the Company and its members, including the undersigned, as a “profits interest” within the meaning of Revenue Procedure 93-27 and Revenue Procedure 2001-43 (together, the “ Revenue Procedures ”) and other related official guidance promulgated by the Internal Revenue Service. Based on the Revenue Procedures, the undersigned believes that the undersigned is not subject to tax upon receipt of the Membership Interest, either at the time of the grant of the Membership Interest or at the time or times when the Membership Interest will vest under the terms of the grant agreement. However, in case it should be determined that any of the conditions necessary for the Revenue Procedures to apply have not been met and that the undersigned’s receipt of the Membership Interest or the vesting thereof is subject to tax under Section 83 of the Code, the undersigned is making this protective election to have the receipt of the Membership Interest taxed under the provisions of Section 83(b) of the Code at the time the undersigned acquired the Membership Interest.

The Membership Interest was transferred to the undersigned on , 2015 (the “ Transfer Date ”).

The Membership Interest is subject to the following restriction: the Membership Interest vests over a period of three (3) years from the Transfer Date, subject to (i) in part, the achievement of performance criteria and (ii) in certain circumstances, the acceleration of vesting upon the termination of the Management Consulting Agreement between the undersigned and the Company. If the undersigned ceases to perform services to or for the benefit of the Company and its subsidiaries prior to vesting, the unvested Membership Interest will automatically be forfeited and cancelled without any payment with respect thereto, unless the vesting of the Membership Interest is accelerated as a result of such termination.

The fair market value of the property (the Membership Interest) on the Transfer Date with respect to which the election is being made, determined without regard to any lapse restrictions and in accordance with Revenue Procedure 93-27 = $0.

The amount paid by the undersigned for the Membership Interest = $0.

The amount to include in gross income = $0.

The undersigned taxpayer will:

•

Not later than 30 days after the Transfer Date shown in paragraph 3 above, file this election with the Internal Revenue Service office with which the taxpayer’s most recent Federal income tax return was filed.

•

Provide copies of this election to (a) the person for whom the services are performed in connection with which the Membership Interest was transferred, and (b) the person to whom the Membership Interest was transferred, if the recipient of the Membership Interest was not the person performing the services in connection with which the Membership Interest was transferred.

•

Include a copy of this election with his or her Federal income tax return for the taxable year in which the Membership Interest was transferred.

Date: ______________, 2015


	BLACK KNIGHT ADVISORY SERVICES, LLC

By:
	Name: Gregory S. Lane
	Title: Member

Exhibit 31.1

CERTIFICATION PURSUANT TO RULE 13a-14(a)/15d-14(a)

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Lonnie J. Stout II, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of J. Alexander’s Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have:

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 9, 2015

By:

/s/ Lonnie J. Stout II

Lonnie J. Stout II

Chief Executive Officer and President

(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION PURSUANT TO RULE 13a-14(a)/15d-14(a)

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Mark A. Parkey, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of J. Alexander’s Holdings, Inc.;

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 9, 2015

By:

/s/ Mark A. Parkey

Mark A. Parkey

Executive Vice President, Chief Financial Officer and Treasurer

(Principal Financial Officer)

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of J. Alexander’s Holdings, Inc. (the “Company”) on Form 10-Q for the quarter ended September 27, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Lonnie J. Stout II

Lonnie J. Stout II

Chief Executive Officer and President

(Principal Executive Officer)

November 9, 2015

/s/ Mark A. Parkey

Mark A. Parkey

Executive Vice President, Chief Financial Officer and Treasurer

(Principal Financial Officer)

November 9, 2015