Note E - Long-Term Debt and Obligations Under Capital Leases

Long-term debt and obligations under capital leases at January 1, 2012, and January 2, 2011, are summarized below:


		January 1, 2012				January 2, 2011
		Current		Long-Term		Current		Long-Term
Mortgage loan, 8.6% interest, payable
through 2022	$	1,080,000	$	17,252,000	$	999,000	$	18,332,000
Obligation under capital lease, 9.9%
interest, payable through 2015		43,000		104,000		39,000		147,000
	$	1,123,000	$	17,356,000	$	1,038,000	$	18,479,000

Aggregate maturities of long-term debt for the five fiscal years succeeding January 1, 2012, are as follows: 2012 - $1,123,000; 2013 - $1,224,000; 2014 - $1,329,000; 2015 - $1,390,000; 2016 - $1,501,000.

The Company's mortgage loan, which was obtained in 2002 in the original amount of $25,000,000, has an effective annual interest rate, including the effect of the amortization of deferred issue costs, of 8.6% and is payable in equal monthly installments of principal and interest of approximately $212,000 through November 2022. Provisions of the mortgage loan and related agreements require that a minimum fixed charge coverage ratio of 1.25 to 1 be maintained for the businesses operated at the properties included under the mortgage and that a funded debt to EBITDA (as defined in the loan documents) ratio of 6.0 to 1 be maintained for the Company and its subsidiaries. The loan is secured by the real estate, equipment and other personal property of nine of the Company's restaurant locations with an aggregate net book value of $21,894,000 at January 1, 2012. The real property at these locations is owned by JAX Real Estate, LLC, the borrower under the loan agreement, which leases them to a wholly-owned subsidiary of the Company as lessee. The Company has guaranteed the obligations of the lessee subsidiary to pay rents under the lease. JAX Real Estate, LLC, is an indirect wholly-owned subsidiary of the Company which is included in the Company's Consolidated Financial Statements. However, JAX Real Estate, LLC was established as a special purpose, bankruptcy remote entity and maintains its own legal existence, ownership of its assets and responsibility for its liabilities separate from the Company and its other affiliates.

In 2009, the Company entered into a bank loan agreement that provided for two credit facilities. The credit facilities consisted of a three-year $5,000,000 revolving line of credit, which may be used for general corporate purposes and is scheduled to expire on May 22, 2012, and a five-year $3,000,000 term loan which funded the purchase of 808,000 shares of the Company's common stock from Solidus Company, L.P., which was the Company's largest shareholder prior to the purchase, and E. Townes Duncan, a director of the Company. See Note N "Related Party Transactions" for additional description of this transaction. On October 1, 2010, the Company prepaid the balance of approximately $2,400,000 which was outstanding on the term loan. The remaining revolving line of credit is secured by liens on certain personal property of the Company and its subsidiaries, subsidiary guaranties and a negative pledge on certain real property.

Any amounts borrowed under the bank loan agreement bear interest at an annual rate of 30-day LIBOR plus a margin of 3.50% to 4.50% depending on the adjusted debt to EBITDAR ratio achieved, with a minimum interest rate of 4.60%. The loan agreement, among other things, limits capital expenditures, asset sales and liens and encumbrances, prohibits dividends, and contains certain other provisions customarily included in such agreements.

The bank loan agreement also includes certain financial covenants. The Company must maintain a fixed charge coverage ratio of at least 1.05 to 1 as of the end of any fiscal quarter based on the four quarters then ending. 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 non-recurring gains or losses, including any asset impairment charges, and deferred income tax benefits and expenses) plus depreciation and amortization plus interest expense plus scheduled monthly rent payments plus non-cash share-based compensation expense minus certain capital expenditures, to (b) the sum of interest expense during such period plus scheduled monthly rent payments made during such period plus scheduled payments of long-term debt and capital lease obligations made during such period, all determined in accordance with GAAP.

In addition, the Company's adjusted debt to EBITDAR ratio must not exceed 4.5 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 of any extraordinary or non-recurring gains or losses including any asset impairment charges) plus an amount which, in the determination of net income for such period has been deducted for (i) interest expense; (ii) total federal, state, foreign or other income taxes; (iii) all depreciation and amortization; (iv) scheduled monthly rent payments; and (v) non-cash share-based compensation expense, all as determined in accordance with GAAP. Adjusted debt is (i) the Company's debt obligations net of any short term investments, cash and cash equivalents plus (ii) rent payments multiplied by seven. 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. No amounts were outstanding under the revolving line of credit at January 1, 2012, or subsequent to that time through March 30, 2012.

Cash interest payments amounted to $1,577,759, $ 1,763,000, and $1,850,000, in 2011, 2010, and 2009, respectively. No interest costs were capitalized during 2011, 2010 or 2009.

The carrying value and estimated fair value of the Company's mortgage loan were $18,332,000 and $19,644,000, respectively, at January 1, 2012, compared to $19,331,000 and $17,875,000, respectively, at January 2, 2011.