0001157523-12-003530.txt : 20120702 0001157523-12-003530.hdr.sgml : 20120702 20120702150059 ACCESSION NUMBER: 0001157523-12-003530 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20120627 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20120702 DATE AS OF CHANGE: 20120702 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALEXANDERS J CORP CENTRAL INDEX KEY: 0000103884 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 620854056 STATE OF INCORPORATION: TN FISCAL YEAR END: 0112 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08766 FILM NUMBER: 12940041 BUSINESS ADDRESS: STREET 1: 3401 WEST END AVE STREET 2: P O BOX 24300 CITY: NASHVILLE STATE: TN ZIP: 37203 BUSINESS PHONE: 6152691900 MAIL ADDRESS: STREET 1: 3401 WEST END AVE STREET 2: SUITE 260 CITY: NASHVILLE STATE: TN ZIP: 37203 FORMER COMPANY: FORMER CONFORMED NAME: VOLUNTEER CAPITAL CORP / TN / DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: WINNERS CORP DATE OF NAME CHANGE: 19890910 FORMER COMPANY: FORMER CONFORMED NAME: VOLUNTEER CAPITAL CORP DATE OF NAME CHANGE: 19820520 8-K 1 a50329534.htm J. ALEXANDER'S CORPORATION 8-K a50329534.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  July 2, 2012 (June 27, 2012)
 
J. ALEXANDER’S CORPORATION
(Exact Name of Registrant as Specified in Charter)

Tennessee
  
1-08766
  
62-0854056
(State or Other Jurisdiction
of Incorporation)
  
(Commission
File Number)
  
(IRS Employer
Identification No.)

3401 West End Avenue, Suite 260, P.O. Box 24300, Nashville, Tennessee 37202
(Address of Principal Executive Offices)   (Zip Code)
 
Registrant’s telephone number, including area code:  (615) 269-1900
 
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o           Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o           Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o           Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o           Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 
 
 
Item 1.01.           Entry Into a Material Definitive Agreement.
 
On June 27, 2012, J. Alexander’s Corporation (the “Company”) entered into a Second Modification Agreement by and among Pinnacle National Bank (“Pinnacle”) and the Company (the “Second Modification”), to renew and extend its existing line of credit under that certain Loan Agreement, dated May 22, 2009, between the Company and Pinnacle (the “Loan Agreement”), as previously amended by that certain First Modification Agreement, dated April 2, 2010, between the Company and Pinnacle.
 
The Second Modification amends the Loan Agreement and that certain Revolving Promissory Note thereunder, dated May 22, 2009, made by the Company in favor of Pinnacle National Bank (the “Revolving Note”) to, among other things, (1) adjust and modify the interest rate charged on the Revolving Note from LIBOR plus a variable margin based on the Company’s Adjusted Debt to EDITDAR Ratio (with such margin ranging from 3.5% to 4.5%) under the Loan Agreement to LIBOR plus 300 basis points (or 3%) with a minimum applicable interest rate of 4.25% under the Second Modification; (2) increase the maximum principal amount available for borrowing under the Revolving Note from $5,000,000 to $6,000,000; and (3) extend the maturity date of the Revolving Note to June 27, 2015.
 
The foregoing description of the Second Modification does not purport to be complete and is qualified in its entirety by reference to the Second Modification, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
 
Item 9.01.           Financial Statements and Exhibits.
 
 (d)           Exhibits. The following exhibit is filed as part of this report:
 
 
  10.1
Second Modification Agreement, dated June 27, 2012, between the Company and Pinnacle National Bank.
 
 
 
 
 
SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
 
 
J. Alexander’s Corporation
   
   
Date:  July 2, 2012
By:
/s/ R. Gregory Lewis
   
R. Gregory Lewis
   
Chief Financial Officer, Vice President of Finance and Secretary
 
 
 
 
 
EXHIBIT INDEX
 
 
Exhibit
Number
  
 
Description
   
  10.1
  
Second Modification Agreement, dated June 27, 2012, between the Company and Pinnacle National Bank.
EX-10.1 2 a50329534ex10-1.htm EXHIBIT 10.1 a50329534ex10-1.htm
Exhibit 10.1
 
 
SECOND MODIFICATION AGREEMENT

THIS MODIFICATION AGREEMENT made and entered into as of this 27th day of June, 2012 the “Effective Date”) by and among PINNACLE NATIONAL BANK (“Lender”), and J. ALEXANDER’S CORPORATION, a Tennessee corporation (hereinafter “Borrower”).

W I T N E S S E T H:

WHEREAS, Lender extended to Borrower certain indebtedness evidenced and secured by the following:

(a)           Promissory Note dated May 22, 2009 in the original principal amount of $3,000,000.00 executed by Borrower to Lender, (the “Term Note”), the said Term Note having since been paid in full;

(b)           Revolving Promissory Note dated May 22, 2009 in the original principal amount of $5,000,000.00  by and between Borrower and Lender, (the “Line of Credit” or “Revolving Note”), having an outstanding balance of  ($-0-);

(c)           Loan Agreement dated May 22, 2009 by and between Borrower and Lender;

(d)           Guaranty dated May 22, 2009 by and among Lender and J. Alexander’s Restaurants, Inc., a Tennessee corporation, J. Alexander’s Restaurants, Inc. of Kansas, Inc., a Kansas corporation, J. Alexander’s of Texas, Inc., a Texas corporation, and J. Alexander’s of Kansas, LLC, A Kansas limited liability company (collectively Guarantors”);

(e)           Assignment and Security Agreement dated May 22, 2009 by and among Borrower, Lender, J. Alexander’s Restaurants, Inc., a Tennessee corporation, J. Alexander’s Restaurants of Kansas, Inc., a Kansas corporation, J. Alexander’s of Texas, Inc., a Texas corporation, and J. Alexander’s of Kansas, LLC, a Kansas limited liability company;
 
 
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(f)           First Modification Agreement dated April 2, 2010, by and between Lender and Borrower; and

(g)           Certain other documents executed in connection therewith.

(the foregoing and any and all other documents executed in connection with the Note, and any and all extensions, renewals and modifications thereof, being sometimes herein collectively called the “Loan Documents”).

WHEREAS, Lender is the owner and the holder of the indebtedness evidenced and secured by the Loan Documents, and Lender, among other things, has agreed to modify the terms and conditions pertaining to the financial covenants set forth in Paragraphs 3.5 of the Loan Agreement, to adjust and modify the interest rate charged on the Revolving Note, to increase the amount of the principal on the Revolving Note from $5,000,000 to $6,000,000, and to further extend the maturity date to June 27, 2015.

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

 
1.
The principal balance of the indebtedness evidenced by the Revolving Note shall be increased from $5,000,000 to $6,000,000.  In addition, the interest rate in said Revolving Note shall be modified and the following portion of the Revolving Note shall now read as follows:

“FOR VALUE RECEIVED, the undersigned, J. ALEXANDER’S CORPORATION, a Tennessee corporation (“Borrower”),  promises  to pay   to  the  order  of  PINNACLE NATIONAL BANK (“Lender”), in lawful currency of the United States of America, at its principal office in Nashville, Tennessee, or at such other place as the holder from time to time may designate in writing, the principal sum of SIX MILLION AND NO/100 ($6,000,000.00) DOLLARS, or so much thereof as may be outstanding hereunder from time to time, together with interest thereon computed on the unpaid principal balance from the date of disbursement hereunder at an annual rate equal to Three Hundred (300) basis points in excess of LIBOR (as hereinafter defined).  As used herein, “LIBOR” shall mean the London Interbank Offered Rate for one (1) month as published in The Wall Street Journal, which is the British Bankers’ Association average of interbank offered rates for dollar deposits in the London market on the date of this instrument, or if such date is not a publication date, on the next preceding publication date; provided, however, in no event shall the interest payable hereunder be less than 4.25% per annum. The interest rate shall be automatically adjusted on the tenth (10th) day of each month after execution hereof until the Maturity Date, as hereinafter defined, unless earlier accelerated, to the interest rate so calculated and in effect on such date, or the next preceding date for which the LIBOR rate is published, if no rate is published on such date.
 
 
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Interest shall be calculated on the basis of a three hundred sixty (360) day year. Principal and interest shall be payable as follows:
 
 
(a)
Commencing on the 27th day of July, 2012 and on the same day of each succeeding month thereafter through May 27, 2015, monthly payments of interest only shall be due and payable.
 
 
(b)
The entire unpaid principal and all accrued interest and other charges shall be due and payable on June 27, 2015.
 
The indebtedness evidenced hereby, and all extensions, modifications and renewals thereof, are secured by an Assignment and Security Agreement herewith, and certain additional security documents (the “Security Instruments”).
 
The whole of the principal sum and, to the extent permitted by law, any accrued interest, shall bear, after default or maturity, interest at the lesser of (i) the highest lawful rate then in effect pursuant to applicable law, or (ii) the rate that is four percentage points (4%) in excess of LIBOR, as it varies from time to time.”
 
 
2.
The Loan Agreement is hereby amended in all respects necessary to reflect that the maximum principal amount of the Line of Credit has been increased to $6,000,000.00
 
 
3.
1.3 of the Loan Agreement shall be modified to read as follows:
 
The Revolving Note shall bear interest at the annual rate as set forth in the Revolving Note.
 
 
4.
Section 1.5 of the Loan Agreement shall be modified to as follows:
 
The annual commitment fee on the Revolving Note shall be equal to 0.25% per annum instead of 0.50% per annum. The unused fee shall remain unchanged (equal to 0.25% per annum and payable quarterly in arrears).
 
 
 
5.
Section 1.6 shall be modified to change the Lender’s address to 150 3rd Avenue South, Suite 800, Nashville, Tennessee 37201.
 
 
 
6.
Section 3.5 (a) and (b) of the Loan Agreement shall be modified as follows:
 

3.5           Financial Covenants.  Financial covenants will be calculated on a trailing four quarters basis (except as set forth below) and will consist of:

(a)           Fixed Charge Coverage Ratio. Borrower shall maintain a Fixed Charge Coverage Ratio of not less than 1.15 to 1.0.  Fixed Charge Coverage Ratio shall be measured as of the end of each of Borrower’s fiscal quarters beginning July 1, 2012, and shall be calculated for the then-ending four (4) fiscal quarters, and as of the end of each fiscal quarter thereafter for the then-ending four (4) fiscal quarters. Fixed Charge Coverage Ratio shall be defined as the ratio of (A) the sum of net income (excluding the effect of any extraordinary or non-recurring gains or losses including any asset impairment charges, restaurant closing expenses (including lease buy-out expenses) changes in valuation allowance for deferred tax assets and non-cash deferred income tax benefits and expenses and up to $500,000 (in the aggregate beginning June 27,2012 through the term of the Loans) in uninsured losses) plus depreciation and amortization plus interest expense plus scheduled monthly rent payments plus non-cash FASB 123R items (i.e. stock based compensation) minus the greater of i) actual total store maintenance capital expenditures (excluding major remodeling or image enhancements), or ii) the total number of Borrower’s stores operating for at least 18 months as of the date of determination multiplied by $40,000, 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 made during such period plus scheduled payments of capital leases made during such period, all determined in accordance with GAAP.
 
 
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 Any voluntary or mandatory partial pre-payments of the Line of Credit by Borrower, however, will not reduce (or be included in) scheduled payments of long term debt for purposes of calculating the Fixed Charge Coverage Ratio covenant testing.

(b)           Adjusted Debt to EBITDAR Ratio.  Borrower shall maintain an Adjusted Debt to EBITDAR Ratio of not more than (i) 4.5 to 1.0.  Adjusted Debt to EBITDAR shall be measured at quarter-end based on then-ending four (4) fiscal quarters. Maximum Adjusted Debt to EBITDAR is defined as the ratio of (A) total funded debt (defined as the principal portion of indebtedness for borrowed money) minus invested funds plus rent payments multiplied by 7, to (B) EBITDAR. Invested funds is defined as short term, liquid investments such as money markets with maturities of less than one year in length, and cash and cash equivalents; provided that investments into any joint venture or any endeavor not consistent with Borrower’s core restaurant operating business without the consent of Lender shall be excluded. EBITDAR shall be defined as the sum of net income for such period  (excluding the effect of any extraordinary or non-recurring gains or losses including any asset impairment charges, restaurant closing expenses (including lease buy-out expenses), and up to $500,000 (in the aggregate beginning June 27, 2012, through the term of the Loans) in uninsured losses) plus an amount which, in the determination of net income for such period has been deducted for (i) interest expense for such period; (ii) total federal, state, foreign or other income taxes for such period; (iii) all depreciation and amortization for such period; (iv) scheduled monthly rent payments made during such period; and non-cash FASB 123R items, (i.e., stock based compensation), all as determined with GAAP.

7.           The Loan Documents shall be modified to remove any and all terms and conditions that applied only to the Term Loan.

8.           The Loan Documents, as modified herein, are fully enforceable in accordance with their terms and Borrower has no claim, demand or right of setoff against Lender arising out of or with respect to any of the Loan Documents, or the indebtedness evidenced and secured thereby.

9.           The Loan Documents are further amended to the extent necessary to conform to the foregoing, but no further or otherwise.  The Loan Documents shall continue in full force and effect, amended only as specifically stated herein.  In the event of default in any provisions of the Loan Documents, as amended hereby, the provisions of said instruments and documents making the whole of the indebtedness evidenced and secured due and payable shall be, and continue to be, in full force and effect, and Lender reserves all rights, remedies and privileges provided in the Loan Documents, as amended hereby.  This instrument does not constitute a novation of any of the Loan Documents.
 
 
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10.           Borrower shall pay all reasonable costs and expenses, including but not limited to, reasonable attorney's fees, incurred by Lender in connection with the preparation and consummation of this instrument, and in obtaining, maintaining and preserving the collateral securing the indebtedness evidenced and secured by the Loan Documents.  This instrument is severable such that the invalidity or unenforceability of any provision hereof shall not impair the validity or enforceability of the remaining provisions.  This instrument shall be binding upon the parties hereto, their heirs, successors and assigns.  This instrument shall be governed in accordance with the laws of the State of Tennessee, except with respect to applicable laws or regulations of the United States of America governing the charging and receiving of interest.

11.           The Guarantors join in the execution of this Modification Agreement for the purpose of acknowledging Debtor’s and Guarantors’ obligations under this Modification Agreement, the Revolving Note, the Loan Agreement, and any other instrument or document evidencing or securing all or any part of the indebtedness secured hereunder, and specifically including the said Guarantors being obligated to be Guarantors for the amount of the Line of Credited being increased to the said $6,000,000.00.

IN WITNESS WHEREOF, this instrument has been executed to be effective as of the date first above written.
 
 
BORROWER:
   
 
J. ALEXANDER'S CORPORATION,
 
a Tennessee corporation
   
   
 
By: /s/ R. Gregory Lewis                                    
   
   
 
LENDER:
   
 
PINNACLE NATIONAL BANK
   
   
 
By: /s/ William W. DeCamp                              
 
          William W. DeCamp Senior Vice President
 
 
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GUARANTORS:
   
J. ALEXANDER’S RESTAURANTS, INC.,
a Tennessee corporation
   
By:
 /s/ R. Gregory Lewis                          
Name:
R. Gregory Lewis
Title:
Vice President
   
   
   
J. ALEXANDER’S RESTAURANTS OF
KANSAS, INC., a Kansas corporation
   
By:
/s/ R. Gregory Lewis                           
Name:
R. Gregory Lewis
Title:
Vice President
   
   
   
J. ALEXANDER’S OF TEXAS, INC.,
a Texas corporation
   
By:
/s/ William C. Dufour                          
Name:
William C. Dufour
Title:
President
   
   
   
J. ALEXANDER’S OF KANSAS, LLC,
a Kansas limited liability company
   
By:
/s/ R. Gregory Lewis                           
Name:
R. Gregory Lewis
Title:
Vice President & Treasurer
 
 
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