Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant.
J. Alexanders, LLC (J. Alexanders) and Stoney River Management Company, LLC (Stoney
River; collectively, the Borrowers), each an indirect subsidiary of J. Alexanders Holdings, Inc. (the Company), applied for and received loans (the Loans) from Pinnacle Bank (the Lender) in
the aggregate principal amount of $10.0 million and $5.1 million, respectively, pursuant to the Paycheck Protection Program (the PPP) under the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), which was
enacted March 27, 2020.
The Loans are each evidenced by a promissory note (a Note), dated April 10, 2020 and April 15, 2020
respectively, issued by the applicable Borrower to the Lender. The J. Alexanders Note matures on April 10, 2022 and the Stoney River Note matures on April 15, 2022, and each bears interest at a rate of 1.00% per annum, payable
monthly commencing on November 5, 2020, following an initial deferral period as specified under the PPP. The Notes may be prepaid by the applicable Borrower at any time prior to maturity with no prepayment penalties. Proceeds from the Loans will be
available to the respective Borrower to fund designated expenses, including certain payroll costs, group health care benefits and other permitted expenses, in accordance with the PPP. Under the terms of the PPP, up to the entire amount of principal
and accrued interest may be forgiven to the extent Loan proceeds are used for qualifying expenses as described in the CARES Act and applicable implementing guidance issued by the U.S. Small Business Administration under the PPP. The Company intends
that each Borrower would use their entire Loan amount for designated qualifying expenses and to apply for forgiveness of the respective Loan in accordance with the terms of the PPP. No assurance can be given that the Borrowers will obtain
forgiveness of the Loan in whole or in part.
With respect to any portion of either Loan that is not forgiven, the Loan will be subject to customary
provisions for a loan of this type, including customary events of default relating to, among other things, payment defaults, breaches of the provisions of the applicable Note and cross-defaults on any other loan with the Lender or other creditors.
As previously disclosed, J. Alexanders is party to that certain Second Amended and Restated Loan Agreement, dated May 20, 2015, by and between
J. Alexanders and Pinnacle Bank, as amended (the Loan Agreement), consisting of both term loan borrowings and available lines of credit. As previously disclosed, on March 24, 2020, the Company announced it drew down the remaining
$17.0 million available under the line of credit facilities under the Loan Agreement (the Credit Draw). The Credit Draw was undertaken as a precautionary measure to provide increased liquidity and preserve financial flexibility in light
of current disruption and uncertainty resulting from the novel coronavirus (COVID-19) outbreak. The proceeds from the Credit Draw are available to be used for general corporate purposes, including working capital.
As of April 16, 2020, and including the full funding of borrowings under the above referenced PPP Loans, the Company will have approximately $33.7 million of
cash on hand and $40.8 million of outstanding indebtedness, which includes $21.0 million of borrowings under the line of credit facilities, and $15.1 million of borrowings under the above referenced PPP Loans.
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements, which include all statements that do not relate solely to historical or current facts, such as statements concerning the Companys expectations, anticipations,
intentions, or beliefs regarding the Loan. These forward-looking statements are based on managements beliefs, as well as assumptions made by, and information currently available to, management. Because such statements are based on expectations
and are not statements of fact, actual results may differ materially from those projected and are subject to a number of known and unknown risks and uncertainties, including financial market conditions; actions by the Loan parties; changes by the
Small Business Association or other governmental authorities regarding the CARES Act, the Payroll