Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
J. Alexander's, LLC ("J. Alexander's") and Stoney River Management Company, LLC
("Stoney River"; collectively, the "Borrowers"), each an indirect subsidiary of
J. Alexander's 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. Alexander's 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. Alexander's is party to that certain Second Amended
and Restated Loan Agreement, dated May 20, 2015, by and between J. Alexander's
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 Company's expectations, anticipations,
intentions, or beliefs regarding the Loan. These forward-looking statements are
based on management's beliefs, as well as assumptions made by, and information
currently available to, management. Because such statements are based on
expectations 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
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Protection Program or related administrative matters; the Company's and
Borrower's ability to comply with the terms of the Loan and the CARES Act,
including to use the proceeds of the Loan as described herein; and other risks
and uncertainties described under the headings "Forward-Looking Statements,"
"Risk Factors" and other sections of the Company's Annual Report on Form 10-K
filed with the Securities and Exchange Commission on March 13, 2020, and
subsequent filings. The Company undertakes no obligation to update any
forward-looking statements, whether as a result of new information, future
events or otherwise.
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J. ALEXANDER'S HOLDINGS, INC. 
