Exhibit 10.6

 

MODIFICATION AGREEMENT

 

THIS MODIFICATION AGREEMENT (this “Agreement”) is made and entered into
effective as of the 2nd day of January, 2019 (the “Effective Date”), by and
between J. ALEXANDER’S, LLC, a Tennessee limited liability company (“Borrower”)
and PINNACLE BANK (“Lender”).

 

W I T N E S S E T H:

 

WHEREAS, Lender made a Term Loan, Line of Credit, Development Loan, and Second
Term Loan to Borrower (collectively, the “Loans”), as evidenced and secured by
the following:

 

(a)Promissory Note dated September 3, 2013, in the original principal amount of
$15,000,000.00 executed by Borrower to Lender (the “Term Note”);

 

(b)Revolving Promissory Note dated September 3, 2013, in the original principal
amount of $1,000,000.00 executed by Borrower to Lender (the “Revolving Note”);

 

(c)Revolving Promissory Note dated December 9, 2014, in the original principal
amount of $15,000,000.00 executed by Borrower to Lender and modified by Amended
and Restated Revolving Promissory Note dated May 20, 2015, in the original
principal amount of $20,000,000.00 executed by Borrower to Lender (the
“Development Note”);

 

(d)Promissory Note dated May 20, 2015, in the original principal amount of
$10,000,000.00 executed by Borrower to Lender (the “Second Term Note”);

 

(e)Loan Agreement dated September 3, 2013 evidencing the Revolving Note and
other indebtedness owed by Borrower to Lender as therein described, modified by
Amended and Restated Loan Agreement dated December 9, 2014, modified by Second
Amended and Restated Loan Agreement executed by Borrower and Lender, and further
executed by by J. Alexander’s Holdings, LLC, a Delaware limited liability
company, J. Alexander’s Restaurants, LLC,  a Tennessee limited liability
company, J. Alexander’s Restaurants of Kansas, LLC, a Kansas limited liability
company, J. Alexander’s of Texas, LLC, a Texas limited liability company, JAX
Real Estate, LLC, a Delaware limited liability company, JAX  RE  Holdings, LLC,
a Delaware limited liability company, JAX Real Estate Management, LLC, a
Delaware limited liability company, Stoney River Management Company, LLC, a
Delaware limited liability company, SRLS LLC, a Delaware limited liability
company, Stoney River Legendary Management, L.P., a Georgia limited partnership,
and Stoney River, LLC, a Delaware limited liability company (each a “Guarantor”
and collectively the “Guarantors”) dated May 20, 2015 (the “Second Amended and
Restated Loan Agreement”), and further modified by Modification Agreement dated
September 3, 2016  (collectively the “Loan Agreement”);

 

(f)Mortgages and Deeds of Trust liens, as modified and amended by First Master
Modification Agreement dated December 9, 2014, by Second Master Modification
Agreement dated May 20, 2015 and Modifications to the Mortgages and Deeds
of  Trust dated May 20, 2015, on twelve (12) certain real estate assets owned by
JAX Real Estate, LLC, J. Alexander's, LLC, and

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J. Alexander's Restaurants, LLC, each having a J. Alexander's Restaurant, Stoney
River Restaurant, or a Redlands Grill Restaurant located thereon (“Real Estate
Collateral”) securing the Notes and other indebtedness as described in each of
the Mortgages/Deeds of Trust and recorded in the jurisdiction in which the
respective real estate assets are located, (collectively the “Security
Instruments”);

 

(g)Assignment and Security Agreements executed by Borrower, J. Alexander’s
Restaurants, LLC and J. Alexander’s Restaurants of Kansas, LLC as Debtor and
Lender dated September 3, 2013, modified by Amended and Restated Assignment and
Security Agreement dated December 9, 2014 and further modified by Second Amended
and Restated Assignment and Security Agreement dated May 20, 2015  (collectively
the “Assignment and Security Agreement”); and

 

(h)Guaranties dated September 3, 2013, as amended by Amended and Restated
Guaranties executed by each of the Guarantors dated December 9, 2014 and further
amended by Second Amended and Restated Guaranties dated May 20, 2015
(collectively the “Guaranties”).

 

(the Term Note, Revolving Note, Development Note, Second Term Note, Loan
Agreement, Security Instruments, Assignment and Security Agreement and
Guaranties, and all other instruments and documents now or hereafter evidencing
or securing the Loan, as amended, extended, or otherwise modified from time to
time, being collectively referred to herein as the “Loan Documents”); and

 

WHEREAS, Borrower has requested and Lender has agreed to reprice the interest
rates in the Notes and the Non-Use Fee for the unused portion of the Line of
Credit and the Development Loan.

 

NOW, THEREFORE, for and in consideration of the premises, the mutual covenants
of the parties, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower and Lender covenant and
agree as follows:

 

1.Section 1.5 of the Second Amended and Restated Loan Agreement is hereby
deleted, and the following section substituted in its place and stead:

 

1.5 Commitment Fees; Non-Use Fee.  On May 20, 2015, Borrower paid to Lender an
upfront commitment fee equal to 0.25% of the $5,000,000.00 increase in the
Development Loan and the original principal amount of the Second Term Loan.

 

Borrower shall also pay to Lender a non-use fee (the “Non-Use Fee”) for the
unused portion of the Line of Credit and the Development Loan based on
Borrower’s reported Maximum Adjusted Debt to EBITDAR Ratio for the preceding
quarter, as determined by Borrower’s quarterly loan compliance report submitted
to Lender in accordance with Section 3.4 herein, in the amount specified below:

 

 

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Reported Maximum Adjusted Debt to EBITDAR Ratio for Preceding Quarter

Non-Use Fee (per annum of the average, unused portion of the Line of Credit and
the Development Loan until the termination of the Line of Credit and the
termination of the Development Loan, payable quarterly in arrears)

˂ 1.25x

0.15%

˂ 2.25x

0.20%

˂ 3.25x

0.25%

≥ 3.25x

0.30%

 

The initial Non-Use Fee shall be 0.20% per annum of the average, unused portion
of the Line of Credit and the Development Loan, subject to quarterly
adjustments, until the termination of the Line of Credit and the termination of
the Development Loan, payable quarterly in arrears.

 

2.Section 3.5(b) of the Second Amended and Restated Loan Agreement is hereby
deleted, and the following section substituted in its place and stead:

 

(b)Maximum Adjusted Debt to EBITDAR Ratio.  Borrower shall maintain an Adjusted
Debt to EBITDAR Ratio of not more than 4.0 to 1.0.  Maximum adjusted Debt to
EBITDAR shall be measured at quarter-end based on a four quarter trailing basis.
Maximum Adjusted Debt to EBITDAR Ratio is defined as the ratio of (A) Total
Funded Debt 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
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), changes in valuation
allowance for deferred tax assets and non-cash deferred income tax benefits and
expenses and up to $1,000,000.00  (in the aggregate for the five year term of
the Development Loan) 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)
rent payments; and (v) non-cash FASB 123R items, i.e. stock based compensation,
and non-cash expense related to a profits interest plan, plus any other non-cash
expenses or charges, and plus expenses associated with the public
offering/spin-off process, regardless of whether the public offering/spin-off
process occurs or is delayed, all as determined with GAAP.

 

“GAAP” shall mean generally accepted accounting principles consistently applied,
provided that, notwithstanding any changes in such generally accepted accounting
principles, any leases now existing or hereafter entered into that would

 

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have been treated as operating leases under generally accepted accounting
principles as of December 30, 2018, will continue to not be treated as
indebtedness for all purposes under this Agreement, including this Section 3.5.

 

3.The following shall be inserted after Section 3.11 of the Second Amended and
Restated Loan Agreement:

 

3.12Reimbursement.Upon receiving the reported Maximum Adjusted Debt to EBITDAR
Ratio for the preceding quarter determined by Borrower’s quarterly loan
compliance report, and determining the applicable interest rate and non-use fee,
Lender and Borrower agree that Lender shall reimburse Borrower for any interest
and non-use fee overpaid and Borrower shall reimburse Lender for any interest
and non-use fee owed within thirty (30) days of such determination.

 

4.The Real Estate Collateral is and shall remain subject to the charge or
encumbrance of the Security Instruments, and nothing herein contained or done
pursuant hereto shall affect or be construed to affect the charge or encumbrance
of the Security Instruments or the priority thereof over other liens, charges,
or encumbrances or to release or affect the liability of any party or parties
who may now or hereafter be liable under or on account of any of the Loan
Documents.

 

5.The Loan Documents, as amended hereby, are fully enforceable in accordance
with their terms.  

 

6.The Guarantors join in the execution of this Agreement for the purpose of
acknowledging this Agreement, and to acknowledge and covenant that Guarantors,
under their existing Guaranties, guarantee, among other things and without
limitation, the full and prompt payment and performance to Lender at all times
of all indebtedness and obligations of Borrower to Lender, whether now existing
or hereafter arising, including, but not limited to, the indebtedness evidenced
by the Revolving Note and the Loan Documents, as amended hereby.

 

7.As of the Effective Date, Borrower and Guarantors have no claim, demand, or
right of setoff against Lender or any other party arising out of or with respect
to any of the Loan Documents or the indebtedness evidenced thereby.  

 

8.The Loan Documents are hereby 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.  Lender reserves all of its rights, remedies, and privileges set forth
in the Loan Documents, as amended hereby.  This Agreement does not constitute a
novation of any of the Loan Documents.

 

9.Borrower is a Tennessee limited liability company, validly existing, and in
good standing under the laws of the State of Tennessee and has the authority and
power to enter into and perform its obligations under this Agreement.  The party
executing this Agreement on behalf of Borrower is duly authorized to act on
Borrower’s behalf.  

 

 

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10.Borrower and Guarantors shall execute and deliver to Lender such instruments
and documents as Lender may from time to time reasonably require and shall take
such actions as Lender may from time to time reasonably require to carry out the
provisions contained herein and to assure the full realization by Lender of the
benefit of the Loan Documents and the security given thereunder.

 

11.Borrower shall pay all costs, fees, and expenses, including, but not limited
to, appraisal fees, recording fees and reasonable attorneys’ fees, incurred by
Lender in connection with the preparation and consummation of this Agreement and
in obtaining, maintaining, and preserving the collateral securing the
indebtedness evidenced and secured by the Loan Documents and otherwise in
protecting or perfecting Lender’s rights and interests pursuant to the Loan
Documents.  This Agreement is governed by the laws of the State of
Tennessee.  This Agreement is severable such that the invalidity or
unenforceability of any provision hereof shall not impair the validity or
enforceability of the remaining provisions.  This Agreement shall be binding
upon the parties hereto and their successors and assigns. This Agreement may be
executed in multiple counterparts that when taken as a whole shall constitute a
complete agreement.

 

12.BORROWER, GUARANTORS, AND LENDER HEREBY KNOWINGLY, VOLUNTARILY,
INTENTIONALLY, AND IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT TO
ANY LITIGATION, WHETHER IN CONTRACT OR TORT, AT LAW OR IN EQUITY, BASED HEREON
OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS Agreement, ANY INSTRUMENTS
OR DOCUMENTS EVIDENCING OR SECURING THIS Agreement, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF ANY
PARTY HERETO.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER ENTERING INTO
OR ACCEPTING THIS Agreement. FURTHER, BORROWER AND GUARANTORS HEREBY CERTIFY
THAT NO REPRESENTATIVE OR AGENT OF LENDER, OR LENDER’S COUNSEL, HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT LENDER WOULD NOT, IN THE EVENT OF SUCH LITIGATION,
SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION.  ANY ACTION
BROUGHT HEREUNDER OR WITH RESPECT TO THE SUBJECT MATTER HEREOF MUST BE BROUGHT
IN THE STATE COURTS SITTING IN DAVIDSON COUNTY, TENNESSEE OR IN THE UNITED
STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF TENNESSEE WHICH SHALL HAVE
EXCLUSIVE JURISDICTION AND VENUE OF ANY SUCH MATTERS.  

 

13.Capitalized Terms not otherwise defined herein shall have the meanings as set
forth in the Second Amended and Restated Loan Agreement.

 

 

{Signature pages to follow}

 

 

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IN WITNESS WHEREOF, the undersigned has executed this Modification Agreement
effective as of the Effective Date.

 

BORROWER:

 

J. ALEXANDER’S, LLC,

a Tennessee limited liability company

 

 

By:         /s/ Mark A. Parkey

Name:Mark A. Parkey

Title:Executive Vice President and Chief Financial Officer

 

 

 

  LENDER:

 

  PINNACLE BANK

 

 

  By:  /s/ William W. DeCamp

         William W. DeCamp, Senior Vice President

 

 

 

 

 

GUARANTORS:

 

J. ALEXANDER’S HOLDINGS, LLC,

a Delaware limited liability company

 

By:       /s/ Mark A. Parkey

Name:Mark A. Parkey

Title:Executive Vice President and Chief Financial Officer

 

 

J. ALEXANDER’S RESTAURANTS, LLC,

a Tennessee limited liability company

 

By:       /s/ Mark A. Parkey

Name:Mark A. Parkey

Title:Executive Vice President and Chief Financial Officer

 

 

 

 

 

 

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J. ALEXANDER’S RESTAURANTS OF

KANSAS, LLC, a Kansas limited liability company

 

By:       /s/ Mark A. Parkey

Name:Mark A. Parkey

Title:Executive Vice President and Chief Financial Officer

 

 

J. ALEXANDER’S OF TEXAS, LLC,

a Texas limited liability company

 

By:       /s/ Mark A. Parkey

Name:Mark A. Parkey

Title:Executive Vice President and Chief Financial Officer

 

 

JAX REAL ESTATE, LLC,

a Delaware limited liability company

 

By:       /s/ Mark A. Parkey

Name:Mark A. Parkey

Title:Executive Vice President and Chief Financial Officer

 

 

JAX RE HOLDINGS, LLC,

a Delaware limited liability company

 

By:       /s/ Mark A. Parkey

Name:Mark A. Parkey

Title:Executive Vice President and Chief Financial Officer

 

 

JAX REAL ESTATE MANAGEMENT, LLC,

a Delaware limited liability company

 

By:       /s/ Mark A. Parkey

Name:Mark A. Parkey

Title:Executive Vice President and Chief Financial Officer

 

 

 

 

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STONEY RIVER MANAGEMENT COMPANY, LLC,

a Delaware limited liability company

 

By:       /s/ Mark A. Parkey

Name:Mark A. Parkey

Title:Executive Vice President and Chief Financial Officer

 

 

SRLS LLC,

a Delaware limited liability company

 

By:       /s/ Mark A. Parkey

Name:Mark A. Parkey

Title:Executive Vice President and Chief Financial Officer

 

 

STONEY RIVER LEGENDARY MANAGEMENT, L.P.,

a Georgia limited partnership

 

By:       /s/ Mark A. Parkey

Name:Mark A. Parkey

Title:Executive Vice President and Chief Financial Officer

 

 

STONEY RIVER, LLC,

a Delaware limited liability company

 

By:       /s/ Mark A. Parkey

Name:Mark A. Parkey

Title:Executive Vice President and Chief Financial Officer

 

 

 

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