<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 23, 1999
REGISTRATION NO. 333-__________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
J. ALEXANDER'S CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
TENNESSEE 5812 62-0854056
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NO.) IDENTIFICATION NO.)
P.O. BOX 24300 R. GREGORY LEWIS
3401 WEST END AVENUE P.O. BOX 24300
NASHVILLE, TENNESSEE 37203 3401 WEST END AVENUE
(615) 269-1900 NASHVILLE, TENNESSEE 37203
(ADDRESS, INCLUDING ZIP CODE, AND Copy to: (615) 269-1900
TELEPHONE NUMBER, INCLUDING F. MITCHELL WALKER, JR. (NAME, ADDRESS, INCLUDING ZIP CODE,
AREA CODE, OF REGISTRANT'S BASS, BERRY & SIMS PLC AND TELEPHONE NUMBER, INCLUDING
PRINCIPAL EXECUTIVE OFFICES) 2700 FIRST AMERICAN CENTER AREA CODE, OF AGENT FOR SERVICE)
NASHVILLE, TENNESSEE 37238
(615) 742-6200
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after effectiveness of the Registration Statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================================================
PROPOSED
AMOUNT MAXIMUM PROPOSED MAXIMUM
TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED REGISTERED PER SHARE PRICE REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.05 par value per share (1).................. 1,086,267 $3.75 $4,073,501 $1,133
================================================================================================================================
</TABLE>
(1) Maximum number of shares of J. Alexander's Corporation's common stock to be
sold to holders of common stock in this rights offering. Common stock
includes associated rights to purchase Series A Junior Preferred Stock, no
par value, which are issued for no additional consideration; no additional
registration fee is required.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933, AS AMENDED OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.
<PAGE> 2
The information in this prospectus is not complete and may be changed. The
Company may not sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This prospectus is not
an offer to sell, and it is not soliciting an offer to buy, these securities in
any state where the offer or sale is not permitted.
1,086,267 SHARES OF COMMON STOCK
SUBSCRIPTION PRICE $3.75 PER SHARE
J. ALEXANDER'S CORPORATION
The Company is distributing non-transferable rights to owners of shares of the
Company's common stock. During this Rights Offering, the Company will issue up
to 5,431,335 rights to purchase shares and 1,086,267 shares of common stock.
<TABLE>
<CAPTION>
===========================================================================
Net Proceeds to the
Subscription Price Company (1)
- ---------------------------------------------------------------------------
<S> <C> <C>
Per Share.................. $ 3.75 $ 3.75
- ---------------------------------------------------------------------------
Total................... $ 4,073,501 $ 4,073,501
============================================================================
</TABLE>
(1) Before deducting expenses payable by the Company, estimated to be $150,000.
THE EXERCISE OF THE RIGHTS INVOLVES SUBSTANTIAL RISK.
YOU SHOULD REFER TO THE DISCUSSION OF MATERIAL RISK FACTORS BEGINNING ON PAGE 6
OF THIS PROSPECTUS.
You will receive 1.0 right for each share of common stock that you own at the
close of business on April 5, 1999. Each right entitles you to purchase 0.2
share of common stock, rounding up any remaining fractional share to the next
whole number of shares, for $3.75 per share. Because one of the Company's
significant shareholders, Solidus, LLC ("Solidus"), recently acquired 1,086,266
additional shares of the Company's common stock, Solidus has agreed that it will
not exercise during this Rights Offering rights attributable to the 1,086,266
additional shares.
Shares of the Company's common stock are currently traded on the New York Stock
Exchange under the symbol "JAX." The rights may not be transferred and will not
trade on any exchange or market.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is _________, 1999
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUMMARY................................................................................................1
QUESTIONS AND ANSWERS ABOUT THE COMPANY.........................................................................1
QUESTIONS AND ANSWERS ABOUT THE RIGHTS OFFERING.................................................................1
A WARNING ABOUT FORWARD-LOOKING STATEMENTS........................................................................6
RISK FACTORS......................................................................................................6
If You Do Not Exercise Your Rights, Your Ownership Interest May Be Diluted ..............................6
The Company May Need Additional Capital Even After the Sale to Solidus and the Rights
Offering .......................................................................................7
The Company Relies on Certain Key Personnel .............................................................8
The Company May Not be in Compliance With New York Stock Exchange Rules..................................8
Significant Ownership Positions and Certain Anti-takeover Provisions May Affect Your Rights
as a Shareholder................................................................................8
The Company Does Not Anticipate Paying Dividends on Common Stock.........................................9
The Company's Stock Price Has Been And May Continue to Be Volatile.......................................9
The Company Faces Challenges in Opening New Restaurants..................................................9
The Company Faces Intense Competition....................................................................9
The Company May Experience Fluctuations in Quarterly Results............................................10
Government Regulation and Licensing May Delay New Restaurant Openings or Affect
Operations.....................................................................................10
The Company May Encounter Problems With Year 2000 Compliance............................................10
THE COMPANY......................................................................................................11
RECENT DEVELOPMENTS..............................................................................................11
USE OF PROCEEDS..................................................................................................12
CAPITALIZATION...................................................................................................13
THE RIGHTS OFFERING..............................................................................................14
IF YOU HAVE QUESTIONS............................................................................................19
PLAN OF DISTRIBUTION.............................................................................................20
FEDERAL INCOME TAX CONSIDERATIONS................................................................................20
TAXATION OF THE COMPANY..........................................................................................22
LEGAL MATTERS....................................................................................................22
EXPERTS..........................................................................................................22
IF YOU WOULD LIKE ADDITIONAL INFORMATION.........................................................................23
</TABLE>
i
<PAGE> 4
PROSPECTUS SUMMARY
This section answers in summary form some questions you may have about
the Company and this Rights Offering. The information in this section is not
complete and may not contain all of the information that you should consider
before exercising your rights. You should read the entire prospectus carefully,
including the "Risk Factors" section and the documents listed under "If You
Would Like Additional Information."
QUESTIONS AND ANSWERS ABOUT THE COMPANY
WHAT IS J. ALEXANDER'S CORPORATION?
J. Alexander's Corporation (the "Company") operates 20 J. Alexander's
full-service, casual dining restaurants located in Tennessee, Ohio, Florida,
Kansas, Alabama, Michigan, Illinois, Colorado, Texas, Kentucky and Louisiana.
J. Alexander's is a traditional restaurant with an American menu that features
prime rib of beef; hardwood-grilled steaks, seafood and chicken; pasta; salads
and soups; assorted sandwiches, appetizers and desserts; and a full-service bar.
Management believes quality food, outstanding service and value are critical to
the success of J. Alexander's.
Prior to 1997, the Company was also a franchisee of Wendy's
International, Inc. However, in November 1996, the Company sold 52 of its 58
Wendy's Old Fashioned Hamburgers restaurants to Wendy's International, Inc. The
six restaurants not acquired by Wendy's International in November 1996 were sold
or closed.
WHERE IS THE COMPANY LOCATED?
The Company's corporate offices are located at 3401 West End Avenue, P.O.
Box 24300, Nashville, Tennessee 37202, telephone (615) 269-1900.
QUESTIONS AND ANSWERS ABOUT THE RIGHTS OFFERING
WHAT IS A RIGHT?
The Company will distribute to you 1.0 right for each share of common
stock that you own at the close of business on April 5, 1999. For every right
you receive, you will be entitled to purchase 0.2 share of common stock,
rounding up any remaining fractional share to the nearest whole number of
shares, for $3.75 per share. When you "exercise" rights, that means that you
choose to purchase the shares of common stock that the rights entitle you to
purchase. You may exercise any number of your rights, or you may choose not to
exercise any rights. See "The Rights Offering - The Rights."
WHAT IS THE RIGHTS OFFERING?
This Rights Offering is an opportunity for you to purchase shares of
common stock at a fixed price and in an amount proportional to your existing
interest in the Company.
WILL EVERY SHAREHOLDER RECEIVE RIGHTS IN PROPORTION TO THEIR CURRENT HOLDINGS?
Yes, but only shareholders who exercise their rights will receive
additional shares of common stock. On March 22, 1999, Solidus, LLC, a Tennessee
limited liability company whose principal owners are Dr.
<PAGE> 5
John Morris and members of his family, purchased 1,086,266 additional shares of
common stock for approximately $4.1 million, a purchase price of $3.75 per
share. E. Townes Duncan, a director of the Company, is also an owner of and
manages the investments of Solidus. The Company completed the sale of common
stock to Solidus before the Rights Offering to provide the Company with
additional equity on favorable terms (including the agreements described below)
and more quickly than would have been possible through the Rights Offering, and
to ensure that the Company obtained the minimum amount of new equity capital
which it believed it needed to effectively carry out its long term business
plan. Because Solidus purchased these shares before the Rights Offering, Solidus
agreed that it will not exercise any rights attributable to the 1,086,266
additional shares it purchased. In addition, Solidus agreed not to purchase or
obtain additional shares in excess of 33% of the Company's outstanding common
stock and also agreed not to sell any of its common stock for a period of seven
years. See "Recent Developments - Sale of Common Stock to Solidus."
WHY IS THE COMPANY ENGAGING IN A RIGHTS OFFERING?
The Rights Offering is part of a financing plan that the Company expects
will raise up to approximately $8.1 million in equity for the Company (the
"Financing Plan"). The Company believes that raising equity capital to repay
some of the Company's outstanding debt will benefit the Company by reducing its
debt to equity ratio and reducing its interest expense, which will improve
earnings. The Company believes that accomplishing these objectives will improve
its financial condition and may allow it to negotiate improved terms for its
credit facilities, including interest rates and availability.
The Financing Plan has two parts:
- Sale of $4.1 million of common stock to Solidus.
On March 22, 1999, Solidus purchased 1,086,266 additional shares of
common stock for approximately $4.1 million. In addition, Solidus
agreed to the following:
- for a period of seven years, Solidus would not acquire or hold
more than 33% of the Company's common stock.
- for a period of seven years, Solidus would not solicit proxies
for a vote of the shareholders of the Company.
- for a period of seven years, Solidus would not sell the
Company's common stock it owns and would only transfer common
stock to the Company, a person, entity or group approved by
the Company or to an affiliate of Solidus.
- the above restrictions on Solidus' ownership and ability to
solicit proxies would terminate in the event of certain tender
offers or exchange offers, a notice filing with the Department
of Justice relating to the acquisition of more than 15% of the
outstanding common stock or with the SEC relating to the
acquisition of more than 10% of the outstanding common stock,
the Company's proposing or approving a merger or other
business combination, or a change to a majority of the
Company's Board of Directors over a two-year period.
2
<PAGE> 6
- Solidus would not exercise during the Rights Offering rights
attributable to the 1,086,266 additional shares of common
stock purchased on March 22, 1999.
- $4.1 million rights offering.
The Company is issuing all of its shareholders of record as of the close
of business on April 5, 1999, 1.0 non-transferable right for each share of
common stock held by them on that date. For every right you hold, you will be
entitled to purchase 0.2 share of common stock, rounding up any remaining
fractional share to the next whole number of shares, for $3.75 per share. A
total of 1,086,267 shares could be purchased during the Rights Offering for a
total purchase price of $4,073,501.
The Company will apply the proceeds from the Financing Plan to repay a
portion of the debt under its revolving credit facility. See "Use of Proceeds"
and "Capitalization."
HOW MANY SHARES MAY I PURCHASE?
You will receive 1.0 right for each share of common stock that you own at
the close of business on April 5, 1999. Each right entitles you to purchase 0.2
share of common stock, rounding up any remaining fractional share to the nearest
whole number of shares, for $3.75 per share. See "The Rights Offering - Basic
Subscription Right."
HOW DID THE COMPANY ARRIVE AT THE $3.75 PER SHARE PRICE?
In determining the price per share for the sale to Solidus and for the
Rights Offering, the Company considered current and historical market prices for
the common stock and the Company's need for capital. Solidus bought its shares
on March 22, 1999 at the same price per share. See "The Rights Offering -
Determination of Share Price."
HOW DO I EXERCISE MY RIGHTS?
You must properly complete the attached Subscription Certificate and
forward it to SunTrust Bank, Nashville, N.A., as Subscription Agent, on or
before ______________, 1999. The address for the Subscription Agent is on page
19. See "The Rights Offering - Exercise of Rights." Your Subscription
Certificate must be accompanied by proper payment for each share that you wish
to purchase. See "The Rights Offering - Method of Payment."
HOW LONG WILL THE RIGHTS OFFERING LAST?
You will be able to exercise your rights only during a limited period.
If you do not exercise your rights before 5:00 p.m. Central Daylight Time, on
________ __, 1999, the rights will expire. The Company, in its discretion, may
decide to extend the Rights Offering for up to 10 days. See "The Rights Offering
- - Expiration Date."
3
<PAGE> 7
AFTER I EXERCISE MY RIGHTS, CAN I CHANGE MY MIND?
No. Once you send in your Subscription Certificate and payment, you
cannot revoke the exercise of your rights. See "Rights Offering - No
Revocation."
IS EXERCISING MY RIGHTS RISKY?
The exercise of your rights involves a degree of risk. You should
carefully consider the "Risk Factors" described in this prospectus, beginning on
page 6.
WHAT HAPPENS IF I CHOOSE NOT TO EXERCISE MY RIGHTS?
You will retain your current number of shares of common stock even if you
do not exercise your rights. If you do not exercise your rights, you could
diminish your proportionate interest in the Company, and your voting rights
could be diluted. See "Risk Factors - If You Do Not Exercise Your Rights, Your
Ownership Interest May Be Diluted."
CAN I SELL MY RIGHTS?
No. You may not sell or transfer your rights to another individual or
entity. See "The Rights Offering - Non-Transferability of Rights."
CAN I SELL MY COMMON STOCK AFTER THE RIGHTS OFFERING?
Common stock sold in this rights offering will be registered under the
federal securities laws. Therefore, these shares of common stock may be sold
freely after the rights offering, subject to restrictions on affiliates of the
Company. See "The Rights Offering - Basic Subscription Right."
WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF EXERCISING MY RIGHTS?
The Company believes that the receipt of the rights by shareholders will
be a nontaxable stock dividend. However, the IRS may view the distribution of
the rights as ordinary income to the shareholder taxable in the amount of the
fair market value of the rights. In any event, the exercise of the rights will
not be taxable. You should seek specific tax advice from your personal tax
advisor. See "Tax Consequences to Shareholders."
WHEN WILL I RECEIVE MY NEW SHARES?
If you purchase shares through the Rights Offering, the Company will send
you a certificate representing shares of common stock as soon as practicable
after ________ __, 1999.
CAN THE COMPANY CANCEL THE RIGHTS OFFERING?
Yes. The Company can cancel the Rights Offering at any time on or before
________ __, 1999, for any reason.
4
<PAGE> 8
HOW MUCH MONEY WILL THE COMPANY RECEIVE FROM THE SALE TO SOLIDUS AND THE RIGHTS
OFFERING?
The Company received $4,073,498 for the sale of 1,086,266 shares of common
stock to Solidus on March 22, 1999. The Company's gross proceeds from the Rights
Offering depend on the number of shares of common stock that are purchased. If
the Company sells all 1,086,267 shares offered by this prospectus, then the
Company will receive proceeds of $4,073,501 from the Rights Offering.
HOW WILL THE COMPANY USE THE PROCEEDS FROM THE RIGHTS OFFERING?
The Company will use the proceeds from the Rights Offering to repay a
portion of the debt under its revolving credit facility. See "Use of Proceeds."
HOW MANY SHARES WILL BE OUTSTANDING AFTER THE RIGHTS OFFERING?
The number of shares of common stock outstanding after the Rights Offering
depends on the number of shares that are purchased.
If the Company sells all of the shares offered by this prospectus, then
the Company will issue during the Rights Offering 1,086,267 new shares of common
stock. Based on this number, the Company anticipates that there will be
7,603,868 shares of the Company's common stock outstanding after the Rights
Offering.
WHO CAN I TALK TO IF I HAVE MORE QUESTIONS?
If you have questions or need assistance concerning the procedure for
exercising rights, or if you would like additional copies of this prospectus or
the Notice of Guaranteed Delivery, you should contact the Subscription Agent at
the address on page 19 below.
If you have more questions about the Rights Offering, please contact
R. Gregory Lewis
Chief Financial Officer
J. Alexander's Corporation
P.O. Box 24300
3401 West End Avenue
Nashville, Tennessee 37203
(615) 269-1900
See "If You Have Questions."
5
<PAGE> 9
A WARNING ABOUT FORWARD-LOOKING STATEMENTS
This prospectus may contain "forward-looking statements." Any statement in
this prospectus, other than a statement of historical fact, may be a
forward-looking statement.
You can generally identify forward-looking statements by looking for words
such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe"
or "continue." Variations on those or similar words, or the negatives of such
words, also may indicate forward-looking statements.
Although the Company believes that the expectations reflected in this
prospectus are reasonable, the Company cannot assure you that its expectations
will be correct. Factors which could affect actual results include, but are not
limited to, the Company's ability to increase sales in its restaurants; the
Company's ability to recruit and train qualified restaurant management
personnel; intense competition within the casual dining industry; changes in
business and economic conditions; changes in consumer tastes; and government
regulations. The Company has included a discussion entitled "Risk Factors" in
this prospectus, disclosing other important factors that could cause its actual
results to differ materially from its expectations. If in the future you hear or
read any forward-looking statements concerning the Company, you should refer
back to these Risk Factors.
The forward-looking statements in this prospectus are accurate only as of
its date. If the Company's expectations change, or if new events, conditions or
circumstances arise, the Company is not required to, and may not, update or
revise any forward-looking statement in this prospectus.
RISK FACTORS
As you decide whether to exercise your rights, and when you evaluate the
Company's performance and the forward-looking statements in this prospectus, you
should carefully consider the following risk factors, as well as the other
information contained in this prospectus.
IF YOU DO NOT EXERCISE YOUR RIGHTS, YOUR OWNERSHIP INTEREST MAY BE DILUTED
If you do not exercise all of your rights, you may suffer significant
dilution of your percentage ownership in the Company relative to shareholders
who exercise their rights. Immediately after the Rights Offering, the net
tangible book value per share of common stock will significantly decrease. The
chart below illustrates the potential dilution that could result immediately
after the closing of the Rights Offering if a shareholder who owns 100,000
shares of common stock fails to exercise its rights, and other shareholders
purchase all 1,066,267 remaining shares of common stock sold in the Rights
Offering.
6
<PAGE> 10
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<CAPTION>
AFTER THE
RIGHTS AFTER THE RIGHTS
OFFERING OFFERING
ASSUMING ASSUMING
BEFORE THE SHAREHOLDER SHAREHOLDER
RIGHTS EXERCISES EXERCISES NO
OFFERING ALL RIGHTS RIGHTS
---------- ----------- ----------------
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Shares Owned by Shareholder....................... 100,000 120,000 100,000
Total Number of Common Shares Outstanding......... 6,517,601 7,603,868 7,583,868
Shareholder's Percentage Ownership................ 1.53% 1.58% 1.32%
</TABLE>
THE COMPANY MAY NEED ADDITIONAL CAPITAL EVEN AFTER THE SALE TO SOLIDUS AND
THE RIGHTS OFFERING
The Company's ability to conduct its business depends to a significant
degree on its ability to incur indebtedness and obtain equity capital. The
Company needs financing primarily to fund its development of new restaurants. To
meet these needs, the Company currently uses cash from operations and borrowings
under a revolving credit facility.
The sale to Solidus and the Rights Offering are intended to raise
additional capital for the Company. Even after the completion of the sale to
Solidus and the Rights Offering, however, the Company may need additional
capital to meet its capital requirements. The Company cannot assure you that
such capital will be available on satisfactory terms. If all of the rights are
not exercised, or if the Company fails to reach sufficient cash flows, the
Company will require additional debt or equity.
Through the sale to Solidus and the Rights Offering, its existing credit
facility and cash flow from operations, the Company believes that it will have
access to sufficient funds to carry on its existing level of business and
develop additional restaurants. The Company cannot assure you that its existing
credit facility will remain available past July 1, 2000, and the Company cannot
assure you that it will be successful in consummating any future financing
transactions on satisfactory terms.
Factors which could affect the Company's access to the capital markets, or
the costs of such capital, include:
- changes in interest rates,
- general economic conditions, and
- investors' perceptions of the Company's business, results of
operations, leverage, financial condition and business prospects.
Economic, financial, competitive and other matters strongly influence each of
these factors, and the Company may not be able to control those influences.
7
<PAGE> 11
In addition, covenants under the Company's existing or future debt
securities and credit facilities may significantly restrict the Company's
ability to incur additional indebtedness or to issue preferred stock. The
Company's existing credit facility requires the Company to maintain certain
financial ratios and also prohibits new borrowing other than under the revolving
credit facility.
THE COMPANY RELIES ON CERTAIN KEY PERSONNEL
The Company depends on the efforts and abilities of a number of its
current key management personnel, including Lonnie J. Stout II, its President
and Chief Executive Officer. The success of the Company depends to a large
extent on its ability to retain and continue to attract key employees through
its compensation plans, including employee stock options. If the Company loses
certain key employees or cannot retain or attract key employees in the future,
the Company's operations could be adversely affected.
THE COMPANY MAY NOT BE IN COMPLIANCE WITH NEW YORK STOCK EXCHANGE RULES
No shareholder approval is required under Tennessee corporate law or
federal securities laws for the Company's recent sale of common stock to Solidus
or for the Rights Offering. It is possible that the New York Stock Exchange may
assert that shareholder approval is required under its guidelines or that the
Company is otherwise not in compliance with New York Stock Exchange requirements
relating to market capitalization or operating results. It is possible that the
New York Stock Exchange may consider whether to delist the Company's common
stock. If the New York Stock Exchange delists the Company's common stock, the
Company would apply for listing of the common stock for trading on The Nasdaq
Stock Market's National Market or Small Cap Market.
SIGNIFICANT OWNERSHIP POSITIONS AND CERTAIN ANTI-TAKEOVER PROVISIONS MAY
AFFECT YOUR RIGHTS AS A SHAREHOLDER
The Company's Board of Directors has the authority to issue up to
1,000,000 shares of preferred stock and to determine the price, rights,
preferences and privileges of those shares without any further vote of, or
action by, the Company's shareholders. Your rights will be subject to, and may
be adversely affected by, the rights of holders of preferred stock. If the
Company chooses to issue preferred stock with voting rights, the issuance could
provide desirable flexibility in connection with possible acquisitions and other
corporate purposes. In addition, the Company has in effect a shareholder rights
plan, which is intended to encourage third parties interested in acquiring the
Company to negotiate with the Board of Directors. Under the shareholder rights
plan, shares of common stock have attached Series A Junior Preferred Stock
purchase rights, which may be exercised if a person or group (other than Solidus
and its affiliates) acquires 20% of the outstanding common stock or if a person
or group initiates a tender or exchange offer that would result in such person
or group acquiring 10% or more of the outstanding common stock. In addition,
Solidus currently owns approximately 24% of the outstanding common stock. In the
future, Solidus' vote of its common stock will have a significant impact on the
outcome of any matters that are determined by a majority vote of the Company's
shareholders. The issuance of voting preferred stock, the presence of the
shareholder rights plan, or the ownership of a significant percentage of the
common stock by a single shareholder, such as Solidus, could also make it more
difficult for a third party to acquire control of the Company. Certain
provisions of Tennessee law applicable to the Company may also discourage
third-party attempts to acquire control.
8
<PAGE> 12
THE COMPANY DOES NOT ANTICIPATE PAYING DIVIDENDS ON COMMON STOCK
The Company does not plan to pay cash dividends on the Company's common
stock in the foreseeable future. The Board of Directors will decide, in the
exercise of its business judgment, whether to apply legally available funds to
the payment of dividends. The Board of Directors will consider the Company's
results of operations and financial condition, any existing or proposed
commitments for the use of available funds, and the Company's obligations to its
creditors or holders of preferred stock, if any preferred stock is issued.
Financial covenants in the Company's future credit agreements may restrict the
Company's ability to pay dividends.
THE COMPANY'S STOCK PRICE HAS BEEN AND MAY CONTINUE TO BE VOLATILE
Trading volume and prices for the common stock have been subject to wide
fluctuations during the past year and may continue to fluctuate in response to
quarterly variations in operating results, announced earnings and other factors.
The Company cannot always foresee or predict such events. The market price of
the Company's common stock could also be influenced by developments or matters
not related to the Company, including the sale or attempted sale of a large
amount of the Company's common stock on the open market by a shareholder. A
shareholder is not permitted to revoke the exercise of a right, even if the
market price of the common stock falls prior to the closing of this Rights
Offering. The Company cannot predict whether a shareholder will be able to sell
common stock purchased in this Rights Offering for a price that equals or
exceeds the subscription price of $3.75 per share.
THE COMPANY FACES CHALLENGES IN OPENING NEW RESTAURANTS
The Company's continued growth depends on its ability to open new J.
Alexander's restaurants and to operate them profitably, which will depend on a
number of factors, including the selection and availability of suitable
locations, the hiring and training of sufficiently skilled management and other
personnel and other factors, some of which are beyond the control of the
Company. In addition, it has been the Company's experience that new restaurants
generate operating losses while they build sales levels to maturity. The Company
currently operates twenty J. Alexander's restaurants, of which six have been
open for less than two years. Because of the Company's relatively small J.
Alexander's restaurant base, an unsuccessful new restaurant could have a more
adverse effect on the Company's results of operations than would be the case in
a restaurant company with a greater number of restaurants.
THE COMPANY FACES INTENSE COMPETITION
The restaurant industry is intensely competitive with respect to price,
service, location and food quality, and there are many well-established
competitors with substantially greater financial and other resources than the
Company. Some of the Company's competitors have been in existence for a
substantially longer period than the Company and may be better established in
markets where the Company's restaurants are or may be located. The restaurant
business is often affected by changes in consumer tastes, national, regional or
local economic conditions, demographic trends, traffic patterns and the type,
number and location of competing restaurants.
9
<PAGE> 13
THE COMPANY MAY EXPERIENCE FLUCTUATIONS IN QUARTERLY RESULTS
The Company's quarterly results of operations are affected by timing of
the opening of new J. Alexander's restaurants, and fluctuations in the cost of
food, labor, employee benefits, and similar costs over which the Company has
limited or no control. The Company's business may also be affected by inflation.
In the past, management has attempted to anticipate and avoid material adverse
effects on the Company's profitability from increasing costs through its
purchasing practices and menu price adjustments, but there can be no assurance
that it will be able to do so in the future.
GOVERNMENT REGULATION AND LICENSING MAY DELAY NEW RESTAURANT OPENINGS OR AFFECT
OPERATIONS
The restaurant industry is subject to extensive state and local government
regulation relating to the sale of food and alcoholic beverages, and sanitation,
fire and building codes. Termination of the liquor license for any J.
Alexander's restaurant would adversely affect the revenues for the restaurant.
Restaurant operating costs are also affected by other government actions that
are beyond the Company's control, which may include increases in the minimum
hourly wage requirements, workers' compensation insurance rates and unemployment
and other taxes. If the Company experiences difficulties in obtaining or fails
to obtain required licensing or other regulatory approvals, this delay or
failure could delay or prevent the opening of a new J. Alexander's restaurant.
The suspension of, or inability to renew, a license could interrupt operations
at an existing restaurant, and the inability to retain or renew such licenses
would adversely affect the operations of the new restaurants.
THE COMPANY MAY ENCOUNTER PROBLEMS WITH YEAR 2000 COMPLIANCE
The term "Year 2000" is a general term used to describe the various
problems that may result from the improper processing of dates and
date-sensitive calculations by computers and other machinery as the year 2000 is
approached and reached. The Company's key financial, informational and
operational systems have been assessed for Year 2000 compliance, and detailed
plans have been developed to address system modifications required by September
30, 1999. These systems include information technology systems ("IT"). The
Company has assessed its major IT vendors and technology providers and is in the
process of testing its systems to determine Year 2000 compliance. In addition,
the Company is in the process of assessing its non-IT systems that utilize
embedded technology, such as microcontrollers, and reviewing them for Year 2000
compliance. Because the Company's testing phase is not yet substantially in
process, and accordingly it has not fully assessed its risk from potential Year
2000 failures, the Company has not yet developed detailed contingency plans
specific to Year 2000 events for any specific area of business.
To operate its business, the Company relies upon government agencies,
utility companies, providers of telecommunication services, suppliers, and other
third party service providers ("Material Relationships"), over which it can
assert little control. The Company's ability to conduct its core business is
dependent upon the ability of these Material Relationships to rectify their Year
2000 issues to the extent they affect the Company. If the telecommunications
carriers, public utilities and other Material Relationships do not appropriately
rectify their Year 2000 issues, the Company's ability to conduct its core
business may be materially impacted, which could result in a material adverse
effect on the Company's financial condition. The Company has begun an assessment
of all Material Relationships to determine risk and assist in the development of
contingency plans. This effort is to be completed by June 30, 1999. The Company
is unable to estimate the costs that it may incur as a result of Year 2000
problems suffered by the parties with which
10
<PAGE> 14
it deals, such as Material Relationships, and there can be no assurance that the
Company will successfully address the Year 2000 problems present in its own
systems.
THE COMPANY
J. Alexander's Corporation (the "Company") operates 20 J. Alexander's
full-service, casual dining restaurants located in Tennessee, Ohio, Florida,
Kansas, Alabama, Michigan, Illinois, Colorado, Texas, Kentucky and Louisiana.
J. Alexander's is a traditional restaurant with an American menu that features
prime rib of beef; hardwood-grilled steaks, seafood and chicken; pasta; salads
and soups; assorted sandwiches, appetizers and desserts; and a full-service bar.
Management believes quality food, outstanding service and value are critical to
the success of J. Alexander's.
Prior to 1997, the Company was also a franchisee of Wendy's International,
Inc. However, in November 1996, the Company sold 52 of its 58 Wendy's Old
Fashioned Hamburgers restaurants to Wendy's International. The six
restaurants not acquired by Wendy's International in November 1996 were sold or
closed.
RECENT DEVELOPMENTS
FOURTH QUARTER AND YEAR END RESULTS
On March 1, 1999, the Company reported operating results for the fourth
quarter of 1998, with higher operating income and same store sales. Restaurant
operating income for the fourth quarter, which was a 14-week period, increased
to $2,419,000, from $890,000 in the 13-week fourth quarter of the prior year.
For the fourth quarter, the Company posted average weekly same store sales of
$76,900 per restaurant, increasing by 8.8% over $70,700 posted for the fourth
period of 1997. Net sales for the quarter rose 32% to $20,506,000 from
$15,504,000.
The Company reported net income of $367,000, or $.07 per share, in the
fourth quarter of 1998, up from a loss of $4,635,000, or $.85 per share, in the
final quarter of 1997. The 1997 results included a valuation adjustment to the
Company's deferred tax assets, which increased the net loss for the quarter by
$2,393,000, or $.44 per share.
For the year ended January 3, 1999, J. Alexander's Corporation recorded
average weekly same store sales of $76,300 for its 17 restaurants which were in
operation for more than twelve months, up 4.8% from $72,800 achieved in the
prior year. Net sales for fiscal 1998, which included 53 weeks, were
$74,200,000, a gain of 30% from $57,138,000 generated in 1997, a 52-week period.
The Company narrowed its loss for fiscal 1998 to $1,485,000, or $.27 per share
in 1998, from $5,991,000, or $1.11 per share in 1997. In addition to the 1997
tax asset adjustment, which increased the loss per share for the year by $.44,
the Company recorded a charge of $885,000, or $.16 per share, in the first
quarter of 1997 to reflect the cumulative effect of a change in its accounting
policy for pre-opening costs to expense those costs as incurred. Restaurant
operating income for 1998 rose to $6,710,000 from $5,114,000 in 1997.
During 1998, J. Alexander's Corporation opened two new restaurants, one in
Louisville, Kentucky and another in Baton Rouge, Louisiana. For 1999, the
Company has plans to open a restaurant in West
11
<PAGE> 15
Bloomfield, Michigan, and is finalizing its plans for a restaurant in
Cincinnati, Ohio, with construction expected to start in the fall of 1999.
SALE OF COMMON STOCK TO SOLIDUS
On March 22, 1999, Solidus purchased 1,086,266 additional shares of common
stock for approximately $4.1 million. In addition, Solidus agreed to the
following:
- for a period of seven years, Solidus would not acquire or hold
more than 33% of the Company's common stock.
- for a period of seven years, Solidus would not solicit proxies
for a vote of the shareholders of the Company.
- for a period of seven years, Solidus would not sell the
Company's common stock it owns and would only transfer common
stock to the Company, a person, entity or group approved by
the Company or to an affiliate of Solidus.
- the above restrictions on Solidus' ownership and ability to
solicit proxies would terminate in the event of certain tender
offers or exchange offers, a notice filing with the Department
of Justice relating to the acquisition of more than 15% of the
outstanding voting securities or with the SEC relating to the
acquisition of more than 10% of the outstanding common stock,
the Company's proposing or approving a merger or other
business combination, or a change to a majority of the
Company's Board of Directors over a two-year period.
- Solidus would not exercise rights during the Rights Offering
attributable to the 1,086,266 additional shares of common
stock purchased on March 22, 1999.
USE OF PROCEEDS
The Company will apply its net proceeds from the sale to Solidus and the
Rights Offering to repay a portion of the debt under its revolving credit
facility. Amounts repaid will continue to be available for reborrowing.
Borrowings under the revolving credit facility bear interest at a rate equal to
LIBOR plus a spread of two to three percent, depending on the ratio of the
Company's senior debt to EBITDA (earnings before interest, taxes, depreciation
and amortization). The facility matures, unless the Company elects to convert
outstanding borrowings to a term loan, on July 1, 2000. After giving effect to
the sale of 1,086,266 additional shares of common stock to Solidus on March 22,
1999, the principal amount outstanding under the revolving credit facility was
$5.2 million. Borrowings under the credit facility were incurred to finance
development of the Company's restaurants.
Assuming that shareholders exercise the rights to purchase 1,086,267
shares of common stock and including the sale to Solidus of 1,086,266 shares,
the Company will receive net proceeds from this Rights Offering and the Solidus
purchase of approximately $8.1 million.
12
<PAGE> 16
CAPITALIZATION
The following table sets forth the short-term indebtedness and the
capitalization of the Company, on an historical basis as of January 3, 1999, and
on a pro forma basis as of January 3, 1999, based on completion of the Solidus
purchase and the Rights Offering assuming the maximum exercise of the rights.
The net proceeds from the sale to Solidus on March 22, 1999 and the Rights
Offering are being applied as set forth above in Use of Proceeds.
<TABLE>
<CAPTION>
JANUARY 3, 1999
-------------------------------
AS
ACTUAL ADJUSTED
------------- -------------
(in thousands)
<S> <C> <C>
Current portion of long-term debt: $ 1,917 $ 1,917
============ ==========
Long-term debt:
Long-term debt and obligations under capital leases, less current
maturities.................................................................... $ 21,361 $ 13,364
------------ ----------
Stockholders' equity:
Common stock, $0.05 par value; 10,000,000 shares authorized;
5,431,335 issued and outstanding; 7,603,868 outstanding, as
adjusted(1)............................................................... 272 380
Preferred stock, no par value; authorized 1,000,000 shares; none issued....... -- --
Additional paid in capital.................................................... 30,007 37,896
Retained earnings............................................................. 4,272 4,272
------------ ----------
34,551 42,548
Note receivable-Employee Stock Ownership Plan(2).............................. (820) (820)
------------ ----------
Total stockholders' equity................................................ 33,731 41,728
------------ ----------
Total capitalization............................................. $ 55,092 $ 55,092
============ ==========
</TABLE>
- ---------------
(1) Does not include 678,820 shares of common stock reserved for issuance upon
the exercise of options granted pursuant to the Company's existing stock
option plans and 774,648 shares of common stock reserved for issuance upon
conversion of the Company's Convertible Subordinated Debentures due 2003.
(2) During 1992, the Company established an Employee Stock Ownership Plan
("ESOP"), which purchased 457,055 shares of common stock for an aggregate
purchase price of $1,714,000. The Company funded the ESOP by loaning it an
amount equal to the purchase price. The loan is secured by a pledge of the
unallocated stock held by the ESOP. The Company has made a contribution to
the ESOP each year since the ESOP was established allowing the ESOP to make
its scheduled loan repayments to the Company, with the exception of 1996
when no contribution was made. The terms of the ESOP note, as amended in
1997, call for interest to be paid at an annual rate of 10% and for
repayment of the ESOP note's remaining principal in annual amounts ranging
from $135,000 to $197,000 over the period 1999 through 2003.
13
<PAGE> 17
THE RIGHTS OFFERING
THE RIGHTS
The Company is distributing non-transferable rights to owners of shares of
its common stock at the close of business on April 5, 1999, at no cost to the
shareholders. The Company will give you 1.0 right for each share of common stock
that you own at the close of business on April 5, 1999. If you wish to exercise
your rights, you must do so on or before _______ __, 1999 at 5 p.m., Central
Daylight Time. After that date, the rights will expire and will no longer be
exercisable.
BASIC SUBSCRIPTION RIGHT
For each right you receive, you will be entitled to purchase, upon payment
of $3.75 per share to the Company, 0.2 share of common stock, rounding up any
remaining fractional share to the next whole number of shares (the "Basic
Subscription Right"). The Company will send you certificates representing the
shares of common stock that you purchase pursuant to your Basic Subscription
Right as soon as practicable after ________ __, 1999, whether you exercise your
rights immediately prior to that date or earlier.
EXPIRATION DATE
The rights will expire at 5:00 p.m., Central Daylight Time, on _______ __,
1999, unless the Company, in its discretion, extends the Rights Offering for up
to 10 days. If you do not exercise your Basic Subscription Rights prior to
___________ __, 1999, the rights will be null and void. The Company will not be
required to issue shares to you if the Subscription Agent receives your
Subscription Certificate or your payment after that date, regardless of when you
sent the Subscription Certificate and payment, unless you send the documents in
compliance with the Guaranteed Delivery Procedures described below.
WITHDRAWAL RIGHT
The Company may withdraw the Rights Offering at any time prior to or on
________ __, 1999, for any reason (including, without limitation, a change in
the market price of the common stock). If the Company withdraws the Rights
Offering, any funds received from shareholders will be promptly refunded,
without interest or penalty.
DETERMINATION OF SHARE PRICE
The Company and its Board of Directors decided to offer shares for $3.75
per share during the Rights Offering after considering such factors as the
historic and current market price of the Company's common stock and the
Company's need for capital. Solidus also purchased 1,086,266 additional shares
of common stock on March 22, 1999 at the $3.75 per share price. The $3.75 per
share price should not be considered an indication of the actual value of the
Company or its common stock. The Company cannot assure you that the market price
of the common stock will not decline during the Rights Offering. The Company
also cannot assure you that you will be able to sell shares of common stock
purchased during the Rights Offering at a price equal to or greater than $3.75
per share.
14
<PAGE> 18
NON-TRANSFERABILITY OF RIGHTS
The rights may not be sold and may only be transferred by operation of law.
The Company common stock will be represented by stock certificates. Common stock
issued under this Rights Offering will be registered under the federal
securities laws. Therefore, these shares of common stock may be sold freely
after the Rights Offering, subject to restrictions on affiliates of the Company.
See "- Basic Subscription Right."
EXERCISE OF RIGHTS
You may exercise your rights by delivering to the Subscription Agent on or
prior to _________ __, 1999:
(1) a properly completed and duly executed Subscription Certificate;
(2) any required signature guarantees; and
(3) payment in full of $3.75 per share to be purchased through the Basic
Subscription Right.
You should deliver your Subscription Certificate and payment to the address set
forth below under "-- Subscription Agent."
METHOD OF PAYMENT
Payment for the shares must be made by:
(1) bank draft drawn upon a United States bank or a postal,
telegraphic or express money order payable to "SunTrust Bank,
Nashville, N.A., as Subscription Agent";
(2) wire transfer of funds to the account maintained by the
Subscription Agent for such purpose at SunTrust Bank, Nashville,
N.A. (please contact Subscription Agent for specific
instructions); or
(3) notice of guaranteed delivery of payment, as discussed below
(a "Notice of Guaranteed Delivery"), from a member firm of a
registered national securities exchange or a member of the
National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an office or
correspondent in the United States.
Payment will be deemed to have been received by the Subscription Agent
only upon:
(1) clearance of any uncertified check;
(2) receipt by the Subscription Agent of any certified check or bank
draft drawn upon a U.S. bank or of any postal, telegraphic or
express money order; or
(3) receipt of actual funds pursuant to any Notice of Guaranteed
Delivery.
15
<PAGE> 19
PLEASE NOTE THAT FUNDS PAID BY UNCERTIFIED PERSONAL CHECK MAY TAKE AT
LEAST FIVE BUSINESS DAYS TO CLEAR. ACCORDINGLY, IF YOU WISH TO PAY BY MEANS OF
AN UNCERTIFIED PERSONAL CHECK, THE COMPANY URGES YOU TO MAKE PAYMENT
SUFFICIENTLY IN ADVANCE OF _________ ___, 1999, TO ENSURE THAT THE PAYMENT IS
RECEIVED AND CLEARS BEFORE THAT DATE. THE COMPANY ALSO URGES YOU TO CONSIDER
PAYMENT BY MEANS OF CERTIFIED OR CASHIER'S CHECK, MONEY ORDER OR WIRE TRANSFER
OF FUNDS.
GUARANTEED DELIVERY PROCEDURES
If you want to exercise your rights, but time will not permit your payment
or Subscription Certificate to reach the Subscription Agent on or prior to
__________ ___, 1999, you may exercise your rights if you satisfy the following
Guaranteed Delivery Procedures:
(1) You send, and the Subscription Agent receives, on or prior to
________ ___, 1999, a Notice of Guaranteed Delivery,
substantially in the form provided with the prospectus, from a
member firm of a registered national securities exchange or a
member of the National Association of Securities Dealers, Inc.,
or a commercial bank or trust company having an office or
correspondent in the United States. The Notice of Guaranteed
Delivery must state your name, the number of rights that you
hold, and the number of shares that you wish to purchase
pursuant to the Basic Subscription Right. The Notice of
Guaranteed Delivery must guarantee the delivery of (i) payment
in full for each share of common stock to be purchased through
the Basic Subscription Right and (ii) your Subscription
Certificate to the Subscription Agent within three New York
Stock Exchange trading days following the date of the Notice of
Guaranteed Delivery; and
(2) You send, and the Subscription Agent receives, (i) payment in
full for each share of common stock to be purchased through the
Basic Subscription Right and (ii) your properly completed and
duly executed Subscription Certificate, including any required
signature guarantees, within three New York Stock Exchange
trading days following the date of your Notice of Guaranteed
Delivery. The Notice of Guaranteed Delivery may be delivered to
the Subscription Agent in the same manner as your Subscription
Certificate at the addresses set forth below, or may be
transmitted to the Subscription Agent by facsimile transmission,
to facsimile number (615) 748-5331. You can obtain additional
copies of the form of Notice of Guaranteed Delivery by
requesting it from the Subscription Agent at the address set
forth below under "-- Subscription Agent."
16
<PAGE> 20
SIGNATURE GUARANTEES
Signatures on the Subscription Certificate must be guaranteed by an
Eligible Guarantor Institution, as defined in Rule 17Ad-15 of the Exchange Act,
subject to the standards and procedures adopted by the Subscription Agent.
Eligible Guarantor Institutions include banks, brokers, dealers, credit unions,
national securities exchanges and savings associations.
Signatures on the Subscription Certificate do not need to be guaranteed
if:
(1) the Subscription Certificate provides that the shares and
certificates for shares of common stock to be purchased are to
be issued and delivered directly to you, the record owner of
such rights, or
(2) the Subscription Certificate is submitted for the account of a
member firm of a registered national securities exchange or a
member of the National Association of Securities Dealers, Inc.,
or a commercial bank or trust company having an office or
correspondent in the United States.
SHARES HELD FOR OTHERS
If you hold shares of common stock for the account of others, such as a
broker, a trustee or a depository for securities, you should notify the
respective beneficial owners of such shares as soon as possible to obtain
instructions with respect to the rights beneficially owned by them.
If you are a beneficial owner of common stock held by a holder of record,
such as a broker, trustee or a depository for securities, you should contact the
holder and ask him to effect transactions in accordance with your instructions.
AMBIGUITIES IN EXERCISE OF THE RIGHTS
If you do not specify the number of rights being exercised on your
Subscription Certificate, or if your payment is not sufficient to pay the total
purchase price for all of the shares that you indicated you wished to purchase,
you will be deemed to have exercised the maximum number of rights that could be
exercised for the amount of the payment that the Subscription Agent receives
from you.
If your payment exceeds the total purchase price for all of the rights
shown on your Subscription Certificate, your payment will be applied, until
depleted, to subscribe for shares in the following order:
(1) to subscribe for the number of shares, if any, that you
indicated on the Subscription Certificate that you wished to
purchase through your Basic Subscription Right;
(2) to subscribe for shares until your Basic Subscription Right has
been fully exercised.
Any excess payment remaining after the foregoing allocation will be
returned to you as soon as practicable by mail, without interest or deduction.
17
<PAGE> 21
IMPORTANT
PLEASE CAREFULLY READ THE INSTRUCTIONS INCLUDED IN THE SUBSCRIPTION
CERTIFICATE AND FOLLOW THOSE INSTRUCTIONS IN DETAIL.
DO NOT SEND SUBSCRIPTION CERTIFICATES TO THE COMPANY.
- -----------------------------------------------------
YOU ARE RESPONSIBLE FOR CHOOSING THE PAYMENT AND DELIVERY METHOD FOR YOUR
SUBSCRIPTION CERTIFICATE, AND YOU BEAR THE RISKS ASSOCIATED WITH SUCH DELIVERY.
IF YOU CHOOSE TO DELIVER YOUR SUBSCRIPTION CERTIFICATE AND PAYMENT BY MAIL, THE
COMPANY RECOMMENDS THAT YOU USE REGISTERED MAIL, PROPERLY INSURED, WITH RETURN
RECEIPT REQUESTED. THE COMPANY ALSO RECOMMENDS THAT YOU ALLOW A SUFFICIENT
NUMBER OF DAYS TO ENSURE DELIVERY TO THE SUBSCRIPTION AGENT AND CLEARANCE OF
PAYMENT PRIOR TO ____________ __, 1999. BECAUSE UNCERTIFIED PERSONAL CHECKS MAY
TAKE AT LEAST FIVE BUSINESS DAYS TO CLEAR, THE COMPANY STRONGLY URGES YOU TO
PAY, OR ARRANGE FOR PAYMENT, BY MEANS OF CERTIFIED OR CASHIER'S CHECK, MONEY
ORDER OR WIRE TRANSFER OF FUNDS.
COMPANY'S DECISION BINDING
All questions concerning the timeliness, validity, form and eligibility of
any exercise of rights will be determined by the Company, whose determinations
will be final and binding. The Company, in its sole discretion, may waive any
defect or irregularity, or permit a defect or irregularity to be corrected
within such time as it may determine, or reject the purported exercise of any
right by reason of any defect or irregularity in such exercise. Subscriptions
will not be deemed to have been received or accepted until all irregularities
have been waived or cured within such time as the Company determines in its sole
discretion. Neither the Company nor the Subscription Agent will be under any
duty to give notification of any defect or irregularity in connection with the
submission of Subscription Certificates or incur any liability for failure to
give such notification.
NO REVOCATION
AFTER THE SUBSCRIPTION AGENT HAS RECEIVED YOUR SUBSCRIPTION
CERTIFICATE OR A NOTICE OF GUARANTEED DELIVERY ON YOUR BEHALF, YOU MAY
NOT REVOKE YOUR SUBSCRIPTION.
FEES AND EXPENSES
The Company will pay all fees charged by the Subscription Agent. You are
responsible for paying any other commissions, fees, taxes or other expenses
incurred in connection with the exercise of the rights. Neither the Company nor
the Subscription Agent will pay such expenses.
18
<PAGE> 22
SUBSCRIPTION AGENT
The Company has appointed SunTrust Bank, Nashville, N.A., as Subscription
Agent for the Rights Offering. The Subscription Agent's address is:
<TABLE>
<S> <C>
U.S. Mail By Courier or Overnight Delivery
- ---------------------------------------- ----------------------------------------
SunTrust Bank Corporate Trust Department SunTrust Bank Corporate Trust Department
SunTrust Financial Center, Sixth Floor SunTrust Financial Center, Sixth Floor
P.O. Box 305110 424 Church Street
Nashville, Tennessee 37230 Nashville, Tennessee 37219
Attn: Donna Williams Attn: Donna Williams
Kyle Burchard Kyle Burchard
</TABLE>
The Subscription Agent's telephone number is (615) 748-4745, and its facsimile
number is (615) 748-5331.
You should deliver your Subscription Certificate, payment of the
Subscription Price and Notice of Guaranteed Delivery (if any) to the
Subscription Agent.
The Company will pay the fees and expenses of the Subscription Agent. The
Company has also agreed to indemnify the Subscription Agent from any liability
which it may incur in connection with the Rights Offering.
IF YOU HAVE QUESTIONS
If you have questions or need assistance concerning the procedure for
exercising rights, or if you would like additional copies of this prospectus or
the Notice of Guaranteed Delivery, you should contact the Subscription Agent at
the address set out above.
If you have other questions concerning the Rights Offering or the Company,
you may contact:
R. Gregory Lewis
Chief Financial Officer
J. Alexander's Corporation
P.O. Box 24300
3401 West End Avenue
Nashville, Tennessee 37203
(615) 269-1900
19
<PAGE> 23
TRANSFER AGENT AND REGISTRAR
SunTrust Bank, Nashville, N.A. c/o SunTrust Bank, Atlanta, N.A. is the
transfer agent and registrar for the common stock.
PLAN OF DISTRIBUTION
Promptly following the effective date of the Registration Statement that
contains this prospectus, the Company will distribute the rights and copies of
this prospectus to individuals who own shares of common stock at the close of
business on April 5, 1999. If you wish to exercise your rights and to purchase
shares, you should complete the Subscription Certificate and return it, with
payment for the shares, to the Subscription Agent, SunTrust Bank, Nashville,
N.A. at the address on page 19. See "The Rights Offering - Exercise of Rights."
If you have any questions, you should contact the Subscription Agent at the
telephone number and address on page 19.
FEDERAL INCOME TAX CONSIDERATIONS
The following summarizes the material federal income tax considerations of
the Rights Offering to you and the Company. This summary is based on current
law, which is subject to change at any time, possibly with retroactive effect.
This summary is not a complete discussion of all federal income tax consequences
of the Rights Offering, and, in particular, may not address federal income tax
consequences applicable to Company shareholders subject to special treatment
under federal income tax law. In addition, this summary does not address the tax
consequences of the Rights Offering under applicable state, local or foreign tax
laws. This discussion assumes that your shares of common stock and the rights
and shares issued to you during the Rights Offering constitute capital assets.
THIS DISCUSSION IS INCLUDED FOR YOUR GENERAL INFORMATION ONLY. YOU SHOULD
CONSULT YOUR TAX ADVISOR TO DETERMINE THE TAX CONSEQUENCES TO YOU OF THE RIGHTS
OFFERING IN LIGHT OF YOUR PARTICULAR CIRCUMSTANCES, INCLUDING ANY STATE, LOCAL
AND FOREIGN TAX CONSEQUENCES.
TAX CONSEQUENCES TO SHAREHOLDERS
ISSUANCE OF RIGHTS
The Company believes that the Rights Offering should be characterized as a
tax-free distribution under Section 305(a) of the Internal Revenue Code of 1986,
as amended (the "Code"). However existing law is not clear as to whether the
distribution of rights to shareholders will be characterized as a distribution
under Section 305(a) of the Code or, alternatively, as a distribution under
Sections 301 and 305(b) of the Code. Under Section 305(a) of the Code, a
distribution of stock or stock rights to a corporation's shareholders is
generally tax free. Section 305(b), however, provides certain instances where a
distribution of stock or stock rights is taxable to the shareholders. One such
instance is a "disproportionate distribution" in which the distribution (or a
series of distributions) has the result of (i) the receipt of property by some
shareholders, and (ii) an increase in the proportionate interests of other
shareholders in the assets or earnings and profits of the corporation. For
purposes of this determination, the holders of the Company's convertible
debentures and holders of outstanding options will be treated as shareholders.
If required under the terms of the convertible debentures, the Rights Offering
will result in an adjustment in the conversion ratio. Such an adjustment might
have the effect of avoiding an increase
20
<PAGE> 24
in the common stockholders' interests in the assets and earnings and profits of
the Company as a result of the Rights Offering (when compared to the interest of
the holders of convertible debentures). However, no such adjustment is provided
under the terms of outstanding stock options.
The Internal Revenue Service ("IRS") may contend that the distribution of
rights is a disproportionate distribution of stock taxable to recipients of the
rights under Section 305(b) of the Code. Alternatively, the IRS may contend that
the distribution of rights is a taxable distribution of "property" (rather than
stock) within the meaning of Section 317(a) of the Code. If the IRS were to
prevail under either contention, a shareholder would be viewed as receiving a
distribution equal to the fair market value of the rights, which would be
taxable as a dividend to the extent of the Company's current and accumulated
earnings and profits. The determination of a corporation's earnings and profits
is complex, and in the case of current earnings and profits, cannot be
determined until the close of its taxable year. The Company presently has
accumulated earnings and profits, but no computation has been made of the
precise amount.
Notwithstanding the foregoing, the Rights Offering may properly be
characterized as a tax-free distribution under Section 305(a) of the Code, in
which case it will not be taxable regardless of whether the Company has current
or accumulated earnings and profits for the year. The Company believes that the
Rights Offering should be characterized as a tax-free distribution under Section
305(a) of the Internal Revenue Code of 1986, as amended (the "Code"). However
BASIS AND HOLDING PERIOD
If the Rights Offering is characterized as a nontaxable Section 305(a)
distribution, except as provided below the shareholder will assign a zero tax
basis to the rights. If, however, either (i) the fair market value of the rights
on the date of distribution is equal to 15% or more of the fair market value of
the common stock with respect to which they are received, or (ii) the
shareholder elects, in his or her federal income tax return for the taxable year
in which the rights are received, to allocate part of the tax basis of the
common stock to the rights, then upon exercise of the rights, the shareholder's
tax basis in the common stock will be allocated between the common stock and the
rights in proportion to the fair market values of each on the date of the
distribution of the rights.
Regardless of the value of the rights, if the Rights Offering is treated
as a nontaxable Section 305(a) distribution, the holding period of the rights
received as a distribution on the shareholder's common stock will include the
shareholder's holding period for the common stock with respect to which the
rights were issued.
If, however, the Rights Offering is characterized as a taxable dividend,
each shareholder will have a tax basis in the rights equal to the fair market
value of the rights on the date of the Rights Offering and the holding period of
the rights will commence on the day after the date of the distribution.
LAPSE OF RIGHTS
If the Rights Offering is characterized as a nontaxable Section 305(a)
distribution, a shareholder who allows rights received by him or her to lapse
without exercising them will not recognize any gain or loss, and, as the rights
were not exercised, no adjustment will be made to the tax basis of the common
stock owned by the shareholder. If, however, the Rights Offering is
characterized as a taxable dividend, a shareholder who allowed the rights to
lapse will have a short-term capital loss an amount equal to his or her tax
basis in
21
<PAGE> 25
the rights (as discussed above), and no adjustment will be made to the tax basis
of the common stock owned by the shareholder.
EXERCISE OF RIGHTS
A shareholder will not recognize any gain or loss upon the exercise of
rights. The tax basis of common stock acquired through exercise of rights will
be equal to the sum of the Exercise Price therefor and the holder's tax basis in
the rights, if any. The holding period for the common stock acquired through
exercise of the rights will begin on the day following the date the rights are
considered exercised.
COMMON STOCK ACQUIRED
The sale or other disposition of common stock acquired will result in the
recognition of gain or loss by the holder of such common stock in an amount
equal to the difference between the amount realized and the holder's adjusted
tax basis in the common stock. Any such gain or loss will generally be capital
gain or loss.
TAXATION OF THE COMPANY
The Company will not recognize any gain, other income or loss upon the
issuance of the rights, the lapse of the rights or the receipt of payment for
shares upon exercise of the rights.
LEGAL MATTERS
The validity of the issuance of the shares of common stock offered hereby
will be passed upon for the Company by Bass, Berry & Sims PLC, Nashville,
Tennessee. Certain members of Bass, Berry & Sims PLC beneficially own shares of
the common stock.
EXPERTS
The consolidated financial statements of J. Alexander's Corporation
appearing in J. Alexander's Corporation's Annual Report (Form 10-K) for the year
ended January 3, 1999, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference. Such consolidated financial statements are incorporated
herein by reference in reliance upon such report given on the authority of such
firm as experts in accounting and auditing.
22
<PAGE> 26
IF YOU WOULD LIKE ADDITIONAL INFORMATION
The Company files annual, quarterly and special reports, proxy statements
and other information with the U.S. Securities and Exchange Commission ("SEC").
You may read and copy this information at the SEC's public reference rooms,
which are located at:
450 Fifth Street, NW 7 World Trade Center, Suite 1300
Washington, DC 20549 New York, NY 10048
500 West Madison Street, Suite 1400
Chicago, IL 60661-2511
Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. This information is also available on-line through the
SEC's Electronic Data Gathering, Analysis, and Retrieval System (EDGAR), located
on the SEC's web site (http://www.sec.gov.).
Also, the Company will provide you (free of charge) with any of its
documents filed with the SEC. To get your free copies, please call or write:
R. Gregory Lewis
Chief Financial Officer
J. Alexander's Corporation
P.O. Box 24300
3401 West End Avenue
Nashville, Tennessee 37203
(615) 269-1900
The Company has filed a Registration Statement with the SEC on Form S-3
with respect to the Rights Offering. This prospectus is a part of the
Registration Statement, but the prospectus does not repeat important information
that you can find in the Registration Statement, reports and other documents
that the Company filed with the SEC. The SEC allows the Company to "incorporate
by reference" those documents, which means that the Company can disclose
important information to you by referring you to other documents. The documents
that are incorporated by reference are legally considered to be a part of this
prospectus. The documents incorporated by reference are:
(1) Annual Report on Form 10-K for the year ended January 3, 1999;
(2) The description of the common stock contained in the Company's
Form 8-A, as amended; and
(3) Any filings with the SEC pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act of 1934 between the date of this
prospectus and the termination of the Rights Offering.
As you read the above documents, you may find some inconsistencies in
information from one document to another. If you find inconsistencies between
the documents, or between a document and this prospectus, you should rely on the
statements made in the most recent document.
23
<PAGE> 27
You should rely only on the information in this prospectus or incorporated
by reference. The Company has not authorized anyone to provide you with any
different information.
PROSPECTIVE INVESTORS MAY RELY ON THE INFORMATION CONTAINED IN THIS
PROSPECTUS. THE COMPANY HAS NOT AUTHORIZED ANYONE TO PROVIDE PROSPECTIVE
INVESTORS WITH INFORMATION DIFFERENT FROM THAT CONTAINED IN THIS PROSPECTUS.
THIS PROSPECTUS IS NOT AN OFFER TO SELL NOR IS IT SEEKING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. THIS
PROSPECTUS IS NOT AN OFFER TO SELL NOR IS IT SEEKING AN OFFER TO BUY SECURITIES
OTHER THAN THE SHARES OF COMMON STOCK TO BE ISSUED PURSUANT TO THE RIGHTS
OFFERING. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT ONLY AS OF THE
DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF THE DELIVERY OF THIS
PROSPECTUS OR ANY SALE OF THESE SECURITIES.
NO ACTION IS BEING TAKEN IN ANY JURISDICTION OUTSIDE THE UNITED STATES TO
PERMIT A PUBLIC OFFERING OF THE COMMON STOCK OR POSSESSION OR DISTRIBUTION OF
THIS PROSPECTUS IN ANY SUCH JURISDICTION. PERSONS WHO COME INTO POSSESSION OF
THIS PROSPECTUS IN JURISDICTIONS OUTSIDE THE UNITED STATES ARE REQUIRED TO
INFORM THEMSELVES ABOUT AND TO OBSERVE ANY RESTRICTIONS AS TO THIS OFFERING AND
THE DISTRIBUTION OF THIS PROSPECTUS APPLICABLE IN THE JURISDICTION.
24
<PAGE> 28
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses in connection with this
Registration Statement. The Company will pay all expenses of the Rights
Offering. All such expenses are estimates, other than the filing fees payable to
the Securities and Exchange Commission and the New York Stock Exchange.
<TABLE>
<S> <C>
Securities and Exchange Commission Filing Fee.................. $ 1,133
New York Stock Exchange Listing Fee............................ 3,802
Printing Fees and Expenses..................................... 20,000
Legal Fees and Expenses........................................ 75,000
Accounting Fees and Expenses................................... 25,000
Subscription Agent Fee......................................... 10,000
Miscellaneous.................................................. 15,065
------------
Total.......................................................... $ 150,000
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Tennessee Business Corporation Act ("TBCA") provides that a
corporation may indemnify any of its directors and officers against liability
incurred in connection with a proceeding if (i) the director or officer acted in
good faith, (ii) in the case of conduct in his or her official capacity with the
corporation, the director or officer reasonably believed such conduct was in the
corporation's best interest, (iii) in all other cases, the director or officer
reasonably believed that his or her conduct was not opposed to the best interest
of the corporation, and (iv) in connection with any criminal proceeding, the
director or officer had no reasonable cause to believe that his or her conduct
was unlawful. In actions brought by or in the right of the corporation, however,
the TBCA provides that no indemnification may be made if the director or officer
was adjudged to be liable to the corporation. In cases where the director or
officer is wholly successful, on the merits or otherwise, in the defense of any
proceeding instigated because of his or her status as an officer or director of
a corporation, the TBCA mandates that the corporation indemnify the director or
officer against reasonable expenses incurred in the proceeding. The TBCA also
provides that in connection with any proceeding charging improper personal
benefit to an officer or director, no indemnification may be made if such
officer or director is adjudged liable on the basis that personal benefit was
improperly received. Notwithstanding the foregoing, the TBCA provides that a
court of competent jurisdiction, upon application, may order that an officer or
director be indemnified for reasonable expenses if, in consideration of all
relevant circumstances, the court determines that such individual is fairly and
reasonably entitled to indemnification, notwithstanding the fact that (i) such
officer or director was adjudged liable to the corporation in a proceeding by or
in right of the corporation; (ii) such officer or director was adjudged liable
on the basis that personal benefit was improperly received by him; or (iii) such
officer or director breached his duty of care to the corporation.
Paragraph 10 of the Company's Charter, as amended (the "Charter"),
provides that to the fullest extent permitted by law no director of the Company
shall be personally liable to the Company or any of its
II-1
<PAGE> 29
shareholders for monetary damages for breach of any fiduciary duty as a
director. Under the TBCA, this Charter provision relieves the Company's
directors from personal liability to the Company or its shareholders for
monetary damages for breach of fiduciary duty as a director except for liability
arising from (i) any breach of a director's duty of loyalty to the Company or
its shareholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, or (iii) any unlawful
distributions. In addition, the Company's bylaws provide that the Company shall
indemnify all present and future directors and officers (and any person who may
have served at its request as an officer or director of another company in which
the Company owns shares of its capital stock) to the fullest extent permitted by
law.
ITEM 16. EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- ------- ----------------------------------------------------------------
4.1 Charter (Exhibit 3(a) of the Registrant's Annual Report on Form
10-K for the year ended December 30, 1990, is incorporated herein
by reference)
4.2 Amendment to Charter dated February 7, 1997 (Exhibit 3(a)(2) of
the Registrant's Annual Report on Form 10-K for the year ended
December 29, 1996, is incorporated herein by reference)
4.3 Restated Bylaws as currently in effect (Exhibit 3(b) of the
Registrant's Annual Report on Form 10-K for the year ended
January 3, 1999, is incorporated herein by reference)
4.4 Form of Indenture dated as of May 19, 1983, between the
Registrant and First American National Bank of Nashville, Trustee
(Exhibit 4 of the Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1983, is incorporated herein by
reference)
4.5 Rights Agreement dated May 16, 1989, by and between the
Registrant and NationsBank (formerly Sovran Bank/Central South)
including Form of Rights Certificate and Summary of Rights
(Exhibit 3 to the Report on Form 8-K dated May 16, 1989, is
incorporated herein by reference)
4.6 Amendments to Rights Agreement dated February 22, 1999, by and
between the Registrant and SunTrust Bank (amending Rights
Agreement dated May 16, 1989) (Exhibit 4(c) to the Registrant's
Annual Report on Form 10-K for the year ended January 3, 1999 is
incorporated herein by reference)
4.7 Amendment to Rights Agreement dated March 22, 1999, by and
between the Registrant and SunTrust Bank (amending Rights
Agreement dated May 16, 1989) (Exhibit 4(d) to the Registrant's
Annual Report on Form 10-K for the year ended January 3, 1999 is
incorporated herein by reference)
4.8 Form of Subscription Rights Agreement by and between the Company
and SunTrust Bank, Nashville, N.A., as Subscription Agent
5 Opinion of Bass, Berry & Sims PLC
23.1 Consent of Bass, Berry & Sims PLC (included in Exhibit 5)
II-2
<PAGE> 30
EXHIBIT
NO. DESCRIPTION
- ------- ------------------------------------------------------------
23.2 Consent of Ernst & Young LLP
24 Power of Attorney (included on signature page)
99.1 Form of Subscription Certificate
99.2 Form of Notice of Guaranteed Delivery for Subscription
Certificates
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes:
(1) To file during any period in which offers or sales are being
made, a post-effective amendment to this registration statement
to include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(4) That for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in
reliance on Rule 430A and contained in a form of prospectus
filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of
this registration statement as of the time it is declared
effective.
II-3
<PAGE> 31
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Nashville, Davidson County, Tennessee, on March 23, 1999.
J. ALEXANDER'S CORPORATION
By: /s/ Lonnie J. Stout II
-----------------------------------------------
Lonnie J. Stout II
Chairman, President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on March 23, 1999. Each of the undersigned officers and
directors of the registrant hereby constitutes Lonnie J. Stout II and R. Gregory
Lewis, any of whom may act, his true and lawful attorneys-in-fact with full
power to sign for him and in his name in the capacities indicated below and to
file any and all amendments to the registration statement filed herewith
(including post-effective amendments), making such changes in the registration
statement as the registrant deems appropriate, and to sign and file any other
registration statement for the same offering that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act of 1933, and generally to do
all such things in his name and behalf in his capacity as an officer and
director to enable the registrant to comply with the provisions of the
Securities Act of 1933 and all requirements of the Securities and Exchange
Commission.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------- ----------------------------------------------------
<S> <C>
/s/ Lonnie J. Stout II Director and Chairman, President and Chief Executive
- --------------------------------- Officer (Principal Executive Officer)
Lonnie J. Stout II
/s/ R. Gregory Lewis Vice President and Chief Financial Officer
- --------------------------------- (Principal Financial Officer)
R. Gregory Lewis
/s/ Mark A. Parkey Controller
- --------------------------------- (Principal Accounting Officer)
Mark A. Parkey
/s/ Earl Beasley, Jr.
- ---------------------------------
Earl Beasley, Jr. Director
</TABLE>
II-4
<PAGE> 32
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------- --------------------------------------------
<S> <C>
/s/ E. Townes Duncan
- ---------------------------------
E. Townes Duncan Director
/s/ Garland G. Fritts
- ---------------------------------
Garland G. Fritts Director
/s/ John L.M. Tobias
- ---------------------------------
John L.M. Tobias Director
</TABLE>
II-5
<PAGE> 33
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- ------- ----------------------------------------------------------------
4.1 Charter (Exhibit 3(a) of the Registrant's Annual Report on Form
10-K for the year ended December 30, 1990, is incorporated herein
by reference)
4.2 Amendment to Charter dated February 7, 1997 (Exhibit 3(a)(2) of
the Registrant's Annual Report on Form 10-K for the year ended
December 29, 1996, is incorporated herein by reference)
4.3 Restated Bylaws as currently in effect (Exhibit 3(b) of the
Registrant's Annual Report on Form 10-K for the year ended
January 3, 1999, is incorporated herein by reference)
4.4 Form of Indenture dated as of May 19, 1983, between the
Registrant and First American National Bank of Nashville, Trustee
(Exhibit 4 of the Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1983, is incorporated herein by
reference)
4.5 Rights Agreement dated May 16, 1989, by and between the
Registrant and NationsBank (formerly Sovran Bank/Central South)
including Form of Rights Certificate and Summary of Rights
(Exhibit 3 to the Report on Form 8-K dated May 16, 1989, is
incorporated herein by reference)
4.6 Amendments to Rights Agreement dated February 22, 1999, by and
between the Registrant and SunTrust Bank (amending Rights
Agreement dated May 16, 1989) (Exhibit 4(c) to the Registrant's
Annual Report on Form 10-K for the year ended January 3, 1999 is
incorporated herein by reference)
4.7 Amendment to Rights Agreement dated March 22, 1999, by and
between the Registrant and SunTrust Bank (amending Rights
Agreement dated May 16, 1989) (Exhibit 4(d) to the Registrant's
Annual Report on Form 10-K for the year ended January 3, 1999 is
incorporated herein by reference)
4.8 Form of Subscription Rights Agreement by and between the Company
and SunTrust Bank, Nashville, N.A., as Subscription Agent
5 Opinion of Bass, Berry & Sims PLC
23.1 Consent of Bass, Berry & Sims PLC (included in Exhibit 5)
23.2 Consent of Ernst & Young LLP
24 Power of Attorney (included on signature page)
99.1 Form of Subscription Certificate
99.2 Form of Notice of Guaranteed Delivery for Subscription
Certificates
<PAGE> 1
EXHIBIT 4.8
SUBSCRIPTION RIGHTS AGREEMENT
This SUBSCRIPTION RIGHTS AGREEMENT (the "Agreement") is dated as of ___________
___, 1999, between J. Alexander's Corporation, a Tennessee corporation (the
"Company"), and SunTrust Bank, Nashville, N.A., a national banking association,
as Subscription Agent and Transfer Agent.
RECITALS
WHEREAS, the Company proposes to issue Rights (the "Rights") entitling the
holders thereof to purchase an aggregate of up to approximately 1,086,267 shares
(the "Shares") of the Company's Common Stock, $.05 par value (the "Common
Stock"); and
WHEREAS, the Subscription Agent, at the request of the Company, has agreed to
act as the agent of the Company in connection with the issuance, registration,
and exercise of the Rights;
NOW, THEREFORE, in consideration of the premises and mutual agreements herein
set forth, the parties hereto agree as follows:
AGREEMENT
1. APPOINTMENT OF SUBSCRIPTION AGENT.
The Company hereby appoints the Subscription Agent to act as agent for the
Company in accordance with the instructions hereinafter set forth; and the
Subscription Agent hereby accepts such appointment, upon the terms and
conditions hereinafter set forth.
2. AMOUNT ISSUED.
Subject to the provisions of this Agreement, the Company shall issue
non-transferable Rights to purchase approximately 1,086,267 shares of Common
Stock. The Company shall deliver to holders of Common Stock as of April 5, 1999
(the "Record Date") (the "Record Holders")1.0 Right for each share of Common
Stock held of record on the Record Date. No fractional Rights or cash in lieu
thereof will be issued or paid. Each Right shall entitle the holder thereof to
purchase 0.2 share of Common Stock, rounding up any remaining fractional share
to the nearest whole number of shares, at a price of $3.75 per share upon
exercise of the Right as herein provided.
3. FORM OF SUBSCRIPTION CERTIFICATES.
(a) The Rights shall be evidenced by certificates (the "Subscription
Certificates") to be delivered pursuant to this Agreement in registered
form only. The Subscription Certificates shall be in substantially the
form set forth in Exhibit A hereto together with such appropriate
insertions, omissions, substitutions and other variations as are
required or permitted by this Agreement, and may have such letters,
numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with any law
or with any rules made pursuant thereto or with any rules of any
securities exchange, any agreement between the Company and any holder
of a Right (a "Rightholder"), or as may, consistently herewith, be
determined by the officers executing such Subscription Certificates, as
evidenced by their execution of such Subscription Certificates.
<PAGE> 2
(b) Each record holder shall receive one (1) Subscription Certificate
reflecting the total number of Rights the holder is entitled to
exercise.
(c) No Subscription Certificate may be divided in such a way as to
permit the holder to receive a greater number of Rights than the number
to which such Subscription Certificate entitles its holder, except that
a depositary, bank, trust company, and securities broker or dealer
holding shares of Common Stock on the Record Date for more than one
beneficial owner may by delivering a written request by 5:00 p.m.,
Central time, on a date which is fifteen (15) business days from the
effective date of the Registration Statement, as hereinafter defined,
upon proper showing to the Subscription Agent, exchange its
Subscription Certificate to obtain Subscription Certificates for the
number of Rights to which each such beneficial owner individually would
have been entitled had each been a Record Holder. The Company reserves
the right to refuse to issue any such Subscription Certificate if such
issuance would be inconsistent with the principle that each beneficial
owner's Rights will entitle such owner to purchase shares of Common
Stock rounded up to the nearest whole share.
4. EXECUTION OF SUBSCRIPTION CERTIFICATES.
Subscription Certificates shall be signed on behalf of the Company by its
Chairman, President, a Vice President or its Treasurer and attested by its
Secretary. Each such signature upon the Subscription Certificates may be in the
form of a facsimile signature of the current or any future Chairman, President,
Vice President, Treasurer or Secretary and may be imprinted or otherwise
reproduced on the Subscription Certificates, and for that purpose the Company
may adopt and use the facsimile signature of any person who shall have been
Chairman, President, Vice President, Treasurer or Secretary notwithstanding the
fact that at the time the Subscription Certificates shall be delivered or
disposed of, such person shall have ceased to hold such office.
If any officer of the Company who shall have signed any of the Subscription
Certificates shall cease to be such officer before the Subscription Certificates
so signed shall have been delivered by the Subscription Agent or disposed of by
the Company, such Subscription Certificates nevertheless may be delivered or
disposed of as though such person had not ceased to be such officer of the
Company; and any Subscription Certificate may be signed on behalf of the Company
by any person who, at the actual date of the execution of such Subscription
Certificate, shall be a proper officer of the Company to sign such Subscription
Certificate, although at the date of the execution of this Agreement any such
person was not such officer.
5. REGISTRATION.
The Subscription Certificates shall be numbered and shall be registered in a
register (the "Rights Register") to be maintained by the Subscription Agent. The
Company and the Subscription Agent may deem and treat the registered holder of a
Subscription Certificate as the absolute owner thereof (notwithstanding any
notation of ownership or other writing thereon made by anyone), for the purpose
of any exercise thereof or any distribution to the holder thereof and for all
other
2
<PAGE> 3
purposes, and neither the Company nor the Subscription Agent shall be affected
by any notice to the contrary.
6. RIGHTS ISSUED TO A CERTAIN SHAREHOLDER.
Pursuant to a Stock Purchase and Standstill Agreement dated as of March 22,
1999, (the "Purchase Agreement") among the Company and Solidus, LLC ("Solidus"),
Solidus has agreed that it will not exercise or acquire any of the Rights issued
to them as a result of its purchase of 1,086,266 shares of Common Stock pursuant
to the Purchase Agreement. Thus, no Subscription Certificate will be issued to
Solidus with respect to these shares.
7. DURATION AND EXERCISE OF RIGHTS; SUBSCRIPTION PRICE.
(a) The Rights shall expire at (i) 5:00 p.m. Central Daylight Time (the
"Close of Business") on ________, 1999, subject to extension by up to
10 days, in the sole discretion of the Company in a written statement
to the Subscription Agent and with notice to registered Rightholders in
the manner provided for in Section 15 (such date of expiration being
hereinafter referred to as the "Expiration Date"). At such time as the
Rights become exercisable, and thereafter until the Close of Business
on the Expiration Date, the Rights may be exercised on any business
day. After the Close of Business on the Expiration Date, the Rights
will become void and of no value.
(b) Subject to the provisions of this Agreement, each Right shall
entitle the holder thereof to purchase from the Company (and the
Company shall issue and sell to such holder of a Right) 0.2 fully paid
and nonassessable Share at the price of $3.75 (U.S.) per share (the
"Subscription Price") (the "Basic Subscription Right").
(c) A Rightholder shall exercise such holder's Rights to purchase
Shares by depositing with the Subscription Agent at its offices
maintained in Nashville, Tennessee (or at such other offices or
agencies as may be designated by the Agent for the purpose of
exercising the Rights (a "Subscription Agent Office"), the Subscription
Certificate evidencing such Right duly completed and signed by the
registered holder or holders thereof or by the duly appointed legal
representative thereof or by a duly authorized attorney, such signature
to be guaranteed if required in the manner described in Section 7(d)
hereof, and paying to the Subscription Agent, in lawful money of the
United States of America by wire transfer, check or bank draft drawn
upon a United States bank or a postal, telegraphic or express money
order, an amount equal to the Subscription Price multiplied by the
number of Shares in respect of which the Rights are being exercised.
Once a Rightholder submits a Subscription Certificate to exercise a
Right, that exercise may not be revoked.
(d) If a Rightholder wishes to exercise its Rights, but time will not
permit such holder to cause both (i) payment in full for each Share to
be purchased and (ii) the Subscription Certificate evidencing such
Rights to reach the Subscription Agent on or prior to the Expiration
Date, such Rights may nevertheless be exercised if all of the following
conditions (the "Guaranteed Delivery Procedures") are met:
3
<PAGE> 4
(i) the Subscription Agent receives, on or prior to the
Expiration Date, a guarantee notice ("Notice of Guaranteed
Delivery") substantially in the form provided with the
Subscription Certificate, and distributed with the
Subscription Certificates, from a member firm of a
registered national securities exchange or a member of the
National Association of Securities Dealers, Inc. (the "NASD"),
or from a commercial bank or trust company having an office or
correspondent in the United States (each, an "Eligible
Institution"), stating the name of the exercising Rightholder,
the number of Rights represented by the Subscription
Certificate held by such exercising Rightholder, and the
number of Shares being subscribed for pursuant to the Basic
Subscription Right. The Notice of Guaranteed Delivery must
guarantee the delivery to the Subscription Agent of (a)
payment in full for each Share to be purchased pursuant to the
Basic Subscription Right at a price of $3.75 per Share, and
(b) any Subscription Certificate evidencing such Rights
within three (3) New York Stock Exchange trading days
following the date of the Notice of Guaranteed Delivery; and
(ii) payment in full for each Share to be purchased pursuant
to the Basic Subscription Right and the properly completed
Subscription Certificate evidencing the Rights being
exercised, with any required signatures guaranteed, are both
received by the Subscription Agent within three New York Stock
Exchange trading days following the date of the Notice of
Guaranteed Delivery relating thereto. The Notice of Guaranteed
Delivery may be delivered to the Subscription Agent in the
manner set forth in Section 20 hereof.
Unless a Subscription Certificate (i) provides that the shares of
Common Stock to be issued pursuant to the exercise of Rights
represented thereby are to be delivered directly to the record holder
of such Rights at the address of record, or (ii) is submitted for the
account of a member firm of a registered national securities exchange
or a member of the NASD, or a commercial bank or trust company being an
office or correspondent in the United States, signatures on such
Subscription Certificate must be guaranteed by an Eligible Guarantor
Institution, as defined in Rule 17Ad-15 of the Exchange Act. Eligible
Guarantor Institutions include banks, brokers, dealers, credit unions,
national securities exchanges and savings institutions.
(e) Except where this Agreement provides otherwise, upon such surrender
of a Subscription Certificate and payment of the Subscription Price,
and as soon as practicable after the Expiration Date (if the offering
of Rights is not withdrawn by the Company), the Subscription Agent, in
its capacity as the Company's transfer agent (the "Transfer Agent"),
shall requisition for issuance and delivery to the registered holder of
such Subscription Certificate and in the name of the registered holder,
or the beneficial owner in the case of an exercise through a broker or
nominee, as the registered holder may designate, a certificate or
certificates for the Share or Shares issuable upon the exercise of the
Basic Subscription
4
<PAGE> 5
Right evidenced by such Subscription Certificate. Such certificate or
certificates shall be deemed to have been issued and any person so
designated to be named therein shall be deemed to have become the
holder of record of such Share or Shares as of the Expiration Date.
The Subscription Price will be deemed to have been received by the
Subscription Agent only upon (i) clearance of any uncertified check,
(ii) receipt by the Subscription Agent of any wire transfer, certified
check or bank draft drawn upon a U.S. bank or any postal, telegraphic
or express money order, or (iii) receipt of actual funds pursuant to
any Notice of Guaranteed Delivery.
(f) The Subscription Agent shall account promptly to the Company with
respect to Rights exercised and, immediately following the Expiration
Date, pay or deliver to the Company all moneys and other consideration
received by it upon the purchase of Shares through the exercise of the
Basic Subscription Rights.
(g) If either the number of Rights being exercised is not specified on
a Subscription Certificate, or the payment delivered is not sufficient
to pay the full aggregate Subscription Price for all shares of Common
Stock stated to be subscribed for, the Rightholder will be deemed to
have exercised the maximum number of Rights that could be exercised for
the amount of the payment delivered by such Rightholder. If the payment
delivered by the Rightholder exceeds the aggregate Subscription Price
for the number of Rights evidenced by the Subscription Certificate
delivered by such Rightholder, the payment will be applied, until the
Basic Subscription Right is depleted, to subscribe for shares of Common
Stock. Any excess payment remaining after the foregoing allocation will
be returned to the Rightholder as soon as practicable by mail, without
interest or deduction.
8. WITHDRAWAL OF RIGHTS OFFERING.
The Company may withdraw the offering of Rights at any time prior to or on the
Expiration Date for any reason. Upon notice of withdrawal by the Company to the
Subscription Agent, the Subscription Agent shall cancel all Subscription
Certificates, and any funds received from Rightholders for the exercise of their
Rights shall be returned to the Rightholders as soon as practicable by mail,
without interest or penalty.
9. PAYMENT OF TAXES.
The Company will pay all documentary stamp taxes attributable to the initial
issuance of Rights and of Shares upon the exercise of Rights; provided, that the
Company shall not be required to pay any tax or taxes which may be payable in
respect of any transfer involved in the issue of any Subscription Certificates
or any certificates for Shares in a name other than the registered holder of a
Subscription Certificate surrendered upon the exercise of a Right, and the
Company shall not be required to issue or deliver such certificates unless or
until the person or persons requesting the issuance thereof shall have paid to
the Company the amount of such tax or shall have established
5
<PAGE> 6
to the satisfaction of the Company that such tax has been paid or adequate
provision has been made for the payment thereof.
10. MUTILATED OR MISSING SUBSCRIPTION CERTIFICATES.
If any of the Subscription Certificates shall be mutilated, lost, stolen or
destroyed, the Company may in its discretion issue, and the Subscription Agent
shall deliver, in exchange and substitution for and upon cancellation of the
mutilated Subscription Certificate, or in lieu of and substitution for the
Subscription Certificate lost, stolen or destroyed, a new Subscription
Certificate of like tenor and representing an equivalent number of Rights, but
only upon receipt of evidence satisfactory to the Company and the Subscription
Agent of such loss, theft or destruction of such Subscription Certificate and
indemnity or bond, if requested, also satisfactory to them. Applicants for such
substitute Subscription Certificates shall also comply with such other
reasonable regulations and pay such other reasonable charges as the Company or
the Subscription Agent may prescribe.
11. RESERVATION OF SHARES.
For the purpose of enabling it to satisfy any obligation to issue Shares upon
exercise of Rights, the Company will at all times through the Close of Business
on the Expiration Date, reserve and keep available, free from preemptive rights
and out of its aggregate authorized but unissued shares of Common Stock, the
number of Shares deliverable upon the exercise of all outstanding Rights
(excluding the Rights accompanying 1,086,266 Shares issued to Solidus pursuant
to the Purchase Agreement), and the Transfer Agent is hereby irrevocably
authorized and directed at all times to reserve such number of authorized and
unissued shares of Common Stock as shall be required for such purpose. The
Subscription Agent, in its capacity as Transfer Agent, is hereby irrevocably
authorized to requisition from time to time stock certificates issuable upon
exercise of outstanding Rights.
Before taking any action that would cause an adjustment pursuant to Section
13(b) reducing the Subscription Price below the then par value (if any) of the
Shares issuable upon exercise of the Rights, the Company will take any corporate
action that may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and nonassessable Shares at the
Subscription Price as so adjusted.
The Company covenants that all Shares issued upon exercise of the Rights will,
upon issuance in accordance with the terms of this Agreement, be fully paid and
nonassessable and free from all liens, charges and security interests created by
or imposed upon the Company with respect to the issuance thereof.
12. REGISTRATION OF SHARES.
The Company has filed with the SEC a registration statement on Form S-3 (the
"Registration Statement") which has been or will be declared effective. The
Company will use its best efforts to keep the Registration Statement
continuously effective from the date hereof through the Close of Business ten
(10) business days following the Expiration Date. So long as any unexpired
Rights
6
<PAGE> 7
remain outstanding, the Company will take all necessary action to obtain and
keep effective any and all permits, consents and approvals of government
agencies and authorities and to make filings under federal and state securities
acts and laws, which may be or become necessary in connection with the issuance
and delivery of the Subscription Certificates, the exercise of the Rights and
the issuance, sale and delivery of the Shares issued upon exercise of Rights.
13. ADJUSTMENT OF SUBSCRIPTION PRICE AND NUMBER OF SHARES PURCHASABLE OR
NUMBER OF RIGHTS.
(a) Except as provided in subsection (b) below, the Subscription Price
and the number of Shares to be purchased upon the exercise of each
Right shall not be adjusted during the term of the offering of the
Rights or upon exercise of any Right or Rights.
(b) If the Company shall (i) pay a dividend on its shares of Common
Stock in shares of Common Stock, (ii) subdivide its outstanding shares
of Common Stock, (iii) combine its outstanding shares of Common Stock
into a smaller number of shares of Common Stock or (iv) reclassify the
Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing
corporation), the number of Shares to be purchased upon exercise of
each Right immediately prior thereto shall be adjusted so that the
holder of each Right shall be entitled upon exercise to receive the
kind and number of Shares or other securities of the Company which such
holder would have owned or have been entitled to receive after the
happening of any of the events described above, had such Right been
exercised immediately prior to the happening of such event or any
record date with respect thereto. An adjustment made pursuant to this
subparagraph (b) shall become effective immediately after the effective
date of such event retroactive to the record date, if any, for such
event. In addition, in the event of any reclassification of the Common
Stock, references in this Agreement to Common Stock shall thereafter be
deemed to refer to the securities into which the Common Stock shall
have been reclassified.
(c) In case of any consolidation of the Company with or merger of the
Company into another corporation or in case of any sale or conveyance
to another corporation of the property of the Company as an entirety or
substantially as an entirety or the Company is a party to a merger or
binding share exchange which reclassifies or changes its outstanding
Common Stock, the Company or such successor or purchasing corporation,
as the case may be, shall execute with the Subscription Agent an
agreement, in form and substance substantially equivalent to this
Agreement, that each holder of a Subscription Certificate shall have
the right thereafter, subject to terms and conditions substantially
equivalent to those contained in this Agreement, upon payment of the
Subscription Price in effect immediately prior to such action to
purchase upon exercise of each Right the kind and amount of shares and
other securities and property which such holder would have owned or
have been entitled to receive after the happening of such
consolidation, merger, sale or conveyance had such Right been exercised
immediately prior to such action. The Company shall mail by first-class
mail, postage prepaid, to each registered holder of a Right, notice of
the execution of any such agreement. Such agreement shall provide for
adjustments, which
7
<PAGE> 8
shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 13. The provisions of this subparagraph
(c) shall similarly apply to successive consolidations, mergers, sales
or conveyances. The Subscription Agent shall be under no duty or
responsibility to determine the correctness of any provisions contained
in any such agreement relating either to the kind or amount of shares
of stock or other securities or property receivable upon exercise of
Rights or with respect to the method employed and provided therein for
any adjustments and shall be entitled to rely upon the provisions
contained in any such agreement.
14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
The Company shall issue 1.0 Right for each share of Common Stock held by a
Record Holder on the Record Date. The Company shall not distribute fractional
Rights or Subscription Certificates that evidence fractional Rights or are
exercisable for the purchase of fractional shares. The number of Rights to be
distributed to each Record Holder will be rounded up to the nearest whole
number. Each Right will be exercisable for 0.2 share of Common Stock, rounding
up any remaining fractional share to the nearest whole number of shares.
15. NOTICES TO RIGHTHOLDERS.
If, prior to the Expiration Date:
(a) the Company shall declare any dividend payable in any securities
upon its shares of Common Stock or make any distribution (other than a
cash dividend declared in the ordinary course) to the holders of its
shares of Common Stock, or
(b) the Company shall offer to the holders of its shares of Common
Stock any additional shares of Common Stock or securities convertible
or exchangeable into shares of Common Stock or any right to subscribe
for or purchase Common Stock, or
(c) there shall be a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation, merger or sale
of all or substantially all of its property, assets and business as an
entirety),
(d) then the Company shall (i) cause written notice of such event to be
filed with the Subscription Agent and shall cause written notice of
such event to be given to each of the registered holders of the
Subscription Certificates at such holder's address appearing on the
Rights Register, by first-class mail, postage prepaid, and (ii) make a
public announcement in a daily morning English language newspaper of
general circulation, of such event, such giving of notice and
publication to be completed at least ten (10) calendar days (or twenty
(20) calendar days in any case specified in clause (c) above) prior to
the date fixed as a record date or the date of closing the transfer
books for the determination of the stockholders entitled to such
dividend, distribution or subscription rights, or for the determination
of stockholders entitled to vote on such proposed dissolution,
liquidation or winding up. Such notice shall specify such record date
or the date of closing the transfer
8
<PAGE> 9
books, as the case may be. The failure to give the notice required by
this Section 15 or any defect therein shall not affect the legality or
validity of any dividend, distribution, right, option, warrant,
dissolution, liquidation or winding up or the vote upon or any other
action taken in connection therewith.
16. MERGER, CONSOLIDATION OR CHANGE OF NAME OF SUBSCRIPTION AGENT.
Any corporation into which the Subscription Agent may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Subscription Agent shall be a party, or
any corporation succeeding to the shareholder services business of the
Subscription Agent, shall be the successor to the Subscription Agent hereunder
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, provided that such corporation would be eligible for
appointment as a successor Subscription Agent under the provisions of Section
18.
17. SUBSCRIPTION AGENT.
The Subscription Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the Company
and the holders of Subscription Certificates, by their acceptance thereof, shall
be bound:
(a) The Subscription Agent shall not be responsible for any failure of
the Company to comply with any of the covenants contained in this
Agreement or in the Subscription Certificates to be complied with by
the Company nor shall it at any time be under any duty or
responsibility to any holder of a Right to make or cause to be made any
adjustment in the Subscription Price or in the number of Shares
issuable upon exercise of any Subscription (except as instructed by the
Company)
(b) The Company agrees to indemnify the Subscription Agent and save it
harmless against any and all losses, liabilities and expenses,
including judgments, costs and reasonable counsel fees and expenses,
for anything done or omitted by the Subscription Agent arising out of
or in connection with this Agreement except as a result of its
negligence or bad faith.
(c) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may
reasonably be required by the Subscription Agent for the carrying out
or performing the provisions of this Agreement.
(d) The Subscription Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder
from the Chairman, the President, any Vice President, the Controller,
the Treasurer or an Assistant Treasurer, the Secretary or an Assistant
Secretary of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and shall not be liable for
any action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer or in good faith
9
<PAGE> 10
reliance upon any statement signed by any one of such officers of the
Company with respect to any fact or matter (unless other evidence in
respect thereof is herein specifically prescribed) which may be deemed
to be conclusively proved and established by such signed statement.
18. CHANGE OF SUBSCRIPTION AGENT.
If the Subscription Agent shall resign (such resignation to become effective not
earlier than sixty (60) days after the giving of written notice thereof to the
Company and the registered holders of Subscription Certificates) or shall
become incapable of acting as Subscription Agent or if the Board of Directors of
the Company shall by resolution remove the Subscription Agent (such removal to
become effective not earlier than thirty (30) days after the filing of a
certified copy of such resolution with the Subscription Agent and the giving of
written notice of such removal to the registered holders of Subscription
Certificates), the Company shall appoint a successor to the Subscription Agent.
If the Company shall fail to make such appointment within a period of thirty
(30) days after such removal or after it has been so notified in writing of such
resignation or incapacity by the Subscription Agent or by the registered holder
of a Subscription Certificate (in the case of incapacity), then the registered
holder of any Subscription Certificate may apply to any court of competent
jurisdiction for the appointment of a successor to the Subscription Agent.
Pending appointment of a successor to the Subscription Agent, either by the
Company or by such a court, the duties of the Subscription Agent shall be
carried out by the Company. Any successor Subscription Agent, whether appointed
by the Company or by such a court, shall be a bank or trust company, in good
standing, incorporated under the laws of any state or of the United States of
America. As soon as practicable after appointment of the successor Subscription
Agent, the Company shall cause written notice of the change in the Subscription
Agent to be given to each of the registered holders of the Subscription
Certificates at such holder's address appearing on the Rights Register. After
appointment, the successor Subscription Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally named
as Subscription Agent without further act or deed. The former Subscription Agent
shall deliver and transfer to the successor Subscription Agent any property at
the time held by it hereunder and execute and deliver, at the expense of the
Company, any further assurance, conveyance, act or deed necessary for the
purpose. Failure to give any notice provided for in this Section 18 or any
defect therein, shall not affect the legality or validity of the removal of the
Subscription Agent or the appointment of a successor Subscription Agent, as the
case may be.
19. RIGHTHOLDER NOT DEEMED A STOCKHOLDER.
Nothing contained in this Agreement or in any of the Subscription Certificates
shall be construed as conferring upon the holders thereof the right to vote or
to receive dividends or to consent or to receive notice as stockholders in
respect of the meetings of stockholders or for the election of directors of the
Company or any other matter, or any rights whatsoever as stockholders of the
Company.
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<PAGE> 11
20. NOTICES TO COMPANY AND SUBSCRIPTION AGENT.
Any notice or demand authorized by this Agreement to be given or made by the
Subscription Agent or by any registered holder of any Subscription Certificate
to or on the Company shall be sufficiently given or made if sent by mail,
first-class or registered, postage prepaid, addressed (until another address is
filed in writing by the Company with the Subscription Agent), as follows:
J. Alexander's Corporation
3401 West End Avenue
Nashville, Tennessee 37203
Attention: R. Gregory Lewis
If the Company shall fail to maintain such office or agency or shall
fail to give such notice of any change in the location thereof,
presentation may be made and notices and demands may be served at the
principal office of the Subscription Agent.
Any notice pursuant to this Agreement to be given by the Company or by any
registered holder of any Subscription Certificate to the Subscription Agent
shall be sufficiently given if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing by the Subscription Agent
with the Company), as follows:
SunTrust Bank, Nashville, N.A.
Corporate Trust Department, Sixth Floor
P.O. Box 305110
Nashville, Tennessee 37230
Attention: Donna Williams
Kyle Burchard
The Subscription Agent maintains a Subscription Agent Office at 424 Church
Street, SunTrust Financial Center, Sixth Floor, Nashville, Tennessee 37219.
21. SUPPLEMENTS AND AMENDMENTS.
The Company and the Subscription Agent may from time to time supplement or amend
this Agreement without the approval of any holders of Subscription Certificates
in order to cure any ambiguity, manifest error or other mistake in this
Agreement, or to correct or supplement any provision contained herein that may
be defective or inconsistent with any other provision herein or in the
Registration Statement, or to make any other provisions in regard to matters or
questions arising hereunder that the Company and the Subscription Agent may deem
necessary or desirable and that shall not adversely affect, alter or change the
interests of the holders of the Rights in any material respect.
Any supplement or amendment of this Agreement which may not be made by the
Company and the Subscription Agent without the approval of holders of
Subscription Certificates pursuant to the preceding paragraph shall require the
approval of the holders of Subscription Certificates entitled to purchase upon
exercise thereof a majority of the Shares which may be purchased upon
11
<PAGE> 12
the exercise of all outstanding Subscription Certificates at the time that such
amendment or supplement is to be made. Notwithstanding the foregoing, any
amendment or supplement to this Agreement which would provide for an adjustment
to either (i) the number of Shares purchasable upon exercise of a Right or (ii)
the exercise price for which Shares are purchasable upon exercise of a Right, in
either case, in a manner not provided for in this agreement and in a manner that
would have a substantial negative impact on the holders of Subscription
Certificates, then such amendment or supplement shall require the consent of the
holders of all Subscription Certificates.
22. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the benefit of the
Company or the Subscription Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
23. TERMINATION.
This Agreement shall terminate at the Close of Business on the date which is
fifteen (15) New York Stock Exchange trading days after the Expiration Date.
Upon termination of the Agreement, the Subscription Agent shall retain all
canceled Subscription Certificates and related documentation as required
by applicable law.
24. GOVERNING LAW.
This Agreement and each Subscription Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of Tennessee and for
all purposes shall be construed in accordance with the internal laws of the
State of Tennessee without regard to principles of conflict of law or choice of
laws of the State of Tennessee or any other jurisdiction which would cause the
application of any laws other than of the State of Tennessee.
25. BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company, the Subscription Agent and the registered
holders of the Subscription Certificates any legal or equitable right, remedy
or claim under this Agreement, and this Agreement shall be for the sole and
exclusive benefit of the Company, the Subscription Agent and the registered
holders of the Subscription Certificates.
26. COUNTERPARTS.
This Agreement may be executed in a number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original, and such
counterparts shall together constitute but one and the same instrument.
27. HEADINGS.
The headings of sections of this Agreement have been inserted for convenience of
reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
12
<PAGE> 13
IN WITNESS WHEREOF the parties hereto have caused this Rights Agreement to be
executed and delivered as of the day and year first above written.
J. ALEXANDER'S CORPORATION
By:_____________________________________
Name:_____________________________
Title:____________________________
SUNTRUST BANK, NASHVILLE, N.A.
By:_____________________________________
Name:_____________________________
Title:____________________________
13
<PAGE> 1
EXHIBIT 5
B A S S, B E R R Y & S I M S P L C
A PROFESSIONAL LIMITED LIABILITY COMPANY
ATTORNEYS AT LAW
2700 FIRST AMERICAN CENTER 1700 RIVERVIEW TOWER
NASHVILLE, TENNESSEE 37238-2700 POST OFFICE BOX 1509
TELEPHONE (615) 742-6200 KNOXVILLE, TENNESSEE 37901-1509
TELECOPIER (615) 742-6293 TELEPHONE (423) 521-6200
TELECOPIER (423) 521-6234
March 23, 1999
J. Alexander's Corporation
P.O. Box 24300
3401 West End Avenue
Nashville, Tennessee 37203
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as your counsel in connection with your preparation of a
Registration Statement on Form S-3 (the "Registration Statement") to be filed by
you with the Securities and Exchange Commission (the "Commission") on March 23,
1999, covering 1,086,267 shares of common stock, par value $.05 per share (the
"Common Stock"), of J. Alexander's Corporation (the "Company") issuable upon the
exercise of 5,431,335 rights to purchase 0.2 share of common stock.
In connection with this opinion, we have examined and relied upon such
records, documents, certificates, and other instruments as in our judgment are
necessary or appropriate in order to express the opinions hereinafter set forth
and have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, and the conformity to original documents
of all documents submitted to us as certified or photostatic copies.
Based on the foregoing and such other matters as we have deemed
relevant, we are of the opinion that the shares of Common Stock to be issued by
the Company when issued and delivered against receipt by the Company of the
agreed consideration therefor, will be, validly issued, fully paid, and
nonassessable.
We hereby consent to the reference to our law firm in the Registration
Statement under the caption "Legal Matters" and filing of this opinion with the
Commission as Exhibit 5 to the Registration Statement.
Very truly yours,
/s/ Bass, Berry & Sims PLC
<PAGE> 1
EXHIBIT 23.2
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of J. Alexander's
Corporation for the registration of 1,086,267 shares of its common stock
issuable upon the exercise of 5,431,335 rights to purchase shares of common
stock and to the incorporation by reference therein of our report dated March
22, 1999, with respect to the consolidated financial statements and schedule of
J. Alexander's Corporation included in its Annual Report (Form 10-K) for the
year ended January 3, 1999, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Nashville, Tennessee
March 22, 1999
<PAGE> 1
EXHIBIT 99.1
VOID IF NOT RECEIVED BY THE SUBSCRIPTION AGENT BEFORE 5:00 PM
[____________________] TIME ON [___________] *
J. ALEXANDER'S CORPORATION
SUBSCRIPTION CERTIFICATE
TO BE USED TO SUBSCRIBE FOR SHARES OF COMMON STOCK
DEAR SHAREHOLDER,
As a registered owner of this Subscription Certificate, you are entitled to
purchase shares of the common stock of J. Alexander's Corporation pursuant to
the terms and conditions set forth in the enclosed Prospectus which describes
the Rights Offering. This is a non-transferable right, and only you can exercise
it.
You will receive 1.0 right for each share of common stock of record you held on
April 5, 1999 (the "Record Date"). Each right entitles you to purchase 0.2 share
of common stock for $3.75 per share. For every five rights you receive, you will
be entitled to purchase 1 new share of common stock. See the box below which
calculates how many shares you are entitled to purchase through the offering
(Basic Subscription Right). As an example, if you owned 100 shares on April 5,
1999, you would be entitled to purchase 20 new shares of J. Alexander's
Corporation's common stock. No fractional shares will be issued; any remaining
fractional share will be rounded up to the nearest whole number of shares.
- --------------------------------------------------------------------------------
FULL BASIC SUBSCRIPTION RIGHT
Number of shares you owned on April 5, 1999 ______ * 0.2 = ______
shares you are entitled to purchase
(round up fractions of shares)
- --------------------------------------------------------------------------------
YOU HAVE THREE CHOICES:
1. You can subscribe for all the new shares listed in the box above
(the "Basic Subscription Right")
3. You can subscribe for less than the number of new shares listed in the
box above, or
4. If you do not wish to purchase new shares, disregard this material.
ENTER ONE CHOICE ONLY:
[ ] 1. I wish to apply for the Basic Subscription Right.
Enter number of shares ____________ x $3.75 = Total Due $_____________
[ ] 2. I wish to apply for less than the number of new shares listed above
Enter number of shares ____________ x $3.75 = Total Due $_____________
Control No._______________
Account No._______________
1
<PAGE> 2
INSTRUCTIONS
IN ORDER TO PURCHASE SHARES OF J. ALEXANDER'S CORPORATION PURSUANT TO THE RIGHTS
OFFERING, PLEASE BE SURE TO:
1. COMPLETE THE INFORMATION ON THE FRONT OF THIS CERTIFICATE.
2. SIGN BELOW.
3. RETURN THIS COMPLETED AND SIGNED CERTIFICATE TOGETHER WITH PAYMENT AS
CALCULATED ON THE FRONT OF THIS CERTIFICATE TO SUNTRUST BANK, NASHVILLE, N.A.,
IN THE ENVELOPE PROVIDED BEFORE 5:00 P.M., CENTRAL DAYLIGHT TIME ON
[________________] (THE "EXPIRATION DATE"). REMEMBER, FULL PAYMENT MUST BE MADE
IN UNITED STATES DOLLARS BY MONEY ORDER OR CHECK DRAWN ON A BANK LOCATED IN THE
UNITED STATES AND MADE PAYABLE TO "SUNTRUST BANK, NASHVILLE, N.A., AS
SUBSCRIPTION AGENT" OR BY WIRE TRANSFER. NO THIRD PARTY CHECKS WILL BE ACCEPTED.
4. ALTERNATIVELY, YOU MAY CONTACT YOUR BROKER AND COMPLETE A NOTICE OF
GUARANTEED DELIVERY FORM.
SIGNATURE
I acknowledge that I have received the Prospectus for this rights offering, and
I hereby irrevocably subscribe for the number of new shares indicated on the
front of this certificate on the terms and conditions specified in the
Prospectus.
I hereby agree that if I fail to pay in full for the shares for which I have
subscribed, J. Alexander's Corporation may exercise any of the remedies provided
for in the Prospectus.
Print Name of Subscriber(s) ______________________________________
Signature of Subscriber(s) ______________________________________
Signature Guarantee if required ______________________________________
(Please sign here) ______________________________________
Telephone number (including area code):_________________________
If you wish to have your shares and refund check (if any) delivered to another
address other than that listed on this subscription certificate, you must have
your signature guaranteed. Appropriate signature guarantors include: banks and
savings associations, credit unions, member firms of a national securities
exchange, municipal securities dealers and government securities dealers. Please
provide delivery address below and please note if it is a permanent change.
Other Address___________________________________________________________________
* Unless offer is extended
2
<PAGE> 1
EXHIBIT 99.2
FORM OF NOTICE OF GUARANTEED DELIVERY
FOR SHARES OF COMMON STOCK
OF J. ALEXANDER'S CORPORATION SUBSCRIBED
FOR UNDER THE BASIC SUBSCRIPTION RIGHT
As set forth on pages 16 and 17 of the Prospectus dated ___________, 1999 under
"The Rights Offering - Guaranteed Delivery Procedures," this form or one
substantially equivalent hereto may be used as a means of effecting subscription
and payment for all shares of J. Alexander's Corporation's common stock
subscribed for pursuant to the Basic Subscription Right. Such form may be
delivered by hand or sent by facsimile transmission, overnight courier or mail
to the Subscription Agent.
The Subscription Agent is:
SunTrust Bank, Nashville, N.A.
Attention: Corporate Trust Department
Donna Williams; Kyle Burchard
<TABLE>
<S> <C> <C>
By Mail: By Facsimile: By Hand, Express Mail or
SunTrust Financial Center (Telecopier): Overnight Courier:
Sixth Floor (615) 748-5331 SunTrust Financial Center
P. O. Box 305110 Confirm by Telephone: Sixth Floor
Nashville, Tennessee, 37230 (615) 748-4745 424 Church Street
Nashville, TN 37219
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS
VIA A TELECOPY OR FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE, DOES NOT
CONSTITUTE A VALID DELIVERY.
The member firm of a national securities exchange or the National Association of
Securities Dealers, Inc., or bank or trust company having an office or
correspondent in the United States which completes this form must communicate
the guarantee and the number of shares subscribed for to the Subscription Agent
and must deliver this Notice of Guaranteed Delivery, guaranteeing delivery of
(i) payment in full for all subscribed shares at a price of $3.75 per share and
(ii) a properly completed and signed copy of the Subscription Certificate, to
the Subscription Agent prior to 5:00 p.m., Central Daylight Time, on the
Expiration Date. Failure to do so will result in a forfeiture of the Rights.
GUARANTEE
The undersigned, a member firm of a national securities exchange or the National
Association of Securities Dealers, Inc. or a bank or trust company, having an
office or correspondent in the United States, guarantees delivery to the
Subscription Agent by the close of business 5:00 p.m., Central Daylight Time on
[___________], 1999 of (A) a properly completed and executed Subscription
Certificate, and (B) payment of the full subscription price for all subscribed
shares at a price of $3.75, as subscription for such shares is indicated herein
or in the Subscription Certificate.
No. of Shares of Common Stock _____________ * $3.75 = Total Payment
Due $______________
<PAGE> 2
METHOD OF DELIVERY (CIRCLE ONE)
A. Through the Depository Trust Company ("DTC")
B. Direct to the Subscription Agent
Please assign above a unique control number for each guarantee submitted. This
number should be referenced on any direct delivery or any delivery through DTC.
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Name of Firm Authorized Signature
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Address Title
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Zip Code Name (Please Type or Print)
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Telephone Number Date
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DTC Participant Number
