<PAGE> 1
Filed Pursuant to Rule 424(b)(2)
Registration Number 333-74849
1,089,067 Shares of Common Stock
Subscription Price $3.75 Per Share
(J. ALEXANDER'S LOGO)
-------------------------
J. Alexander's is distributing non-transferable rights to owners of shares
of J. Alexander's common stock. During this rights offering, J. Alexander's will
issue up to 5,445,335 rights to purchase shares and up to 1,089,067 shares of
common stock.
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NET PROCEEDS TO
SUBSCRIPTION PRICE J. ALEXANDER'S(1)
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<S> <C> <C>
Per Share............ $ 3.75 $ 3.75
Total.............. $4,084,001 $4,084,001
</TABLE>
(1) Before deducting expenses payable by J. Alexander's, 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 3 OF THIS PROSPECTUS.
You will receive 1.0 right for each share of common stock that you own at
the close of business on May 20, 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. To participate in this rights
offering, you must exercise your rights by 5:00 pm, Central Daylight Time on
June 21, 1999.
Shares of J. Alexander'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. On May 18, 1999, the closing price of
a share of the common stock on the NYSE was $4.06.
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 May 20, 1999
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TABLE OF CONTENTS
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PAGE
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Prospectus Summary.................... 1
Risk Factors.......................... 3
J. Alexander's May Need Additional
Capital Even After the Sale to
Solidus and the Rights Offering,
and Without Additional Capital,
J. Alexander's May Not Be Able To
Develop New Restaurants.......... 3
J. Alexander's Credit Facility or
Satisfactory Alternative
Financing May Not be Available
After July 1, 2000, Which Could
Have an Adverse Effect on Results
of Operations or New Restaurant
Openings......................... 3
If J. Alexander's Loses or is Not
Able to Hire Key Personnel, Its
Operations Could Suffer.......... 4
If We Are Not in Compliance With the
New York Stock Exchange's Share-
holder Voting, Market
Capitalization or Operating
Result Requirements, We May Be
Delisted......................... 4
Certain Anti-takeover Provisions May
Affect Your Rights as a
Shareholder...................... 4
Significant Ownership Positions May
Affect Your Rights as a
Shareholder...................... 5
Provisions of Tennessee Law
Applicable to J. Alexander's May
Discourage Third Party Attempts
to Acquire Control............... 5
J. Alexander's Does Not Anticipate
Paying Dividends on Common
Stock............................ 5
J. Alexander's Stock Price Has Been
and May Continue to Be Volatile,
and May Be Less than $3.75 Per
Share............................ 5
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PAGE
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J. Alexander's Faces Challenges in
Opening New Restaurants.......... 6
Intense Competition Could Damage
Profitability.................... 6
J. Alexander's May Experience
Fluctuations in Quarterly Results
Because of Timing of Restaurant
Openings and Fluctuations in
Costs............................ 6
Government Regulation and Licensing
May Delay New Restaurant Openings
or Affect Operations............. 7
J. Alexander's May Encounter
Problems With Year 2000
Compliance....................... 7
The IRS May Contend that
Shareholders Must Pay Taxes on
the Distribution of Rights....... 8
A Warning About Forward-Looking
Statements.......................... 8
If You Do Not Exercise Your Rights,
Your Ownership Interest May Be
Diluted............................. 9
Recent Developments................... 10
Use of Proceeds....................... 11
Capitalization........................ 12
The Rights Offering................... 13
If You Have Questions................. 18
Plan of Distribution.................. 18
Federal Income Tax Considerations..... 19
Tax Consequences to Shareholders.... 19
Taxation of J. Alexander's.......... 21
Legal Matters......................... 21
Experts............................... 21
If You Would Like Additional
Information......................... 22
Questions and Answers About the Rights
Offering............................ 24
</TABLE>
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PROSPECTUS SUMMARY
The information in this section is a summary and does 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, which details the risks involved in the exercise of rights and the
ownership of our common stock, and the documents listed under "If You Would Like
Additional Information."
J. ALEXANDER'S CORPORATION
J. Alexander's Corporation 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. J. Alexander's
corporate offices are located at 3401 West End Avenue, P.O. Box 24300,
Nashville, Tennessee 37202, telephone (615) 269-1900.
THE RIGHTS OFFERING
In this rights offering, J. Alexander's will distribute to you 1.0 right to
purchase common stock for each share of common stock that you own at the close
of business on May 20, 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. You can
"exercise" rights to purchase the shares of common stock by following the
instructions in this prospectus. You may exercise any number of your rights, or
you may choose not to exercise any rights.
USE OF PROCEEDS
J. Alexander's gross proceeds from the rights offering depend on the number
of shares of common stock that are purchased when shareholders exercise rights.
If J. Alexander's sells all 1,089,067 shares offered by this Prospectus, then J.
Alexander's will receive proceeds of $4,084,001 from the rights offering before
payment of estimated offering expenses of $150,000. J. Alexander's will use the
proceeds from the rights offering to repay a portion of the debt under its
revolving credit facility.
J. Alexander's may not receive any proceeds from the rights offering if
shareholders do not exercise their rights.
FINANCING PLAN
The rights offering is part of a financing plan to raise equity capital to
repay some of J. Alexander's outstanding debt. J. Alexander's believes that this
will benefit J. Alexander's by reducing its debt-to-equity ratio and reducing
its interest expense, which will improve earnings. J. Alexander's 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.
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The other part of J. Alexander's financing plan is the sale of $4.1 million
of common stock to Solidus, LLC, a Tennessee limited liability company, whose
principal owners are Dr. John Morris and members of his family. E. Townes
Duncan, a director of J. Alexander's, is also an owner of and manages the
investments of Solidus. J. Alexander's received $4,073,498 for the sale of
1,086,266 shares of common stock to Solidus on March 22, 1999. J. Alexander's
completed the sale of common stock to Solidus before the rights offering to
provide J. Alexander's with additional equity on favorable terms and more
quickly than would have been possible through the rights offering, and to ensure
that J. Alexander's 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.
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RISK FACTORS
As you decide whether to exercise your rights, and when you evaluate J.
Alexander'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.
J. ALEXANDER'S MAY NEED ADDITIONAL CAPITAL EVEN AFTER THE SALE TO SOLIDUS AND
THE RIGHTS OFFERING, AND WITHOUT ADDITIONAL CAPITAL, J. ALEXANDER'S MAY NOT BE
ABLE TO DEVELOP NEW RESTAURANTS
Even after the completion of the sale to Solidus and the rights offering,
J. Alexander's may need additional capital to meet its capital requirements. J.
Alexander's cannot assure you that such capital will be available on
satisfactory terms. If all of the rights are not exercised, or if J. Alexander's
fails to reach sufficient cash flows, J. Alexander's will require additional
debt or equity. J. Alexander's existing credit facility requires J. Alexander's
to maintain certain financial ratios and also prohibits new borrowing other than
under the revolving credit facility.
J. Alexander's ability to conduct its business depends to a significant
degree on its ability to incur indebtedness and obtain equity capital. J.
Alexander's needs financing primarily to fund its development of new
restaurants. To meet these needs, J. Alexander's currently uses cash from
operations and borrowings under a revolving credit facility.
Through the sale to Solidus and the rights offering, its existing credit
facility and cash flow from operations, J. Alexander's believes that it will
have access to sufficient funds to carry on its existing level of business and
develop additional restaurants.
J. ALEXANDER'S CREDIT FACILITY OR SATISFACTORY ALTERNATIVE FINANCING MAY NOT BE
AVAILABLE AFTER JULY 1, 2000, WHICH COULD HAVE AN ADVERSE EFFECT ON RESULTS OF
OPERATIONS OR NEW RESTAURANT OPENINGS
J. Alexander's cannot assure you that its existing credit facility will
remain available past July 1, 2000, and J. Alexander's cannot assure you that it
will be successful in consummating any future financing transactions on
satisfactory terms. If the credit facility is not available after July 1, 2000,
J. Alexander's would be forced to seek alternative financing for its debt,
whether through the sale of additional equity, issuance of debt securities or a
new credit facility, which may be on less favorable terms, including increased
interest rates. Costs incurred for future financing transactions, such as
increased interest expense, could have an adverse effect on J. Alexander's
results of operations and could result in delays of new restaurant openings.
Factors which could affect J. Alexander's access to the capital markets, or
the costs of such capital, include:
- changes in interest rates,
- general economic conditions, and
- investors' perceptions of J. Alexander's business, results of operations,
leverage, financial condition and business prospects.
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Economic, financial, competitive and other matters strongly influence each of
these factors, and J. Alexander's may not be able to control those influences.
In addition, covenants under J. Alexander's existing or future debt
securities and credit facilities may significantly restrict J. Alexander's
ability to incur additional indebtedness or to issue preferred stock.
IF J. ALEXANDER'S LOSES OR IS NOT ABLE TO HIRE KEY PERSONNEL, ITS OPERATIONS
COULD SUFFER
If J. Alexander's loses certain key employees or cannot retain or attract
key employees in the future, J. Alexander's operations could be adversely
affected. J. Alexander's 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 J. Alexander's 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 WE ARE NOT IN COMPLIANCE WITH THE NEW YORK STOCK EXCHANGE'S SHAREHOLDER
VOTING, MARKET CAPITALIZATION OR OPERATING RESULT REQUIREMENTS, WE MAY BE
DELISTED
It is possible that the New York Stock Exchange may consider whether to
delist J. Alexander's common stock because the New York Stock Exchange may
assert that shareholder approval for J. Alexander's recent sale of common stock
to Solidus or for the rights offering is required under its guidelines or that
J. Alexander's is otherwise not in compliance with New York Stock Exchange
requirements relating to market capitalization or operating results. If the New
York Stock Exchange delists J. Alexander's common stock, J. Alexander's would
apply for listing of the common stock for trading on The Nasdaq Stock Market's
National Market or Small Cap Market. If the common stock was not listed on an
exchange or a national market, shareholders would be able to trade common stock
only in negotiated private transactions. This would significantly impair their
liquidity and could adversely affect the price of the common stock. The New York
Stock Exchange has authorized listing of the shares to be sold in the rights
offering and the shares sold to Solidus, subject to notice of issuance.
CERTAIN ANTI-TAKEOVER PROVISIONS MAY AFFECT YOUR RIGHTS AS A SHAREHOLDER
The ability of the Board of Directors to issue preferred stock and the
existence of a shareholder rights plan could discourage a takeover attempt or
have a depressive effect on the price of the common stock. J. Alexander's has in
effect a shareholder rights plan, which is intended to encourage third parties
interested in acquiring J. Alexander's 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. Because a potential acquiror must negotiate with the Board of
Directors in order to avoid triggering the preferred stock purchase rights, the
existence of the shareholder rights plan could discourage a takeover attempt or
have a depressive effect on the price of the common stock. J. Alexander's Board
of Directors also 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, J. Alexander's shareholders.
Your rights will be subject to, and may be adversely affected by, the rights of
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<PAGE> 7
holders of preferred stock. If J. Alexander's chooses to issue preferred stock
with voting rights, the issuance could provide desirable flexibility in
connection with possible acquisitions and other corporate purposes.
SIGNIFICANT OWNERSHIP POSITIONS MAY AFFECT YOUR RIGHTS AS A SHAREHOLDER
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 J.
Alexander's shareholders. In addition, the ownership of a significant percentage
of the common stock by a single shareholder, such as Solidus, could make it more
difficult for a third party to acquire control of J. Alexander's.
PROVISIONS OF TENNESSEE LAW APPLICABLE TO J. ALEXANDER'S MAY DISCOURAGE
THIRD-PARTY ATTEMPTS TO ACQUIRE CONTROL
Certain provisions of Tennessee law could make it more difficult for a
third party to acquire control of J. Alexander's and therefore could have a
depressive effect on the price of the common stock. The Tennessee Business
Combination Act provides that generally, any party owning more than 10% of the
stock in a publicly held Tennessee corporation cannot engage in a business
combination with the corporation unless the combination takes place at least
five years after the shareholder first acquired a 10% interest and either is
approved by at least two-thirds of the noninterested voting shares of the
corporation or satisfies certain fairness conditions. Tennessee's Investor
Protection Act, in addition to prohibiting fraudulent, deceptive, or
manipulative practices by any party in connection with a tender offer, requires
a party making a tender offer directed at certain Tennessee corporations to file
a registration statement with the Commissioner of Insurance. The Investor
Protection Act also requires both the offeror and the offeree corporation to
deliver all solicitation materials used in connection with the tender offer to
the Commissioner.
J. ALEXANDER'S DOES NOT ANTICIPATE PAYING DIVIDENDS ON COMMON STOCK
J. Alexander's does not plan to pay cash dividends on its 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 J. Alexander's results of
operations and financial condition, any existing or proposed commitments for the
use of available funds, and J. Alexander's obligations to its creditors or
holders of preferred stock, if any preferred stock is issued. Financial
covenants in J. Alexander's future credit agreements may restrict J. Alexander's
ability to pay dividends.
J. ALEXANDER'S STOCK PRICE HAS BEEN AND MAY CONTINUE TO BE VOLATILE, AND MAY BE
LESS THAN $3.75 PER SHARE
J. Alexander's 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. 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.
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J. Alexander's cannot foresee or predict such events. The market price of J.
Alexander's common stock could also be influenced by developments or matters not
related to J. Alexander's, including the sale or attempted sale of a large
amount of J. Alexander'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.
J. ALEXANDER'S FACES CHALLENGES IN OPENING NEW RESTAURANTS
It has been J. Alexander's experience that new restaurants generally
generate operating losses in the initial months following opening while they
build sales levels to maturity. J. Alexander's currently operates twenty J.
Alexander's restaurants, of which six have been open for less than two years.
Because of J. Alexander's relatively small restaurant base, an unsuccessful new
restaurant could have a more adverse effect on our results of operations than
would be the case in a restaurant company with a greater number of restaurants.
J. Alexander's continued growth depends on its ability to open new 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 J. Alexander's.
INTENSE COMPETITION COULD DAMAGE PROFITABILITY
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 J.
Alexander's. Some of J. Alexander's competitors have been in existence for a
substantially longer period than J. Alexander's and may be better established in
markets where J. Alexander'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.
J. ALEXANDER'S MAY EXPERIENCE FLUCTUATIONS IN QUARTERLY RESULTS BECAUSE OF
TIMING OF RESTAURANT OPENINGS AND FLUCTUATIONS IN COSTS
J. Alexander'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 J. Alexander's has
limited or no control. J. Alexander's business may also be affected by
inflation, which could have the effect of increasing J. Alexander's costs for
food, labor, employee benefits, and other routine expenditures. In the past,
management has attempted to anticipate and avoid material adverse effects on J.
Alexander'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. Fluctuations in quarterly results may have a negative
impact on the stock price.
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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 J. Alexander's control, which may include increases in the minimum
hourly wage requirements, workers' compensation insurance rates and unemployment
and other taxes. If J. Alexander's 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.
J. ALEXANDER'S 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. J. Alexander's has completed its assessment of its
internal information technology systems and its major information technology
vendors and detailed plans have been developed to address system modifications
required by September 30, 1999. Generally, J. Alexander's information systems
are relatively new systems based on personal computer, rather than mainframe,
technology. As a result, J. Alexander's remediation process consists primarily
of replacing personal computers which are not Year 2000 compliant and installing
upgrades from certain third party software vendors which J. Alexander's has been
advised will make that software Year 2000 compliant. As indicated, the
assessment phase with respect to information technology systems has been
completed. With respect to remediation, all of J. Alexander's personal computers
have been tested for Year 2000 compliance, and replaced as necessary. Software
upgrades are expected to be installed on or before August 31, 1999, with testing
completed by September 30, 1999. J. Alexander's estimates that its Year 2000
readiness initiatives with respect to its information technology systems is
approximately 50% complete.
J. Alexander's is currently in the process of assessing its non-information
technology systems that utilize embedded technology such as microcontrollers and
reviewing them for Year 2000 compliance. J. Alexander's will continue to assess
these systems and take appropriate action with respect to non-Year 2000
compliant systems of this nature where practicable. However, J. Alexander's does
not believe that non-Year 2000 compliance of these systems will have a material
effect on J. Alexander's operations.
J. Alexander's information systems are generally not interfaced with third
party vendors. However, to operate its business, J. Alexander's 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. J. Alexander'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 J. Alexander's. If the
telecommunications carriers, public utilities and other Material Relationships
do not appropriately rectify their Year 2000 issues, J. Alexander's ability to
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conduct its core business may be materially impacted, which could result in a
material adverse effect on J. Alexander's financial condition. J. Alexander has
had discussions with a limited number of its Material Relationships regarding
their Year 2000 readiness and plans to further query certain of its Material
Relationships in order to obtain additional information from them. J. Alexander
believes that making these inquiries nearer Year 2000 will allow it to receive
the latest information from its Material Relationships regarding their state of
readiness. J. Alexander's plans to complete its survey process prior to June 30,
1999, and will use information obtained from that process to further assess its
risks and assist in the development of contingency plans prior to the end of
1999.
Because J. Alexander's remediation, testing and, with respect to Material
Relationships, assessment phases are not complete, it has not fully assessed its
risk from potential Year 2000 failures, and has not yet developed detailed
contingency plans specific to Year 2000 events for any specific area of
business. J. Alexander's is unable to estimate the costs that it may incur as a
result of Year 2000 problems suffered by the parties with which it deals, such
as Material Relationships, and there can be no assurance that J. Alexander's
will successfully address the Year 2000 problems present in its own systems.
Year 2000 problems in J. Alexander's systems or those of its Material
Relationships could cause J. Alexander's to be unable to keep its restaurants
open in the initial days or weeks after January 1, 2000, which could result in a
material adverse effect on J. Alexander's financial condition.
THE IRS MAY CONTEND THAT SHAREHOLDERS MUST PAY TAXES ON THE DISTRIBUTION OF
RIGHTS
The Internal Revenue Service may contend that the distribution of rights to
shareholders is a taxable distribution, although it is structured as a tax-free
stock dividend under Section 305 of the Internal Revenue Code.
If the IRS should prevail, you would be taxed on the fair market value of
the rights you receive and you would have to pay taxes in cash based on the
value of the rights even though you are not receiving a cash distribution in
connection with the distribution or exercise of the rights. You would have to
pay this tax whether or not you exercise the rights. Even if the distribution
should be taxable, the fair market value of the rights is likely to be minimal
because the rights are not transferable, because the exercise price is greater
than the market price of our common stock on the date J. Alexander's announced
the rights offering to the public and because the exercise price is likely to be
only slightly less than the market price over the time period that the rights
may be exercised.
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.
J. Alexander's believes forward-looking statements can generally be
identified 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 J. Alexander's believes that the expectations reflected in this
prospectus are reasonable, J. Alexander's cannot assure you that its
expectations will be correct. Factors
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which could affect actual results include, but are not limited to, J.
Alexander's ability to increase sales in its restaurants; J. Alexander'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. J.
Alexander's 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 J. Alexander's, you should refer
back to these Risk Factors.
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 J. Alexander's relative to shareholders
who exercise their rights. Immediately after the rights offering, the net
tangible book value per share of common stock will 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
1,069,067 remaining shares of common stock sold in the rights offering.
<TABLE>
<CAPTION>
AFTER THE
RIGHTS AFTER THE RIGHTS
OFFERING OFFERING
ASSUMING ASSUMING
BEFORE THE SHAREHOLDER SHAREHOLDER
RIGHTS EXERCISES EXERCISES NO
OFFERING ALL RIGHTS RIGHTS
---------- ----------- ----------------
<S> <C> <C> <C>
Shares Owned by Shareholder................. 100,000 120,000 100,000
Total Number of Common Shares Outstanding... 6,531,601 7,620,668 7,600,668
Shareholder's Percentage Ownership.......... 1.53% 1.57% 1.32%
</TABLE>
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RECENT DEVELOPMENTS
FIRST QUARTER RESULTS
On April 26, 1999, J. Alexander's reported operating results for the first
quarter of 1999, with higher operating income and same store sales. For the
first quarter of 1999, J. Alexander's had average weekly same store sales of
$76,900, increasing by 3.8% over $74,100 posted for the first quarter of 1998.
Net sales for the quarter rose 9.7% to $19,208,000 from $17,512,000.
J. Alexander's reported net income of $244,000, or $.04 per share, for the
first quarter of 1999, up from a loss of $1,104,000, or $.20 per share, in the
first quarter of 1998. First quarter results of 1999 included a pre-tax gain of
$90,000 related to the repurchase of a portion of J. Alexander's convertible
debentures. These results are set out in the chart below.
<TABLE>
<CAPTION>
FIRST QUARTER 1999 1998
------------- ----------- -----------
<S> <C> <C>
Average Weekly Same Store Sales............. $ 76,900 $ 74,100
Net Sales................................... 19,208,000 17,512,000
Net Income.................................. 244,000 (1,104,000)
Net Income Per Share........................ .04 (.20)
</TABLE>
For 1999, J. Alexander's has plans to open a restaurant in West Bloomfield,
Michigan, and is finalizing its plans for a restaurant in Cincinnati, Ohio, with
construction expected to start in the fall of 1999.
RECENT CONTINGENT PROPOSAL BY O'CHARLEY'S, INC.
In April 1999, O'Charley's, Inc. proposed to the Board of Directors of J.
Alexander's that the two companies discuss a business combination in which
O'Charley's would consider paying an unspecified combination of cash and
O'Charley's stock designed to be valued at $5.50 per share of J. Alexander's
common stock. The proposal was conditioned on Solidus' agreeing to sell its
1,086,266 shares of J. Alexander's stock purchased on March 22, 1999 to
O'Charley's at $3.75 per share. The proposal was also conditioned on J.
Alexander's canceling this rights offering. The Board of Directors of J.
Alexander's declined to pursue discussions with O'Charley's because J.
Alexander's Board of Directors and management believe that it is in the best
interest of J. Alexander's and its shareholders to continue to execute its
strategic business plan as an independent public company.
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 J. Alexander's common stock.
- for a period of seven years, Solidus would not solicit proxies for a vote
of the shareholders of J. Alexander's.
10
<PAGE> 13
- for a period of seven years, Solidus would not sell J. Alexander's common
stock it owns and would only transfer common stock to J. Alexander's, a
person, entity or group approved by J. Alexander's 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, J. Alexander's proposing or approving a merger or other
business combination, or a change to a majority of J. Alexander's Board
of Directors over a two-year period.
- Solidus would not exercise rights during this rights offering
attributable to the 1,086,266 additional shares of common stock purchased
on March 22, 1999.
USE OF PROCEEDS
J. Alexander's will apply its net proceeds from 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 J. Alexander's senior debt to EBITDA
(earnings before interest, taxes, depreciation and amortization). The facility
matures, unless J. Alexander's elects to convert outstanding borrowings to a
term loan, on July 1, 2000. After applying the proceeds from the sale of
1,086,266 additional shares of common stock to Solidus, the principal amount
outstanding as of April 29, 1999 under the revolving credit facility was $5.8
million. Borrowings under the credit facility were incurred to finance
development of J. Alexander's restaurants.
Assuming that shareholders exercise the rights to purchase 1,089,067 shares
of common stock, J. Alexander's will receive net proceeds from this rights
offering of approximately $3.9 million after payment of approximately $150,000
in offering expenses. J. Alexander's may not receive any proceeds from the
rights offering if shareholders do not exercise their rights.
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<PAGE> 14
CAPITALIZATION
The following table sets forth the short-term indebtedness and the
capitalization of J. Alexander's, 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. The net proceeds from the sale to Solidus on March 22, 1999
were 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 $17,288
------- -------
STOCKHOLDERS' EQUITY:
Common stock, $0.05 par value; 10,000,000 shares authorized;
5,431,335 issued and outstanding; 6,517,601 outstanding,
as adjusted(1)............................................ 272 326
Preferred stock, no par value; authorized 1,000,000 shares;
none issued............................................... -- --
Additional paid in capital.................................. 30,007 34,026
Retained earnings........................................... 4,272 4,272
------- -------
34,551 38,624
Note receivable -- Employee Stock Ownership Plan(2)......... (820) (820)
------- -------
Total stockholders' equity................................ 33,731 37,804
------- -------
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 J. Alexander's existing stock
option plans and 774,648 shares of common stock reserved for issuance upon
conversion of J. Alexander's Convertible Subordinated Debentures due 2003.
(2) During 1992, J. Alexander's established an Employee Stock Ownership Plan
("ESOP"), which purchased 457,055 shares of common stock for an aggregate
purchase price of $1,714,000. J. Alexander's 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. J. Alexander's has made a
contribution to the ESOP each year since the ESOP was established allowing
the ESOP to make its scheduled loan repayments to J. Alexander's, 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.
12
<PAGE> 15
THE RIGHTS OFFERING
THE RIGHTS
J. Alexander's is distributing non-transferable rights to owners of shares
of its common stock at the close of business on May 20, 1999, at no cost to the
shareholders. J. Alexander's will give you 1.0 right for each share of common
stock that you own at the close of business on May 20, 1999. If you wish to
exercise your rights, you must do so on or before June 21, 1999 at 5:00 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 J. Alexander's, 0.2 share of common stock, rounding up any
remaining fractional share to the next whole number of shares (the "Basic
Subscription Right"). J. Alexander's will send you certificates representing the
shares of common stock that you purchase pursuant to your Basic Subscription
Right as soon as practicable after June 21, 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 June 21,
1999, unless J. Alexander's, in its discretion, extends the rights offering for
up to 10 days. If you do not exercise your Basic Subscription Rights on or prior
to June 21, 1999, the rights will be null and void. J. Alexander's 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
J. Alexander's may withdraw the rights offering at any time prior to or on
June 21, 1999, for any reason (including, without limitation, a change in the
market price of the common stock). If J. Alexander's withdraws the rights
offering, any funds received from shareholders will be promptly refunded,
without interest or penalty.
DETERMINATION OF SHARE PRICE
J. Alexander's 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 J. Alexander's common stock and J.
Alexander'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 J.
Alexander's or its common stock. J. Alexander's cannot assure you that the
market price of the common stock will not decline during the rights offering. J.
Alexander's 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.
13
<PAGE> 16
NON-TRANSFERABILITY OF RIGHTS
The rights may not be sold and may only be transferred by operation of law.
J. Alexander's 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 J.
Alexander's. See "-- Basic Subscription Right" for an explanation of what you
will receive upon exercise of your rights.
EXERCISE OF RIGHTS
You may exercise your rights by delivering to the Subscription Agent on or
prior to June 21, 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.
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, J. ALEXANDER'S URGES YOU TO MAKE PAYMENT
SUFFICIENTLY IN ADVANCE OF JUNE 21, 1999, TO ENSURE THAT THE PAYMENT IS RECEIVED
AND CLEARS BEFORE THAT DATE.
14
<PAGE> 17
J. ALEXANDER'S ALSO URGES YOU TO CONSIDER PAYMENT BY MEANS OF CERTIFIED OR
CASHIER'S CHECK, MONEY ORDER OR WIRE TRANSFER OF FUNDS.
GUARANTEED DELIVERY PROCEDURES THROUGH A BROKER
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 June
21, 1999, you may exercise your rights if you and your broker satisfy the
following Guaranteed Delivery Procedures:
(1) You send, and the Subscription Agent receives, on or prior to June
21, 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 (a)
payment in full for each share of common stock to be purchased through the
Basic Subscription Right and (b) 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, (a) payment in full
for each share of common stock to be purchased through the Basic
Subscription Right and (b) 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."
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.
15
<PAGE> 18
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.
IMPORTANT
PLEASE CAREFULLY READ THE INSTRUCTIONS INCLUDED IN THIS PROSPECTUS AND THE
SUBSCRIPTION CERTIFICATE AND FOLLOW THOSE INSTRUCTIONS IN DETAIL.
DO NOT SEND SUBSCRIPTION CERTIFICATES TO J. ALEXANDER'S.
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
16
<PAGE> 19
YOUR SUBSCRIPTION CERTIFICATE AND PAYMENT BY MAIL, J. ALEXANDER'S RECOMMENDS
THAT YOU USE REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED.
J. ALEXANDER'S ALSO RECOMMENDS THAT YOU ALLOW A SUFFICIENT NUMBER OF DAYS TO
ENSURE DELIVERY TO THE SUBSCRIPTION AGENT AND CLEARANCE OF PAYMENT PRIOR TO JUNE
21, 1999. BECAUSE UNCERTIFIED PERSONAL CHECKS MAY TAKE AT LEAST FIVE BUSINESS
DAYS TO CLEAR, J. ALEXANDER'S 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 J. Alexander's, whose
determinations will be final and binding. J. Alexander's, 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 J.
Alexander's determines in its sole discretion. Neither J. Alexander's 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
J. Alexander's 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 J. Alexander's
nor the Subscription Agent will pay such expenses.
SUBSCRIPTION AGENT
J. Alexander's has appointed SunTrust Bank, Nashville, N.A., as
Subscription Agent for the rights offering. The Subscription Agent's address is:
<TABLE>
<CAPTION>
U.S. MAIL BY COURIER OR OVERNIGHT DELIVERY
--------- --------------------------------
<S> <C>
SunTrust Bank SunTrust Bank
Corporate Trust Department Corporate Trust Department
SunTrust Financial Center, Sixth SunTrust Financial Center, Sixth
Floor 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.
17
<PAGE> 20
You should deliver your Subscription Certificate, payment of the
Subscription Price and Notice of Guaranteed Delivery (if any) to the
Subscription Agent.
J. Alexander's will pay the fees and expenses of the Subscription Agent. J.
Alexander's 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 J.
Alexander's, 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
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, J. Alexander's will distribute the rights and copies
of this prospectus to individuals who own shares of common stock at the close of
business on May 20, 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 17. For further instructions on how to exercise
rights, 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 17.
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<PAGE> 21
FEDERAL INCOME TAX CONSIDERATIONS
The following general discussion summarizes the anticipated material
federal income tax consequences of the issuance, exercise or lapse of the
rights. This discussion does not consider any federal income tax consequences of
the rights offering to any particular shareholder's individual situation or the
federal income tax consequences of the rights offering that may be relevant to
particular classes of stockholders, such as banks, insurance companies and
foreign individuals and entities. 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 summary is based on current law, which is subject to change at any
time, possibly with retroactive effect.
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 rights offering is intended to 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 (1) the receipt of property by some
shareholders, and (2) 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 J. Alexander'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 in the common stockholders' interests in
the assets and earnings and profits of J. Alexander's 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. If the IRS were to prevail under this
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 J. Alexander'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. J. Alexander's presently has accumulated earnings and profits,
but no computation has been made of the precise amount.
19
<PAGE> 22
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 J. Alexander's has
current or accumulated earnings and profits for the year.
BASIS
Because the rights may not be sold or transferred, the tax basis assigned
to the rights is relevant only if the rights are exercised. 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
holder's tax basis in the rights is determined by allocation of the holder's tax
basis in the common stock with respect to which the rights are received between
that common stock and the rights. That allocation is made in the manner
described in the paragraph immediately below.
If the rights offering is characterized as a nontaxable Section 305(a)
distribution, and if the fair market value of the rights on the date of
distribution is less than 15% of the fair market value of the common stock with
respect to which the rights are received, the shareholder will have the
following choice:
- a basis of zero may be assigned to the rights, or
- an election may be made on the federal tax return for the taxable year in
which the stock rights are received to allocate the basis of the common
stock between the common stock and the rights in proportion to the fair
market value of each.
However, if the fair market value of the rights on the date of distribution is
15% or more of the fair market value of the common stock, the basis of the
common stock must be allocated proportionately between the common stock and the
rights. In either case, the tax basis allocation will occur only if the rights
are exercised.
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.
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 in an amount equal to his or her tax
basis in 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
20
<PAGE> 23
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 generally will be capital
gain or loss and will be long-term capital gain or loss if the holder held the
common stock for more than one year.
TAXATION OF J. ALEXANDER'S
J. Alexander's 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
and certain tax matters will be passed upon for J. Alexander's 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.
21
<PAGE> 24
IF YOU WOULD LIKE ADDITIONAL INFORMATION
J. Alexander's 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:
<TABLE>
<S> <C>
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
</TABLE>
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, J. Alexander's 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
J. Alexander's 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 J. Alexander's filed with the SEC. The SEC allows J. Alexander's to
"incorporate by reference" those documents, which means that J. Alexander's 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, as amended, for the year ended January
3, 1999;
(2) The description of the common stock contained in J. Alexander'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.
PROSPECTIVE INVESTORS MAY RELY ON THE INFORMATION CONTAINED IN THIS
PROSPECTUS. WE HAVE 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
22
<PAGE> 25
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.
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QUESTIONS AND ANSWERS ABOUT THE RIGHTS OFFERING
WHAT IS A RIGHT?
A right 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 J.
Alexander's. When you "exercise" rights, that means that you choose to purchase
the shares of common stock that the rights entitle you to purchase.
WHAT IS THE RIGHTS OFFERING?
J. Alexander's will distribute to you 1.0 right for each share of common
stock that you own at the close of business on May 20, 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. You may exercise any number of your rights, or you may choose not to
exercise any rights. For a discussion of the rights to be distributed in the
rights offering, see "The Rights Offering -- The Rights."
WHY IS J. ALEXANDER'S ENGAGING IN A RIGHTS OFFERING?
The rights offering is part of a financing plan that J. Alexander's expects
will raise up to approximately $8.1 million in equity for J. Alexander's. J.
Alexander's believes that raising equity capital to repay some of its
outstanding debt will benefit J. Alexander's by reducing its debt to equity
ratio and reducing its interest expense, which will improve earnings. J.
Alexander's 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.
HOW DID J. ALEXANDER'S ARRIVE AT THE $3.75 PER SHARE PRICE?
In determining the price per share for the sale to Solidus and for the
Rights Offering, J. Alexander's considered current and historical market prices
for the common stock and J. Alexander's need for capital. Solidus bought its
shares on March 22, 1999 at the same price per share. For a further explanation
of how J. Alexander's determined the per-share price, 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 5:00 p.m., Central Daylight Time, on June 21, 1999. The address for the
Subscription Agent is on page 17. See "The Rights Offering -- Exercise of
Rights" for detailed instructions on how to exercise your rights. Your
Subscription Certificate must be accompanied by proper payment for each share
that you wish to purchase. For a full explanation of how to pay for your shares,
see "The Rights Offering -- Method of Payment."
HOW LONG WILL THE RIGHTS OFFERING LAST?
If you do not exercise your rights before 5:00 p.m. Central Daylight Time,
on June 21, 1999, the rights will expire. J. Alexander's, in its discretion, may
decide to extend
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the rights offering for up to 10 days. See "The Rights Offering -- Expiration
Date" for a discussion of the expiration of the rights.
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. For further explanation of the no-revocation
policy, see "Rights Offering -- No Revocation."
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 J. Alexander's, and your voting rights
could be diluted. See "If You Do Not Exercise Your Rights, Your Ownership
Interest May Be Diluted" for a discussion of this consequence.
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" for an
explanation of the prohibition on the transfer of rights.
CAN I SELL MY COMMON STOCK AFTER THE RIGHTS OFFERING?
Yes. These shares of common stock may be sold freely after the rights
offering, subject to restrictions on affiliates of J. Alexander's.
Common stock sold in this rights offering will be registered under the
federal securities laws. For information regarding the stock you will receive
upon exercise of rights, see "The Rights Offering -- Basic Subscription Right."
WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF EXERCISING MY RIGHTS?
The rights offering is intended to be characterized as 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" for a detailed discussion of tax matters.
WHEN WILL I RECEIVE MY NEW SHARES?
If you purchase shares through the rights offering, J. Alexander's will
send you a certificate representing shares of common stock as soon as
practicable after the rights exercise period expires.
CAN J. ALEXANDER'S CANCEL THE RIGHTS OFFERING?
Yes. J. Alexander's can cancel the rights offering at any time on or before
June 21, 1999, for any reason.
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HOW MUCH MONEY WILL J. ALEXANDER'S RECEIVE FROM THE SALE TO SOLIDUS AND THE
RIGHTS OFFERING?
J. Alexander's received $4,073,498 for the sale of 1,086,266 shares of
common stock to Solidus on March 22, 1999. J. Alexander's gross proceeds from
the rights offering depend on the number of shares of common stock that are
purchased. If J. Alexander's sells all 1,089,067 shares offered by this
prospectus, then J. Alexander's will receive proceeds of $4,084,001 from the
rights offering. If no shareholders exercise rights, J. Alexander's will not
receive any proceeds from the rights offering.
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 J. Alexander's sells all
of the shares offered by this prospectus, then J. Alexander's will issue during
the rights offering 1,089,067 new shares of common stock. Based on this number,
J. Alexander's anticipates that there will be 7,620,668 shares of J. Alexander'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 17 above.
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
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