LOAN AGREEMENT

Exhibit 10.1

LOAN AGREEMENT

THIS AGREEMENT (“Loan Agreement”) is made and entered into this 22 ^nd day of May, 2009, by and between J. ALEXANDER’S CORPORATION, a Tennessee corporation (herein called “Borrower”) and PINNACLE NATIONAL BANK (herein called “Lender”).

W I T N E S S E T H:

WHEREAS, Borrower has applied to Lender for financing to acquire certain stock in Borrower from Solidus Company, LP, a Tennessee limited partnership, and for general corporate purposes, including working capital needs, and Lender has agreed to provided such financing, subject to the terms and conditions hereinafter contained.

NOW, THEREFORE, in consideration of the mutual covenants herein contained, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Lender and Borrower covenant and agree as follows:

I. THE LOANS

1.1             Loans.   Subject to the terms and provisions of this instrument, Lender agrees to make available to Borrower a term loan in the original principal amount of THREE MILLION AND NO/100 ($3,000,000.00) DOLLARS , solely for the purposes specifically enumerated herein and certain costs and expenses related thereto, by advancing said sum to Borrower on the date hereof pursuant to the provisions herein contained (the "Term Loan"). The Term Loan shall be evidenced by a certain Promissory Note in the original principal amount of $3,000,000.00, in form and content acceptable to Lender, which shall be executed by Borrower and payable to the order of Lender (together with any and all extensions, renewals and modifications thereof, the "Term Note").  In addition, subject to the terms and provisions of this instrument, Lender also agrees to make available to Borrower a revolving line of credit in the maximum principal amount of FIVE MILLION AND N0/100 ($5,000,000.00) DOLLARS , to be used for general corporate purposes, including working capital needs of Borrower and its subsidiaries, by advancing said sum to Borrower on a revolving basis from time to time at Borrower's request pursuant to the provisions herein contained (the "Line of Credit;" the Term Loan and the Line of Credit are sometimes hereinafter collectively referred to as the "Loans").  The Line of Credit shall be evidenced by a certain Revolving Promissory Note in the maximum principal amount of $5,000,000.00, in form and content acceptable to Lender, which shall be executed by Borrower and payable to the order of Lender (together with any and all extensions, renewals and modifications thereof, the "Revolving Note").  The Term Note and the Revolving Note are hereinafter collectively referred to as the “Notes.”

J. Alexander's Restaurants, Inc., J. Alexander's Restaurants of Kansas, Inc., J. Alexander's of Texas, Inc. and J. Alexander's of Kansas, LLC (herein collectively called “Guarantors”), shall unconditionally guarantee payment of the Loans, and all indebtedness now or hereafter owing to Lender by Borrower, and shall execute instruments in such form as may be reasonably required by Lender to accomplish such guaranties.

1.2             Term.   The term of the Loans shall be as set forth in the Notes and this Loan Agreement.

1.3             Interest.   The Loans shall bear interest at annual rates as set forth in the Notes. Interest accruing under the Notes shall be computed on the basis of a three hundred sixty (360) day year. After default or maturity, interest and penalties shall accrue as set forth in the Notes and this Loan Agreement. Notwithstanding anything herein to the contrary, in no event shall the interest rate exceed the maximum rate allowed by applicable law.  The Applicable Margin, as such term is used in the Notes, shall be determined in accordance with the following pricing grid (with the Adjusted Debt to EBITDAR Ratio calculated in accordance with Section 3.5(b) of this Loan Agreement):

Adjustments to the Applicable Margin shall be made quarterly, effective two (2) business days after delivery by Borrower to Lender of its financial covenant calculations for the applicable fiscal quarter; provided , however , the Applicable Margin shall be determined with reference to Tier IV until delivery by Borrower of financial covenant calculations for the fiscal quarter ending June 28, 2009.

1.4             Repayment Schedule.   Payment of all obligations arising under the Loans shall be made as set forth in the Notes and this Loan Agreement.

1.5             Commitment Fees; Non-Use Fee.   At closing hereunder, Borrower shall pay to Lender an upfront commitment fee equal to 0.50% of the maximum principal amount to the Loans, payable in full in cash at closing.  On each anniversary of the closing hereunder until the termination of the Line of Credit, Borrower shall pay to Lender an annual commitment fee equal to 0.50% of the maximum principal amount of the Line of Credit.  Borrower shall pay to Lender an unused fee equal to 0.25% per annum of the average, unused portion of the Line of Credit until the termination of the Line of Credit, payable quarterly, in arrears.

1.6             Place of Payments .  All payments of principal and interest shall be made at 211 Commerce Street, Suite 300, Nashville, Tennessee 37201, or at such other place, or places, as Lender may direct by notice in writing to Borrower from time to time.

1.7             Prepayment.  

(a)            Prepayment . Prepayment of principal due under the Loans made hereunder may be made at any time without premium or other prepayment charge.

(b)            Mandatory Prepayment . In addition to regularly scheduled payments of principal, Borrower will be required to make prepayments of the Loans to the extent the following exceed an aggregate amount of $100,000 in any calendar year (i) 100% of the net proceeds of any sale or disposition of any assets of Borrower or Guarantors (net of amounts reinvested in replacement assets within 180 days of receipt by Borrower or required to pay taxes or other costs applicable to the disposition), other than from the sale of inventory and gift cards in the ordinary course of business (provided, however, at any time that the Adjusted Debt to EBITDAR Ratio is less than 1.5 to 1.0, no prepayment under clause (i) is required); (ii) 50% of the net proceeds of any sales or issuances of equity (other than proceeds from the exercise of stock options) or debt securities of Borrower or Guarantors and/or any other indebtedness for borrowed money incurred by Borrower or Guarantors after the closing date (other than purchase money indebtedness); and (iii) 100% of the net proceeds of insurance proceeds and condemnation awards of the Borrower and Guarantors to the extent not reinvested in their business, and not required by contract to be paid to another vendor or landlord.  Such prepayments shall be applied first to installments of principal of the Term Loan on until the Term Loan is paid in full and second to the outstanding principal balance of the Line of Credit (without a permanent reduction in the maximum principal amount of the Line of Credit).

(c)            Excess Cash Flow Recapture .  An annual additional principal payment on the Term Loan is to be made by Borrower based on fiscal year-end Fixed Charge Coverage Ratio beginning with the fiscal year ending January 2, 2011.  The additional required principal payments shall be equal to 65% of the excess of the numerator of the Fixed Charge Coverage Ratio over 105% the denominator of the ratio.

(ii)           Borrower and Guarantors shall provide to Lender certified resolutions appropriately authorizing the transactions contemplated herein and designating an authorized officer or other agent of Borrower to execute all Loan Documents to which Borrower is a party.

(iii)           Lender shall have received financing statements in form acceptable to Lender to be filed with the Secretary of State of Tennessee, and such other locations as Lender may reasonably require, perfecting Bank’s security interest in the Collateral (as hereinafter defined), and any waivers or releases reasonably required by Lender.

(iv)           Lender shall have received a copy of certified articles of organization and certificates of existence of Borrower and Guarantors from the Tennessee Secretary of State and/or such other jurisdictions as Lender may reasonably require, together with copies of the bylaws of Borrower and each corporate Guarantor.

(v)           UCC-11 searches issued by the Secretary of State of Tennessee and such other jurisdictions as Lender may reasonably require.

(vi)           Borrower shall be in material compliance with all covenants, warranties and representations to which Borrower is obligated under this Loan Agreement.

(vii)           No Event of Default shall then be in existence hereunder.

(viii)                      Borrower shall have furnished to Lender a detailed list of all of the corporate entities owned by Borrower, with evidence of any indebtedness currently outstanding with Borrower and/or Guarantors.

(ix)           Borrower shall have furnished to Lender any and all releases regarding any outstanding indebtedness owed to any lender that is to be paid off, or that said lender(s) shall be required to release any lien on an encumbrance they may have on any and all of the assets of Borrower or Guarantors, except for Permitted Encumbrances (as hereinafter defined).

(x)           Within ten (10) days of the date hereof (and not as a condition to the initial funding of the Loans), Borrower and Guarantors shall furnish to Lender negative pledges on all real property owned by Borrower and Guarantors not currently pledged to GE Capital, in which Borrower and Guarantors agree not to pledge the properties therein described to any lender or any other entity without Lender’s written permission; provided , however , Borrower and Guarantors shall be permitted to sell up to two (2) restaurant properties during the term of the Loans, so long as the net proceeds are applied in accordance with Section 1.7(b) of this Agreement.  Additionally, Borrower and Guarantors shall provide to Lender an affirmative statement that no other entity shall be granted a negative pledge on said property without first obtaining Lender’s written permission, all of which shall be set forth in this Loan Agreement.

Interest shall accrue on sums advanced only from the date of disbursement of such sums.

1.9             Collateral.   As collateral for the Secured Obligations, as hereinafter defined, including the Loans, Borrower shall execute and deliver, or cause to be executed and delivered, the following prior to or at closing hereunder:

(a)           Lender, shall receive a first priority (except for Permitted Encumbrances) perfected security interest in substantially all existing and after-acquired personal property of Borrower and Guarantors, including all inventory, accounts, equipment, fixtures, chattel paper, patents, trademarks, copyrights, documents, instruments, deposit accounts (provided, deposit account control agreements shall not be required), cash and cash equivalents, investment property (excluding equity interests of non-guarantor subsidiaries), general intangibles, letter of credit rights, commercial tort claims, insurance policies and other personal property of the Borrower and Guarantors (the “Collateral”).  The Collateral will be free and clear of other liens, claims and encumbrances, except Permitted Encumbrances.  As used herein "Permitted Encumbrances" shall mean (i) liens in favor of Lender, (ii) liens securing purchase money indebtedness or capital lease obligations, and (iii) liens for taxes not yet delinquent or being contested in good faith.

(b)           Assignment and Security Agreement, assigning and granting a security interest to Lender in all items therein described and other rights and matters as provided therein arising from or with respect to the Collateral, together with Financing Statements to evidence and perfect such assignment and security interest, all of which shall be in form and substance reasonably satisfactory to Lender in all respects, and which shall be first priority encumbrances upon the property, rights and interests which are the subject of such Assignment and Security Agreement and Financing Statements (subject to Permitted Encumbrances).

(c)           Guaranties of the Guarantors, in form and substance reasonably satisfactory to Lender executed by the Guarantors.

The foregoing instruments and documents, and any other instruments and documents now or hereafter securing the Secured Obligations, are herein sometimes collectively called the “Security Instruments.” The Security Instruments, together with the Notes, this Loan Agreement, and any other instruments and documents now or hereafter evidencing, securing or regulating the Loans or Secured Obligations are herein sometimes collectively called the “Loan Documents.”

Without limiting any of the provisions thereof, the Security Instruments shall secure the following (the “Secured Obligations”):

(a)           The full  and  timely  payment  of  the  indebtedness evidenced by the Notes, together with interest thereon, and all extensions, modifications and renewals thereof.

(b)           The full and prompt performance of all the obligations of Borrower to Lender under the Loan Documents.

(c)           The full and prompt payment of all costs and expenses of whatever kind or nature incident to the collection of any indebtedness evidenced by the Notes, the enforcement or protection of the Security Instruments, or the exercise by Lender or any rights or remedies of Lender with respect to any indebtedness evidenced by the Notes, including but not limited to reasonable attorney fees incurred by Lender in connection therewith, all of which Borrower agrees to pay upon demand.

(d)           The full and prompt payment and performance of any and all other indebtedness and obligations of Borrower to Lender, whether direct, indirect, contingent or matured, and whether incurred as endorser, guarantor, maker, surety or otherwise, whether now existing or hereafter arising.

1.10             Further Documents and Actions .  Borrower, and any other necessary parties, shall execute such instruments as Lender may reasonably require from time to time (which shall be in such form and substance as Lender may reasonably require), and shall take such other actions as Lender may reasonably require from time to time, to assure the full realization by Lender of the security of all the Collateral.

II. REPRESENTATIONS AND WARRANTIES

Borrower represents and warra