| Item 1.01. | Entry into a Material Definitive Agreement. |
On April 20, 2020, J. Alexander’s Holdings, Inc. (the “Company”) entered into a Cooperation Agreement (the “Agreement”) with Ancora Advisors, LLC, Ancora Merlin Institutional LP, Ancora Merlin, LP, Ancora Catalyst Institutional LP, Ancora Catalyst LP, Ancora/ThelenSmall-Mid Cap Mutual Fund and Frederick DiSanto (collectively, the “Ancora Parties”).
Pursuant to the Agreement, the Board of Directors of the Company (the “Board”) agreed to appoint Carl J. Grassi as a Class II director of the Company with a term expiring at the 2020 annual meeting of shareholders (the “2020 Annual Meeting”). Additionally, except in the event the Ancora Parties cease to collectively beneficially own in the aggregate at least 3% of the Company’s then outstanding common stock, the Board has agreed to nominate Mr. Grassi for election as a Class II director of the Company at the 2020 Annual Meeting. In the event Mr. Grassi (or any replacement director appointed in accordance with the provisions of the Agreement) is unable (due to death or disability) to serve, resigns or is removed as a director during the term of the Agreement, the Ancora Parties have the ability to recommend a replacement director who meets the conditions set forth in the Agreement, so long as the Ancora Parties collectively beneficially own in the aggregate at least 3% of the Company’s then outstanding common stock.
Unless earlier terminated by mutual written agreement of the Company and the Ancora Parties, the Agreement terminates on the earlier of (i) the date that is 60 days prior to the date of the Company’s 2021 annual meeting of shareholders (the “2021 Annual Meeting”), and (ii) the day immediately following any public announcement by the Company that it has abandoned its previously announced strategic review process. In the event the Agreement expires on any date that is later than the tenth calendar day prior to the deadline for shareholder nominations of director candidates for the 2021 Annual Meeting, the Company has agreed to extend such nomination deadline for an additional ten calendar days following the expiration of the Agreement.
During the term of the Agreement, the Ancora Parties have agreed to vote all of their shares of the Company’s common stock in favor of recommendations of the Board with respect to (i) the election, removal and/or replacement of directors (a “Director Proposal”), (ii) the ratification of the appointment of the Company’s independent registered public accounting firm and (iii) any other proposal submitted to the Company’s shareholders at a meeting of the Company’s shareholders, in each case as such recommendation of the Board is set forth in the applicable definitive proxy statement filed in respect thereof; provided, however, that in the event both Institutional Shareholder Services Inc. (“ISS”) and Glass Lewis & Co., LLC (“Glass Lewis”) make a recommendation that differs from the recommendation of the Board with respect to any proposal submitted to the shareholders at any meeting of the Company’s shareholders (other than Director Proposals), the Ancora Parties are permitted to vote in accordance with the ISS and Glass Lewis recommendation; provided, further, that in the event Mr. Grassi (or any replacement director appointed in accordance with the provisions of the Agreement) has voted against any publicly announced proposal relating to a merger, acquisition, disposition of all or substantially all of the assets of the Company and its subsidiaries or other business combination involving the Company, in each case, that requires a vote of the Company’s shareholders, the Ancora Parties are entitled to vote in their sole discretion with respect to such proposal.
In addition, during the term of the Agreement, the Ancora Parties have agreed, subject to certain exceptions, to comply with certain customary standstill provisions, including, without limitation, the Ancora Parties’ ownership of the Company’s common stock being subject to a 9.9% cap.
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