Exhibit 10.1
CREDIT AGREEMENT
dated as of
March 25, 2022
among
SPROUTS FARMERS MARKET, INC.,
as Holdings
SPROUTS FARMERS MARKETS HOLDINGS, LLC,
as the Borrower
The Lenders Party Hereto
and
BANK OF AMERICA, N.A.,
as Administrative Agent, Issuing Bank and Swingline Lender
J.P. MORGAN SECURITIES LLC,
as Sustainability Structuring Agent
BMO CAPITAL MARKETS CORP., JPMorgan Chase Bank, N.A. and
Wells Fargo SECURITIES, LLC,
as Syndication Agents
and
TRUIST BANK and PNC BANK, N.A.,
as Documentation Agents
BOFA SECURITIES, INC., BMO CAPITAL MARKETS CORP., JPMorgan Chase Bank, N.A.
and
Wells Fargo SECURITIES, LLC,
as Joint Bookrunners and Joint Lead Arrangers
TABLE OF CONTENTS
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ARTICLE I Definitions |
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SECTION 1.01. | Defined Terms | 1 |
SECTION 1.02. | Classification of Loans and Borrowings | 44 |
SECTION 1.03. | Terms Generally | 44 |
SECTION 1.04. | Accounting Terms; GAAP | 45 |
SECTION 1.05. | Currency Equivalents | 45 |
SECTION 1.06. | Status of Obligations | 45 |
SECTION 1.07. | Interest Rates | 46 |
SECTION 1.08. | Rounding | 46 |
SECTION 1.09. | Limited Condition Transactions | 46 |
SECTION 1.10. | Waiver of Break Funding Payments under the Existing Credit Agreement | 47 |
SECTION 1.11. | Pro Forma Adjustments | 47 |
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ARTICLE II The Credits |
| 47 |
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SECTION 2.01. | Commitments | 47 |
SECTION 2.02. | Loans and Borrowings | 48 |
SECTION 2.03. | Requests for Revolving Borrowings | 49 |
SECTION 2.04. | Intentionally Omitted | 49 |
SECTION 2.05. | Swingline Loans | 49 |
SECTION 2.06. | Letters of Credit | 51 |
SECTION 2.07. | Funding of Borrowings | 56 |
SECTION 2.08. | Interest Elections | 57 |
SECTION 2.09. | Termination and Reduction of Commitments | 58 |
SECTION 2.10. | Repayment of Loans; Evidence of Debt | 58 |
SECTION 2.11. | Prepayment of Loans | 59 |
SECTION 2.12. | Fees | 59 |
SECTION 2.13. | Interest | 60 |
SECTION 2.14. | Alternate Rates of Interest | 61 |
SECTION 2.15. | Increased Costs | 63 |
SECTION 2.16. | Break Funding Payments | 65 |
SECTION 2.17. | Taxes | 65 |
SECTION 2.18. | Payments Generally; Allocations of Proceeds; Pro Rata Treatment; Sharing of Set-offs | 68 |
SECTION 2.19. | Mitigation Obligations; Replacement of Lenders | 71 |
SECTION 2.20. | Expansion Option | 71 |
SECTION 2.21. | Defaulting Lenders | 73 |
SECTION 2.22. | Extension of Maturity Date | 75 |
SECTION 2.23. | Sustainability Adjustments | 77 |
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ARTICLE III Representations and Warranties |
| 79 |
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SECTION 3.01. | Organization; Powers | 79 |
SECTION 3.02. | Authorization | 79 |
SECTION 3.03. | Enforceability | 80 |
SECTION 3.04. | Governmental Approvals | 80 |
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SECTION 3.05. | Financial Statements | 80 |
SECTION 3.06. | No Material Adverse Effect | 81 |
SECTION 3.07. | Title to Properties; Possession Under Leases | 81 |
SECTION 3.08. | Subsidiaries | 81 |
SECTION 3.09. | Litigation; Compliance with Laws | 81 |
SECTION 3.10. | Federal Reserve Regulations | 82 |
SECTION 3.11. | Investment Company Act | 82 |
SECTION 3.12. | Use of Proceeds | 82 |
SECTION 3.13. | Tax Returns | 82 |
SECTION 3.14. | No Material Misstatements | 83 |
SECTION 3.15. | Employee Benefit Plans | 83 |
SECTION 3.16. | Environmental Matters | 83 |
SECTION 3.17. | Collateral Documents | 84 |
SECTION 3.18. | Location of Real Property and Leased Premises | 84 |
SECTION 3.19. | Solvency | 85 |
SECTION 3.20. | Labor Matters | 85 |
SECTION 3.21. | Intellectual Property; Licenses, Etc | 85 |
SECTION 3.22. | Senior Debt | 85 |
SECTION 3.23. | Insurance | 86 |
SECTION 3.24. | Anti-Corruption Laws and Sanctions | 86 |
SECTION 3.25. | EEA Financial Institutions | 86 |
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ARTICLE IV Conditions |
| 86 |
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SECTION 4.01. | Effective Date | 86 |
SECTION 4.02. | Each Credit Event | 87 |
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ARTICLE V Affirmative Covenants |
| 88 |
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SECTION 5.01. | Existence; Businesses and Properties | 88 |
SECTION 5.02. | Insurance | 88 |
SECTION 5.03. | Taxes | 89 |
SECTION 5.04. | Financial Statements, Reports, etc | 89 |
SECTION 5.05. | Litigation and Other Notices | 91 |
SECTION 5.06. | Compliance with Laws | 92 |
SECTION 5.07. | Maintaining Records; Access to Properties and Inspections | 92 |
SECTION 5.08. | Use of Proceeds | 92 |
SECTION 5.09. | Compliance with Environmental Laws | 92 |
SECTION 5.10. | Further Assurances; Additional Collateral | 92 |
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ARTICLE VI Negative Covenants |
| 95 |
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SECTION 6.01. | Indebtedness | 95 |
SECTION 6.02. | Liens | 99 |
SECTION 6.03. | Sale and Lease-Back Transactions | 102 |
SECTION 6.04. | Investments, Loans and Advances | 103 |
SECTION 6.05. | Mergers, Consolidations, Sales of Assets and Acquisitions | 107 |
SECTION 6.06. | Restricted Payments | 108 |
SECTION 6.07. | Transactions with Affiliates; Transfers of Material Intellectual Property to Unrestricted Subsidiaries | 110 |
SECTION 6.08. | Business of the Borrower and the Subsidiaries | 113 |
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SECTION 6.09. | Limitation on Payments and Modifications of Indebtedness; Modifications of Certificate of Incorporation, By-Laws and Certain Other Agreements; etc | 113 |
SECTION 6.10. | Changes in Fiscal Year | 115 |
SECTION 6.11. | Financial Performance Covenants | 116 |
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ARTICLE VII Holdings Covenant |
| 116 |
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ARTICLE VIII Events of Default |
| 116 |
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ARTICLE IX The Administrative Agent |
| 119 |
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SECTION 9.01. | Authorization and Action | 119 |
SECTION 9.02. | Administrative Agent’s Reliance, Indemnification, Etc | 121 |
SECTION 9.03. | Posting of Communications | 122 |
SECTION 9.04. | The Administrative Agent Individually | 124 |
SECTION 9.05. | Successor Administrative Agent | 124 |
SECTION 9.06. | Acknowledgements of Lenders and Issuing Banks | 125 |
SECTION 9.07. | Collateral Matters | 125 |
SECTION 9.08. | Credit Bidding | 126 |
SECTION 9.09. | Certain ERISA Matters | 127 |
SECTION 9.10. | Swap Obligations and Banking Services Obligations included in Secured Obligations | 129 |
SECTION 9.11. | Recovery of Erroneous Payments | 129 |
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ARTICLE X Miscellaneous |
| 129 |
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SECTION 10.01. | Notices | 129 |
SECTION 10.02. | Waivers; Enforcement; Amendments | 131 |
SECTION 10.03. | Expenses; Indemnity; Damage Waiver | 134 |
SECTION 10.04. | Successors and Assigns | 136 |
SECTION 10.05. | Survival | 140 |
SECTION 10.06. | Counterparts; Integration; Effectiveness; Electronic Execution; Electronic Records | 140 |
SECTION 10.07. | Severability | 141 |
SECTION 10.08. | Right of Setoff | 141 |
SECTION 10.09. | Governing Law; Jurisdiction; Consent to Service of Process | 142 |
SECTION 10.10. | WAIVER OF JURY TRIAL | 143 |
SECTION 10.11. | Headings | 143 |
SECTION 10.12. | Confidentiality | 143 |
SECTION 10.13. | USA PATRIOT Act | 144 |
SECTION 10.14. | Appointment for Perfection | 144 |
SECTION 10.15. | Releases of Subsidiary Loan Parties | 144 |
SECTION 10.16. | Interest Rate Limitation | 145 |
SECTION 10.17. | No Fiduciary Duty, etc | 145 |
SECTION 10.18. | Agency of the Borrower for the Loan Parties | 146 |
SECTION 10.19. | Payments Set Aside | 146 |
SECTION 10.20. | Acknowledgement Regarding Any Supported QFCs | 146 |
SECTION 10.21. | Acknowledgement and Consent to Bail-In of Affected Financial Institutions | 147 |
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SCHEDULES:
Schedule 1.01A -- Certain Subsidiaries
Schedule 1.01B -- Sustainability Table
Schedule 1.01C -- Adjusted EBITDA
Schedule 1.01D -- Immaterial Subsidiaries
Schedule 1.01E -- Subsidiary Loan Parties
Schedule 1.01F -- Unrestricted Subsidiaries
Schedule 2.01A -- Commitments
Schedule 2.01B -- Letter of Credit Commitments
Schedule 2.06 -- Existing Letters of Credit
Schedule 3.01 -- Organization and Good Standing
Schedule 3.04 -- Governmental Approvals
Schedule 3.08(a) -- Subsidiaries
Schedule 3.08(b) -- Subscriptions
Schedule 3.09(a) -- Litigation
Schedule 3.09(b) -- Compliance with Laws
Schedule 3.13 -- Taxes
Schedule 3.16 -- Environmental Matters
Schedule 3.20 -- Labor Matters
Schedule 3.21 -- Intellectual Property
Schedule 3.23 -- Insurance
Schedule 5.10(h) -- Certain Collateral Matters
Schedule 6.01 -- Indebtedness
Schedule 6.02(a) -- Liens
Schedule 6.04 -- Investments
Schedule 6.07 -- Transactions with Affiliates
EXHIBITS:
Exhibit A -- Form of Assignment and Assumption
Exhibit B -- Form of Intercompany Subordination Terms
Exhibit C -- Form of Increasing Lender Supplement
Exhibit D -- Form of Augmenting Lender Supplement
Exhibit E -- List of Closing Documents
Exhibit F-1 -- Form of U.S. Tax Certificate (Foreign Lenders That Are Not Partnerships)
Exhibit F-2 -- Form of U.S. Tax Certificate (Foreign Participants That Are Not Partnerships)
Exhibit F-3 -- Form of U.S. Tax Certificate (Foreign Participants That Are Partnerships)
Exhibit F-4 -- Form of U.S. Tax Certificate (Foreign Lenders That Are Partnerships)
Exhibit G-1 -- Form of Borrowing Request
Exhibit G-2 -- Form of Interest Election Request
Exhibit G-3 -- Form of Swingline Borrowing Request
Exhibit H -- Form of Note
Exhibit I -- Form of Notice of Loan Prepayment
Exhibit J -- Form of Secured Party Designation Notice
Exhibit K -- Form of Compliance Certificate
Exhibit L -- Form of Pricing Certificate
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CREDIT AGREEMENT
CREDIT AGREEMENT (this “Agreement”) dated as of March 25, 2022 among SPROUTS FARMERS MARKET, INC. (f/k/a Sprouts Farmers Markets, LLC), a Delaware corporation (“Holdings”), SPROUTS FARMERS MARKETS HOLDINGS, LLC, a Delaware limited liability company (the “Borrower”), the LENDERS from time to time party hereto and BANK OF AMERICA, N.A., as Administrative Agent, Issuing Bank and Swingline Lender.
WHEREAS, the Borrower has requested that the Lenders and the Issuing Banks make loans and other financial accommodations to the Borrower; and
WHEREAS, the Lenders and the Issuing Banks have agreed to make such loans and other financial accommodations to the Borrower on the terms and subject to the conditions herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto hereby agree as follows:
Definitions
1
Pricing Level | Total Net Leverage Ratio | Term SOFR Spread | ABR Spread | Commitment Fee Rate |
1 | < 1.25:1.00 | 1.00% | 0.00% | 0.100% |
2 | > 1.25:1.00 but < 2.25:1.00 | 1.25% | 0.25% | 0.125% |
3 | > 2.25:1.00 but < 3.25:1.00 | 1.50% | 0.50% | 0.175% |
4 | > 3.25:1.00 | 1.75% | 0.75% | 0.225% |
For purposes of the foregoing,
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“Change in Control” means the occurrence, after the date of this Agreement, of the following:
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minus, to the extent included in determining Consolidated Net Income of the Borrower and the Subsidiaries on a consolidated basis for such period, without duplication, (b) the sum of non-cash items for such period (but excluding any such items (A) in respect of which cash was received in a prior period or will be received in a future period or (B) which represent the reversal of any accrual of, or cash reserve for, anticipated cash charges that reduced EBITDA in any prior period);
provided that, notwithstanding the foregoing, for purposes of calculating “EBITDA” for the Borrower and the Subsidiaries on a consolidated basis of any period:
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“Market Capitalization” means an amount equal to (i) the total number of issued and outstanding shares of common Equity Interests of Holdings or such Parent Entity on the date of the declaration of a Restricted Payment multiplied by (ii) the arithmetic mean of the closing prices per share of such common Equity Interests on the principal securities exchange on which such common Equity Interests are traded for the 30 consecutive trading days immediately preceding the date of declaration of such Restricted Payment.
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“Term SOFR” means:
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provided that if the Term SOFR determined in accordance with either of the foregoing provisions (a) or (b) of this definition would otherwise be less than zero, the Term SOFR shall be deemed zero for purposes of this Agreement.
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The Credits
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If no election as to the Type of Revolving Borrowing is specified, then the requested Revolving Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Term SOFR Revolving Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s
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duration. Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.
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If the Borrower so requests, an Issuing Bank may issue a Letter of Credit that has automatic extension provisions (each, an “Auto-Extension Letter of Credit”); provided that any such Auto-Extension Letter of Credit shall permit such Issuing Bank to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “Non-Extension Notice Date”) in each such twelve-month period to be agreed upon by the Borrower and such Issuing Bank at the time such Letter of Credit is issued. Unless otherwise directed by such Issuing Bank, the Borrower shall not be required to make a specific request to such Issuing Bank for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) such Issuing Bank to permit the extension of such Letter of Credit at any time to an expiration date not later than the date permitted pursuant to Section 2.06(c)(i); provided that such Issuing Bank shall not permit any such extension if (A) such Issuing Bank would not be permitted at such time to issue such Letter of Credit in its extended form under the terms hereof (except that the expiration date may be extended to a date that is no more than one (1) year from the then-current expiration date) or (B) such Issuing Bank has received notice (which may be in writing or by telephone (if promptly confirmed in writing)) on or before the day that is seven (7) Business Days before the Non-Extension Notice Date from the Administrative Agent, any Lender or the Borrower that one or more of the applicable conditions set forth in Section 4.02 is not then satisfied, and in each such case directing such Issuing Bank not to permit such extension.
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If any such Interest Election Request requests a Term SOFR Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.
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Thereafter, (x) the obligation of the Lenders to make or maintain Term SOFR Loans, or to convert ABR Loans to Term SOFR Loans, shall be suspended (to the extent of the affected Term SOFR Loans or Interest Periods), and (y) in the event of a determination described in the preceding sentence with respect to the Term SOFR component of the Alternate Base Rate, the utilization of the Term SOFR component in determining the Alternate Base Rate shall be suspended, in each case until the Administrative Agent (or, in the case of a determination by the Required Lenders described in clause (ii) of this Section 2.14(b), until the Administrative Agent upon instruction of the Required Lenders) revokes such notice.
Upon receipt of such notice, (i) the Borrower may revoke any pending request for a Borrowing of, or conversion to, or continuation of Term SOFR Loans (to the extent of the affected Term SOFR Loans or Interest Periods) or, failing that, will be deemed to have converted such request into a request for a Borrowing of ABR Loans in the amount specified therein and (ii) any outstanding Term SOFR Loans shall be deemed to have been converted to ABR Loans immediately at the end of their respective applicable Interest Period.
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then, on a date and time determined by the Administrative Agent (any such date, the “Term SOFR Replacement Date”), which date shall be at the end of an Interest Period or on the relevant interest payment date, as applicable, for interest calculated and, solely with respect to clause (ii) above, no later than the Scheduled Unavailability Date, Term SOFR will be replaced hereunder and under any Loan Document with Daily Simple SOFR plus the SOFR Adjustment for any payment period for interest calculated that can be determined by the Administrative Agent, in each case, without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document (the “Successor Rate”).
If the Successor Rate is Daily Simple SOFR plus the SOFR Adjustment, all interest payments will be payable on a quarterly basis.
Notwithstanding anything to the contrary herein, (i) if the Administrative Agent determines that Daily Simple SOFR is not available on or prior to the Term SOFR Replacement Date, or (ii) if the events or circumstances of the type described in Section 2.14(c)(i) or (ii) have occurred with respect to the Successor Rate then in effect, then in each case, the Administrative Agent and the Borrower may amend this Agreement solely for the purpose of replacing Term SOFR or any then current Successor Rate in accordance with this Section 2.14 at the end of any Interest Period, relevant interest payment date or payment period for interest calculated, as applicable, with an alternative benchmark rate giving due consideration to any evolving or then existing convention for similar U.S. dollar denominated credit facilities syndicated and agented in the United States for such alternative benchmark. and, in each case, including any mathematical or other adjustments to such benchmark giving due consideration to any evolving or then existing convention for similar U.S. dollar denominated credit facilities syndicated and agented in the United States for such benchmark, which adjustment or method for calculating such adjustment shall be published on an information service as selected by the Administrative Agent from time to time in its reasonable discretion and may be periodically updated. For the avoidance of doubt, any such proposed rate and adjustments, shall constitute a “Successor Rate”. Any such amendment shall become effective at 5:00 p.m. on the fifth Business Day after the Administrative Agent shall have posted such proposed amendment to all Lenders and the Borrower unless, prior to such time, Lenders comprising the Required Lenders have delivered to the Administrative Agent written notice that such Required Lenders object to such amendment.
The Administrative Agent will promptly (in one or more notices) notify the Borrower and each Lender of the implementation of any Successor Rate.
Any Successor Rate shall be applied in a manner consistent with market practice; provided that to the extent such market practice is not administratively feasible for the Administrative Agent, such Successor Rate shall be applied in a manner as otherwise reasonably determined by the Administrative Agent.
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Notwithstanding anything else herein, if at any time any Successor Rate as so determined would otherwise be less than zero percent (0%), the Successor Rate will be deemed to be zero percent (0%) for the purposes of this Agreement and the other Loan Documents.
In connection with the implementation of a Successor Rate, the Administrative Agent will have the right to make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this Agreement; provided that, with respect to any such amendment effected, the Administrative Agent shall post each such amendment implementing such Conforming Changes to the Borrower and the Lenders reasonably promptly after such amendment becomes effective.
For purposes of this Section 2.14, those Lenders that either have not made, or do not have an obligation under this Agreement to make, the relevant Loans in Dollars shall be excluded from any determination of Required Lenders.
and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, continuing, converting into or maintaining any Loan or of maintaining its obligation to make any such Loan or to increase the cost to such Lender, such Issuing Bank or such other Recipient of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender, such Issuing Bank or such other Recipient hereunder, whether of principal, interest or otherwise, then the Borrower will pay to such Lender, such Issuing Bank or such other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender, such Issuing Bank or such other Recipient, as the case may be, for such additional costs incurred or reduction suffered as reasonably determined by the Administrative Agent, such Lender or such Issuing Bank (which determination shall be made in good faith (and not on an arbitrary or capricious basis) and generally consistent with similarly situated customers of the Administrative Agent, such Lender or such Issuing Bank, as applicable, under agreements having provisions similar to this Section 2.15, after consideration of such factors as the Administrative Agent, such Lender or such Issuing Bank, as applicable, then reasonably determines to be relevant).
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Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.
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If (i) a Bankruptcy Event or a Bail-In Action with respect to a Lender Parent shall occur following the date hereof and for so long as such event shall continue or (ii) the Swingline Lender or any Issuing Bank has a good faith belief that any Lender has defaulted in fulfilling its obligations under one or more other agreements in which such Lender commits to extend credit, the Swingline Lender shall not be required to fund any Swingline Loan and no Issuing Bank shall be required to issue, amend or increase any Letter of Credit, unless the Swingline Lender or such Issuing Bank, as the case may be, shall have entered into arrangements with the Borrower or such Lender, satisfactory to the Swingline Lender or such Issuing Bank, as the case may be, to defease any risk to it in respect of such Lender hereunder.
In the event that the Administrative Agent, the Borrower, the Swingline Lender and each Issuing Bank each agrees that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the Swingline Exposure and LC Exposure of the Lenders shall be readjusted to reflect the inclusion of such Lender’s Commitment and on such date such Lender shall purchase at par
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(together with any break funding costs incurred by such other Lenders as a result of such purchase) such of the Loans of the other Lenders (other than Swingline Loans) as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Applicable Percentage.
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Representations and Warranties
The Borrower (and, solely in the case of representations and warranties relating to Holdings, Holdings) represent and warrant to the Lenders that:
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Conditions
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The Administrative Agent shall notify the Borrower and the Lenders of the Effective Date, and such notice shall be conclusive and binding. Without limiting the generality of the provisions of Section 10.02(b), for purposes of determining compliance with the conditions specified in this Section 4.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or
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satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Effective Date specifying its objection thereto..
Each making of a Loan (and not, for the avoidance of doubt, the conversion of a Loan to another Type or the continuation of a Loan as the same Type) and each issuance, amendment, renewal or extension of a Letter of Credit shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in paragraphs (a) and (b) of this Section (subject to Section 1.09 if all or any portion of the proceeds of the Loans are or such Letter of Credit is being used in connection with a Limited Condition Transaction).
Affirmative Covenants
Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full and all Letters of Credit shall have expired or terminated, in each case, without any pending draw, and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees with the Lenders that the Borrower will, and will cause each of the Subsidiaries to (and, to the extent relating to Holdings, Holdings covenants and agrees with the Lenders that it will, solely in the case of each of the covenants set forth in Sections 5.01, 5.02, 5.03, 5.05, 5.06, 5.08, 5.09 and 5.10):
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Negative Covenants
Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder have been paid in full and all Letters of Credit have expired or terminated, in each case, without any pending draw, and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees with the Lenders that the Borrower will not, and will not permit any of the Subsidiaries to:
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For purposes of determining compliance with this Section 6.01, the amount of any Indebtedness denominated in any currency other than Dollars shall be calculated based on customary currency exchange rates in effect, in the case of such Indebtedness incurred (in respect of term Indebtedness) or committed (in respect of revolving Indebtedness) on or prior to the Effective Date, on the Effective Date and, in the case of such Indebtedness incurred (in respect of term Indebtedness) or committed (in respect of revolving Indebtedness) after the Effective Date, on the date that such Indebtedness was incurred (in respect of term Indebtedness) or committed (in respect of revolving Indebtedness); provided that if such Indebtedness is incurred to refinance other Indebtedness denominated in a currency other than Dollars (or in a different currency from the Indebtedness being refinanced), and such refinancing would cause the applicable Dollar- denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such Dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed (i) the outstanding or committed principal amount, as applicable, of such Indebtedness being refinanced plus (ii) the aggregate amount of fees, underwriting discounts, premiums (including tender premiums), defeasance costs and other costs and expenses incurred in connection with such refinancing. Further, for purposes of determining
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compliance with this Section 6.01, Indebtedness resulting solely from the accretion of accreted value, the payment of interest in the form of additional Indebtedness or the amortization of original issue discount, in each case with respect to other Indebtedness permitted under this Section 6.01, shall be permitted under this Section 6.01.
Further, for purposes of determining compliance with this Section 6.01, (A) Indebtedness need not be permitted solely by reference to one category of permitted Indebtedness described in Sections 6.01(a) through (gg) but may be permitted in part under any combination thereof and (B) in the event that an item of Indebtedness (or any portion thereof) meets the criteria of one or more of the categories of permitted Indebtedness described in Sections 6.01(a) through (gg), the Borrower shall, in its sole discretion, classify or reclassify, or later divide, classify or reclassify, such item of Indebtedness (or any portion thereof) in any manner that complies with this Section 6.01 and will only be required to include the amount and type of such item of Indebtedness (or any portion thereof) in one of the above clauses and such item of Indebtedness shall be treated as having been incurred or existing pursuant to only one of such clauses; provided that all Indebtedness outstanding on the Effective Date under this Agreement shall at all times be deemed to have been incurred pursuant to clause (b) of this Section 6.01.
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For purposes of determining compliance with this Section 6.02, (A) a Lien securing an item of Indebtedness need not be permitted solely by reference to one category of permitted Liens described in Sections 6.02(a) through (kk) but may be permitted in part under any combination thereof and (B) in the event that a Lien securing an item of Indebtedness (or any portion thereof) meets the criteria of one or more of the categories of permitted Liens described in Sections 6.02(a) through (kk), the Borrower shall, in its sole discretion, classify or reclassify, or later divide, classify or reclassify, such Lien securing such item of Indebtedness (or any portion thereof) in any manner that complies with this covenant and will only be required to include the amount and type of such Lien or such item of Indebtedness secured by such Lien in one of the above
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clauses and such Lien securing such item of Indebtedness will be treated as being incurred or existing pursuant to only one of such clauses. In addition, with respect to any Lien securing Indebtedness that was permitted to be secured at the time of incurrence thereof, additional Indebtedness resulting solely from the accrual of interest, accretion of accreted value, the payment of interest in the form of additional Indebtedness or in the form of common stock of the Borrower, or the amortization of original issue discount, the accretion of original issue discount or liquidation preference and increases in the amount of Indebtedness outstanding solely as a result of fluctuations in the exchange rate of currencies, in each case with respect to such permitted secured Indebtedness, shall also be permitted to be secured by such Lien.
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The amount of Investments that may be made at any time pursuant to Section 6.04(b) or 6.04(k) (such Sections, the “Related Sections”) may, at the election of the Borrower, be increased by the amount of Investments that could be made at such time under the other Related Section; provided that the amount of each such increase in respect of one Related Section shall be treated as having been used under the other Related Section.
Any Investment in any person other than the Borrower or a Subsidiary Loan Party that is otherwise permitted by this Section 6.04 may be made through intermediate Investments in Subsidiaries that are not Loan Parties and such intermediate Investments shall be disregarded for purposes of determining the outstanding amount of Investments pursuant to any clause set forth above. The amount of any Investment
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made other than in the form of cash or cash equivalents shall be the fair market value thereof (as determined by the Borrower in good faith) valued at the time of the making thereof, and without giving effect to any subsequent write-downs or write-offs thereof. In the event that an Investment (or any portion thereof) meets the criteria of one or more of the categories of the Investments permitted by this Section 6.04, the Borrower shall, in its sole discretion, classify or reclassify, or later divide, classify or reclassify, such Investment, loan or advance (or any portion thereof) in any manner that complies with this negative covenant restricting Investments, loans and advances.
Further, for purposes of determining compliance with this Section 6.04, (A) Investments need not be permitted solely by reference to one category of permitted Investments described in Sections 6.04(a) through (dd) but may be permitted in part under any combination thereof and (B) in the event that an Investment (or any portion thereof) meets the criteria of one or more of the categories of permitted Investments described in Sections 6.04(a) through (dd), the Borrower shall, in its sole discretion, classify or reclassify, or later divide, classify or reclassify, such Investment (or any portion thereof) in any manner that complies with this Section 6.04 and will only be required to include the amount and type of such Investment (or any portion thereof) in one of the above clauses and such Investment shall be treated as having been incurred or existing pursuant to only one of such clauses.
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Further, for purposes of determining compliance with this Section 6.06, (A) Restricted Payments need not be permitted solely by reference to one category of permitted Restricted Payments described in Sections 6.06(a) through (l) but may be permitted in part under any combination thereof and (B) in the event that an Restricted Payment (or any portion thereof) meets the criteria of one or more of the categories of permitted Restricted Payments described in Sections 6.06(a) through (l), the Borrower shall, in its sole discretion, classify or reclassify, or later divide, classify or reclassify, such Restricted Payment (or any portion thereof) in any manner that complies with this Section 6.06 and will only be required to include the amount and type
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of such Restricted Payment (or any portion thereof) in one of the above clauses and such Restricted Payment shall be treated as having been incurred or existing pursuant to only one of such clauses.
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Holdings Covenant
Holdings hereby covenants and agrees with each Lender that, until the Maturity Date, unless the Required Lenders shall otherwise consent in writing, (a) Holdings will not create, incur, assume or permit to exist any Lien on any of its property or assets (including stock or other securities of any person, including
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any Subsidiary) other than (i) Liens created under the Loan Documents, (ii) Liens on Equity Interests of the Borrower constituting Collateral securing Incremental Equivalent Debt and any Permitted Refinancing thereof (or successive Permitted Refinancings thereof) and (iii) Liens on any Equity Interests of the Borrower held by Holdings to the extent such Liens would not be prohibited by Section 6.02 if such Section were applicable to Holdings in the same manner applicable to the Borrower and (b) Holdings shall do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence; provided that so long as no Default has occurred and is continuing or would result therefrom, Holdings may merge with any other person (and if it is not the survivor of such merger, the survivor shall assume Holdings’ obligations, as applicable, under the Loan Documents).
Events of Default
If any of the following events (“Events of Default”) shall occur:
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then, and in every such event (other than an event with respect to the Borrower described in clause (h) or (i) of this Article), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrower, take any or all of the following actions, at the same or different times: (i) terminate the Commitments (and the Letter of Credit Commitments), and thereupon the Commitments (and the Letter of Credit Commitments) shall terminate immediately, (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other Secured Obligations of the Borrower accrued hereunder and under the other Loan Documents, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower, and (iii) require Cash Collateral for the LC Exposure in accordance with Section 2.06(j); and in case of any event with respect to the Borrower described in clause (h) or (i) of this Article, the Commitments (and the Letter of Credit Commitments) shall automatically terminate and the principal of the Loans then outstanding and Cash Collateral for the LC Exposure, together with accrued interest thereon and all fees and other Secured Obligations accrued hereunder and under the other Loan Documents, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower. Upon the occurrence and during the continuance of an Event of Default, the Administrative Agent may, and at the request of the Required Lenders shall, exercise any rights and remedies provided to the Administrative Agent under the Loan Documents or at law or equity, including all remedies provided under the UCC.
The Administrative Agent
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and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such proceeding is hereby authorized by each Lender, each Issuing Bank and each other Secured Party to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, the Issuing Banks or the other Secured Parties, to pay to the Administrative Agent any amount due to it, in its capacity as the Administrative Agent, under the Loan Documents (including under Section 9.03). Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or Issuing Bank any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or Issuing Bank or to authorize the Administrative Agent to vote in respect of the claim of any Lender or Issuing Bank in any such proceeding.
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“Communications” means, collectively, this Agreement, any Loan Document and any notice, demand, communication, information, document or other material provided by or on behalf of any Loan Party pursuant to any Loan Document or the transactions contemplated therein which is distributed by the Administrative Agent, any Lender or any Issuing Bank by means of electronic communications pursuant to this Section, including through an Approved Electronic Platform.
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Miscellaneous
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222 Broadway, 14th Floor, Mail Code: NY3-222-14-03 New York, NY 10038; Attn: Lisa Berishaj; Telephone: 646.556.2314; Facsimile: 704.683.2314; Email: lisa.berishaj@bofa.com;
Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Notices delivered through Approved Electronic Platforms, to the extent provided in paragraph (b) below, shall be effective as provided in said paragraph (b).
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For the purposes of this Section 10.04(b), the terms “Approved Fund” and “Ineligible Institution” have the following meanings:
“Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
“Ineligible Institution” means (a) a natural person, (b) a Defaulting Lender or its Lender Parent, (c) the Borrower, any of its Subsidiaries or any of its Affiliates, or (d) a company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural person or relative(s) thereof.
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EACH LENDER ACKNOWLEDGES THAT CONFIDENTIAL INFORMATION AS DEFINED IN THE IMMEDIATELY PRECEDING PARAGRAPH FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING THE BORROWER AND ITS RELATED PARTIES OR THEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.
ALL CONFIDENTIAL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE BORROWER OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NONPUBLIC INFORMATION ABOUT THE BORROWER, THE OTHER LOAN PARTIES AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES. ACCORDINGLY, EACH LENDER REPRESENTS TO THE BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE CONFIDENTIAL INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW.
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The Borrower further acknowledges and agrees, and acknowledges its Subsidiaries’ understanding, that each Credit Party, together with its Affiliates, is a full service securities or banking firm engaged in securities trading and brokerage activities as well as providing investment banking and other financial services. In the ordinary course of business, any Credit Party may provide investment banking and other financial services to, and/or acquire, hold or sell, for its own accounts and the accounts of customers, equity, debt and other securities and financial instruments (including bank loans and other obligations) of, the Borrower, its Subsidiaries and other companies with which the Borrower or any of its Subsidiaries may have commercial or other relationships. With respect to any securities and/or financial instruments so held by any Credit Party or any of its customers, all rights in respect of such securities and financial instruments, including any voting rights, will be exercised by the holder of the rights, in its sole discretion.
In addition, the Borrower acknowledges and agrees, and acknowledges its Subsidiaries’ understanding, that each Credit Party and its affiliates may be providing debt financing, equity capital or other services (including financial advisory services) to other companies in respect of which the Borrower or any of its Subsidiaries may have conflicting interests regarding the transactions described herein and otherwise. No Credit Party will use confidential information obtained from the Borrower by virtue of the transactions contemplated by the Loan Documents or its other relationships with the Borrower in connection with the performance by such Credit Party of services for other companies, and no Credit Party will furnish any such information to other companies. The Borrower also acknowledges that no Credit Party has any obligation to use in connection with the transactions contemplated by the Loan Documents, or to furnish to the Borrower or any of its Subsidiaries, confidential information obtained from other companies.
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[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to be duly executed and delivered by their respective authorized officers as of the day and year first above written.
BORROWER: SPROUTS FARMERS MARKETS HOLDINGS, LLC,
a Delaware limited liability company
By: /s/ Susannah Livingston
Name: Susannah Livingston
Title: Vice President, Treasury & Investor Relations
HOLDINGS: SPROUTS FARMERS MARKET, INC., a Delaware corporation
By: /s/ Susannah Livingston
Name: Susannah Livingston
Title: Vice President, Treasury & Investor Relations
[SIGNATURE PAGES FOLLOWS]
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ADMINISTRATIVE AGENT: BANK OF AMERICA, N.A., as Administrative Agent
By: /s/ Lisa Berishaj
Name: Lisa Berishaj
Title: Assistant Vice President
LENDERS: BANK OF AMERICA, N.A.,
as a Lender, Issuing Bank and Swingline Lender
By: /s/ Stephanie McClure
Name: Stephanie McClure
Title: Senior Vice President
JPMORGAN CHASE BANK, N.A.
By: /s/ James Kyle O’Donnell
Name: James Kyle O’Donnell
Title: Vice President
BMO HARRIS BANK N.A.
By: /s/ Corey Noland
Name: Corey Noland
Title: Director
Wells Fargo BANK, N.A.
By: /s/ Bina Barnes
Name: Bina Barnes
Title: Vice President
TRUIST BANK
By: /s/ Patricia J. Noneman
Name: Patricia J. Noneman
Title: Director
PNC BANK, N.A.
By: /s/ Mark Nichols
Name: Mark Nichols
Title: Senior Vice President
BANK OF THE WEST
By: /s/ Chris Stratton II
Name: Chris Stratton II
Title: Director
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