UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) May 23, 2016

Sprouts Farmers Market, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware

 

001-36029

 

32-0331600

(State or other jurisdiction

of incorporation or organization)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

5455 E. High Street, Suite 111

Phoenix, Arizona 85054

(Address of principal executive offices and zip code)

(480) 814-8016

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

o

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(e)  On August 6, 2015, the Board of Directors of Sprouts Farmers Market, Inc. (the “Company”) appointed Amin N. Maredia as Chief Executive Officer and James L. Nielsen as President and Chief Operating Officer.  In connection with such appointments, the Compensation Committee of the Board of Directors approved a grant of stock options to purchase 1,200,000 and 500,000 shares of the Company’s common stock at an exercise price of $20.98 per share to Messrs. Maredia and Nielsen, respectively (the “August 2015 Options”) pursuant to the Company’s 2013 Incentive Plan (the “Plan”).  The vesting schedule of the August 2015 Options was over 12 quarters through June 30, 2018.  The August 2015 Options, taken together with other options granted under the Plan to Messrs. Maredia and Nielsen during 2015, exceeded the limit of 500,000 shares which may be granted pursuant to stock options and stock appreciation rights per calendar year to each participant under the Plan by 733,439 shares in the case of Mr. Maredia and 33,439 shares in the case of Mr. Nielsen (the “Excess Options”).  Accordingly, the Company has determined, and Messrs. Maredia and Nielsen have acknowledged, that the grants of the Excess Options were null and void.  

The Compensation Committee has reaffirmed, in its business judgment, that the August 2015 Options, including the Excess Options, were an integral part of Messrs. Maredia and Nielsen’s respective compensation packages awarded in connection with their appointments and were appropriate and aligned with the interests of the Company’s stockholders.  Therefore, in order to satisfy the original intent with respect to these individuals’ compensation, on May 23, 2016, the Compensation Committee granted to Messrs. Maredia and Nielsen under the Plan options to purchase 386,496 and 33,439 shares of the Company’s common stock at an exercise price of $24.48 per share, respectively, and 215,251 and 2,601 shares of restricted common stock, respectively.

The options and shares of restricted stock granted to Mr. Maredia shall vest on a quarterly basis over a seven quarter period, beginning on December 31, 2016, and the options and shares of restricted stock granted to Mr. Nielsen shall vest on June 30, 2018.  In addition, in order to better align the compensation packages of Messrs. Maredia and Nielsen with the original intent at the time of the August 2015 compensation decisions, the Compensation Committee amended the vesting schedule of the August 2015 Options (excluding, for the avoidance of doubt, the Excess Options) to reflect, as closely as practicable, the intended vesting terms of the August 2015 Options, so that as of May 23, 2016, (1) with respect to Mr. Maredia, 300,000 of the August 2015 Options shall be fully vested, 100,000 of the August 2015 Options vest on June 30, 2016, and the remaining 66,561 of the August 2015 Options vest on September 30, 2016; and (2) with respect to Mr. Nielsen, 125,000 of the August 2015 Options shall be fully vested, 41,666 of the August 2015 Options shall vest on the last day of each of the next eight quarters beginning with June 30, 2016, and the remaining unvested 8,233 August 2015 Options shall vest on June 30, 2018.

Each individual has entered into an agreement with the Company with respect to his options and restricted stock. The form of stock option agreement is filed as Exhibit 10.1 to this Current Report on Form 8-K, and the form of restricted share award agreement is filed as Exhibit 10.2 to this Current Report on Form 8-K.  

Item 9.01. Financial Statements and Exhibits.

(d)  Exhibits

 

Exhibit
Number

 

Description

 

10.1

 

Form of Stock Option Agreement

 

10.2

 

Form of Restricted Share Award Agreement

 

 

 

 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

SPROUTS FARMERS MARKET, INC.

 

 

 

Date: May 25, 2016

 

By:

 

/s/ Brandon F. Lombardi

 

 

Name:

 

Brandon F. Lombardi

 

 

Title:

 

Chief Legal Officer and Corporate Secretary

 

EXHIBIT INDEX

 

 

Exhibit
Number

 

Description

 

10.1

 

Form of Stock Option Agreement

 

10.2

 

Form of Restricted Share Award Agreement

 

 

Exhibit 10.1

SPROUTS FARMERS MARKET, INC.

Stock Option Agreement

Cover Sheet

Sprouts Farmers Market, Inc., a company organized under the laws of the State of Delaware (“Company”), hereby grants an option to acquire its Shares (the “Option”) to the individual named below.  The terms and conditions of the Option are set forth in this cover sheet (the “Cover Sheet”), in the attached Stock Option Agreement (the “Agreement”) and in the Sprouts Farmers Market, Inc. 2013 Incentive Plan (the “Plan”).  All capitalized terms used but not defined in this Cover Sheet and the attached Stock Option Agreement will have the meanings ascribed to such terms in the Plan.  

 

Granted to:

 

 

Grant Date:

 

May 23, 2016

Shares subject to the Option:

 

 

Exercise Price per Share:

 

$24.48

Expiration Date:

 

August 11, 2022

Vesting Schedule:

 

 

 

By signing this Cover Sheet, you agree to all of the terms and conditions described in this Cover Sheet, in the Agreement and in the Plan.  In addition, by signing this Cover Sheet, you hereby acknowledge and agree that with respect to the stock option granted to you on August 11, 2015, the number of Shares subject to such option could not, pursuant the Plan, have exceeded 466,561, and any action by the Company purporting to grant to you options for Shares in excess of that amount was void ab initio, and all documentation related to that grant is deemed to be modified such that such option shall relate to 466,561 Shares.

By signing this Cover Sheet, you and the Company further acknowledge and agree that the vesting schedule applicable to the stock option granted to you on August 11, 2015 to purchase 466,561 Shares is hereby amended so that                                       .  The agreement, including the applicable cover sheet, evidencing such option are hereby amended to reflect the terms set forth in this paragraph.

If you do not sign and return this Cover Sheet within 60 days of the Grant Date, the Company will have the right to rescind this award.

 

Signature:

 

 

Date:

 

 

 

SPROUTS FARMERS MARKET, INC.

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

SPROUTS FARMERS MARKET, INC.

2013 INCENTIVE PLAN

STOCK OPTION AGREEMENT

 

Nonstatutory Stock Option

 

This Option is not intended to be an incentive stock option under section 422 of the Internal Revenue Code and will be interpreted accordingly.

 

 

 

Vesting

 

Your right to exercise this Option vests at the times and in the manner as shown on the Cover Sheet.

 

This Option will cease vesting as of the date your employment with the Company and its Affiliates has terminated for any reason.

 

 

 

Termination

 

Should your employment with the Company terminate for any reason except pursuant to a Change of Control as described below, the portion of your Option that is not then vested will immediately terminate, and, except as provided below, the portion that is then vested will terminate at the close of business at the Company’s registered office on the 90th day after your termination date.  Your Option will expire in any event at the close of business at the Company’s registered office on the Expiration Date set forth on the Cover Sheet.

 

The grant of the Option does not confer upon you any right to continued employment with the Company or interfere with the Company’s right to terminate your employment at any time.

 

 

 

Death

 

If your employment terminates because of your death, your right to purchase vested Shares under this Option will expire at the close of business at the Company’s registered office on the date that is six months and one day after the date of death (or on the Expiration Date set forth on the Cover Sheet, if earlier).  During that period, your estate or heirs may exercise this Option.

 

 

 

Disability

 

If your employment terminates because of a disability which qualifies you for disability benefits under the Company’s long term disability plan, then your right to purchase vested Shares under this Option will expire at the close of business at the Company’s registered office on the date that is six months and one day after your termination date (or on the Expiration Date set forth on the Cover Sheet, if earlier).

 

 

 

Termination for Cause; Specified Conduct

 

If your employment is terminated for Cause (as defined in Exhibit A) or following any termination of your employment you engage in Specified Conduct (as defined in Exhibit A), the Option, whether or not vested, will immediately terminate.

 

 

 

-2-

 

 

Change in Control

 

Notwithstanding the foregoing:

 

(A) if there occurs a Change in Control  (as defined in Exhibit A), and the Option, to the extent then outstanding,  does not continue or is not assumed by an acquiror on a substantially equivalent basis, then the Option will become vested and exercisable immediately prior to the Change in Control; and

 

(B) if there occurs a Change in Control, and the Option continues or is assumed by an acquiror on a substantially equivalent basis, and

your employment is terminated by the Company or an acquiror without Cause or by you for Good Reason (as defined in Exhibit A), in each case within 24 months following the Change in Control, then the Option will become vested and exercisable immediately upon such termination.

 

 

 

Restrictions on Exercise

 

The Company will not permit you to exercise this Option if the issuance of Shares at that time would violate any law, regulation or Company policy.

 

 

 

 

Notice of Exercise

 

When you wish to exercise this Option, you must complete and execute such documents, if any, and complete such processes, that the Company or a securities broker approved by the Company may require to accomplish the Option exercise (“Notice of Exercise”).

 

If someone else wants to exercise this Option after your death, that person must prove to the Company’s satisfaction that he or she is entitled to do so.

 

 

 


Form of Payment

 

When you submit your Notice of Exercise, you must include payment of the exercise price for the Shares you are purchasing, along with applicable withholding taxes.  Payment may be made in one (or a combination) of the following forms:

 

 

 

 

 

· Your personal check, a cashier’s check or a money order.

 

· If permitted by the Company, irrevocable directions to a securities broker approved by the Company to sell your Shares subject to the Option and to deliver all or a portion of the sale proceeds to the Company in payment of the exercise price and applicable withholding taxes.  (The balance of the sale proceeds, if any, will be delivered to you.)  The directions must be given by signing forms, if any, provided by the Company or the securities broker.

 

 

 

Taxes

 

When you exercise any portion of the Option, the Company will withhold taxes as required by applicable law, and your ability to exercise any portion of the Option is conditional upon your making arrangements satisfactory to the Company, in accordance with the methods set forth above, to enable it to satisfy its withholding obligation.

 

 

 

Restrictions on Resale

 

By signing this Agreement, you agree not to sell any Shares received upon exercise of the Option at a time when applicable laws, regulations or Company policies prohibit a sale.  

 

 

 

-3-

 

 

Transfer of Option

 

Prior to your death, only you may exercise this Option.  You cannot transfer or assign this Option.  For instance, you may not sell this Option or use it as security for a loan.  If you attempt to do any of these things, this Option will immediately become invalid.  You may, however, dispose of this Option in your will.

 

Regardless of any marital property settlement agreement, the Company or a securities broker, as applicable, is not obligated to honor a Notice of Exercise from your former spouse, nor is the Company or the securities broker obligated to recognize your former

spouse’s interest in your Option in any other way.

 

 

 

Stockholder Rights

 

You, or your estate or heirs, have no rights as a stockholder of the Company with respect to the Shares subject to the Option until a proper Notice of Exercise has been submitted and the exercise price and withholding taxes have been tendered.  No adjustments are made for dividends or other rights if the applicable record date occurs before a proper Notice of Exercise has been submitted and the exercise price has been tendered, except as described in the Plan.

 

 

 

Applicable Law

 

This Agreement will be interpreted and enforced under the laws of the State of Delaware.

 

 

 


The Plan and Other Agreements

 

The text of the Plan and any amendments thereto are incorporated in this Agreement by reference.

 

This Agreement, the Cover Sheet and the Plan constitute the entire understanding between you and the Company regarding this Option.  Any prior agreements, commitments or negotiations concerning this Option are superseded.

 

By signing the Cover Sheet of this Agreement, you agree to all of the terms and conditions described in the Cover Sheet, above and in the Plan and evidence your acceptance of the powers of the Committee of the Board of Directors of the Company that administers the Plan.

-4-

 

 

Exhibit A

Certain Definitions

“Affiliate” means, when used with reference to any Person, any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with, or owns greater than fifty percent (50%) of the voting power in the specified Person (the term “control” for this purpose shall mean the ability, whether by the ownership of shares or other equity interest, by contract or otherwise, to elect a majority of the directors of a corporation, independently to select the managing partner of a partnership or the managing member or the majority of the managers, as applicable, of a limited liability company, or otherwise to have the power independently to remove and then select a majority of those Persons exercising governing authority over an entity, and control shall be conclusively presumed in the case of the direct or indirect ownership of fifty percent (50%) or more of the voting equity interests in the specified Person).

“Cause” shall have the meaning ascribed thereto in any effective employment agreement between you and the Company or its Affiliates, or if no employment agreement is in effect that contains a definition of cause, then Cause shall mean that you have (i) committed a felony or a crime involving moral turpitude, (ii) committed any act of gross negligence or fraud, (iii) failed, refused or neglected to substantially perform your duties (other than by reason of a physical or mental impairment) or to implement the reasonable directives of the Company (which, if deemed curable in the discretion of the Committee, is not cured within 30 days after notice thereof to you by the Committee), (iv) materially violated any policy of the Company (which, if deemed curable in the discretion of the Committee, is not cured within 30 days after notice thereof to you by the Committee), or (v) engaged in conduct that is materially injurious to the Company, monetarily or otherwise.

“Change in Control” shall mean:

 

(i)

any event occurs the result of which is that any “person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act, becomes the “beneficial owner”, as defined in Rules l3d-3 and l3d-5 under the Exchange Act directly or indirectly, of more than  50% of the voting stock of the Company or any successor company thereto, including, without limitation, through a merger or consolidation or purchase of voting stock of the Company; provided that the transfer of 100% of the voting stock of the Company to a Person that has an ownership structure identical to that of the Company prior to such transfer, such that the Company becomes a wholly owned subsidiary of such Person, shall not be treated as a Change in Control;

 

(ii)

during any period of two (2) consecutive years, individuals who at the beginning of such period constituted the Board, together with any new directors whose election by such Board or whose nomination for election by the stockholders of the Company was approved by a vote of a majority of the directors of the Company then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board then in office;

 

(iii)

the sale, lease, transfer, conveyance or other disposition, in one or a series of related transactions other than a merger or consolidation, of all or substantially all of the assets of the Company and its consolidated subsidiaries taken as a whole to any Person or group of related Persons; or

 

(iv)

the adoption of a plan relating to the liquidation or dissolution of the Company.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

-5-

 

 

“Good Reason” shall have the meaning ascribed thereto in any effective employment agreement between you and the Company or its Affiliates, or if no employment agreement is in effect that contains a definition of good reason, then Good Reason shall mean that the Company or its Affiliates (i) has required that you relocate to a principal place of employment that is more than 50 miles from your then-current principal place of employment; (ii) has reduced, or has notified you of its intent to reduce, your base salary by more than 10%, unless such reduction is agreed to by you or is involuntarily imposed upon all other employees of the Company who are similarly situated to you; or (iii) without your consent, materially diminishes your authority or responsibilities; provided, however, that in the event you believe any of the forgoing conditions exist that constitute Good Reason, prior to Good Reason being established, you will first provide notice to the Company and give the Company a reasonable opportunity (not to exceed thirty (30) calendar days) to cure the condition you contend establishes Good Reason.

“Person” means and includes any individual, partnership, joint venture, corporation, limited liability company, estate, trust, or other entity.

“Specified Conduct” means, if you are party to an employment agreement that contains post-termination restrictive covenants, a breach of any such covenant, or if you are not party to an employment agreement that contains post-termination restrictive covenants, your (i) unauthorized disclosure of confidential information relating to the Company or its Affiliates, (ii) engaging, directly or indirectly, as an employee, partner, consultant, director, stockholder (other than as a passive investor in not more than 5% of the shares of any publicly traded class of securities of any business), owner, or agent in any business that is competitive with the businesses conducted by the Company and its Affiliates at the time of termination of your employment, (iii) soliciting or inducing, directly or indirectly, any former, present or prospective customer or client of the Company or its Affiliates to purchase any services or products offered by the Company or its Affiliates from any Person other than the Company or its Affiliates, or (iv) hiring, directly or indirectly, any individual who was an employee of the Company or its Affiliates within the six month period prior to termination of your employment, or soliciting or inducing, directly or indirectly, any such individual to terminate his or her employment with the Company or its Affiliates.

 

-6-

 

Exhibit 10.2

SPROUTS FARMERS MARKET, INC.

RESTRICTED Share award Agreement

Cover Sheet

Sprouts Farmers Market, Inc., a company incorporated under the laws of the State of Delaware (“Company”), hereby grants an award of restricted shares (“Restricted Shares”) to the individual named below.  The terms and conditions of the Restricted Shares are set forth in this cover sheet (“Cover Sheet”), in the attached Restricted Share Award Agreement (the “Agreement”) and in the Sprouts Farmers Market, Inc. 2013 Incentive Plan (the “Plan”).  All capitalized terms used but not defined in this Cover Sheet and the Agreement will have the meanings ascribed to such terms in the Plan.  

 

Granted to:

 

 

Grant Date:

 

May 23, 2016

Number of Restricted Shares

 

 

Issuance of Shares:

 

Upon issuance, the Restricted Shares will not be vested, and until vesting occurs, the Restricted Shares shall be subject to forfeiture and restrictions on transfer as set forth in the Agreement.

Vesting Schedule:

 

 

 

By signing this Cover Sheet, you agree to all of the terms and conditions described in this Cover Sheet, in the Agreement and in the Plan.  

If you do not sign and return this Cover Sheet and the attached Irrevocable Standing Order to Sell Shares within 60 days of the Grant Date, the Company will have the right to rescind this award.

 

Signature:

 

 

Date:

 

 

 

SPROUTS FARMERS MARKET, INC.

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

SPROUTS FARMERS MARKET, INC.

2013 INCENTIVE PLAN

RESTRICTED Share AWARD AGREEMENT

 

Right to Shares

 

The Restricted Shares are subject to the vesting conditions described below.  Upon vesting, all restrictions on the Restricted Shares shall lapse.  

 

 

 

Vesting

 

The Restricted Shares issued to you will vest in accordance with the schedule set forth in the Cover Sheet.

 

 

 

 

Termination; Specified Conduct

 

Should your employment with the Company and its Affiliates terminate for any reason or if you engage in Specified Conduct (as defined in Exhibit A) prior to a vesting date, you shall forfeit all rights to any Restricted Shares which have not vested as of such vesting date. Such Restricted Shares shall be returned to the Company automatically and for no consideration.

 

 

 

Change in Control

 

Notwithstanding the foregoing:

 

(A) if there occurs a Change in Control (as defined in Exhibit A), and this award does not continue or is not assumed by an acquiror, then any Restricted Shares which have not vested as of the Change in Control will become fully vested immediately prior to the Change in Control, and all applicable restrictions shall lapse;

 

(B) if there occurs a Change in Control, and this award continues or is assumed by an acquiror, and your employment is terminated by the Company or an acquiror without Cause (as defined in Exhibit A) or by you for Good Reason (as defined in Exhibit A), in each case within 24 months following the Change in Control, then any Restricted Shares at the time of such termination shall become fully vested and all restrictions shall lapse.

 

 

 

 

 

 

Taxes

 

Unless you make an election under Section 83(b) of the Code within 30 days of the Grant Date, the value of the Restricted Shares as and when they vest will be treated as wages subject to payroll withholding.  The Company will satisfy the withholding obligation through a “sell to cover” whereby you irrevocably direct a securities broker approved by the Company to sell a portion of your Restricted Shares that are then scheduled to vest and to deliver the sale proceeds to the Company in payment of the applicable withholding taxes. You agree to provide these directions by signing and returning the Irrevocable Standing Order to Sell Shares attached hereto, along with a signed copy of the Cover Sheet, within 60 days of the Grant Date.

 

The number of Shares that the broker will sell will be based on an estimate made by the broker of the Shares required to be sold to satisfy the withholding taxes. You agree that the proceeds received from the sale of Shares will be used to satisfy the withholding taxes and, accordingly, you authorize the broker to pay such proceeds to the Company for such purpose. To the extent that the proceeds obtained by such sale exceed the amount necessary to satisfy the withholding taxes, such excess proceeds shall be deposited into your brokerage account and in the event of a shortfall, additional Shares

may be sold and/or cash withholding may be required from you. Any remaining Shares shall be deposited into your brokerage account.

 

If there is not a market in the Shares or the Company determines in its sole discretion that the sell to cover procedure is not advisable or sufficient, the Company will have the right to make other arrangements to satisfy the withholding taxes due upon the vesting of the Shares with respect to the Restricted Shares, including, but not limited to, the right to deduct amounts from salary or payments of any kind otherwise due to the Participant or withhold in Shares (by transferring Shares back to the Company).  If such other arrangements are made, your Irrevocable Standing Order to Sell Shares will be voided.

 

You represent to the Company that, as of the date you sign the Irrevocable Standing Order to Sell Shares, you are not aware of any material nonpublic information about the Company or the Shares. You and the Company have structured this Agreement to constitute a “binding contract” relating to the sale of Shares, consistent with the affirmative defense to liability under Section 10(b) of the Exchange Act under Rule 10b5-1(c) issued under such Act.

 

 

 

Restrictions on Resale

 

By signing this Agreement, you agree not to sell any Shares issued hereunder at a time when applicable laws, regulations or Company policies prohibit a sale.  

 

In addition, until the Restricted Shares have vested pursuant to the schedule set forth in the Cover Sheet, they may not be sold, transferred, assigned, pledged, margined, or otherwise encumbered or disposed of (except for transfers and forfeitures to the Company).

 

The Company’s obligation to issue the Restricted Shares shall be subject to applicable laws, rules and regulations and also to such approvals by governmental agencies as may be deemed appropriate to comply with relevant securities laws and regulations.

 

You shall deliver to the Chief Legal Officer of the Company, at the time of execution of this Agreement and/or at such other time or times as the Chief Legal Officer may request, one or more executed stock powers, authorizing the transfer of the Restricted Shares to the Company upon forfeiture, and you shall take such other steps or perform such other actions as may be requested by the Chief Legal Officer to effect the transfer of any forfeited Restricted Shares.

 

 

 

 

Transfer of Restricted Shares

 

Prior to the applicable vesting date, you cannot transfer or assign the Restricted Shares.  For instance, you may not use the Restricted Shares as security for a loan.  If you attempt to transfer or assign the Restricted Shares, your award will immediately become invalid.  

 

Regardless of any marital property settlement agreement, the Company or a securities broker, as applicable, is not obligated to recognize your former spouse’s interest in your right to Restricted Shares in any way.

 

 

 

 

 

Stockholder Rights; Dividends

 

You shall have the rights as a stockholder in respect of the Restricted Shares, subject to the restrictions set forth in this Agreement (including, without limitation, transfer restrictions and forfeiture during

the vesting period); provided that, you shall not have any rights to dividends on the Restricted Shares until the date on which the Restricted Shares vest; provided further that, on such date, you will receive all dividends that were paid on such Restricted Shares during the period of restriction.

 

 

 

Applicable Law

 

This Agreement will be interpreted and enforced under the laws of the State of Delaware.

 

 

 


The Plan and Other Agreements

 

The text of the Plan and any amendments thereto are incorporated in this Agreement by reference.

 

This Agreement, the Cover Sheet and the Plan constitute the entire understanding between you and the Company regarding the Restricted Shares.  Any prior agreements, commitments or negotiations concerning the Restricted Shares are superseded.

 

By signing the Cover Sheet of this Agreement, you agree to all of the terms and conditions described above and in the Plan and evidence your acceptance of the powers of the Committee of the Board of Directors of the Company that administers the Plan.  

 

 

Exhibit A

Certain Definitions

“Affiliate” means, when used with reference to any Person, any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with, or owns greater than fifty percent (50%) of the voting power in, the specified Person (the term “control” for this purpose shall mean the ability, whether by the ownership of shares or other equity interest, by contract or otherwise, to elect a majority of the directors of a corporation, independently to select the managing partner of a partnership or the managing member or the majority of the managers, as applicable, of a limited liability company, or otherwise to have the power independently to remove and then select a majority of those Persons exercising governing authority over an entity, and control shall be conclusively presumed in the case of the direct or indirect ownership of fifty percent (50%) or more of the voting equity interests in the specified Person).

“Cause” shall have the meaning ascribed thereto in any effective employment agreement between you and the Company or its Affiliates, or if no employment agreement is in effect that contains a definition of cause, then Cause shall mean that you have (i) committed a felony or a crime involving moral turpitude, (ii) committed any act of gross negligence or fraud, (iii) failed, refused or neglected to substantially perform your duties (other than by reason of a physical or mental impairment) or to implement the reasonable directives of the Company (which, if deemed curable in the discretion of the Committee, is not cured within 30 days after notice thereof to you by the Committee), (iv) materially violated any policy of the Company (which, if deemed curable in the discretion of the Committee, is not cured within 30 days after notice thereof to you by the Committee), or (v) engaged in conduct that is materially injurious to the Company, monetarily or otherwise.

“Change in Control” shall mean:

 

(i)

any event occurs the result of which is that any “person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act, becomes the “beneficial owner”, as defined in Rules l3d-3 and l3d-5 under the Exchange Act directly or indirectly, of more than  50% of the voting stock of the Company or any successor company thereto, including, without limitation, through a merger or consolidation or purchase of voting stock of the Company; provided that the transfer of 100% of the voting stock of the Company to a Person that has an ownership structure identical to that of the Company prior to such transfer, such that the Company becomes a wholly owned subsidiary of such Person, shall not be treated as a Change in Control;

 

(ii)

during any period of two (2) consecutive years, individuals who at the beginning of such period constituted the Board, together with any new directors whose election by such Board or whose nomination for election by the stockholders of the Company was approved by a vote of a majority of the directors of the Company then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board then in office;

 

(iii)

the sale, lease, transfer, conveyance or other disposition, in one or a series of related transactions other than a merger or consolidation, of all or substantially all of the assets of the Company and its consolidated subsidiaries taken as a whole to any Person or group of related Persons; or

 

(iv)

the adoption of a plan relating to the liquidation or dissolution of the Company.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

 

“Good Reason” shall have the meaning ascribed thereto in any effective employment agreement between you and the Company or its Affiliates, or if no employment agreement is in effect that contains a definition of good reason, then Good Reason shall mean that the Company or its Affiliates (i) has required that you relocate to a principal place of employment that is more than 50 miles from your then-current principal place of employment; (ii) has reduced, or has notified you of its intent to reduce, your base salary by more than 10%, unless such reduction is agreed to by you or is involuntarily imposed upon all other employees of the Company who are similarly situated to you; or (iii) without your consent, materially diminishes your authority or responsibilities; provided, however , that in the event you believe any of the forgoing conditions exist that constitute Good Reason, prior to Good Reason being established, you will first provide notice to the Company and give the Company a reasonable opportunity (not to exceed thirty (30) calendar days) to cure the condition you contend establishes Good Reason.

“Person” means and includes any individual, partnership, joint venture, corporation, limited liability company, estate, trust, or other entity.

“Specified Conduct” means, if you are party to an employment agreement that contains post-termination restrictive covenants, a breach of any such covenant, or if you are not party to an employment agreement that contains post-termination restrictive covenants, your (i) unauthorized disclosure of confidential information relating to the Company or its Affiliates, (ii) engaging, directly or indirectly, as an employee, partner, consultant, director, stockholder (other than as a passive investor in not more than 5% of the shares of any publicly traded class of securities of any business), owner, or agent in any business that is competitive with the businesses conducted by the Company and its Affiliates at the time of termination of your employment, (iii) soliciting or inducing, directly or indirectly, any former, present or prospective customer or client of the Company or its Affiliates to purchase any services or products offered by the Company or its Affiliates from any Person other than the Company or its Affiliates, or (iv) hiring, directly or indirectly, any individual who was an employee of the Company or its Affiliates within the six month period prior to termination of your employment, or soliciting or inducing, directly or indirectly, any such individual to terminate his or her employment with the Company or its Affiliates.

 

 

IRREVOCABLE STANDING ORDER TO SELL SHARES

I have been granted an award in respect of Restricted Shares (“Restricted Shares”) by Sprouts Farmers Market, Inc. (the “Company”), which is evidenced by a restricted share award agreement between me and the Company (the “Agreement,” copy attached).  Provided that I remain employed by the Company on the applicable vesting date, the shares vest according to the provisions of the Agreement.

I understand that on the Grant Date (as defined in the Agreement), the Restricted Shares will be deposited into my account at E*Trade (the “Broker”) and that on the applicable vesting date, I will recognize taxable ordinary income as a result.  Pursuant to the terms of the Agreement and as a condition of my receipt of the Shares, I understand and agree that, on the vesting date, I must sell a number of shares sufficient to satisfy all withholding taxes applicable to that ordinary income. Therefore, I hereby direct the Broker to sell, at the market price and on the vesting date (or the first business day thereafter if the vesting date should fall on a day when the market is closed), the number of Shares that the Company informs the Broker is sufficient to satisfy the applicable withholding taxes, which shall be calculated based on the closing price of the Company’s ordinary shares on the last trading day before the vesting date. I understand that the Broker will remit the proceeds to the Company for payment of the withholding taxes.

I understand and agree that by signing below, I am making an Irrevocable Standing Order to Sell Shares which will remain in effect until the vesting date. I also agree that this Irrevocable Standing Order to Sell Shares is in addition to and subject to the terms and conditions of any existing Account Agreement that I have with the Broker.

 

 

 

Signature

 

 

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