Entry Into a Material Definitive Agreement.
On April 2, 2021, Vital Farms, Inc. and its wholly owned subsidiaries (collectively, the Company or the Borrowers) entered
into the Ninth Amendment to Revolving Credit, Term Loan and Security Agreement (the Ninth Amendment and such agreement, as amended by the Ninth Amendment, the Load Agreement) with PNC Bank, National Association (as Lender and
as Agent) (the Lender), which modified certain of the terms applicable to the Companys credit facility provided thereunder (as modified by the Ninth Amendment, the Credit Facility).
The Credit Facility provides for an increased revolving line of credit of up to $20.0 million of borrowing availability, subject to a borrowing base that
applies if the Company is more than 65% drawn on the Credit Facility. Pursuant to the Ninth Amendment, the Credit Facility no longer provides for a term loan or equipment loan. The Ninth Amendment also extended the maturity date of the Credit
Facility to April 2024. As of the close of business on April 1, 2021, no amounts were outstanding under the Credit Agreement, and no amounts were borrowed in connection with the Ninth Amendment.
Interest on borrowings under the Credit Facility is repayable monthly in arrears and accrues at a rate, at the Companys election at the time of
borrowing, equal to (i) the LIBOR Rate (as defined in the Loan Agreement) plus 2.00% or (ii) 1.00% plus the highest of (x) the Base Rate (as defined in the Loan Agreement), (y) the sum of the Federal Funds Open Rate (as defined in the Loan
Agreement) plus 50 basis points and (z) the Daily LIBOR Rate (as defined in the Loan Agreement) plus 100 basis points. The Ninth Amendment also provides for the selection of an alternative benchmark rate in the event of the discontinuance
of LIBOR or any subsequent benchmark rate.
The Credit Facility is secured by substantially all of the Companys and its subsidiaries assets.
The Ninth Amendment also modified certain affirmative and negative covenants applicable to the Borrowers, with the effect of increasing the ability of the Borrowers to sell, lease, transfer or otherwise dispose of properties or assets in the
ordinary course of business, to make acquisitions subject to satisfaction of certain other specified conditions, to make capital expenditures and to engage in certain other transactions without requiring the consent of the Lender. Additionally, the
affirmative financial covenants applicable to the Borrowers will apply only in the event that the Borrowers fail to maintain at least $20.0 million in a certain institutional asset management account maintained with the Lender.
In connection with the Ninth Amendment, the Borrowers also entered into a Second Amended and Restated Revolving Credit Note (the Note), which
amended and restated the Amended and Restated Revolving Credit Note, dated May 11, 2020.
The foregoing descriptions of the Ninth Amendment and the
Note do not purport to be complete and are qualified in their entirety by reference to the Ninth Amendment and the Note, copies of which will be filed as exhibits to the Companys Quarterly Report on Form
10-Q for the fiscal quarter ended June 27, 2021.
Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 of
this Current Report on Form 8-K is incorporated by reference into this Item 2.03.