What changed in this filing

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Item 9A. Controls and Procedures

2023-03-01 compared with 2022-03-02 · 84 added, 61 removed, 293 unchanged (33% of the section changed)

3 unchanged sentences

Our disclosure controls are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of January 1, 2022.

Management's Report on Internal Control Over Financial Reporting

1 unchanged sentence

The Company's management conducted an assessment of the Company's internal control over financial reporting based on the framework established by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework (2013).

Based on this assessment, the Company's management has concluded that, as of January 1, 2022, the Company's internal control over financial reporting is effective.

The Company's internal control over financial reporting as of January 1, 2022 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which is set forth below.

Based on this assessment, the Company's management has concluded that, as of December 31, 2022, the Company's internal control over financial reporting is effective.

The Company's internal control over financial reporting as of December 31, 2022 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which is set forth below.

Changes in Internal Control over Financial Reporting

During the quarter ended January 1, 2022, there was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

During the quarter ended December 31, 2022, there was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls

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We have audited the internal control over financial reporting of Grocery Outlet Holding Corp.

and subsidiaries (the "Company") as of January 1, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 1, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended January 1, 2022, of the Company and our report dated March 2, 2022, expressed an unqualified opinion on those financial statements.

and subsidiaries (the "Company") as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2022, of the Company and our report dated March 1, 2023, expressed an unqualified opinion on those financial statements.

Basis for Opinion

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DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

The information required by this item is incorporated herein by reference from sections entitled "Corporate Governance and Board Matters," "Proposals for Consideration and the Annual Meeting – Proposal 1 – Election of Directors" and "Additional Information" in our definitive Proxy Statement related to the 2022 Annual Meeting of Stockholders (the "2022 Proxy Statement") to be filed with the SEC within 120 days of our fiscal year ended January 1, 2022 and is incorporated herein by reference.

The information required by this item is incorporated herein by reference from sections entitled "Corporate Governance and Board Matters," "Proposals for Consideration and the Annual Meeting – Proposal 1 – Election of Directors" and "Additional Information" in our definitive Proxy Statement related to the 2023 Annual Meeting of Stockholders (the "2023 Proxy Statement") to be filed with the SEC within 120 days of our fiscal year ended December 31, 2022 and is incorporated herein by reference.

EXECUTIVE COMPENSATION

The information required by this item is incorporated herein by reference from sections entitled "Compensation Discussion and Analysis," "Named Executive Officer Compensation Tables," "Corporate Governance and Board Matters - Board of Directors – Director Compensation," "Corporate Governance and Board Matters – Board of Directors – Compensation Committee Interlocks and Insider Participation," and "Compensation Committee Report" in our 2022 Proxy Statement.

The information required by this item is incorporated herein by reference from sections entitled "Compensation Discussion and Analysis," "Named Executive Officer Compensation Tables" (excluding the information under the subheading "Pay Versus Performance"), "Corporate Governance and Board Matters - Board of Directors – Director Compensation," "Corporate Governance and Board Matters – Board of Directors – Compensation Committee Interlocks and Insider Participation," and "Compensation Committee Report" in our 2023 Proxy Statement.

However, the Compensation Committee Report included in such 2023 Proxy Statement shall not be deemed "filed" with the SEC for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing made by us with the SEC, regardless of any general incorporation language in such filing.

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PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by th is item is included under the sections entitled "Corporate Governance and Board Matters – Board of Directors," and "Proposals for Consideration and the Annual Meeting – Proposal No.

2 – Ratification of Independent Registered Public Accounting Firm" in our 2022 Proxy Statement and is incorporated herein by reference.

The information required by this item is included under the sections entitled "Corporate Governance and Board Matters – Board of Directors," and "Other Audit and Risk Committee Matters" in our 2023 Proxy Statement and is incorporated herein by reference.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

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Exhibit Form File

3.1 Amended and Restated Certificate of Incorporation of Grocery Outlet Holding Corp.

S-8 333-232318 6/24/2019 4.1

3.1 Restated Certificate of Incorporation of Grocery Outlet Holding Corp.

8-K 001-38950 6/10/2022 3.1

3.2 Amended and Restated Bylaws of Grocery Outlet Holding Corp.

S-8 333-232318 6/24/2019 4.2

8-K 001-38950 4/8/2022 3.1

4.1 Form of Stock Certificate for Common Stock

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4.3* Description of Grocery Outlet Holding Corp.'s Securities

10-K 001-38950 3/2/2021 4.3

10.1 Incremental Agreement, dated as of January 24, 2020, among GOBP Holdings, Inc., Globe Intermediate Corp., certain subsidiaries of GOBP Holdings, Inc., the lenders party thereto, and Morgan Stanley Senior Funding, Inc., as Administrative Agent

19 unchanged sentences

S-1/A 333-231428 5/22/2019 10.6

10.9 Credit Agreement, dated as of February 21, 2023, by and among Grocery Outlet Holding Corp.

, the Lenders and Letter of Credit Issuers from time to time party thereto, and Bank of America, N.A., as the Administrative Agent, Collateral Agent and Swingline Lender.

8-K 001-38950 2/23/2023 10.1

10.10† Globe Holding Corp.

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S-1/A 333-231428 6/10/2019 10.31

10.20† Transition Agreement, dated January 7, 2020, by and between Grocery Outlet Holding Corp.

MacGregor Read, Jr.

8-K 001-38950 1/7/2020 10.1

10.21† Grocery Outlet Holding Corp.

16 unchanged sentences

10-K 001-38950 3/2/2021 10.34

10.27† Employment Offer Letter by and between Heather L.

Mayo and the Company dated August 29, 2019

Employment Offer Letter by and between Heather L.

Mayo and the Company dated August 29, 2019

10-Q 001-38950 5/12/2021 10.1

10.27† Transition, Separation Agreement, and General Release of all Claims, dated as of December 13, 2021, by and between Grocery Outlet Inc.

and Heather Mayo

and Heather L.

8-K 001-38950 12/15/2021 10.1

1 unchanged sentence

2019 Stock Incentive Plan) (effective October 2021)

10-K 001-38950 3/2/2022 10.29

10.29† Form of Restricted Stock Unit Grant and Agreement (Grocery Outlet Holding Corp.

2019 Stock Incentive Plan) (effective October 2021)

10.31†* Non-Employee Director Compensation Policy

10-K 001-38950 3/2/2022 10.30

10.30† Non-Employee Director Compensation Policy (as amended November 6, 2020)

10-K 001-38950 3/2/2022 10.31

10.31† Non-Employee Director Compensation Policy (as amended April 27, 2022)

10-Q 001-38950 8/10/2022 10.1

10.32† Non-Employee Director Compensation Policy (as amended November 2, 2022 and as effective January 1, 2023)

8-K 001-38950 11/8/2022 10.2

10.33† Employment Agreement, effective January 1, 2023, by and among Robert Joseph Sheedy, Jr., Grocery Outlet Inc.

and Grocery Outlet Holding Corp.

8-K 001-38950 11/8/2022 10.1

10.34†* Restricted Stock Unit Grant and Agreement (Grocery Outlet Holding Corp.

2019 Stock Incentive Plan) (CEO Form)

21.1* Subsidiaries of the Registrant

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101.PRE Inline XBRL Extension Presentation Linkbase Document

104 Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

104 Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document and included as Exhibit 101.

____________________________________

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Capital stock:

Voting common stock, par value $ 0.001 per share, 500,000,000 shares authorized;

Common stock, par value $ 0.001 per share, 500,000,000 shares authorized;

97,674,356 and 96,144,433 shares issued and outstanding, respectively

13 unchanged sentences

2022 January 1,

2021 December 28,

2022 January 2,

Operating expenses $ 251 $ 251 $ 265

11 unchanged sentences

2022 January 1,

2021 December 28,

2022 January 2,

Cash flows from operating activities:

3 unchanged sentences

Changes in operating assets and liabilities:

Other current assets — — 497

Net cash provided by (used in) operating activities ( 251 ) ( 265 ) 224

Net cash used in operating activities ( 251 ) ( 251 ) ( 265 )

Cash flows from investing activities:

3 unchanged sentences

Intercompany payables 251 251 265

Proceeds from initial public offering, net of underwriting discounts — — 407,666

Proceeds from exercise of share-based compensation awards 6,890 7,226 32,604

Payments related to net settlement of share-based compensation awards — — ( 483 )

Other direct costs paid related to the initial public offering — — ( 7,062 )

Repurchase of common stock ( 3,451 ) — —

Net cash provided by financing activities 3,690 7,477 32,386

16 unchanged sentences

Accordingly, the Parent Company is dependent upon distributions from Intermediate to fund its limited, non-significant operating expenses.

However, GOBP Holdings' and GOI's ability to pay dividends or lend to Intermediate or the Parent Company is limited under the terms of various debt agreements.

Intermediate and GOBP Holdings are parties to credit facilities that contain covenants limiting the Parent Company's ability and the ability of its restricted subsidiaries to, among other things:

As of December 31, 2022, GOBP Holdings' and GOI's ability to pay dividends or lend to Intermediate or the Parent Company were limited under the terms of various debt agreements.

Intermediate and GOBP Holdings were parties to credit facilities that contained covenants limiting the Parent Company's ability and the ability of its restricted subsidiaries to, among other things:

pay dividends or distributions, repurchase equity, prepay junior debt and make certain investments;

4 unchanged sentences

and enter into agreements that would restrict its subsidiaries to pay dividends or make other payments to the Parent Company.

Due to the aforementioned qualitative restrictions, substantially all of the assets of the Parent Company's subsidiaries are restricted.

These covenants are subject to important exceptions and qualifications as described in such credit facilities.

Due to the aforementioned qualitative restrictions, substantially all of the assets of the Parent Company's subsidiaries were restricted.

These covenants were subject to important exceptions and qualifications as described in such credit facilities.

NOTE 2—Basis of Presentation

1 unchanged sentence

These parent company only financial statements should be read in conjunction with the Parent Company's consolidated financial statements and notes thereto, included elsewhere in this Annual Report on Form 10-K.

NOTE 3—Initial Public Offering and Secondary Offerings

In June 2019, we completed an initial public offering ("IPO") of 19,765,625 shares of our common stock at a public offering price of $ 22.00 per share for net proceeds of $ 407.7 million, after deducting underwriting discounts and commissions of $ 27.1 million.

We also incurred offering costs payable by us of $ 7.2 million.

The shares of common stock sold in the IPO and the net proceeds from the IPO included the full exercise of the underwriters' option to purchase additional shares.

On October 8, 2019, certain of our selling stockholders completed a secondary public offering of shares of our common stock.

We did not receive any of the proceeds from the sale of these shares by the selling stockholders.

We incurred offering costs payable by us of $ 1.1 million which are included in selling, general and administrative expenses ("SG&A") for fiscal 2019.

We received $ 3.2 million in cash (excluding withholding taxes) in connection with the exercise of 451,470 options by certain stockholders participating in this secondary public offering.

On February 3, 2020, certain selling stockholders completed an additional secondary public offering of shares of our common stock.

NOTE 3—Secondary Offerings

On February 3, 2020, certain selling stockholders completed a secondary public offering of shares of our common stock.

We did not receive any of the proceeds from the sale of these shares by the selling stockholders.

7 unchanged sentences

We did not receive any proceeds or incur any material costs related to this distribution.

NOTE 4—Subsequent Event

On February 21, 2023, the Parent Company entered into a credit agreement with Bank of America, N.A., as administrative agent and collateral agent, and the other parties party thereto (the "Credit Agreement").

The Credit Agreement provides for senior secured credit facilities consisting of (i) a senior secured term loan facility (the "term loan facility") in an aggregate principal amount of $ 300.0 million and (ii) a senior secured revolving credit facility (the "revolving credit facility" and, together with the term loan facility, the "credit facilities") in an aggregate principal amount of $ 400.0 million.

The term loan facility was borrowed in full at closing, and $ 25.0 million of the revolving credit facility was borrowed at closing.

On February 21, 2023, Parent Company repaid all of the outstanding indebtedness under a first lien credit agreement, dated as of October 22, 2018, with GOBP Holdings as borrower (the "Prior First Lien Credit Agreement"), of $ 387.2 million as well as fees and expenses in connection therewith.

All obligations of the Parent Company’s subsidiaries under the Prior First Lien Credit Agreement were discharged as of such date.

The revolving credit facility includes borrowing capacity available for letters of credit and for borrowings on same-day notice, referred to as the swingline loans.

The credit facilities permit the Parent Company to add one or more incremental term loan facilities, increase any existing term loan facility, increase revolving commitments, and/or add incremental replacement revolving credit facility tranches.

The aggregate principal amount of such incremental facilities are limited to (a) an amount not in excess of the sum of the greater of $ 200.0 million and 100 % of Consolidated EBITDA (as defined in the Credit Agreement), subject to certain limitations, plus (b) voluntary prepayments of the term loan facility, voluntary permanent reductions of the commitments for the revolving credit facility and voluntary prepayments of indebtedness secured by liens on the collateral securing the credit facilities, subject to certain exceptions, plus (c) an amount such that (assuming that the full amount of any such incremental revolving increase and/or incremental replacement revolving credit facility was drawn, and after giving effect to any appropriate pro forma adjustment events) the Parent Company would be in compliance, on a pro forma basis (but excluding the cash proceeds of such incurrence), with a total net leverage ratio of 3.00 to 1.00.

The lenders under the credit facilities are not under any obligation to provide any such incremental commitments or loans under incremental facilities and any such incremental commitments or loans under incremental facilities are subject to certain customary conditions.

Borrowings under the Credit Agreement in dollars bear interest at a rate equal to, at our option, either (a) the base rate, which is defined as a fluctuating rate per annum equal to the greatest of (i) the federal funds rate then in effect, plus 0.50 %, (ii) the prime rate then in effect and (iii) a specified Term SOFR (as defined in the Credit Agreement) rate plus 1.00 %, subject to the interest rate floors set forth therein, plus an applicable margin ranging from 0.75 % to 1.75 % based on the Parent Company's total net leverage ratio;

and (b) an adjusted Term SOFR rate determined on the basis of a one, three or six month interest period, plus 0.10 %, subject to the interest rate floors set forth therein, plus an applicable margin ranging from 1.75 % to 2.75 % based on the Parent Company's total net leverage ratio.

As of the closing date, interest on the initial borrowings under the new credit facility were based on one-month Term SOFR with an applicable margin of 2.25 %.

The term credit facilities mature on February 21, 2028.

The Parent Company’s obligations under the Credit Agreement are unconditionally guaranteed by all of the Parent Company’s wholly owned restricted subsidiaries, subject to certain exceptions.

All obligations under the Credit Agreement, and the guarantees of such obligations, are secured, subject to permitted liens and other exceptions, by substantially all of the Parent Company’s assets and those of each subsidiary guarantor.

The Credit Agreement requires the Parent Company to make scheduled amortization payments of the outstanding term loans.

The Parent Company may voluntarily prepay the senior secured credit facilities, in whole or in part, at any time without premium or penalty, subject to reimbursement of the lenders’ breakage and redeployment costs in applicable cases.

The Credit Agreement contains certain customary representations and warranties, subject to limitations and exceptions, and affirmative and customary covenants.

The Credit Agreement contains certain covenants that, among other things, limit the Parent Company’s ability and the ability of the Parent Company’s restricted subsidiaries to:

pay dividends or distributions, repurchase equity, prepay junior debt and make certain investments;

incur additional debt or issue certain disqualified stock and preferred stock;

incur liens on assets;

merge or consolidate with another company or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets;

enter into transactions with affiliates;

and allow to exist certain restrictions on the ability of subsidiaries to pay dividends or make other payments to the Parent Company.

The Credit Agreement also contains financial performance covenants requiring the Parent Company to satisfy a maximum total net leverage ratio test and a minimum interest coverage ratio test as of the last day of each fiscal quarter ending on or after April 1, 2023, as specified therein.

FORM 10-K SUMMARY

3 unchanged sentences

March 1, 2023 By:

Lindberg, Jr.

Chief Executive Officer

/s/ Robert Joseph Sheedy, Jr.

Robert Joseph Sheedy, Jr.

President and Chief Executive Officer

(Principal Executive Officer)

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitute and appoint Eric J.

Lindberg, Jr., Charles C.

Bracher, and Pamela B.

Burke, or any of them, his or her attorneys-in-fact, for such person in any and all capacities, to sign any amendments to this report and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that either of said attorneys-in-fact, or substitute or substitutes, may do or cause to be done by virtue hereof.

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitute and appoint Robert Joseph Sheedy, Jr., Charles C.

Bracher and Luke D.

Thompson, or any of them, his or her attorneys-in-fact, for such person in any and all capacities, to sign any amendments to this report and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that either of said attorneys-in-fact, or substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature Title Date

Lindberg, Jr.

Chief Executive Officer and Director

/s/ Robert Joseph Sheedy, Jr.

President and Chief Executive Officer;

(Principal Executive Officer) March 1, 2023

Lindberg, Jr.

Robert Joseph Sheedy, Jr.

/s/ Charles C.

2 unchanged sentences

/s/ Lindsay E.

Gray Vice President and Corporate Controller

Gray Senior Vice President, Accounting

(Principal Accounting Officer) March 1, 2023

Ragatz Director, Chairman of the Board March 2, 2022

MacGregor Read, Jr.

Director, Vice Chairman of the Board March 2, 2022

MacGregor Read, Jr.

Lindberg, Jr.

Director, Chairman of the Board March 1, 2023

Lindberg, Jr.

Ragatz Lead Independent Director March 1, 2023

/s/ Kenneth W.

13 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures