Incentive Unit Grant Agreement, dated as of May 1, 2019, between Sovos Brands Limited Partnership and Risa Cretella
Exhibit 10.51
SOVOS BRANDS LIMITED PARTNERSHIP
2017 EQUITY INCENTIVE PLAN
INCENTIVE UNIT GRANT AGREEMENT
THIS INCENTIVE UNIT GRANT AGREEMENT (the “Agreement”) is made as of May 1, 2019 (the “Grant Date”) among Sovos Brands Limited Partnership, a Delaware limited partnership (the “Partnership”) and Risa Cretella (the “Participant”).
R E C I T A L S
A.The Partnership is governed by the Second Amended and Restated Agreement of Limited Partnership of Sovos Brands Limited Partnership, dated as of January 31, 2017, as may be amended from time to time (the “Partnership Agreement”). Capitalized terms not otherwise defined in this Agreement shall have the meanings ascribed to such terms in the Partnership Agreement.
B.In consideration for the provisions of services to or for the benefit of the Partnership by the Participant, the Partnership hereby grants Incentive Units to the Participant under the terms and provisions of this Agreement, the Sovos Brands Limited Partnership 2017 Equity Incentive Plan (the “Plan”) and the Partnership Agreement.
C.The Partnership and the Participant desire to impose certain vesting conditions with respect to the Incentive Units granted to the Participant.
A G R E E M E N T S
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Partnership and the Participant agree as follows:
ARTICLE I.
GRANT OF INCENTIVE UNITS
(a) an “accredited investor” within the meaning of Rule 501(a) under Regulation D of the Securities Act of 1933, and has (or, in the case of a trust, the trustee has) such knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of his, her or its investment in the Incentive Units, and the Participant is capable of bearing the economic risks of such investment and is able to bear the complete loss of his, her or its investment in the Incentive Units, or
(b) not an accredited investor, and has (or, in the case of a trust, the trustee has), by itself or through a “purchaser representative” within the meaning of Rule 501(i) under Regulation D of the Securities Act, such knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of his, her or its investment in the Incentive Units, and the Participant is capable of bearing the economic risks of such investment and is able to bear the complete loss of his, her or its investment in the Incentive Units.
2
ARTICLE II.
PROFITS INTEREsTS; VESTING
2.1Profits Interests. The Incentive Units granted under this Agreement are intended to constitute “profits interests” as described in Section 3.04 of the Partnership Agreement and shall be subject to the terms and conditions thereof.
2.2Hurdle Amount. The Incentive Unit Hurdle Amount for the Incentive Units being granted to the Participant pursuant to this Agreement is equal to $150, such amount being determined by the General Partner as of the Grant Date pursuant to Section 3.04 of the Partnership Agreement; provided, that the Incentive Unit Hurdle Amount shall, in any event, be consistent with the intended characterization of the Incentive Units being granted hereunder as a “profits interest.”
2.3Vesting of Incentive Units. The Incentive Units being granted to the Participant hereunder shall vest and become Vested Units as provided in this Section 2.3:
(a)Time Vesting Units
(b)Performance Vesting Units.
3
ARTICLE III.
FORFEITURE OF INCENTIVE UNITS; REPURCHASE Right
3.1Forfeiture of Performance Vesting Units and Time Vesting Units. Notwithstanding any other provisions of this Agreement to the contrary, upon a termination of employment for any reason, all Performance Vesting Units and Time Vesting Units that have not vested as of the date of termination of employment, shall expire and immediately be forfeited and canceled in their entirety without any consideration to the Participant.
3.2Forfeiture of Vested Units. Upon (i) a termination of employment for Cause, (ii) resignation by the Participant when grounds for Cause exist or (iii) if, following any termination
4
of employment, the Participant commits a Covenant Breach, then all Vested Units and any Class A Units acquired pursuant to the conversion of Vested Units pursuant to Section 3.04(e) of the Partnership Agreement shall expire and immediately be forfeited and cancelled in their entirety without any consideration to the Participant.
3.3Repurchase Right. The Participant agrees and acknowledges that the Incentive Units and any Class A Units acquired pursuant to the conversion of Vested Units pursuant to Section 3.04(e) of the Partnership Agreement shall be subject to repurchase by the Partnership or its designee under certain circumstances as set forth in Section 7.07 of the Partnership Agreement.
3.4Conversion of Incentive Units into Incentive Class A Units. The Participant acknowledges and agrees that, upon a termination of the Participant’s employment with the Partnership and its Subsidiaries, the Partnership may effect a conversion of the Participant’s Vested Units into Class A Units on the terms and conditions set forth in Section 3.04(e) of the Partnership Agreement.
ARTICLE IV.
Partnership agreement
4.1Partnership Agreement. The Participant agrees and acknowledges that as a condition subsequent to the grant of the Incentive Units granted under this Agreement, the Participant shall execute and become a party to and be bound by the terms and conditions of the Partnership Agreement pursuant to the Joinder Agreement in the form attached hereto as Exhibit C.
ARTICLE V.
Definitions
5.1Definitions. As used in this Agreement, the following terms have the meanings set forth below:
(i) the amount of cash distributions and other cash proceeds received by the Advent Group on or prior to such Change in Control in respect of any Advent Investments, including cash proceeds received from a partial liquidation of the Partnership or such Change in Control;
(ii) the amount of cash proceeds previously received by the Advent Group from the disposition of any non-cash proceeds (including non-cash distributions) received in exchange for, or in respect of, any Advent Investments prior to such Change in Control; and
(iii) an amount equal to the fair market value, as determined by the Board in its reasonable good faith discretion, of Marketable Securities received by the Advent Group on
5
or before a Change in Control with respect to, or from the sale or other disposition of, any Advent Investments (in each of clauses (i), (ii) and (iii) net of any Unreimbursed Transaction Expenses).
Notwithstanding anything to the contrary, none of the following shall be included in the calculation of “Advent Cash Amounts”: Tax Distributions pursuant to Section 5.01(c) of the Partnership Agreement, expense reimbursement, indemnification payments or similar amounts made to the Advent Group.
6
ARTICLE VI.
RESTRICTIVE COVENANTS
6.1Restrictive Covenants. In consideration for the Incentive Units granted to the Participant by the Partnership under this Agreement and for the Participant’s access to and receipt of the confidential information and trade secrets described herein, the Participant agrees to be bound by the following covenants; provided that, if the Participant is subject to restrictive covenants under any other agreement, including, but not limited to, an applicable employment agreement, then the broadest restrictive covenants shall apply to the Participant.
7
8
(i)The Participant acknowledges and agrees that all ideas, methods, inventions, discoveries, improvements, work products and developments (“Inventions”), whether patentable or unpatentable, (x) that relate to the Participant’s work with the Partnership, made or conceived by the Participant, solely or jointly with others, during the Employment Term, or (y) suggested by any work that the Participant performs in connection with the Partnership, either while performing the Participant’s duties with the Partnership or on the Participant’s own time, but only insofar as the Inventions are related to the Participant’s work as an employee or other service provider to the Partnership, shall belong exclusively to the Partnership (or its designee), whether or not patent applications are filed thereon. The Participant will keep full and complete written records (the “Records”), in the manner prescribed by the Partnership of all Inventions and will promptly disclose all Inventions completely and in writing to the Partnership. The Records shall be the sole and exclusive property of the Partnership and the Participant will surrender them upon the termination of the Employment Term, or upon the Partnership’s request. The Participant will assign to the Partnership the Inventions and all patents that may issue thereon in any and all countries, whether during or subsequent to the Employment Term, together with the right to file,
9
in the Participant’s name or in the name of the Partnership (or its designee), applications for patents and equivalent rights (the “Applications”). The Participant will, at any time during and subsequent to the Employment Term, make such applications, sign such papers, take all rightful oaths, and perform all acts as may be requested from time to time by the Partnership with respect to the Inventions. The Participant will also execute assignments to the Partnership (or its designee), of the Applications, and give the Partnership and its attorneys all reasonable assistance (including the giving of testimony) to obtain the Inventions for its benefit, all without additional compensation to the Participant from the Partnership but entirely at the Partnership’s expense.
(ii)In addition, the Inventions will be deemed Work for Hire, as such term is defined under the copyright law of the United States, on behalf of the Partnership and the Participant agrees that the Partnership will be the sole owner of the Inventions, and all underlying rights therein, in all media now known or hereinafter devised, throughout the universe and in perpetuity, without any further obligations to the Participant. If the Inventions, or any portion thereof, are deemed not to be Work for Hire, the Participant hereby irrevocably conveys, transfers and assigns to the Partnership all rights, in all media now known or hereinafter devised, throughout the universe and in perpetuity, in and to the Inventions, including, without limitation, all of the Participant’s right, title and interest in the copyrights (and all renewals, revivals and extensions thereof) to the Inventions, including, without limitation, all rights of any kind or any nature now or hereafter recognized, including, without limitation, the unrestricted right to make modifications, adaptations and revisions to the Inventions, to exploit and allow others to exploit the Inventions and all rights to sue at law or in equity for any infringement or other unauthorized use or conduct in derogation of the Inventions, known or unknown, prior to the date hereof, including, without limitation, the right to receive all proceeds and damages therefrom. In addition, the Participant hereby waives any so-called “moral rights” with respect to the Inventions. The Participant hereby waives any and all currently existing and future monetary rights in and to the Inventions and all patents that may issue thereon, including, without limitation, any rights that would otherwise accrue to the Participant’s benefit by virtue of the Participant being an employee of or other service provider to the Partnership.
6.2Reformation. If it is determined by a court of competent jurisdiction in any state or other jurisdiction that any restriction in this Section 6 is excessive in duration or scope or is unreasonable or unenforceable under the laws of that state or other jurisdiction, it is the intention of the parties that such restriction may be modified or amended by the court to render it enforceable to the maximum extent permitted by the law of that state.
6.3Enforcement; Remedies. The Participant acknowledges that the Participant’s expertise is of a special and unique character which gives this expertise a particular value, and that a breach of Section 6.1 by the Participant will cause serious and potentially irreparable harm to the Partnership. The Participant therefore acknowledges that a breach of Section 6.1 by the Participant cannot be adequately compensated in an action for damages at law, and equitable relief would be necessary to protect the Partnership from a violation of this Agreement and from the harm which this Agreement is intended to prevent. By reason thereof, the Participant acknowledges that the Partnership is entitled, in addition to any other remedies it may have under this Agreement or otherwise, to preliminary and permanent injunctive and other equitable relief to prevent or curtail any breach of this Agreement. The Participant acknowledges, however, that no specification in this Agreement of a specific legal or equitable remedy may be construed as a waiver of or
10
prohibition against pursuing other legal or equitable remedies in the event of a breach of this Agreement by the Participant.
6.4Survival of Provisions. The obligations contained in Section 6 shall survive the termination or expiration of the Participant’s employment with the Partnership or one of its Subsidiaries and shall be fully enforceable thereafter.
ARTICLE VII.
MISCELLANEOUS PROVISIONS
7.1Termination and Amendment of the Agreement. This Agreement shall be terminated only with the prior written consent of the Partnership (with the approval of the General Partner) and the Participant; provided, that this Article VII (Miscellaneous Provisions) shall survive any termination of this Agreement. This Agreement may be amended, and compliance with any term hereof may be waived, only with the prior written consent of the Partnership (with the written approval of the General Partner) and the Participant.
7.2Termination of Status as Participant. From and after the date that the Participant ceases to own any Incentive Units, he shall cease to be a Participant for the purposes of this Agreement and all rights he may have hereunder shall terminate, except for any rights with respect to matters contemplated hereby after such date and except for breaches occurring prior to such time. For the purposes of the preceding sentence, the Participant shall be deemed to own all Incentive Units owned by his Permitted Transferees.
7.3Notices. All notices required hereunder shall be delivered to the following respective addresses:
(a)The Partnership:
Sovos Brands Limited Partnership
c/o Advent International Corporation
75 State Street
Boston, MA 02109
Attention: Jefferson Case and James Westra
With a copy to (which copy shall not constitute notice):
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Marilyn French Shaw, Esq.
(b)the Participant, at the address of the Participant as specified below such Participant’s signature at the end of this Agreement.
Notices shall be in writing and shall be sent by facsimile or pdf e-mail, by mail (postage prepaid, registered or certified, by United States mail, return receipt requested), by nationally recognized private courier or by personal delivery. Notices shall be effective, (i) if sent by facsimile, when
11
transmitted, (ii) if sent by pdf e-mail, when transmitted, (iii) if by nationally recognized private courier, when deposited with the private courier, (iv) if mailed, when deposited in the mail, and (v) if personally delivered, the earlier of when delivery is made or first refused. Any Person may change its address for the delivery of notices by written notice served in accordance with the provisions hereof.
7.4Miscellaneous. The use of the singular or plural or masculine, feminine or neuter gender shall not be given an exclusionary meaning and, where applicable, shall be intended to include the appropriate number or gender, as the case may be.
7.5Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original and all of which, when taken together, shall constitute one instrument. Facsimile and pdf e-mail signatures shall have the same legal effect as manual signatures.
7.6Entire Agreement. This Agreement, the Plan and the Partnership Agreement constitute the entire agreement between the parties with respect to the subject matter hereof and thereof. No promises, statements, understandings, representations, or warranties of any kind, whether oral or in writing, express or implied have been made to Participant by any Person to induce him to enter into this Agreement other than the express terms set forth in this Agreement, the Plan and the Partnership Agreement, and Participant is not relying upon any promises, statements, understandings, representations, or warranties with respect to the subject matter hereof other than those expressly set forth in this Agreement, the Plan and the Partnership Agreement. Any amendments to this Agreement must be made in writing and duly executed by each of the parties entitled to adopt said amendment as provided in Section 7.1 or by an authorized representative or agent of each such party. Participant hereby acknowledges and represents that he has had the opportunity to consult with independent legal counsel or other advisor of his choice and has done so regarding his rights and obligations under this Agreement, that he is entering into this Agreement knowingly, voluntarily, and of his own free will, that he is relying on his own judgment in doing so, and that he fully understands the terms and conditions contained herein.
7.7Incentive Units Subject to Partnership Agreement. By entering into this Agreement the Participant agrees and acknowledges that (i) the Participant has received and read a copy of the Plan and the Partnership Agreement and (ii) the Incentive Units and any Class A Units acquired pursuant to the conversion of Incentive Units into Class A Units are subject to the Partnership Agreement, the terms and provisions of which are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms of this Agreement will govern and prevail. In the event of a conflict between any term or provision contained herein and a term in the Partnership Agreement, the applicable terms and provisions of the Partnership Agreement will govern and prevail (except as expressly set forth herein). Neither the adoption of the Plan nor any award made thereunder shall restrict in any way the adoption of any amendment to the Partnership Agreement in accordance with the terms thereof.
7.8Tax Withholding. The Participant may be required to pay to the Partnership or any of its Subsidiaries or Affiliates, and the Partnership and its Subsidiaries and Affiliates shall have the right and are hereby authorized to withhold from any payment due or transfer made under
12
this Agreement or from any other amount owing to the Participant, the amount (in cash or, at the election of the Partnership, securities or other property) of any applicable federal, state, local or foreign withholding taxes in respect of an Incentive Unit or any payment or transfer under this Agreement and to take such other action as may be necessary in the opinion of the General Partner to satisfy all obligations for the payment of such taxes.
7.9Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto, their heirs, representatives, successors and permitted assigns (including Permitted Transferees to whom Units have been transferred, as applicable).
7.10Enforcement. The failure of any party hereto to insist in one or more instances on performance by another party hereto of any obligation, condition or other term of this Agreement in strict accordance with the provisions hereof shall not be construed as a waiver of any right granted hereunder or of the future performance of any obligation, condition or other term of this Agreement in strict accordance with the provisions hereof, and no waiver with respect thereto shall be effective unless contained in a writing signed by or on behalf of the waiving party. The remedies in this Agreement shall be cumulative and are not exclusive of any other remedies provided by law.
7.11Governing Law. This Agreement, and any and all claims arising out of, under, pursuant to, or in any way related to this Agreement, including but not limited to any and all claims (whether sounding in contract or tort) as to this Agreement’s scope, validity, enforcement, interpretation, construction, and effect, shall be governed by the laws of the State of Delaware (without regard to any conflict of laws rule which might result in the application of the laws of any other jurisdiction).
7.12Severability. If any provision of this Agreement is, becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or as to any Person or award, such provision shall be constructed or deemed amended to conform to all applicable laws, or if it cannot be construed or deemed amended without, in the determination of the General Partner, materially altering the intent of this Agreement or the award, such provision shall be stricken as to such jurisdiction, Person or award and the remainder of this Agreement and any such award shall remain in full force and effect.
7.13No Contract of Employment. Neither this Agreement nor any award granted under this Agreement shall confer upon any Person any right to employment or other service or continuance of employment or other service by the Partnership or any of its Subsidiaries or Affiliates. This Agreement does not constitute a contract of employment or impose on any Participant or the Partnership or any of its Subsidiaries or Affiliates any obligations to retain the Participant as an employee of the Partnership or any of its Subsidiaries or Affiliates, to change the status of the Participant’s employment, or to change the Partnership or any of its Subsidiaries’ or Affiliates’ policies regarding termination of employment.
7.14Captions. The article or section titles or captions contained in this Agreement are for convenience only and are not to be considered in the construction or interpretation of this Agreement or any provision thereof.
13
7.15No Third Party Rights. Nothing in this Agreement shall be construed to grant rights to any Person who is not a party to this Agreement.
7.16Rule of Construction. The parties acknowledge and agree that each has negotiated and reviewed the terms of this Agreement, assisted by such legal and tax counsel as they desired, and has contributed to its revisions. The parties further agree that the rule of construction that a contract shall be construed against the drafter shall not be applied. The word “including”, means “including, without limitation.”
7.17Units after Initial Public Offering. For purposes of determining vesting after an Initial Public Offering, references to Units shall also be deemed to be references to the shares that the holder of such Units receives in respect of such Units in connection with the Initial Public Offering.
[signature page follows]
14
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
SOVOS BRANDS LIMITED PARTNERSHIP
By: Sovos Brands GP LLC, its general partner
By: /s/ Todd Lachman
Name:
Its:
PARTICIPANT
/s/ Risa Cretella
Name: Risa Cretella
Exhibit A
Accredited Investor Questionnaire
The undersigned individual (the “Executive”) represents and warrants that it is not an “accredited investor” as defined in Rule 501(a) promulgated under Regulation D of the Securities Act (please initial the non-accredited investor election below):
The Executive is not an accredited investor.
The Executive represents and warrants that it is an “accredited investor” as defined in Rule 501(a) promulgated under Regulation D of the Securities Act of 1933, as amended (the “Securities Act”), because he or she meets at least one of the following criteria (please initial each applicable item):
The Executive is a natural person whose individual net worth, or joint net worth with his or her spouse, exceeds $1,000,000 at the time of the Executive’s purchase, excluding the value of the primary residence of such natural person, calculated by subtracting from the estimated fair market value of the property the amount of debt secured by the property, up to the estimated fair market value of the property;
RC The Executive is a natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with the Executive’s spouse in excess of $300,000 in each of those years and who reasonably expects to reach the same income level in the current year; or
The Executive is a director or an executive officer of Sovos Brands Limited Partnership or a Subsidiary thereof. An executive officer means the president, any vice president in charge of a principal business unit, division or function (such as sales, administration or finance), any other officer who performs a policy making function, or any other person who performs similar policy making functions for the issuer.
* * * *
IN WITNESS WHEREOF, the undersigned has executed this Accredited Investor Questionnaire on the date set forth below.
Dated: __5/13/19___________
By: /s/ Risa Cretella
Name: Risa Cretella
Exhibit B
Form of Section 83(b) Election
The undersigned taxpayer hereby elects, pursuant to § 83(b) of the Internal Revenue Code of 1986, as amended, to include in gross income as compensation for services the excess (if any) of the fair market value of the shares described below over the amount paid for those shares.
1. The name, taxpayer identification number, address of the undersigned, and the taxable year for which this election is being made are:
TAXPAYER’S NAME: ___Risa Cretella_________________________________
TAXPAYER’S SOCIAL SECURITY NUMBER: __________________________
ADDRESS: _________________________________________________________
TAXABLE YEAR: Calendar Year 2019
2. The property which is the subject of this election is 1,700 Incentive Units of Sovos Brands Limited Partnership (“Partnership”).
3. The property was transferred to the undersigned on ______5/1/19_____________
4. The property is subject to the following restrictions: The Incentive Units are subject to time-based and performance-based vesting.
5. The fair market value of the property at the time of transfer (determined without regard to any restriction other than a nonlapse restriction as defined in § 1.83-3(h) of the Income Tax Regulations) is: $0.
6. For the property transferred, the undersigned paid $0.
7. The amount to include in gross income is $0.
The undersigned taxpayer will file this election with the Internal Revenue Service office with which taxpayer files his or her annual income tax return not later than 30 days after the date of transfer of the property. A copy of the election also will be furnished to the person for whom the services were performed. The undersigned is the person performing the services in connection with which the property was transferred.
Dated: ___5/13/19__________________________
Taxpayer: /s/ Risa Cretella
Exhibit C
Joinder Agreement
This Joinder Agreement (this “Joinder Agreement”) is made as of the date written below by the undersigned (“New Limited Partner”), in accordance with the Second Amended and Restated Agreement of Limited Partnership of Sovos Brands Limited Partnership, dated as of January 31, 2017 (the “Partnership Agreement”), by and among Sovos Brands GP LLC, as the general partner, and the other persons listed on the signature pages thereto, as the same may be amended from time to time. Capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the Partnership Agreement.
Concurrently herewith the Partnership is issuing Incentive Units of the Partnership to the New Limited Partner.
New Limited Partner hereby acknowledges, agrees and confirms that, by its execution of this Joinder Agreement, New Limited Partner shall be deemed to be a party to the Partnership Agreement as of the date hereof, shall be considered an Incentive Unit Limited Partner, and shall have all of the rights and be subject to the obligations of an Incentive Unit Limited Partner as if it had executed the Partnership Agreement. New Limited Partner hereby makes each of the representations and warranties set forth in Article XII of the Partnership Agreement as if such representations and warranties were expressly set forth in this Joinder Agreement. New Limited Partner hereby ratifies, as of the date hereof, and agrees to be bound by, all of the applicable terms, provisions and conditions contained in the Partnership Agreement.
IN WITNESS WHEREOF, New Limited Partner has executed this Joinder Agreement as of the date written below.
Date: __05/13/19___________
/s/ Risa Cretella
Name: Risa Cretella