Contract - Sovos Brands Intermediate - 12/5/2019 ECONOMIC DEVELOPMENT AGREEMENT
This Economic Development Agreement ("Agreement") is entered into this day of
Det',W R—i , 2019, by and between the Round Rock Transportation and Economic
Development Corporation, a Type B Corporation created pursuant to Chapter 505 of the Texas Local
Government Code ("TEDCO"), and Sovos Brands Intermediate, Inc. a Delaware corporation
("Sovos"). The foregoing are referred to collectively as the"Parties."
WHEREAS,Sovos is the owner of Bottom Line Food Processors,Inc.d/b/a Michael Angelo's Gourmet
Foods, Inc. which has had a manufacturing facility (the"Facility") located at 200 Michael Angelo Way
in the City of Round Rock("City") for many years; and
WHEREAS, Sovos intends to invest at least $11,000,000 in the rehabilitation of the Facility, new
equipment for the Facility,and in business personal property for the Facility;and
WHEREAS, TEDCO has determined that the above described expenditure is for a "project" as
described by §501.101 of the Local Government Code and it will result in the creation or retention of
primary jobs as contemplated by said section; and
WHEREAS, TEDCO agrees to provide performance based economic development grants to Sovos to
defray a portion of Sovos' expenses;
NOW, THEREFORE, in consideration of the mutual benefits and promises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, TEDCO, and
Sovos agree as follows:
1. Authority. TEDCO's execution of this Agreement is authorized by§501.158 of the Texas Local
Government Code,
2. Definitions.
2.1 "Business Personal Property" means furniture, fixtures, and equipment purchased for
the purpose of supporting Sovos' business operations, including without limitation,
involving preparation, processing, and packaging of Tenant's products including its line
of frozen foods at the Facility.
2.2 "Economic Incentive Payment(s)" ("EIPs") means the amount paid by TEDCO to
Sovos under this Agreement.
2.3 "Effective Date" is the date this Agreement is executed to be effective by the Parties.
2.4 "Facility" means the manufacturing and warehousing facility located in the Round Rock
city limits with an address of 200 Michael Angelo Way,Austin,Texas.
2.5 "Real Property Improvements" means the cost of real property improvements to the
Facility directly related to the design, rehabilitation, reconstruction, repair, and/or
remodeling of the Facility for the purpose of supporting Sovos' business operations,
including without limitation, involving preparation, processing, and packaging of
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Tenant's products including its line of frozen foods at the Facility. It does not include any
other costs, such as financing cost,attorney fees, insurance, and other similar costs.
2.6 "Recapture Liability" means the total amount of all EIP's that are paid as result of this
Agreement that are subject to recapture by TEDCO from Sovos in the event of a Sovos
default.
2.7 "Skilled Employees" means employees who have the ability to utilize MS Office Suite
for tracking of key metrics,and/or the ability to input and retrieve critical data for Sovos's
enterprise resource planning system.
3. Term, This Agreement shall become enforceable upon its Effective Date and shall terminate on
the date the final EIP is made in 2022, in accordance with 5.1 below.
4. Rights and Obligations of Sovos.
4.1 Investment in the Facility. Sovos agrees to spend at least $1 1,000,000.00 over a three-
year for Real Property Improvements and for Business Personal Property for the Facility
according to the schedule set forth below:
On or Before Amount of Expenditure
December 31, 2019 $ 8,400,000
December 31, 2020 $ 1,600,000
December 31,2021 $ 1,000.000
TOTAL $11,000,000
4.2 Evidence of Satisfaction of Investment. On or before April 15 of the following calendar
year,Sovos agrees to provide proof to TEDCO that the above required expenditures have
been made. TEDCO shall have the right at its expense to audit Sovos' records to verify
same following reasonable advance notice to Sovos.
4.3 Jobs. Sovos agrees to create a minimum of 18 new Skilled Employee positions in
accordance with the following schedule:
On or Before New Jobs Created
December 31, 2019 3
December 31, 2020 6
December 31, 2021 9
TOTAL 18
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4.4 Job Compliance Affidavit. On or before April 15, of 2020 and of each calendar year
thereafter through April 15,2022,Sovos agrees to provide to TEDCO a Job Compliance
Affidavit, the form of such Job Compliance Affidavit being attached hereto as Exhibit
A. TEDCO shall have the right, at its expense following reasonable advance notice to
Sovos,to audit Sovos' records to verify that this obligation has been satisfied.
4.5 Compliance with regulations. Sovos agrees that it will comply with the City's
development approval processes and shall operate the Facility consistent with City
ordinances, development regulations,and requirements.
4.6 Continuous operation_ Sovos agrees that it will continuously operate the Facility during
the Term of this Agreement, including any extensions,subject to normal down-time and
any force majeure events.
5. Rights and Obligations of TEDCO.
In consideration of Sovos' compliance with this Agreement,TEDCO agrees as follows:
5.1 Economic Incentive Payment("EIP").
5.1.1 EIP. TEDCO shall, subject to Sovos' satisfaction of its obligations set forth in
section 4 above,make EIPs to Sovos as set forth below.The E1P's shall be made in annual
payments on or before June 1 of each year,as follows:
Year EIP Amount
2020 $140,000
2021 $75,000
2022 $75,000
TOTAL $290,000
5.1.2 EiPs Subject to Future Appropriations. This Agreement shall not be construed as
a commitment, issue or obligation of any specific taxes or tax revenues for payment to
Sovos.Tile EIPs by TEDCO under this Agreement are subject to TEDCO's appropriation
of funds for such payments in the budget year for which they are made. The EIPs to be
made to Sovos, if paid,shall be made solely from annual appropriations from the general
funds of TEDCO or from such other funds of TEDCO as may be legally set aside for the
implementation of Chapters 501 and/or 505 of the Local Government Code or any other
economic development or financing program authorized by statute or other applicable
Texas law,subject to any applicable limitations or procedural requirements. In the event
that TEDCO docs not appropriate funds in any fiscal year for the EIPs due under this
Agreement, such failure shall not be considered a default under Section 7.3,and TEDCO
shall not be liable to Sovos for such EIPs,however,TEDCO shall extend this Agreement
for another year(s), until Sovos has received all of the Ell's provided for herein. In
addition, Sovos shall have the right but not the obligation to terminate this Agreement,
which shall not be deemed to constitute a default by Sovos, and, in such event, Sovos
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shall be permitted to retain any EIP monies received on or before the date of termination.
To the extent there is a conflict between this paragraph and any other language or
covenant in this Agreement, this paragraph shall control.
6. EIP Recapture. In the event that TEDCO terminates this Agreement as a result of Sovos'
default, TEDCO may recapture and collect from Sovos the Recapture Liability. Sovos shall pay to
TEDCO the Recapture Liability within thirty (30) days after TEDCO makes written demand for same,
subject to any and all lawful offsets, settlements, deduction, or credits to which Sovos may be entitled.
Notwithstanding anything herein to the contrary, such Recapture Liability shall not exceed, in the
aggregate, an amount equal to all EIPs that were paid pursuant to this Agreement from the Effective
Date to the date of termination (together with interest thereon to be charged at the rate for delinquent
taxes as determined by Section 33.01 of the Property Tax Code of the State of Texas, but without the
addition of a penalty). TEDCO shall have all remedies for the collection of the Recapture Liability as
provided generally in the Tax Code for the collection of delinquent property taxes.
7. Miscellaneous.
7.1 Mutual Assistance. The Parties will do all things reasonably necessary ar appropriate to
carry out the terms and provisions of this Agreement.
7.2 Representations and Warranties. TEDCO represents and warrants to Sovos that this
Agreement is within its authority, and that it is duly authorized and empowered to enter
into this Agreement,unless otherwise ordered by a court of competent jurisdiction.Sovos
represents and warrants to TEDCO that it has the requisite authority to enter into this
Agreement.
7.3 Default. If either TEDCO or Sovos should default in the performance of any obligations
of this Agreement, the other party shall provide such defaulting party written notice of
the default, and a minimum period of thirty (30) days to cure such default, prior to
instituting an action for breach or pursuing any other remedy for default. If TEDCO
remains in default after notice and opportunity to cure, Sovos shall have the right to
terminate this Agreement by giving written notice thereof to TEDCO and to pursue any
remedy at law or in equity for TEDCO's breach. If Sovos remains in default after notice
and opportunity to cure,TEDCO as its exclusive remedy shall have the right to terminate
this Agreement by giving written notice thereof to Sovos and, upon such termination,
recapture EIP and interest thereon as provided in Section 6 and, in the event of litigation
or a court proceeding to enforce such recapture,recovery of attorney's fees and expenses
pursuant to the Terms of Section 7.4.
7.4 Attorney's fees. In the event any legal action or proceeding is commenced in a court of
competent jurisdiction between TEDCO and Sovos to enforce provisions of this
Agreement and/or recover damages for breach, the prevailing party in such legal action
shall be entitled to recover its reasonable attorney's fees and expenses incurred by reason
of such action, to the extent allowed by law.
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7.5 Entire Agreement. This Agreement contains the entire agreement between the Parties
with respect to the EIP. This Agreement may only be amended, altered or revoked by
written instrument signed by the Parties.
7.6 Binding Effect. This Agreement shall be binding on and inure to the benefit of the Parties,
their respective successors and assigns.
7.7 Assignment. Sovos may not assign all or part of its rights and obligations to a third party
without the express written consent of TEDCO,which consent shall not be unreasonably
withheld, conditioned or delayed, provided, however, that Sovos may assign this
Agreement without the consent of TEDCO to an entity which controls, is controlled by
or is under common control with Sovos,any successor entity to Sovos by way of merger,
consolidation or other non-bankruptcy corporate reorganization, or an entity which
acquires all or substantially all of Sovos's assets,partnership or membership interests,or
capital stock.
7.8 Amendment. This Agreement may be amended by the mutual written agreement of the
Parties.
7.9 Termination. In the event Sovos elects not to proceed with the investments as
contemplated by this Agreement, Sovos shall notify the City in writing, and this
Agreement and the obligations on the part of all Parties shall be deemed terminated and
of no further force or effect.
7.10 Notice. Any notice and or statement required and permitted to be delivered shall be
deemed delivered by actual delivery, facsimile with receipt of confirmation, or by
depositing the same in the United States mail, certified with return receipt requested,
postage prepaid,addressed to the appropriate party at the following addresses:
If to TEDCO: Round Rock Transportation and Economic Development Corporation
221 E. Main Street
Round Rock, TX 78664
Attn: City Manager
Phone:(512) 218-5400
Email: lhadlcy Proundrocktexas;xguo
With a required copy to:
Sheets & Crossfield
309 E. Main Street
Round Rock,TX 78664
Attn: Stephan L. Sheets
Phone: (512)255-8877
Email: stevcPsccrlaw.com
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If to Sovos: Sovos Brands Intermediate, Inc.
1901 4'h Street, Suite 200
Berkeley, CA 94701
Attn: Chief Financial Officer
Email:
With a required copy to:
Michael Angelo's Gourmet Foods, Inc.
200 Michael Angelo Way
Austin,TX 78728
Attn: Plant Manager
Email:
Any party may designate a different address at any time upon written notice to the other Parties.
7.11 Interpretation. Each of the Parties has been represented by counsel of their choosing in
the negotiation and preparation of this Agreement. Regardless of which party prepared
the initial draft of this Agreement, this Agreement shall, in the event of any dispute, be
interpreted fairly and reasonably and neither more strongly for or against any party.
7.12 Applicable Law. This Agreement is made,and shall be construed and interpreted, under
the laws of the State of Texas and venue shall lie in Williamson County,Texas.
7.13 Scvcrability. In the event any provisions of this Agreement are illegal, invalid or
unenforceable under present or future laws, it is the intention of the Parties that the
remainder of this Agreement shall not be affected. It is also the intention of the Parties of
this Agreement that in lieu of each clause and provision that is found to be illegal,invalid
or unenforceable, a provision be added to this Agreement which is legal, valid or
enforceable and is as similar in terms as possible to the provision found to be illegal,
invalid or unenforceable.
7.14 Paragraph Headings. The paragraph headings contained in this Agreement are for
convenience only and will in no way enlarge or limit the scope or meaning of the various
and several paragraphs.
7.15 No Third-Party Beneficiaries. This Agreement is not intended to confer any rights,
privileges or causes of action upon any third party.
7.16 Force Maieure. Except as otherwise provided herein, an equitable adjustment shall be
made for delay or failure in performing if such delay or failure is caused, prevented, or
restricted by conditions beyond that Party's reasonable control (a"force majeru-e event").
A force majew-e event for the purposes of this Agreement shall include,but not be limited
to,acts of God, fire; explosion,vandalism;storm or similar occurrences;orders or acts of
military or civil authority; litigation; changes in law, rules, or regulations outside the
control of the affected Party; national emergencies or insurrections; riots; acts of
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terrorism;or supplier failures,shortages or breach or delay. Except as otherwise expressly
provided, herein, there shall be an equitable adjustment allowed for performance under
this Agreement as the result of any event offorce majew-e.
7.17 No Joint Venture. It is acknowledged and agreed by the Parties that the terms hereof are
not intended to and shall not be deemed to create any partnership or joint venture among
the Parties.TEDCO,its past, present and future officers,elected officials,employees and
agents of TEDCO, do not assume any responsibilities or liabilities to any third party in
connection with the development of the Facility or the design, construction or operation
of any portion of the Facility.
7.18 Estoppel Certificate. Sovos may request an estoppel certificate from TEDCO so tong as
the certificate is requested in connection with a bona fide business purpose and requests
commercially reasonable certifications. TEDCO agrees to promptly execute and deliver
any estoppel certificate reasonably requested pursuant to this Section 7.18. The
certificate, which will upon request be addressed to Sovos, or a lessee, purchaser or
assignee of Sovos, shall include, but not necessarily be limited to, statements (qualified
to the best knowledge of TEDCO)that this Agreement is in full force and effect without
default (or if a default exists, the nature of such default and any curative action which
should be undertaken to cure same),the remaining terni of this Agreement,and such other
matters reasonably requested by the party(ies)to receive the certificate.
EXECUTED to be effective as of the. day of 10XV 2019(the"Effective Date").
ROUND ROCK TRANSPORTATION AND
ECONOMIC DEVELOPMENT CORPORATION
By:
Craig organ, esident
SOVOS BRANDS I TERMEDIATE, INC.
By:
Its: 0f C--SGO /J4-2 Fr- Z0 t9/�
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EXHIBIT A
Job Compliance Affidavit
Before me, the undersigned authority, on this day personally appeared
(name), known to me to be the person whose
name is subscribed below and after having been duty sworn, on his/her oath stated as
follows:
"My name is . I am over the age of 21 years and
am capable of making this affidavit. The facts stated in this affidavit are within my
personal knowledge and are true and correct. "I am the
(title) of Sovos Brands Intermediate, Inc., and I am
duly authorized to make this affidavit on its behalf.
As of December 31, 202 , in compliance with Section 4.3 of the Economic
Development Agreement, Sovos Brands Intermediate, Inc. had created the following
Skilled Employee positions:
EMPLOYEE ID NO. JOB POSITION OR TITLE
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TOTALJOBS
DATED THIS DAY OF —, 202—.
BY: (Signature)
(Printed Name)
(Title)
SUBSCRIBED AND SWORN TO BEFORE ME ON THIS THE DAY OF
20—.
NOTARY PUBLIC, STATE OF TEXAS
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