Snyder's-Lance, Inc.
SNYDER'S-LANCE, INC. (Form: 10-Q, Received: 05/05/2011 15:28:25)


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d)
 of the Securities Exchange Act of 1934

For the quarter ended April 2, 2011

Commission File Number 0-398
 

SNYDER’S-LANCE, INC.
 (Exact name of registrant as specified in its charter)
     
North Carolina
 (State or other jurisdiction of  incorporation or organization)
 
56-0292920
 (I.R.S. Employer Identification No.)
     
13024 Ballantyne Corporate Place
   
Suite 900
   
Charlotte, North Carolina
 
28277
(Address of principal executive offices)
 
(Zip Code)
 
704-554-1421
 (Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes þ       No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes þ        No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ
Accelerated filer ¨
Non-accelerated filer ¨
Smaller reporting company ¨
   
  (Do not check if a smaller reporting company)
 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes o       No þ

The number of shares outstanding of the registrant’s $0.83-1/3 par value Common Stock, its only outstanding class of Common Stock as of April 29, 2011, was 67,199,422 shares.
 


 
 

 
 
 
  SNYDER’S-LANCE, INC. AND SUBSIDIARIES    
     
I NDEX    
     
PART I.  FINANCIAL INFORMATION
Page  
     
Item 1.  Financial Statements
   
     
3  
     
4  
     
5  
     
6  
     
14  
     
19  
     
19  
     
PART II.  OTHER INFORMATION
   
     
19  
     
19  
     
19  
     
20  
     
21  
 
 
2

 
PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements

SNYDER’S-LANCE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income/(Loss) (Unaudited)
For the Quarters Ended April 2, 2011 and March 27, 2010
(in thousands, except per share data)
 
   
Quarter Ended
 
   
April 2,
2011
   
March 27,
 2010*
 
             
Net revenue
  $ 388,471     $ 221,617  
Cost of sales
    247,299       137,742  
Gross margin
    141,172       83,875  
                 
Selling, general and administrative
    120,905       80,420  
Other expense, net
    39       3,610  
Income/(loss) before interest and income taxes
    20,228       (155 )
                 
Interest expense, net
    2,660       860  
Income/(loss) before income taxes
    17,568       (1,015 )
                 
Income tax expense/(benefit)
    6,525       (330 )
Net income/(loss)
    11,043       (685 )
Net income attributable to noncontrolling interests
    194       -  
Net income/(loss) attributable to Snyder’s-Lance, Inc.
  $ 10,849     $ (685 )
                 
Basic earnings/(loss) per share
  $ 0.16     $ (0.02 )
Weighted average shares outstanding – basic
    66,732       31,758  
                 
Diluted earnings/(loss) per share
  $ 0.16     $ (0.02 )
Weighted average shares outstanding – diluted
    68,060       31,758  
                 
Cash dividends declared per share
  $ 0.16     $ 0.16  
 
* Quarter Ended March 27, 2010 amounts have been revised to reflect the change in accounting for inventory.  See Note 3 for more information.

See Notes to the Condensed Consolidated Financial Statements (Unaudited).
 
 
3

 
SNYDER’S-LANCE, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets
As of April 2, 2011 (Unaudited) and January 1, 2011
(in thousands, except share data)
 
   
April 2, 2011
   
January 1, 2011
 
ASSETS
           
             
Current assets:
           
Cash and cash equivalents
  $ 6,362     $ 27,877  
Accounts receivable, net of allowances of $3,289 and $2,899, respectively
    142,248       128,556  
Inventories
    102,947       96,936  
Income tax receivable
    32,743       29,304  
Deferred income taxes
    9,905       14,346  
Prepaid expenses and other current assets
    24,248       26,748  
Total current assets
    318,453       323,767  
                 
Noncurrent assets:
               
Fixed assets, net of accumulated depreciation of $311,015 and $299,877, respectively
    340,947       336,673  
Goodwill, net
    377,895       376,281  
Other intangible assets, net
    406,693       407,579  
Other noncurrent assets
    18,796       18,056  
Total assets
  $ 1,462,784     $ 1,462,356  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
                 
Current liabilities:
               
Accounts payable
  $ 49,535     $ 39,938  
Accrued compensation
    28,611       31,564  
Other payables and accrued liabilities
    58,851       64,000  
Current portion of long-term debt
    58,666       57,767  
Total current liabilities
    195,663       193,269  
                 
Noncurrent liabilities:
               
Long-term debt
    217,320       227,462  
Deferred income taxes
    186,047       180,812  
Other noncurrent liabilities
    21,836       24,198  
Total liabilities
    620,866       625,741  
                 
Commitments and contingencies
    -       -  
                 
Stockholders’ equity:
               
Common stock, 67,189,213 and 66,336,807 shares outstanding, respectively
    55,989       55,278  
Preferred stock, no shares outstanding
    -       -  
Additional paid-in capital
    723,568       722,007  
Retained earnings
    40,463       40,199  
Accumulated other comprehensive income
    17,859       15,104  
Total Snyder’s-Lance, Inc. stockholders' equity
    837,879       832,588  
Noncontrolling interests
    4,039       4,027  
Total stockholders’ equity
    841,918       836,615  
Total liabilities and stockholders’ equity
  $ 1,462,784     $ 1,462,356  
 
See Notes to the Condensed Consolidated Financial Statements (Unaudited).
 
 
4

 
SNYDER’S-LANCE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)
For the Quarters Ended April 2, 2011 and March 27, 2010
(in thousands)
 
   
Quarter Ended
 
   
April 2,
2011
   
March 27,
2010*
 
             
Operating activities
           
Net income/(loss)
  $ 11,043     $ (685 )
Adjustments to reconcile net income/(loss) to cash from operating activities:
               
Depreciation and amortization
    14,061       9,596  
Stock-based compensation expense
    338       1,821  
(Gain)/loss on sale of fixed and intangible assets
    (48 )     54  
Impairment of fixed assets
    -       584  
Changes in operating assets and liabilities
    (12,982 )     (12,904 )
Net cash provided by/(used in) operating activities
    12,412       (1,534 )
                 
Investing activities
               
Purchases of fixed assets
    (17,471 )     (7,605 )
Purchases of routes
    (622 )     -  
Proceeds from sale of fixed assets
    521       61  
Proceeds from sale of routes
    676       -  
Proceeds from sale of investments
    960       -  
Net cash used in investing activities
    (15,936 )     (7,544 )
                 
Financing activities
               
Dividends paid to stockholders
    (10,584 )     (5,134 )
Dividends paid to noncontrolling interests
    (182 )     -  
Issuances of common stock
    1,935       748  
Repurchases of common stock
    -       (1,261 )
Net (repayments)/proceeds on existing credit facilities
    (9,243 )     15,000  
Net cash (used in)/provided by financing activities
    (18,074 )     9,353  
                 
Effect of exchange rate changes on cash
    83       133  
                 
(Decrease)/increase in cash and cash equivalents
    (21,515 )     408  
Cash and cash equivalents at beginning of period
    27,877       5,418  
Cash and cash equivalents at end of period
  $ 6,362     $ 5,826  
                 
Supplemental information:
               
Cash paid for income taxes, net of refunds of $2 and $12, respectively
  $ 449     $ 842  
Cash paid for interest
  $ 1,478     $ 831  
 
*Quarter Ended March 27, 2010 amounts have been revised to reflect the change in accounting for inventory.  See Note 3 for more information.
 
See Notes to the Condensed Consolidated Financial Statements (Unaudited).
 
 
5

 
SNYDER’S-LANCE, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)
 
1.
BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Snyder’s-Lance, Inc. have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  These condensed financial statements should be read in conjunction with the audited financial statements and notes included in our Form 10-K for the year ended January 1, 2011, filed with the Securities and Exchange Commission (the “SEC”) on March 2, 2011.  In our opinion, these condensed consolidated financial statements reflect all adjustments, consisting of only normal, recurring accruals, necessary to present fairly our condensed consolidated financial statements for the interim periods presented herein.  The consolidated results of operations for the quarter ended April 2, 2011, are not necessarily indicative of the results to be expected for the full year.

Preparing financial statements requires management to make estimates and assumptions about future events that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosure of contingent assets and liabilities.  Examples include customer returns and promotional activity, allowances for doubtful accounts, inventory valuations, self-insurance reserves, impairment analysis of goodwill and other intangible assets, useful lives and impairment of fixed assets, incentive compensation, and income taxes.  Actual results may differ from our estimates.

On December 6, 2010, Lance, Inc. (“Lance”) and Snyder’s of Hanover, Inc. (“Snyder’s”) completed a merger (the “Merger”) to create Snyder’s-Lance, Inc.  The first quarter of 2011 reflects the results of operations of the combined company, while the first quarter of 2010 only reflects the results of operations for Lance.

Effective December 6, 2010, we changed the accounting method for a portion of our inventories from Last-in, First-out (“LIFO”) to First-in, First-out (“FIFO”).  This change, which was applied by retrospectively adjusting the prior years’ financial statements, is described further in Note 3.

2.
NEW ACCOUNTING STANDARDS

In January 2010, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2010-06, “Improving Disclosures about Fair Value Measurements,” which amends the Accounting Standards Codification (ASC) Topic 820, “Fair Value Measurements and Disclosures.”  ASU No. 2010-06 amends ASC Topic 820 to require disclosure of transfers into and out of Level 1 and Level 2 fair value measurements, and requires more detailed disclosure about the activity within Level 3 fair value measurements.  We adopted the guidance in ASU No. 2010-06 related to transfers in and out of Level 1 and Level 2 fair value measurements on the first day of fiscal 2010 and the requirements related to Level 3 disclosures on April 2, 2011.  The guidance had no impact on our condensed consolidated financial statements.

3.
CHANGE IN ACCOUNTING METHOD

Prior to December 6, 2010, inventories were valued using both the LIFO and the FIFO methods.  Effective December 6, 2010, we changed our method of accounting for the finished goods, work-in-progress and raw material inventories previously on the LIFO method to the FIFO method.

The effect of the change on the condensed consolidated statements of income/(loss) and the condensed consolidated statement of cash flows for the quarter ended March 27, 2010, was not significant.

4.
MERGERS & ACQUISITIONS

On December 6, 2010 (the “merger date”), a wholly owned subsidiary of Lance was merged with and into Snyder’s, resulting in Snyder’s becoming a wholly owned subsidiary of Lance.  As part of the Merger, Snyder’s shareholders received 108.25 shares of Lance stock for each share outstanding as of the merger date.  All of the outstanding Snyder’s shares and equity-based awards were exchanged for Lance shares and equity awards as part of the Merger.  Fractional shares generated by the conversion ratio were settled in cash for an immaterial amount.  After the exchange was completed, pre-Merger Lance shareholders retained ownership of 49.8% of the Company.  In conjunction with consummating the Merger, the name of the Company was changed to Snyder’s-Lance, Inc.
 
 
6

 
SNYDER’S-LANCE, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

We have preliminarily allocated the purchase price to the individual assets acquired and liabilities assumed. No significant adjustments to the initial purchase price allocation were made in the first quarter of 2011.  Our valuations are subject to adjustment as additional information is obtained and are expected to be finalized by the end of the third quarter of 2011.

The following unaudited pro forma consolidated financial information has been prepared as if the Merger between Lance and Snyder’s had taken place at the beginning of fiscal 2010.  The unaudited pro forma results include estimates and assumptions regarding increased amortization of intangible assets related to the Merger, increased interest expense related to cash paid for Merger-related expenses, and the related tax effects. However, pro forma results are not necessarily indicative of the results that would have occurred if the Merger had occurred on the date indicated, or that may result in the future.

 
(in thousands, except per share data)
 
Quarter Ended
March 27, 2010
 
       
Net revenue
  $ 378,716  
Income before interest and income taxes
  $ 7,566  
Net income attributable to Snyder’s-Lance, Inc.
  $ 4,231  
Weighted average diluted shares
    66,186  
Diluted earnings per share
  $ 0.06  

In February 2011, we announced a plan to convert approximately 1,300 company-owned routes to an independent operator structure to better position our distribution network to serve customers.  The conversion is currently scheduled to be substantially complete by the middle of 2012 and may result in increased severance charges, possible impairments, or losses on the sale of assets in future periods.  Due to the magnitude and complexity of both the recently announced independent operator conversion and other integration activities, we are still in the process of analyzing the financial impacts.  Accordingly, any resulting gains or losses are not reasonably estimable at this time.

5.
EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income by the weighted average number of shares outstanding during each period.  Diluted earnings per share gives effect to all securities representing potential common shares that were dilutive and outstanding during the period.  In the calculation of diluted earnings per share, the denominator includes the number of additional common shares that would have been outstanding if our outstanding dilutive stock options had been exercised, as determined pursuant to the treasury stock method.

The following table sets forth the computation of basic and diluted earnings per share:

   
Quarter Ended
 
 
(in thousands, except per share data)
 
April 2, 
2011
   
March 27,
2010
 
             
Basic Earnings/(Loss) Per Share:
           
Net income/(loss) attributable to Snyder’s-Lance, Inc.
  $ 10,849     $ (685 )
Weighted average number of shares outstanding
    66,732       31,758  
Basic earnings/(loss) per share
  $ 0.16     $ (0.02 )
                 
Diluted Earnings/(Loss) Per Share:
               
Net income/(loss) attributable to Snyder’s-Lance, Inc.
  $ 10,849     $ (685 )
Weighted average number of shares outstanding
    66,732       31,758  
Effect of dilutive securities
    1,328       -  
Weighted average shares – diluted
    68,060       31,758  
Diluted earnings/(loss) per share
  $ 0.16     $ (0.02 )
 
 
7

 
SNYDER’S-LANCE, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)
 
Approximately 200,000 common equivalent shares were excluded from the calculation of diluted earnings per share for the quarter ended April 2, 2011 because their effects were antidilutive.  The effect of approximately 830,000 common equivalent shares for the quarter ended March 27, 2010 was excluded from the diluted weighted average shares outstanding due to the net loss sustained for the period.

6.
EQUITY-BASED INCENTIVES

Compensation expense related to equity-based incentive plans of $0.3 million and $1.8 million was recognized for the quarters ended April 2, 2011 and March 27, 2010, respectively.  During the quarter ended April 2, 2011, we issued 1,020,765 non-qualified stock options at $17.32 per share and 152,748 restricted shares to employees.  During the quarter ended March 27, 2010, we issued 460,412 non-qualified stock options at $21.98 per share and 85,815 restricted shares to employees.

During the quarter ended March 27, 2010, we repurchased 56,152 shares of common stock from employees to cover withholding taxes payable by employees upon the vesting of restricted stock.  There were no share repurchases during the quarter ended April 2, 2011.

7.
INVENTORIES

 
(in thousands)
 
April 2, 
2011
   
January 1,
2011
 
             
Finished goods
  $ 58,711     $ 55,658  
Raw materials
    18,567       17,015  
Supplies, etc.
    25,669       24,263  
  Total inventories.
  $ 102,947     $ 96,936  

8.
TARGETED ACQUISITION COSTS

During the first quarter of 2010, we incurred $2.9 million in financing commitment fees and professional fees associated with merger and acquisition activities.  The financing commitment fees of $2.7 million are reflected in Other expense, net on the Condensed Consolidated Statement of Income/(Loss).  The professional fees of $0.2 million are reflected in Selling, general & administrative expenses on the Condensed Consolidated Statements of Income/(Loss).

9.
INVESTMENTS

We own a non-controlling equity interest in Late July Snacks LLC (“Late July”), an organic snack food company.  Equity earnings, which are not material, are included in Other expense, net.  We also manufacture products for Late July.  Contract manufacturing revenue from Late July was approximately $1.1 million and $0.8 million during the first quarters of 2011 and 2010, respectively.  As of April 2, 2011, and January 1, 2011, accounts receivable due from Late July totaled $0.4 million and $0.4 million, respectively. During the first quarter of 2011, we purchased manufacturing equipment from Late July for $2.0 million.

As of April 2, 2011, and January 1, 2011, we have $7.8 million and $8.9 million, respectively, in long-term investments consisting of limited partnerships and real estate investment trusts.  During the first quarter of 2011, one of these investments was sold for approximately $1.0 million resulting in an immaterial loss.  Since our ownership interests are less than 5%, these investments are recorded at cost and adjusted for impairments considered other than temporary.  Distributions received are recorded as either a return of capital or as investment income if in the form of a dividend.
 
 
8

 
SNYDER’S-LANCE, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)
 
10.
GOODWILL AND OTHER INTANGIBLE ASSETS

The changes in the carrying amount of goodwill for the quarter ended April 2, 2011, are as follows:

 
(in thousands)
 
Carrying Amount
 
       
Balance as of January 1, 2011
  $ 376,281  
 Purchase price adjustments
    120  
 Change in foreign currency exchange rate
    1,494  
Balance as of April 2, 2011
  $ 377,895  

As of April 2, 2011 and January 1, 2011, acquired intangible assets consisted of the following:

 
 
(in thousands)
 
Gross Carrying Amount
   
Accumulated Amortization
   
Net Carrying Amount
 
                   
As of April 2, 2011:
                 
     Customer relationships - amortized
  $ 64,168     $ (2,256 )   $ 61,912  
     Non-compete agreement - amortized
    500       (500 )     -  
     Routes - unamortized
    50,520       -       50,520  
     Trademarks - unamortized
    294,787       (526 )     294,261  
Balance as of April 2, 2011
  $ 409,975     $ (3,282 )   $ 406,693  
                         
                         
As of January 1, 2011:
                       
     Customer relationships - amortized
  $ 64,168     $ (1,384 )   $ 62,784  
     Non-compete agreement - amortized
    500       (451 )     49  
     Routes - unamortized
    50,485       -       50,485  
     Trademarks - unamortized
    294,787       (526 )     294,261  
Balance as of January 1, 2011
  $ 409,940     $ (2,361 )   $ 407,579  

The intangible assets related to customer relationships are being amortized over a weighted average useful life of 18.5 years and will be amortized through November 2029.  Amortization expense related to intangibles was $0.9 million and $0.2 million for the quarters ended April 2, 2011, and March 27, 2010, respectively.  We estimate that annual amortization expense for intangible assets over the next five years will be approximately $3.5 million per year.

The trademarks are deemed to have an indefinite useful life because they are expected to generate cash flows indefinitely.  Although trademarks are not amortized, they are reviewed for impairment as conditions change or at least on an annual basis.

11.
INCOME TAXES

We have recorded gross unrecognized tax benefits as of April 2, 2011 totaling $3.8 million and related interest and penalties of $1.6 million in other noncurrent liabilities on the Condensed Consolidated Balance Sheet.  Of this amount, $4.1 million would affect the effective tax rate if subsequently recognized.  No taxing authorities’ statutes of limitations related to the computation of our unrecognized tax benefits have expired since the beginning of 2011.  We expect that certain income tax audits will be settled, and additional statutes of limitations will likely expire before the end of 2011 and may result in a potential $0.1 million reduction in the unrecognized tax benefit amount.  We classify interest and penalties associated with income tax positions within income tax expense. 
 
 
9

 
SNYDER’S-LANCE, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)
 
We have open years for income tax audit purposes in our major taxing jurisdictions according to statutes as follows:

Jurisdiction
Open Years
U.S. federal
2007 and forward
Canada federal
2006 and forward
Ontario provincial
2004 and forward
Massachusetts
2001 and forward
North Carolina
2006 and forward
Iowa
2007 and forward
Missouri
2007 and forward
New York
 2007 and forward
California
 2006 and forward
Pennsylvania
 2007 and forward
Michigan
2006 and forward

12.
FAIR VALUE MEASUREMENTS

We have classified assets and liabilities required to be measured at fair value into the fair value hierarchy as set forth below:
 
 
Level 1
- quoted prices in active markets for identical assets and liabilities.
 
Level 2
- observable inputs other than quoted prices for identical assets and liabilities.
 
Level 3
- unobservable inputs in which there is little or no market data available, which requires us to develop our own assumptions.
 
We measure our derivative instruments at fair value using Level 2 inputs.  There were no changes among the levels during the first quarter of 2011.

The carrying amount of cash and cash equivalents, receivables and accounts payable approximates fair value due to their short-term nature.  The carrying amount of variable-rate debt approximates fair value since its variable interest rate is based on current market rates and interest payments are made monthly.  The carrying amount of fixed-rate debt approximates fair value since it was recently recorded at fair value upon the Merger.

During the first quarter of 2010, market value declines for commercial real estate resulted in an impairment charge of $0.6 million related to assets held for sale in Little Rock, Arkansas.  This property was sold in the second quarter of 2010 for $1.8 million in net proceeds.

13.
DERIVATIVE INSTRUMENTS

We are exposed to certain risks related to our ongoing business operations.  We use derivative instruments to manage interest rate and foreign exchange rate risks.

The fair value of the derivative instrument asset/(liability) in the condensed consolidated balance sheets using Level 2 inputs is as follows:

   
Fair Value of Asset/(Liability) at
 
(in thousands)
 
April 2, 2011
   
January 1, 2011
 
             
Derivatives designated as hedging instruments:
           
Interest rate swaps (included in Other noncurrent liabilities)
  $ (737 )   $ (2,630 )
Interest rate swaps (included in Other payables and accrued liabilities)
    (1,214 )     -  
Foreign currency forwards (included in Prepaid expenses and other current assets)
    181       256  
Total derivatives designated as hedging instruments
  $ (1,770 )   $ (2,374 )
 
 
10

 
SNYDER’S-LANCE, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)
 
Interest Rate Swaps
Our variable-rate debt obligations incur interest at floating rates based on changes in the Eurodollar rate and U.S. base rate interest.  To manage exposure to changing interest rates, we selectively enter into interest rate swap agreements to maintain a desirable proportion of fixed to variable-rate debt.  The notional amount of the interest rate swaps as of April 2, 2011 and January 1, 2011 was $65.0 and $65.9 million, respectively.

Foreign Currency Forwards
We have exposure to foreign exchange rate fluctuations through the operations of our Canadian subsidiary.  A majority of the revenue of our Canadian operations is denominated in U.S. dollars and a substantial portion of its costs, such as raw materials and direct labor, are denominated in Canadian dollars.  We have entered into a series of derivative forward contracts to mitigate a portion of this foreign exchange rate exposure.  These contracts have maturities through September 2011.  The notional amount for foreign currency forwards increased from $4.4 million at January 1, 2011, to $4.7 million at April 2, 2011.

The pre-tax income/(expense) effect of derivative instruments on the Condensed Consolidated Statements of Income/(Loss) is as follows:

   
Quarter Ended
 
(in thousands)
 
April 2, 2011
   
March 27, 2010
 
Interest rate swaps (included in Interest expense, net)
  $ (702 )   $ (614 )
Foreign currency forwards (included in Net revenue)
    198       636  
Foreign currency forwards (included in Other expense, net)
    (14 )     (8 )
     Total net pre-tax income/(expense) from derivative instruments
  $ (518 )   $ 14  

The change in unrealized pre-tax gains/(losses) included in other comprehensive income due to fluctuations in interest rates and foreign exchange rates was as follows:

   
Quarter Ended
 
(in thousands)
 
April 2, 2011
   
March 27, 2010
 
Interest rate swaps
  $ 679     $ 256  
Foreign currency forwards 
    (75 )     (368 )
Total change in unrealized pre-tax gains/(losses) from derivative instruments (effective portion)
  $ 604     $ (112 )

Undesignated Hedges

The fair value of the derivative instrument asset/(liability) in the condensed consolidated balance sheets using Level 2 inputs is as follows:

   
Fair Value of Asset/(Liability) at
 
(in thousands)
 
April 2, 2011
   
January 1, 2011
 
Derivatives not designated as hedging instruments:
           
Interest rate swaps (included in Other noncurrent liabilities)
  $ (424 )   $ (485 )
Commodity hedges (included in Prepaid expenses and other current assets)
    -       538  
Total derivatives not designated as hedging instruments
  $ (424 )   $ 53  
 
 
11

 
SNYDER’S-LANCE, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)
 
Interest Rate Swaps:
The pre-tax gain on interest rate swaps with a notional amount of $3.8 million not designated as cash flow hedges was as follows:
 
(in thousands)   Quarter Ended  
   
April 2, 2011
   
March 27, 2010
 
Interest rate swaps (included in Interest expense, net)
  $ 61     $  -  
 
Commodity Contracts:
During the first quarter of 2011, we transferred the commodity contracts for approximately 200,000 bushels of wheat (which were assumed in conjunction with the Merger) to our supplier in order to receive lower prices on firm commitments.  These contracts totaling approximately $0.5 million will remain on the balance sheet as a current asset until delivery of the flour occurs in May. There was no pre-tax gain/(loss) recorded during the first quarter of 2011 associated with these contracts.

The counterparty credit risk associated with our derivative instruments in an asset position is considered low, because we limit our exposure by using strong, creditworthy counterparties.

14.
COMMITMENTS AND CONTINGENCIES

Contractual Obligations
In order to mitigate the risks of volatility in commodity markets to which we are exposed, we have entered into forward purchase agreements with certain suppliers based on market prices, forward price projections, and expected usage levels.  Purchase commitments for inventory increased from $169.6 million as of January 1, 2011, to $203.7 million as of April 2, 2011, due to the increased volume of purchase agreements typically entered into during the first quarter of our fiscal year.  We currently contract from three months to approximately two years for all major ingredients and packaging.

Customer Concentration
A substantial portion of our revenue is generated through our direct-store-delivery (“DSD”) system, which includes both company-owned and independent operator routes.  Sales to our largest customer, Wal-Mart Stores, Inc., including sales from our independent operator routes, decreased from 23% in the first quarter of 2010 to 18% in the first quarter of 2011.  The decrease was primarily due to the Merger, which lowered our overall concentration of sales with Wal-Mart Stores, Inc.  Accounts receivable at April 2, 2011 and January 1, 2011, included receivables from Wal-Mart Stores, Inc. totaling $25.8 million and $22.9 million, respectively.

Guarantees
We guarantee approximately 260 loans made to independent distributors by a third party financial institution for the purchase of distribution routes and trucks. The outstanding aggregate balance on these loans was approximately $16.9 million as of April 2, 2011. The annual maximum amount of future payments we could be required to make under the guarantee equates to 25% of the outstanding loan balance on the first day of each calendar year plus 25% of the amount of any new loans issued during such calendar year.

We have entered into loan service agreements with certain related parties that require us to repurchase certain distribution assets in the event an independent distributor defaults on a loan with the related party.  The Company is required to repurchase the assets 30 days after default at the fair market value as defined in the loan service agreement. As of April 2, 2011, there were approximately 870 outstanding loans made to independent distributors by the related parties for the purchase of distribution routes and trucks with an outstanding aggregate principal balance of approximately $44.2 million.

We are currently subject to various lawsuits and environmental matters arising in the normal course of business.  In our opinion, such matters should not have a material effect upon our consolidated financial statements taken as a whole.
 
 
12

 
SNYDER’S-LANCE, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)
 
15.
RELATED PARTY TRANSACTIONS

We own 51% of Patriot Snacks Real Estate, LLC (“Patriot”) and consolidate its balance sheet and operating results into our consolidated financial statements.  The remaining 49% is owned by one of our employees.
 
We own 80% of Michaud Distributors, Inc., which distributes our products in the northeastern United States.  As of April 2, 2011, we have notes receivable from two stockholders and an affiliate of Michaud Distributors, Inc. of $0.3 million.  The notes are unsecured, due upon demand, and bear interest at the best rate available to Michaud Distributors, Inc. by its primary commercial lenders.

ARWCO Corporation, MAW Associates, LP and Warehime Enterprises, Inc. are significantly owned or controlled by the Chairman of the Board of Snyder’s-Lance, Inc. or direct family members.  These entities provide financing to independent distributors for the purchase of trucks and routes.  Our Chairman of the Board also serves as an officer and/or director of these entities. Transactions with these related parties are primarily related to the collection and remittance of loan payments on notes receivable held by the affiliates.  We are reimbursed for certain overhead and administrative services associated with the services provided to these related parties.  The receivables from, payables to, and administrative fees from these entities are not significant.

One of our directors, C. Peter Carlucci, Jr., is a member of Eckert Seamans Cherin & Mellott, LLC (“Eckert”), which serves as one of our outside legal firms.  There were $0.2 million in payments made to Eckert during the first quarter of 2011.

16.
COMPREHENSIVE INCOME AND NONCONTROLLING INTERESTS

Comprehensive income consisted of the following:

   
Quarter Ended
 
 
(in thousands)
 
April 2,
 2011
   
March 27,
2010*
 
             
Net income/(loss)
  $ 11,043     $ (685 )
Foreign currency translation adjustment
    2,389       1,476  
Net unrealized gain/(loss) on derivatives, net of tax
    366       (96 )
 Total comprehensive income     13,798       695  
 Comprehensive income attributable to noncontrolling interests     (194)       -  
 Comprehensive income attributable to Snyder’s-Lance, Inc.
  $ 13,604     $ 695  

*Quarter Ended March 27, 2010 amounts have been revised to reflect the change in accounting for inventory.  See Note 3 for more information.

Our noncontrolling interests include 80% ownership of Melisi Snacks, Inc., 51% ownership of Patriot Snacks Real Estate, LLC, and 80% ownership of Michaud Distributors, Inc.  The change in noncontrolling interests during the first quarter of 2011 included earnings of $0.2 million and distributions of $0.2 million.  All other changes in stockholders’ equity are attributable to Snyder’s-Lance, Inc.
 
 
13

 
SNYDER’S-LANCE, INC. AND SUBSIDIARIES

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
Cautionary Information About Forward-Looking Statements

This report includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements include statements about our estimates, expectations, beliefs, intentions, or strategies for the future, and the assumptions underlying such statements.  We use the words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “forecasts,” “may,” “will,” “should,” and similar expressions to identify our forward-looking statements.  Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from historical experience or our present expectations.  Factors that could cause these differences include, but are not limited to, the risks and uncertainties set forth in Part II, “Item 1A. Risk Factors” and elsewhere in this report and in our Annual Report on Form 10-K for the year ended January 1, 2011, and those described from time to time in our other reports filed with the Securities and Exchange Commission.

Caution should be taken not to place undue reliance on our forward-looking statements, which reflect our management’s expectations only as of the time such statements are made.  Except as required by law, we undertake no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Results of Operations

Management’s discussion and analysis of our financial condition and results of operations are based upon the condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.  The preparation of these financial statements requires us to make estimates and judgments about future events that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.  The consolidated results of operations for the quarter ended April 2, 2011, are not necessarily indicative of the results to be expected for the full year.  Future events and their effects cannot be determined with absolute certainty.  Therefore, management’s determination of estimates and judgments about the carrying values of assets and liabilities requires the exercise of judgment in the selection and application of assumptions based on various factors, including historical experience, current and expected economic conditions and other factors believed to be reasonable under the circumstances.  We routinely evaluate our estimates, including those related to customer returns and promotions, allowances for doubtful accounts, inventory valuations, useful lives of fixed assets and related impairment, long-term investments, hedge transactions, postretirement benefits, intangible asset valuations, incentive compensation, income taxes, self-insurance, contingencies and litigation.  Actual results may differ from these estimates.

Quarter Ended April 2, 2011 Compared to Quarter Ended March 27, 2010

   
Quarter Ended
   
Favorable/
 
 
(dollars in thousands)
 
April 2, 2011
   
March 27, 2010*
   
(Unfavorable)
Variance
 
                                     
Net revenue
  $ 388,471       100.0 %   $ 221,617       100.0 %   $ 166,854       75.3 %
Cost of sales
    247,299       63.7 %     137,742       62.2 %     (109,557 )     -79.5 %
  Gross margin
    141,172       36.3 %     83,875       37.8 %     57,297       68.3 %
Selling, general and administrative
    120,905       31.1 %     80,420       36.3 %     (40,485 )     -50.3 %
Other expense, net
    39       0.0 %     3,610       1.6 %     3,571       98.9 %
  Income/(loss) before interest and taxes
    20,228       5.2 %     (155 )     -0.1 %     20,383    
nm
 
Interest expense, net
    2,660       0.7 %     860       0.4 %     (1,800 )     -209.3 %
Income tax expense/(benefit)
    6,525       1.7 %     (330 )     -0.1 %     (6,855 )  
nm
 
  Net income/(loss)
  $ 11,043       2.8 %   $ (685 )     -0.3 %   $ 11,728    
nm
 
   
 
 * Quarter Ended March 27, 2010 amounts have been revised to reflect the change in accounting for inventory.

nm = not meaningful.

 
14

 
SNYDER’S-LANCE, INC. AND SUBSIDIARIES

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
Overview:
On December 6, 2010, Lance, Inc. (“Lance”) and Snyder’s of Hanover, Inc. (“Snyder’s”) completed a merger (“Merger”) to create Snyder’s-Lance, Inc.  The first quarter of 2011 reflects the results of operations of the combined company, while the first quarter of 2010 only reflects the results of operations for Lance.

In February 2011, we announced a plan to convert approximately 1,300 company-owned direct-store-delivery (“DSD”) routes to an independent operator structure to better position our distribution network to serve customers.  The conversion is currently scheduled to be substantially complete by the middle of 2012 and is expected to materially impact our financial results in several areas as further described below.

Revenue
Net revenue increased $166.9 million or approximately 75% compared to the first quarter of 2010 primarily as a result of the incremental branded and non-branded revenue from the Merger.  Compared to the first quarter of 2010 and excluding the increase in net revenue from the Merger:

 
·
We had solid growth in our core branded product lines, including sandwich crackers and kettle chips;
 
·
From a channel perspective, we experienced revenue growth in grocery, mass merchandiser and convenience store channels, slightly offset by declines in food service and up-and-down-the-street channels; however,
 
·
We experienced revenue declines in non-branded products primarily due to:
 
o
Selling price adjustments resulting from changes in shipping terms, and
 
o
Lower volume due to the heavy promotional activity from national brand competitors.

Our branded products are principally sold under our recognized company-owned brands.  Non-branded products consists of:   private brand  products , which are sold to retailers and distributors using store brands or our own control brands, such as Brent & Sam’s®, Vista® and Delicious®; partner brands , which consists of other third-party brands that we sell through our DSD network; and contract manufacturing , which represents our contracts with other branded food manufacturers to produce their products.  Revenue by product category was as follows (in millions):

   
Quarter Ended
 
   
April 2, 2011
   
March 27,  2010
 
             
Branded Products
  $ 228.5     $ 126.6  
Non-Branded Products
    160.0       95.0  
   Total Revenue
  $ 388.5     $ 221.6  
 
As we move into the remainder of 2011, we expect to see significant growth in revenue compared to 2010 as a result of the addition of incremental revenue from the Merger, increased product distribution from merger-related synergies, and continued organic growth.
 
Gross Margin
Gross margin increased $57.3 million during the first quarter of 2011 compared to first quarter 2010 but declined 1.5% as a percentage of revenue.  The overall increase in gross margin was driven by the increase in sales volume primarily as a result of the Merger.  The gross margin decline as a percentage of revenue was primarily attributable to the addition of incremental revenue from the Merger, which is due to the independent operator DSD system having a lower revenue per unit sold.  Gross margin from our non-branded products was also negatively impacted by higher commodity costs, which were not fully offset by selling price increases.  Selling price increases continue to be implemented to mitigate the increase in commodity costs for the remainder of the year.  As we convert the company-owned routes to an independent operator DSD network, gross margin as a percentage of revenue should decline due to a greater percentage of sales to independent operators and a higher concentration of non-branded revenue, but should also result in lower distribution costs from these channels.

Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $40.5 million or approximately 50% for the first quarter of 2011 compared to the first quarter of 2010 but declined 5.2% as a percentage of revenue.  The $40.5 million increase was driven by the addition of incremental expenses assumed as part of the Merger.  Excluding the incremental expenses from the Merger,  selling, general and administrative expenses were approximately 10% lower than the same quarter last year due to lower advertising costs, salaries and wages, equity incentive expense and third-party shipping costs, which were somewhat offset by an increase in fuel prices compared to the same quarter last year and $1.6 million of severance charges and professional fees related to the Merger.  We expect continued severance and other integration-related costs throughout the remainder of 2011.

Due to the magnitude and complexity of both the recently announced independent operator conversion and other integration activities, we are still in the process of analyzing the financial impacts.  Accordingly, any resulting expenses are not reasonably estimable at this time.  Excluding the expected increase in severance and other integration related costs, we expect lower operating costs as a percentage of revenue as we convert the company-owned routes to an independent operator DSD network.

Other Expense, Net
Other expense, net was not significant in the first quarter of 2011.  Other expense, net in the first quarter of 2010 consisted of financing commitment fees of $2.7 million associated with merger and acquisition activities and an impairment charge of $0.6 million related to the assets held for sale in Little Rock, Arkansas.

As we convert the company-owned routes to an independent operator DSD network, possible gains or losses on the sale of assets may occur.  Due to the magnitude and complexity of both the recently announced independent operator conversion and other integration activities, we are still in the process of analyzing the financial impacts.  Accordingly, any resulting gains or losses are not reasonably estimable at this time.

Interest Expense
Interest expense increased $1.8 million during the first quarter of 2011 compared to the first quarter of 2010 as a result of higher debt and higher interest rates due to the Merger.

Income Tax Expense/Benefit
The effective income tax rate increased from 32.5% for the first quarter of 2010 to 37.1% for the first quarter of 2011.  The increase in the effective tax rate was due to higher consolidated net income, mix of income of our separate legal entities, higher reserves for uncertain tax positions, and lower utilization of permanent tax deductions.

Liquidity and Capital Resources

Liquidity
Liquidity represents our ability to generate sufficient cash flows from operating activities to meet our obligations as well as our ability to obtain appropriate financing.  Therefore, liquidity cannot be considered separately from capital resources that consist primarily of current and potentially available funds for use in achieving our objectives.  Currently, our liquidity needs arise primarily from working capital requirements, capital expenditures for fixed assets and routes and dividends.  Sufficient liquidity is expected to be available to enable us to meet these demands.

We have a universal shelf registration statement that, subject to our ability to consummate a transaction on acceptable terms, provides the flexibility to sell up to $250 million of debt or equity securities.

Operating Cash Flows
Net cash provided by operating activities was $12.4 million during the first quarter of 2011 while net cash used by operating activities was $1.5 million during the first quarter of 2010.  Net income/(loss) increased from a loss of $0.7 million in the first quarter of 2010 to income of $11.0 million in the first quarter of 2011.  Also, depreciation and amortization expense increased to $14.1 million in the first quarter of 2011 from $9.6 million in the first quarter of 2010, primarily driven by the fixed and intangible assets acquired via the Merger with Snyder’s.

Investing Cash Flows
Net cash used in investing activities was $15.9 million for the first quarter of 2011.  Capital expenditures for fixed assets, principally manufacturing equipment and building improvements, totaled $17.5 million during the first quarter of 2011, partially funded by proceeds from the sale of fixed assets of $0.5 million and the sale of investments of $1.0 million.  Capital expenditures are expected to continue at a level sufficient to support our strategic and operating needs.  Capital expenditures for fiscal 2011 are projected to be between $60 million and $70 million and funded by net cash flow from operating activities, cash on hand, and our existing credit facilities.

Net cash used in investing activities during the first quarter of 2010 represented capital expenditures of $7.6 million, partially offset by proceeds from the sale of fixed assets of $0.1 million.  Capital expenditures for purchases of fixed assets were $33.3 million for the year ended January 1, 2011.

Financing Cash Flows
Net cash used in financing activities was $18.1 million for the first quarter of 2011 while net cash provided by financing activities was $9.4 million in the first quarter of 2010.  During each of the first quarters of 2011 and 2010, we paid dividends of $0.16 per common share totaling $10.6 million and $5.1 million, respectively.  We received cash of $1.9 million and $0.7 million during the first quarter of 2011 and 2010, respectively, as a result of stock option exercises.  Repayments on our existing credit facilities of $9.2 million were primarily funded by cash on hand and cash provided by operating activities in the first quarter of 2011.  Proceeds from our existing credit facilities of $15.0 million received in the first quarter of 2010 were primarily used to fund purchases of fixed assets.  During the first quarter of 2010, we repurchased 56,152 shares of common stock from employees to cover withholding taxes payable by employees upon the vesting of restricted stock for $1.3 million.  On May 3, 2011, the Board of Directors declared a quarterly cash dividend of $0.16 per share, payable on May 24, 2011, to stockholders of record on May 16, 2011.

Other Cash Flow Considerations
Subsequent to the end of the first quarter, we received a $7.3 million income tax refund.  Also, in February 2011, we announced a plan to convert approximately 1,300 company-owned routes to an independent operator structure to better position our distribution network to serve customers.  The conversion is currently scheduled to be substantially complete by the middle of 2012.  We expect significant cash inflows and outflows from the independent operator conversion and other integration activities.

Debt
Additional borrowings available under our existing credit facility totaled $162.0 million as of April 2, 2011.  We have complied with all financial covenants contained in the credit agreement.  Under the existing credit agreement, a $50.0 million loan is due in October 2011.  The repayment of this loan is expected to be funded by a combination of cash flows generated from operations, the sale of routes to independent operators, and borrowings available under the existing credit facility.  We also maintain standby letters of credit in connection with our self-insurance reserves for casualty claims.  The total amount of these letters of credit was $16.2 million as of April 2, 2011.

Contractual Obligations
In order to mitigate the risks of volatility in commodity markets to which we are exposed, we have entered into forward purchase agreements with certain suppliers based on market prices, forward price projections, and expected usage levels.  Purchase commitments for inventory increased from $169.6 million as of January 1, 2011, to $203.7 million as of April 2, 2011, due to the increased volume of purchase agreements typically entered into during the first quarter of our fiscal year.  We currently contract from three months to approximately two years for all major ingredients and packaging.

Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, results of operations or cash flows.

Market Risks

The principal market risks that may adversely impact results of operations and financial position relate to ingredient, packaging and energy costs, interest and foreign exchange rates, and credit risks.

See the “ Contractual Obligations” section above for a discussion of market risks associated with ingredient, packaging and energy costs.
Our variable-rate debt obligations incur interest at floating rates based on changes in the Eurodollar rate and U.S. base rate interest.  To manage exposure to changing interest rates, we selectively enter into interest rate swap agreements to maintain a desirable proportion of fixed to variable-rate debt. While these interest rate swap agreements fixed a portion of the interest rate at a predictable level, pre-tax interest expense would have been $0.7 million lower without these agreements during the first quarter of 2011.

We are exposed to foreign exchange rate fluctuations through the operations of our Canadian subsidiary.  A majority of the revenue of our Canadian operations is denominated in U.S. dollars and a substantial portion of the operations’ costs, such as raw materials and direct labor, are denominated in Canadian dollars.  We have entered into a series of derivative forward contracts to mitigate a portion of this foreign exchange rate exposure.  These contracts have maturities through September 2011.

We are exposed to credit risks related to our accounts receivable.  We perform ongoing credit evaluations of our customers to minimize the potential exposure.  For the first quarters of 2011 and 2010, net bad debt expense was $0.4 million and $0.2 million, respectively.  Allowances for doubtful accounts were $3.3 million at April 2, 2011 and $2.9 million at January 1, 2011.

 
18

 
SNYDER’S-LANCE, INC. AND SUBSIDIARIES
 
Item 3.  Quantitative and Qualitative Disclosures about Market Risk

Quantitative and qualitative disclosures about these market risks are included under “Market Risks” in Item 2 above, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Item 4.  Controls and Procedures

As of the end of the period covered by this report and pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), we conducted an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15(e) of the Exchange Act.  Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of April 2, 2011.

There have been no changes in our internal control over financial reporting during the quarter ended April 2, 2011, that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

We are currently subject to various lawsuits and environmental matters arising in the normal course of business.  In our opinion, such matters should not have a material effect upon our consolidated financial statements taken as a whole.

Item 1A.  Risk Factors
 
In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended January 1, 2011, which factors could materially affect our business, financial condition or future results.  There have been no material changes to such risk factors.
 
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

Our revolving credit agreement restricts our payment of cash dividends and repurchases of our common stock if, after payment of any such dividends or any such repurchases of our common stock, our consolidated stockholders’ equity would be less than $200 million.  As of April 2, 2011, our consolidated stockholders’ equity was $841.9 million.  The private placement agreement for $100 million of senior notes assumed as part of the Merger, as amended in December 2010, has provisions no more restrictive than the revolving credit agreement dated December 2010.

In December 2008, the Board of Directors approved the repurchase of up to 100,000 shares of common stock from employees. On July 21, 2010, the Board of Directors approved the repurchase of up to an additional 100,000 shares, or up to $2.4 million, of common stock from employees.  The purpose of these approved purchases is to permit us to acquire shares of common stock from employees to cover withholding taxes payable by employees upon the vesting of shares of restricted stock.   There were no share repurchases during the first quarter of 2011.  During the first quarter of 2010, we repurchased 56,152 shares of common stock for this purpose.
 
 
19

 
SNYDER’S-LANCE, INC. AND SUBSIDIARIES
 
Item 6.  E xhibits

Exhibit Index

No.
 
Description
     
3.1
 
Restated Articles of Incorporation of Snyder’s-Lance, Inc.,  as amended through April 17, 1998, incorporated herein by reference to Exhibit 3 to the Registrant's Quarterly Report on Form 10-Q for the twelve weeks ended June 13, 1998 (File No. 0-398).
     
3.2
 
Articles of Amendment to Amended and Restated Articles of Incorporation of Snyder’s-Lance, Inc., incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on December 6, 2010 (File No. 0-398).
     
3.2
 
Bylaws of Snyder’s-Lance, Inc., as amended through December 6, 2010, incorporated herein by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed on December 6, 2010 (File No. 0-398).
     
 
2011 Annual Performance Incentive Plan for Officers, filed herewith.
     
 
2011 Three-Year Performance Incentive Plan for Officers and Key Managers, filed herewith.
     
 
Retention and Amendment Agreement, effective as of February 21, 2011, between the Registrant and Rick D. Puckett, filed herewith.
     
 
Form of Executive Severance Agreement between the Registrant and each of Carl E. Lee, Jr. and Kevin P. Henry, filed herewith.
     
 
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a), filed herewith.
     
 
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a), filed herewith.
     
 
Certification pursuant to Rule 13a-14(b), as required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
     
101
 
 
Financial Statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended April 2, 2011, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Income/(Loss), (ii) the Condensed Consolidated Balance Sheets, (iii) the Condensed Consolidated Statements of Cash Flows, and (iv) the Notes to the Condensed Consolidated Financial Statements.
 
* Management contract.
 
Items 3, 4 and 5 are not applicable and have been omitted.
 
 
20

 
SNYDER’S-LANCE, INC. AND SUBSIDIARIES
 
 
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 thereunto duly authorized.
 
 
SNYDER’S-LANCE, INC.
   
   
 
By:
/s/ Rick D. Puckett
 
 
Rick D. Puckett
 
 
Executive Vice President, Chief Financial Officer,
 
 
Treasurer and Secretary
 
Dated:  May 5, 2011
 
21


Exhibit 10.1
 
 
 
SNYDER’S-LANCE, INC.
 
2011 Annual Performance Incentive Plan for Officers
 
 
Purposes and
Introduction
The 2011 Annual Performance Incentive Plan provides for Performance Awards under the Snyder’s-Lance, Inc. 2007 Key Employee Incentive Plan (the “Incentive Plan”).  Except as otherwise expressly defined herein, capitalized terms shall be as defined in the Incentive Plan.
 
 
The primary purposes of the 2011 Annual Performance Incentive Plan for Officers (the “2011 Plan”) are to:
 
 
Motivate behaviors that lead to the successful achievement of specific sales, financial and operations goals that support Snyder’s-Lance, Inc. stated business strategy and to align participants’ interests with those of stockholders.
     
 
Emphasize link between participants’ performance and rewards for meeting predetermined, specific goals.
     
 
Focus participant’s attention on operational effectiveness from both an earnings and an investment perspective.
     
 
Promote the performance orientation at Snyder’s-Lance, Inc. and communicate to employees that greater responsibility carries greater rewards.
     
 
For 2011, participants will be eligible to earn incentive awards based on the performance measures listed on Exhibit A hereto and defined as follows:
 
 
1
Net Revenue is defined as sales and other operating revenue, net of returns, allowances, discounts and other sales deduction items for the 2011 fiscal year, as audited and reported in the Company’s Form 10-K for the 2011 fiscal year.
     
 
2
Corporate Earnings Per Share (“EPS”) is defined as the fully diluted earnings per share, excluding special items, of the Company for the 2011 fiscal year, as audited and reported in the Company’s Form 10-K for the 2011 fiscal year.
 
 
 

 
 
 
3
Free Cash Flow is defined as the net cash flow from operating activities less capital expenditures, excluding special items, for the 2011 fiscal year as audited and reported in the Company’s Form 10-K for the 2011 fiscal year, excluding special items.
 
 
Certain executive officers have an additional performance condition based on pre-tax operating profit for 2011, as described further below. To achieve the maximum motivational impact, plan goals and the awards that will be received for meeting those goals will be communicated to participants as soon as practical after the 2011 Plan and the performance measures are approved by the Compensation Committee of the Board of Directors.
 
 
Each participant will be assigned a Target Incentive, stated as a percent of base salary. The Target Incentive Award, or a greater or lesser amount, will be earned at the end of the Plan Year based on the attainment of predetermined goals.
 
 
Base salary shall be the annual rate of base compensation for the Plan Year which is set no later than April of such Plan Year; provided that for any award intended to satisfy the Performance-Based Exception, base salary shall be the annual rate of base compensation for the Plan Year which is set no later than March 31 of such Plan Year.
 
 
Not later than 75 days after fiscal year-end, 100% of the awards earned will be payable to participants in cash.
 
Plan Year
The period over which performance will be measured is the Company’s 2011 fiscal year (the “Plan Year”).
 
Eligibility and
Participation
Eligibility in the Plan is limited to Officers of Snyder’s-Lance, Inc. who are key to Snyder’s-Lance, Inc. success. The Compensation Committee of the Board of Directors will review and approve participants nominated by the Chief Executive Officer.  Participation in one year does not guarantee participation in a following year, but instead will be reevaluated and determined on an annual basis.
 
 
Participants in the Plan may not participate in any other annual incentive plan (e.g., sales incentives, etc.) offered by Snyder’s-Lance, Inc. or its affiliates.  Exhibit B includes the list of 2011 participants approved by the Compensation Committee at its February 7, 2011 meeting.
 
 
2

 
 
Target Incentives
Awards
Each participant will be assigned a Target Incentive expressed as a percentage of his or her base salary.  Participants may be assigned Target Incentives by position, by salary level or based on other factors as determined by the Compensation Committee.
   
 
Target Incentives will be reevaluated at least every other year, if not annually.  If the job responsibility of a position changes during the year, or base salary is increased significantly, the Target Incentive shall be revised as appropriate.
     
 
Exhibit B lists the Target Incentive for each participant for the Plan Year.  Target Incentives will be communicated to each participant as close to the beginning of the year as practicable, in writing.  Final awards will be calculated by multiplying each participant’s Target Incentive by the appropriate percentage (based on performance for the year, as described below).
 
Performance Measures
and Award Funding
The 2011 performance measures are on Exhibit A attached hereto.
 
   
Threshold
Target
Maximum
 
  Award Level Funded
0%
100%
200%
 
 
Percent of payout will be determined on a straight line basis from Threshold to Target and from Target to Maximum.  There will be no payout unless the Threshold for the applicable performance measure is reached.
 
 
The payout for the Net Revenue performance measure shall not exceed Target if the EPS performance measure does not equal or exceed its Threshold.
 
 
The performance measures will be communicated to each participant as soon as practicable after they have been established.  Final Target Incentive Awards will be calculated after the Compensation Committee has reviewed the Company’s audited financial statements for 2011 and determined the performance level achieved.
 
 
Threshold, Target and Maximum levels will be defined at the beginning of each Plan Year for each performance measure.
 
 
The following definitions for the terms Maximum, Target and Threshold should help set the goals for each year, as well as evaluate the payouts:
 
 
3

 
 
 
Maximum:  Excellent; deserves an above-market incentive
 
 
Target:  Normal or expected performance; deserves market-level incentive
 
 
Threshold: Lowest level of performance deserving payment above base salary; deserves below-market incentive
 
Individual
Performance
 
Each participant will receive 40% of his or her Target Incentive Award based on Net Revenue, 40% of his or her Target Incentive Award based on EPS, excluding special items, and 20% of his or her Target Incentive Award based on Free Cash Flow, excluding special items.  Notwithstanding the foregoing, for each of Messrs. Warehime, Singer and Lee, the award to each such participant for 2011 shall be equal to      %,      % and      %, respectively, of pre-tax operating profit for 2011, excluding special items, subject to such discretionary reductions as may be made by the Compensation Committee.  In considering such reductions, the Committee may take into account the results based on the performance measures set forth on Exhibit A.  For this purpose, “pre-tax operating profit” means the Company’s Net Revenue less total cost of goods and operating expenses.
     
Form and Timing of
Payments
Final award payments will be made in cash as soon as practicable after award amounts are approved by the Compensation Committee of the Board of Directors, but not more than 75 days after the end of the Company’s 2011 fiscal year.  All awards will be rounded to the nearest $100.
 
Change in Status
An employee hired into an eligible position during the Plan Year may participate in the Plan for the balance of the Plan Year on a pro rata basis.
     
Certain Terminations
of Employment
 
In the event a participant voluntarily terminates employment (other than Retirement) or is terminated involuntarily during the Plan Year, any Award will be forfeited.  In the event of death, Disability or Retirement during the Plan Year, the Award will be paid on a pro rata basis based on the actual performance determined after the end of the Plan Year.  In the event of any termination of employment after the end of the Plan Year (including death, Disability, Retirement, voluntary termination or involuntary termination for any reason), any Award will be determined based on actual performance and paid at the same time as Awards are paid to all other participants.
 
 
4

 
 
 
“Retirement” is defined under the Incentive Plan to mean the participant’s termination of employment with the Company either (i) after attainment of age 65 or (ii) after attainment of age 55 with the prior consent of the Compensation Committee.
     
Change In Control
 
In the event of a Change in Control (which will occur only in the event of the closing of the relevant transaction), pro rata payouts will be made at target for the year-to-date, based on the number of days in the Plan Year preceding the closing of the Change in Control transaction.  Payouts will be made within 30 days after the relevant transaction has been completed.
     
Withholding
The Company shall withhold from award payments any Federal, foreign, state or local income or other taxes required to be withheld.
 
Communications
Progress reports should be made to participants quarterly showing the year-to-date performance results and the percentage of Target Incentives that would be earned if results remain at that level for the entire year.
     
Executive Officers
Notwithstanding any provisions to the contrary above, participation, Target Incentive Awards and pro-rations for executive officers, including the Chief Executive Officer, shall be approved by the Compensation Committee.
     
Stockholder Approval
The 2011 Plan and the awards hereunder are made pursuant to the Incentive Plan, which was approved by the Company’s stockholders at the Annual Meeting of Stockholders held on April 26, 2007.
 
 
5

 
 
     
Governance
The Compensation Committee of the Board of Directors of Snyder’s-Lance, Inc. is ultimately responsible for the administration and governance of the Plan.  Actions requiring Committee approval include final determination of plan eligibility and participation, identification of performance measures, performance objectives and final award determination.  The Committee may adjust any award due to extraordinary events such as acquisitions, dispositions, discontinued operations, required accounting adjustments or similar events, all as specified in Section 11(d) of the Incentive Plan; provided, however, that the Committee shall at all times be required to exercise this discretionary power in a manner, and subject to such limitations, as will permit all payments under the Plan to “covered employees,” as defined in Section 162(m) of the Internal Revenue Code, to continue to qualify as “performance-based compensation” for purposes of Section 162(m) of the Code.  In addition, under the Incentive Plan, the Committee retains the discretion to reduce any award amount from the amount otherwise determined under the applicable formula.  Subject to the foregoing, the decisions of the Committee shall be conclusive and binding on all participants.
 
 
6

 
 
Exhibit A
 
Performance Measures
 

 
 
7

 
 
Exhibit B
 
2011 Annual Performance Incentive Plan for Officers
 
 
 
Award
Target
Name
Title
Percentage
Incentive

 
8


Exhibit 10.2
 
SNYDER’S-LANCE, INC.
 
2011 Three-Year Performance Incentive Plan for Officers and Key Managers
 
 
Purposes and
Introduction
 
The 2011 Three-Year Performance Incentive Plan for Officers and Key Managers provides for Stock Options, Restricted Stock and Performance Awards under the Snyder’s-Lance, Inc. 2007 Key Employee Incentive Plan (the “Incentive Plan”).  Except as otherwise expressly defined herein, capitalized terms shall be as defined in the Incentive Plan.
 
 
The primary purposes of the 2011 Three-Year Performance Incentive Plan for Officers and Key Managers (the “2011 Plan”) are to:
   
 
Align officers’ and managers’ interests with those of stockholders by linking a substantial portion of compensation to the price of the Company’s Common Stock and to the Company’s financial performance based on the performance measures specified below.
     
 
Provide a way to attract and retain key executives and managers who are critical to Snyder’s-Lance, Inc. future success.
     
 
Provide competitive total compensation for executives and managers commensurate with Company performance.
 
 
To achieve the maximum motivational impact, the Plan and the awards opportunities will be communicated to participants as soon as practical after the 2011 Plan is approved by the Compensation Committee of the Board of Directors.
 
 
Each officer will be assigned a Target Incentive based on market and peer group data and each other participant will be assigned a Target Incentive, stated as a percent of base salary.  The Chief Executive Officer is assigned a Target Incentive based on his Employment Agreement.  Concurrently with the approval of the 2011 Plan, 25% of the Target Incentive will be awarded in the form of Nonqualified Stock Options and 25% will be awarded in the form of Restricted Stock.  The final 50% of the Target Incentive will be in the form of a Performance Award payable in cash after the completion of the  2012 and 2013  fiscal years (the “Performance Period”), based on the attainment of predetermined goals.
 
 
1

 
 
 
For the 2011 Plan, participants will be eligible to earn the Performance Award based on the matrix on Exhibit A-1 hereto which incorporates the financial performance measures on Exhibit A-2 hereto, excluding special items and adjusted for any acquisition or divestiture related activity, and relative total shareholder return of the peer companies listed on Exhibit A-3 hereto.  The financial performance measures and relative total shareholder return are defined as follows:
 
  1.
Net Revenue (“Net Revenue”) is defined as the cumulative total of the  revenue and other operating revenue, net of returns, allowances, discounts and other sales deduction items for the 2012 and 2013  fiscal years, as audited and reported in the Company’s Forms 10-K for the 2012 and 2013  fiscal years.
 
  2.
Corporate Earnings Per Share (“EPS”) is defined as the cumulative total of the fully diluted earnings per share of the Company for the 2012 and 2013  fiscal years, excluding special items, as audited and reported in the Company’s Forms 10-K for the 2012 and 2013  fiscal years.
 
  3.
Return on Invested Capital (“ROIC”) is defined as the average of the ROIC for the 2012 and 2013 fiscal years, excluding special items as audited and reported in the Company’s Forms 10-K for the 2012 and 2013  fiscal years, calculated as follows:
 
   
Operating Income  x (1 - Tax Rate)
   
Average Equity + Average Net Debt
 
 
Operating Income shall be the Company’s actual earnings before interest and taxes, excluding special items, and excluding other income and expense.
 
 
Tax Rate for ROIC shall be the Company’s actual total effective income tax rate for each year.
 
 
Average Net Debt shall be the Company’s average debt less average cash for each year.
 
  4.
Relative Total Shareholder Return (“RTSR”) is defined as the total shareholder return for Snyder’s-Lance, Inc. relative to a peer group of 24 companies.  Each peer company, including Snyder’s-Lance, Inc. will be compared to each other and put into four quadrants ranked from highest total shareholder return to lowest, with the highest in Quadrant One and the lowest in Quadrant Four.
 
 
2

 
 
 
Total Shareholder Return is defined as the return of $100 invested in each stock at the beginning of the Performance Period compared to the value of that $100, with dividends reinvested, at the end of the measurement period.  The starting number of shares purchased for each peer company, including Snyder’s-Lance, Inc., with $100 will be based on the average weekly stock price for the preceding year 2010 as set forth on Exhibit A-3 hereto.  The number of shares for each peer company will be adjusted for stock dividends, stock splits and other similar reorganizations and for special cash dividends.  The value of Snyder’s-Lance, Inc. stock has been adjusted for the special cash dividend paid on December 10, 2010.
 
 
If any peer company ceases to be publicly traded during the Performance Period, the Russell 2000 Index will be inserted in its place; if a second peer company ceases to be publicly traded, the S&P 500 Index will be inserted in its place; if a third peer company ceases to be publicly traded, the S&P Food & Beverage Select Industry Index will be substituted in its place and if a fourth peer company ceases to be publicly traded, the Russell 1000 Index will be inserted in its place.
 
 
Certain executive officers have an additional performance condition based on total pre-tax operating profit, excluding special items, for 2012 and 2013, as described further below.
 
 
Base salary shall be the annual rate of base compensation for the 2011 fiscal year which is in effect on February 21, 2011; provided that for any award intended to satisfy the Performance-Based Exception, base salary shall be the annual rate of base compensation for the fiscal year which is set no later than March 31 of such fiscal year.
 
 
Notwithstanding the foregoing, for each of Messrs. Singer and Lee, the award to each such participant for the Performance Period shall be equal to         % and        %, respectively, of the cumulative pre-tax operating profit, excluding special items, for 2012 and 2013, subject to such discretionary reductions as may be made by the Compensation Committee.  In considering such reductions, the Committee may take into account the results based on the matrix and performance measures set forth on Exhibits A-1 and A-2 hereto.  For this purpose, “pre-tax operating profit” means the Company’s Net Revenue less total cost of goods and operating expenses for the 2012 and 2013 fiscal years.
 
 
3

 
 
Eligibility and
Participation
 
Eligibility in the Plan is limited to Executive Officers and Key Managers who are key to Snyder’s-Lance, Inc. success as reviewed and approved on an annual basis. The Compensation Committee will review and approve participants nominated by the Chief Executive Officer.  An employee hired or promoted into an eligible position during the Performance Period will not participate in the 2011 Plan.  Participation in the 2011 Plan does not guarantee participation in any subsequent long-term incentive plans but will be reevaluated and determined on an annual basis.
 
 
Exhibits A-4 and A-5 hereto include the list of 2011 Plan participants approved by the Compensation Committee on February 21, 2011.
     
Target Incentives and
Performance Measures
Each participant will be assigned a Target Incentive as specified above.  Participants, other than officers, will be assigned to a Performance Tier by Salary Grade.
 
 
   
Performance Tier
Performance Tier Description
   
1
Officer
   
2
Non-Officer Vice President
   
3
Key Managers
 
 
For the Performance Awards, the 2012-2013 financial performance measures are on Exhibit A-2 hereto.  Percent of payout will be determined according to the matrix on Exhibit A-1 hereto which encompasses RTSR and the financial performance measures.
 
 
The performance measures will be communicated to each participant as soon as practicable after they have been established.  Final Performance Awards will be calculated after the Compensation Committee has reviewed the Company’s audited financial statements for 2012 and 2013 and determined the performance level achieved.
 
 
Exhibits A-4 and A-5 hereto list the Target Incentives for each participant for the 2011 Plan as determined by the Compensation Committee.  Target Incentives will be communicated to each participant as close to the beginning of the year as practicable, in writing.  Target Incentives, except for Officers, will be calculated by multiplying each participant’s base salary by the appropriate Performance Tiers and percentages, as described below.
 
 
4

 
 
   
Performance Tier
Percentage of Base Salary
for 2011 Target Incentives
       
   
2
35 - 40%
   
3
15 - 30%
 
Awards
 
Final Performance Awards will be interpolated and calculated, paid and granted after the Compensation Committee has reviewed the Company’s audited financial statements for 2012 and 2013 and determined the performance levels achieved.  Interpolation will be required relative to the financial performance measures but the relative shareholder return quadrant will determine the percentage to be applied.  As further specified on Exhibits B-1 and B-2 hereto, the Awards under the 2011 Plan shall be as follows:
   
 
 
1.   Stock Options .  Each participant shall receive Stock Options equal to 25% in value of his or her Target Incentive.  The number of Stock Options awarded to each participant will equal the dollar value of the participant’s Stock Option Incentive divided by the Black-Scholes value of the Stock Options, with the result rounded up to the nearest multiple of three shares.
 
 
The grant date for Stock Options will be the date specified by the Compensation Committee upon approval of the awards and the exercise price will be the Fair Market Value of the Common Stock, which is the closing price of the Common Stock, on the grant date.  Each Stock Option will vest in three substantially equal annual installments beginning one year after the date of grant and the term of each Stock Option will be ten years.
 
 
2.   Restricted Stock .  Each participant shall receive Restricted Stock equal to 25% in value of his or her Target Incentive.  The number of shares of Restricted Stock awarded to each participant will equal the dollar value of the participant’s Restricted Stock Incentive divided by the closing price of the Common Stock on the award date, with the results rounded up to the nearest multiple of three shares.
   
  The award date for Restricted Stock will be the date specified by the Compensation Committee upon approval of the awards and the value shall be the Fair Market Value of the Common Stock on the award date.  Each award of Restricted Stock will vest in three substantially equal annual installments beginning one year after the award date.
 
 
5

 
 
 
3.   Performance Awards .  Each participant shall receive a Performance Award equal to 50% in value of his or her Target Incentive.
 
 
For purposes of the 2011 Plan, the award date for cash as a Performance Award will be the date established by the Compensation Committee after completion of the Performance Period and the applicable performance level has been determined.
 
Form and Timing of
Awards
Awards will be made as soon as practicable after the performance level has been determined and approved by the Compensation Committee.  All awards will be rounded to the nearest $100.
     
Change in Status
 
An employee hired or promoted into an eligible position during the Performance Period will not participate in the 2011 Plan.
 
Certain Terminations
of Employment
Performance Awards
   
 
In the event a participant voluntarily terminates employment (other than by Retirement) or is terminated involuntarily during or after the end of the Performance Period but before the applicable award date, the participant shall not receive any Performance Award hereunder.
 
 
In the event of a participant’s death or Disability before the end of the Performance Period, any Performance Award will be determined on and prorated to the date of such event based on target performance and paid out all in cash as soon as administratively practicable (but in no event more than 75 days) after the date of such event.  In the event of a participant’s death or Disability on or after the end of the Performance Period but before the applicable award date, any Performance Award will be determined based on actual performance and paid out all in cash on or about the applicable award date.
 
 
If the event of a participant’s Retirement during or after the end of the Performance Period but before the applicable award date, any Performance Award will be determined based on actual performance and paid out all in cash on or about the applicable award date.
 
 
6

 
 
 
Stock Options
 
 
In the event a participant voluntarily terminates employment (other than by Retirement) or is terminated involuntarily or in the event of death, Disability or Retirement, vesting and the post-termination exercise period for Stock Options will be as follows:
 
 
Voluntary termination (other than Retirement) :   Vested Stock Options will remain exercisable for a period of 90 days following the date of termination (or, if earlier, the original expiration date of the option); unvested Stock Options will be forfeited as of the date of termination.
 
 
Involuntary termination :   Vested Stock Options will remain exercisable for a period of 30 days following the date of termination (or, if earlier, the original expiration date of the option); unvested Stock Options will be forfeited as of the date of termination.
 
 
Death :    Stock Options will remain exercisable for a period of one year following the date of death (or, if earlier, the original expiration date of the option); unvested Stock Options will become fully vested as of the date of termination.
 
 
Disability :    Vested Stock Options will remain exercisable through the original expiration date of the option; unvested Stock Options will become fully vested as of the date of termination.
 
 
Retirement Vested Stock Options will remain exercisable for a period of three years following retirement (or, if earlier, the original expiration date of the option); unvested Stock Options will continue to vest for a period of six months after Retirement and any remaining unvested Stock Options will be forfeited as of such date.
 
 
Restricted Shares
 
 
In the event a participant voluntarily terminates employment (other than by Retirement) or is terminated involuntarily or in the event of death, Disability or Retirement, vesting for Restricted Stock (including any Restricted Stock granted in connection with a Performance Award following completion of the Performance Period) will be as follows:
 
 
Voluntary termination (other than Retirement) :    Unvested Restricted Stock will be forfeited as of the date of termination.
 
 
Involuntary termination :    Unvested Restricted Stock will be forfeited as of the date of termination.
 
 
7

 
 
 
Death :   Unvested Restricted Stock will become fully vested on the date of such event.
 
 
Disability :    Unvested Restricted Stock will become fully vested on the date of such event.
 
  Retirement :    Unvested Restricted Stock will become vested pro rata based on the number of full months elapsed on the date of such event since the award date and any remaining unvested Restricted Stock will be forfeited as of such date.
     
 
“Retirement” is defined under the Incentive Plan to mean the participant’s termination of employment with the Company either (i) after attainment of age 65 or (ii) after attainment of age 55 with the prior consent of the Compensation Committee.
     
Change in Control and
Withholding
 
In the event of a Change in Control (which will occur only upon the closing of the relevant transaction), (i) unvested Stock Options and unvested Restricted Stock will vest as provided in the Incentive Plan upon the closing of the Change in Control transaction and (ii) for outstanding Performance Awards pro rata payouts will be made all in cash at target through the closing date with such proration based on the number of days in the Performance Period preceding the closing of the Change in Control transaction.  Payouts will be made within 30 days after the relevant transaction has been closed.  The Company shall withhold from awards any Federal, foreign, state or local income or other taxes required to be withheld.
     
 
Progress reports should be made to participants annually, showing performance results.
     
Executive Officers
 
Notwithstanding any provisions to the contrary above, participation, awards and pro-rations for Executive Officers, including the Chief Executive Officer, shall be approved by the Compensation Committee.
 
Stockholder Approval
The 2011 Plan and the awards hereunder are made pursuant to the Incentive Plan, which was approved by the Company’s stockholders at the Annual Meeting of Stockholders held on April 26, 2007.
 
 
8

 
 
Governance
 
The Compensation Committee of the Board of Directors of Snyder’s-Lance, Inc. is ultimately responsible for the administration and governance of the Plan.  Actions requiring Committee approval include final determination of plan eligibility and participation, identification of performance measures and goals, final award components and determination and amendments to the Plan.  For purposes of the Plan, acquisition performance will be excluded for the first twelve months after the acquisition and included in the results thereafter.  The Committee may adjust any award due to extraordinary events such as acquisitions, dispositions, required accounting adjustments or similar events, all as specified in Section 11(d) of the Incentive Plan; provided, however, that the Committee shall at all times be required to exercise this discretionary power in a manner, and subject to such limitations, as will permit all payments under the Plan to “covered employees,” as defined in Section 162(m) of the Internal Revenue Code, to continue to qualify as “performance-based compensation” for purposes of Section 162(m) of the Code.  In addition, under the Incentive Plan, the Committee retains the discretion to reduce any award amount from the amount otherwise determined under the applicable formula.  Subject to the foregoing, the decisions of the Committee shall be conclusive and binding on all participants.
 
 
9

 
 
Exhibit A-1
Matrix

 
 
10

 
 
Exhibit A-2
Performance Measures
 

 
11

 
 
Exhibit A-3
Peer Companies



 
12

 
 
Exhibit A-4
 
2011 Three-Year Performance Incentive Plan for Officers
 
   
Target
Name
Title
Incentive
 
 
13

 
 
Exhibit B-1
2011 Three-Year Performance Incentive Plan for Officers


 
 
Name
 
Stock Option
Incentive
Nonqualified
Stock
Options
Restricted
Stock
  Awards
Restricted
Stock
Shares
Performance
Award
Opportunity
 
 
14


Exhibit 10.3

RETENTION AND AMENDMENT AGREEMENT

THIS RETENTION AND AMENDMENT AGREEMENT (the “Agreement”) is made and entered into as of February 21, 2011, by and between SNYDER’S-LANCE, INC., a North Carolina corporation (the “Company”), and RICK D. PUCKETT (“Executive”).
 
Statement of Purpose

The Company and Executive entered into an Amended and Restated Compensation and Benefits Assurance Agreement dated April 24, 2008 (the “CIC Agreement”).  Under the CIC Agreement, Executive may receive severance benefits if his employment is terminated under certain circumstances during a specified period following a change in control of the Company, including a voluntary termination of employment by Executive during the 13 th month following a change in control.

The Company entered into an Agreement and Plan of Merger with Snyder’s of Hanover, Inc. resulting in a merger of Snyder’s of Hanover, Inc. into a wholly-owned subsidiary of the Company (the “Merger”) that was consummated on December 6, 2010.  The Merger constituted a change in control for purposes of the CIC Agreement.  As a result, under the CIC Agreement, Executive has a contractual right to voluntarily terminate employment with the Company in January 2012 (the 13 th month after the Merger) and receive the severance benefits thereunder.

Executive is an important member of the Company’s leadership team. The Company wishes to retain Executive, to appropriately motivate Executive’s future performance and to eliminate Executive’s contractual right to receive severance benefits under the CIC Agreement for a voluntary termination of employment in January 2012.  Accordingly, the purpose of this Agreement is to (i) provide for a retention award of performance-related compensation intended to retain Executive and appropriately motivate Executive’s future performance, (ii) amend the CIC Agreement to eliminate the provision permitting Executive to collect severance benefits through a voluntary termination of employment during the 13 th month following a change in control and (iii) provide for additional covenants and agreements by Executive.

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, the parties hereto hereby agree as follows:

1.             Definitions.   Capitalized terms used in this Agreement that are not otherwise defined herein or in the CIC Agreement shall have the following meanings:
 
(a)           “ Business ” means (i) the manufacture, distribution and sale of sandwich cracker snacks (as that term is used within the Company’s business), private label cookies and crackers, kettle cooked potato chips and pretzels and (ii) the business(es) in which the Company or its Affiliates are or were engaged at the time of, or during the 12 month period prior to, the Termination Date.
 
 
 

 
 
(b)           “ Company Employee ” means any Person who is or was an employee of the Company or its Affiliates at the time of, or during the 12 month period prior to, the Termination Date.
 
(c)           “ Competitive Position ” means any employment with or service to be performed outside of California (whether as owner, member, manager, lender, partner, shareholder, consultant, agent, employee, co-venturer, or otherwise) for a Competitor in which Executive (A) will use or disclose or could reasonably be expected to use or disclose any Confidential Information or Trade Secrets (as defined below) for the purpose of providing, or attempting to provide, such Competitor with a competitive advantage in the Business; (B) will hold a position, will have duties, or will perform or be expected to perform services for such Competitor, that is or are the same as or substantially similar to the position held by Executive with the Company or those duties or services actually performed by Executive for the Company in connection with the provision of Services by the Company, or (C) will otherwise engage in the Business or market, sell or provide Products or Services in competition with the Company; provided, however, service solely as a member of the Board of Directors of a Competitor shall not be deemed to be a Competitive Position.
 
(d)           “ Competitor ” means any third-party (A) whose business is the same as or substantially similar to the Business or major segment thereof, or (B) who owns or operates, intends to own or operate, or is preparing to own or operate a subsidiary, affiliate, or business line or business segment whose business is or is expected to be the same as or substantially similar to the Business or major segment thereof.
 
(e)           “ Customer ” means any Person who is or was a customer or client of the Company or its Affiliates at the time of, or during the 12 month period prior to, the Termination Date.
 
(f)           “ Products and Services ” means (i) sandwich cracker snacks, private label cookies and crackers, kettle cooked potato chips and pretzels and (ii) the products and/or services offered by the Company or its Affiliates at the time of, or during the 12 month period prior to, the Termination Date.
 
(g)           “ Restricted Period ” means the period commencing on the Termination Date and ending twelve (12) full calendar months following the Termination Date.
 
(h)           “ Restricted Territory ” means all states in the United States of America in which the Company currently is engaged in the Business or provides Products and Services.
 
(i)           “ Termination Date ” means the date of Executive’s Termination of Employment, regardless of the date, cause, or manner of that termination.
 
 
- 2 -

 
 
2.             Awards .  The Company shall make the following retention and performance-related compensation awards to Executive:
 
(a)           The Company shall grant Executive restricted shares under the Company’s 2007 Key Employee Incentive Plan with a grant date value of $300,000.  This award shall be in addition to any award of restricted shares to Executive under the Company’s 2011 Three-Year Performance Incentive Plan for Officers and Key Managers (the “Three-Year Plan”). The grant date and the calculation of the number of restricted shares based on the value above shall be determined in the same manner as awards of restricted shares under the Three-Year Plan. The award shall vest in full on the third anniversary of the grant date and otherwise be subject to provisions (e.g., treatment upon termination of employment) consistent with awards of restricted shares under the Three-Year Plan.

(b)           The Company shall grant Executive nonqualified stock options under the Company’s 2007 Key Employee Incentive Plan with a grant date value of $350,000.  This award shall be in addition to any award of stock options to Executive under the Three-Year Plan.  The grant date and the calculation of the number of stock options based on the value above shall be determined in the same manner as awards of stock options under the Three-Year Plan and the term of the stock options shall be ten years.  The award shall vest in full on the third anniversary of the grant date and otherwise be subject to provisions (e.g., treatment upon termination of employment) consistent with awards of stock options under the Three-Year Plan.

3.             Amendment.  In consideration for a lump sum cash payment to Executive in the amount of $250,000 payable coincident with the execution of this Agreement (less any required tax withholdings), Section 4(b) of the CIC Agreement is hereby amended to read as follows:

“(b)         The occurrence of any one or more of the following events (a “Qualifying Termination”) within the thirty-six (36) calendar months immediately following a Change in Control of the Company which occurred during the Term or any Successive Period shall entitle Executive to receive the Severance Benefits:

 
(i)
Executive’s involuntary Termination of Employment without Cause;

 
(ii)
Executive’s voluntary Termination of Employment for Good Reason; or

 
(iii)
The Company, or any successor company, commits a material breach of any of the provisions of this Agreement.

A Qualifying Termination shall not include Executive’s Termination of Employment within thirty-six (36) calendar months following a Change in Control by reason of death, disability [as such term is defined under the Company’s governing disability plan (or any successor plan thereto)], Executive’s voluntary Termination of Employment without Good Reason or Executive’s involuntary Termination of Employment for Cause.  Moreover, a Termination of Employment which occurs before a Change in Control or later than thirty-six (36) months following a Change in Control shall not constitute a Qualifying Termination.”
 
 
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4.             Representations and Acknowledgements Concerning Restrictive Covenants.    In consideration for the Company’s willingness to enter into this Agreement and to provide the awards, payments and benefits set forth in this Agreement under its terms and conditions, Executive agrees not to engage in any activities competitive with the Company or its Affiliates as set forth below.
 
Executive and the Company understand and agree that the restrictions set forth in Sections 4, 5, 6, 7 and 8 hereof apply to Executive and impose post-employment obligations on Executive regardless of (A) the date, cause, or manner of the termination of Executive’s employment with the Company, (B) whether such termination occurs with or without Cause or is a result of Executive’s resignation, or (C) whether Executive receives severance benefits pursuant to Section 4 of the CIC Agreement.
 
Executive and the Company understand and agree that the sole purpose of Sections 4, 5, 6, 7 and 8 hereof is to protect the Company’s legitimate business interests, including, but not limited to, the Company’s Customer and business associate relationships and goodwill, its Confidential Information and Trade Secrets, and the Company’s competitive advantage within the snack food industry.  The restrictions set forth herein are not intended to impair, nor will they impair, Executive’s ability or right to work or earn a living.
 
Executive and the Company further understand and agree that these Sections 4, 5, 6, 7 and 8 represent an important element of this Agreement, and are a material inducement to the Company entering into this Agreement, without which the Company would not have entered into this Agreement.
 
Executive understands that the Company is headquartered in North Carolina and the Company operates the Business across the United States, including in states that permit post-termination non-compete covenants.  Executive acknowledges that Executive’s duties with the Company have entailed involvement with the entire range of the Company’s operations and that Executive’s extensive familiarity with the Business and the Company’s Confidential Information and Trade Secrets justifies a restriction across the entire geographic footprint occupied by the Company.
 
Consequently, Executive acknowledges and agrees that (i) the restrictive covenants contained in this Agreement are reasonable in time, territory, and scope, and in all other respects; (ii) should any part or provision of any covenant be held invalid, void, or unenforceable in any court of competent jurisdiction, such invalidity, voidness, or unenforceability shall not render invalid, void, or unenforceable any other part or provision of this Agreement; and (iii) if any portion of any restrictive covenant provisions herein is found to be invalid or unenforceable by a court of competent jurisdiction because its duration, territory, definition of activities, or definition of information covered is considered to be invalid or unreasonable in scope, the invalid or unreasonable terms shall be redefined to carry out the Company’s and Executive’s intent in agreeing to these restrictive covenants.  These restrictive covenants shall be construed as agreements independent of any other provision in this Agreement and the existence of any claim or cause of action of Executive against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of these restrictive covenants.
 
 
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5.             Covenant Not to Compete.
 
(a)           To the fullest extent permitted by any applicable state law, Executive agrees that during Executive’s employment with the Company, and for the full duration of the Restricted Period following Termination of Employment, Executive shall not, without the prior written consent of the Company, directly or indirectly, obtain or hold a Competitive Position with a Competitor in the Restricted Territory, as these terms are defined herein.
 
(b)           Executive shall be deemed to be in a Competitive Position with a Competitor, in the Restricted Territory, if Executive obtains or holds a Competitive Position with a Competitor that conducts its business within the Restricted Territory (and Executive’s responsibilities relate to that Competitor’s business in the Restricted Territory), even if Executive’s residence or principal place of work (other than California) is not within the Restricted Territory.
 
(c)           Notwithstanding the foregoing, Executive may, as a passive investor, own capital stock of a publicly held corporation, which is actively traded in the over-the-counter market or is listed and traded on a national securities exchange, which constitutes or is affiliated with a Competitor, so long as Executive’s ownership is not in excess of five percent (5%) of the total outstanding capital stock of the Competitor.
 
6.           Non-Solicitation / No Interference Provisions.
 
(a)             Customers and Other Business Partners.   Executive understands and agrees that the Company’s good will and established relationships between the Company and each of its Customers, and potential customers, and its licensors, licensees, suppliers, vendors, contractors, subcontractors and consultants related to the Business (collectively, the “ Partners ”) constitute valuable assets of the Company, and may not be misappropriated for Executive’s own use or benefit or for the use or benefit of any other third-party.  Accordingly, Executive hereby agrees that during Executive’s employment with the Company and for the full duration of the Restricted Period following Termination of Employment, Executive shall not, without the prior written consent of the Company, directly or indirectly, on Executive’s own behalf or on behalf of any other third-party:
 
 
(i)
call-on, solicit, divert, take away or attempt to call-on, solicit, divert, or take away any of the Partners (1) with whom or with which Executive had communications on the Company’s behalf about the Partner’s existing or potential business relationship with the Company with respect to the Business; (2) whose business dealings with the Company are or were managed or supervised by Executive as part of his duties for the Company; or (3) about whom or about which Executive obtained Confidential Information or Trade Secrets solely as a result of Executive’s employment with the Company; or
 
 
- 5 -

 
 
 
(ii)
interfere or engage in any conduct that would otherwise have the effect of interfering, in any manner with the business relationship between the Company and any of the Partners, including, but not limited to, urging or inducing, or attempting to urge or induce, any Partner to terminate its relationship with the Company or to cancel, withdraw, reduce, limit, or modify in any manner such Partner’s business or relationship with the Company.
 
(b)             Company Employees.   Executive understands and agrees that the relationship between the Company and Company Employees constitutes a valuable asset of the Company and such assets may not be converted to Executive’s own use or benefit or for the use or benefit of any other third-party.  Accordingly, Executive hereby agrees that during Executive’s employment with the Company and for the full duration of the Restricted Period following Termination of Employment, Executive shall not, without the Company’s prior written consent, directly or indirectly, solicit or recruit for employment; attempt to solicit or recruit for employment; or attempt to hire or accept as an employee, consultant, contractor, or otherwise, any Company Employee.
 
7.             Enforcement of Restrictive Covenants.   Notwithstanding any other provision of this Agreement, in the event of Executive’s actual or threatened breach of any provision of Sections 5 and 6 hereof, the Company shall be entitled to an injunction restraining Executive from such breach or threatened breach, it being agreed that any breach or threatened breach of these restrictive covenants would cause immediate and irreparable injury to the Company and that money damages would not provide an adequate remedy to the Company.  Nothing herein shall be construed as prohibiting the Company from pursuing any other equitable or legal remedies for such breach or threatened breach, including the recovery of monetary damages from Executive pursuant to Section 10 below.
 
8.           Confidential Information and Company Property.
 
(a)           Executive and the Company recognize that due to the nature of Executive’s employment and Executive’s relationship with the Company, Executive has had access to, has acquired, or has assisted in developing confidential and proprietary information relating to the business, technology, financial, marketing, sales, strategic planning, methods, processes and manufacturing operations of the Company, and that the Company is entitled to protection for this information.
 
(b)           Executive recognizes and acknowledges that, unless otherwise available to the public, or otherwise generally known to the public,
 
 
(i)
all information relating to the business, technology, financial, marketing, sales, strategic planning, methods, processes and manufacturing operations of the Company, and
 
 
- 6 -

 
 
 
(ii)
all information of a technical or proprietary nature made available to the Company and its employees by customers, suppliers and vendors on a confidential basis in order to foster and facilitate the operation and success of the Company in conducting business,
 
 
(iii)
as such information may exist from time to time (hereinafter collectively referred to as “ Confidential Information ”), and whether in electronic, print or other form, all copies, compilations, notes, or other reproductions thereof are valuable, special and unique assets of the Company.
 
(c)           Executive therefore agrees that Executive shall not disclose any Confidential Information or any part thereof to any Person not employed by or affiliated with the Company for any reason or purpose whatsoever and shall not use such Confidential Information except on behalf of the Company at any time during the term of Executive’s employment with the Company, or at any time during the three (3) year period which immediately follows the Termination Date.
 
(d)           In addition, throughout the term of this Agreement and at all times after the Termination Date, Executive shall not directly or indirectly transmit or disclose any Trade Secret of the Company to any Person, not employed by or affiliated with the Company for any reason or purpose whatsoever and shall not make use of any Trade Secret, except on behalf of the Company.  For purposes of this Agreement, the term “ Trade Secret ” means any item of Confidential Information that constitutes a trade secret of the Company under the common law or statutory law of the state in which the Employee is domiciled.  The Parties acknowledge and agree that this Agreement is not intended to, and does not, alter either the Company’s rights or Employee’s obligations under any state or federal statutory or common law regarding trade secrets and unfair trade practices.
 
(e)           It is hereby acknowledged and agreed that any breach or threatened breach of the provisions of this Section 8 would cause irreparable injury to the Company and that money damages would not provide an adequate remedy to the Company.  In the event of a breach or threatened breach by Executive of the provisions of this Section 8, the Company shall be entitled to an injunction restraining Executive from disclosing, in whole or in part, any such Confidential Information or Trade Secrets, and, further, an injunction restraining Executive from accepting any employment with or rendering any services to any such person, firm, corporation, association or other entity to whom any such Confidential Information or Trade Secrets, in whole or in part, has been disclosed or is threatened to be disclosed.
 
(f)           Nothing contained herein shall be construed as prohibiting the Company from pursuing any other equitable or legal remedies for any such breach or threatened breach, including recovery from Executive of any monetary damages from Executive pursuant to Section 10 below.
 
 
- 7 -

 
 
(g)           Executive represents that upon Termination of Employment, Executive will return to the Company all property of the Company, including all Confidential Information, which is now or may hereafter come into his possession.
 
9.           Additional Post-Termination Covenants.
 
(a)           Upon Termination of Employment hereunder, regardless of the date, cause, or manner of such termination, Executive shall resign and does resign from all positions as an officer of the Company and from any other positions with the Company, with such resignations to be effective upon the Termination Date.
 
(b)           From and after the Termination Date, Executive agrees not to make any statements to the Company’s employees, customers, vendors, or suppliers or to any public or media source, whether written or oral, regarding Executive’s employment hereunder or termination from the Company’s employment, except as may be approved in writing by an executive officer of the Company in advance.  Executive further agrees not to make any statement (including to any media source, or to the Company’s suppliers, customers or employees) or take any action that would disrupt, impair, embarrass, harm or affect adversely the Company or any of the employees, officers, directors, or customers of the Company or place the Company or such individuals in any negative light.
 
(c)           Executive agrees to make himself available at reasonable times during normal business hours and upon reasonable notice to consult with and provide assistance and cooperation to the Company from time to time, as necessary, regarding management transition, licensing issues, pending and potential disputes, claims, litigation, and other matters relating to the Company’s corporate or professional liabilities.  Executive’s assistance and cooperation in litigation matters shall include, but not be limited to, as requested by the Company, providing informal interviews with the Company or its representatives; supplying affidavits; and appearing at and providing truthful testimony in depositions, hearings, arbitrations, administrative proceedings and trials.  Executive agrees to notify the Company in the event he is contacted by opposing counsel in any lawsuit naming the Company as a defendant.
 
Both parties agree to act reasonably and in good faith in scheduling the dates, times and length of time during which Executive will perform consulting services and provide assistance and cooperation in litigation.  In connection with such litigation or investigation, the Company shall attempt to accommodate Executive’s schedule, shall reimburse Executive (unless prohibited by law) for any actual loss of wages in connection therewith, shall provide Executive with reasonable notice in advance of the times in which Executive’s cooperation or assistance is needed, and shall reimburse Executive for any reasonable expenses incurred in connection with such matters.  Executive also shall be compensated at a reasonable market hourly rate for the time required to perform consulting services and provide assistance and cooperation in litigation.
 
 
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10.             Forfeiture of Benefits.   In the event that Executive violates the terms of this Agreement, including but not limited to the provisions of Sections 4, 5, 6 and 8, then Executive shall forfeit any award, payment or benefit to which Executive may be entitled pursuant to Section 2 hereof, and, within 30 days of a written request of the Company, shall reimburse the Company for any award, payment or benefit paid to Executive pursuant to Section 2 hereof.
 
Nothing herein shall be construed as prohibiting the Company from pursuing any other remedies available to the Company in the event of any breach or threatened breach, or as a waiver of the Company’s right to seek injunctive relief to enforce this Agreement’s restrictive covenants.
 
11.             Section 409A .              This Agreement is intended to comply with the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), and this Agreement will, to the extent practicable, be construed in accordance therewith.  In any event, the Company makes no representations or warranty and will have no liability to Executive or any other person, other than with respect to payments made by the Company in violation of the provisions of this Agreement or the CIC Agreement, if any provisions of or payments under this Agreement or the CIC Agreement are determined to constitute deferred compensation subject to Section 409A but not to satisfy the conditions of that section.

12.             Force and Effect.            Except as expressly or by necessary implication amended hereby, the CIC Agreement shall remain in full force and effect.

IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by its duly authorized officer, and Executive has hereunto set his hand, all as of the day and year first above written.
 
 
  “Company”
 
     
    SNYDER’S-LANCE, INC.  
       
\
 
By:    /s/ David V. Singer  
    David V. Singer  
    Title   
    Chief Executive Officer  
       
       
    “Executive”  
       
    /s/ Rick D. Puckett     
    Rick D. Puckett  
 
 
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Exhibit 10.4

 
 STATE OF NORTH CAROLINA     FORM OF EXECUTIVE
    SEVERANCE AGREEMENT
 COUNTY OF MECKLENBURG    
                                                                             
THIS AGREEMENT is entered into this ____ day of ______________, 2011, by and between Snyder’s-Lance, Inc., a North Carolina corporation, hereinafter referred to as the “Company”, and ________________, hereinafter referred to as “Executive”.

STATEMENT OF PURPOSE

The Board of Directors of the Company has authorized a program (the “Severance Program”) designed to provide certain executives of the Company with severance benefits upon the termination of their employment with the Company and its Affiliates.

Pursuant to the Severance Program, the Company desires to provide Executive with certain benefits in the event of Executive’s involuntary termination of employment without cause, or Executive’s voluntary termination for good reason, and to impose certain post-employment covenants to protect the Company’s business interests.

NOW, THEREFORE , in consideration of the Statement of Purpose and the terms and provisions of this Agreement, the parties hereto mutually agree as follows:

1.
Definitions.   Capitalized terms used in this Agreement that are not otherwise defined herein shall have the following meanings:
 
 
(a)
Affiliate ” with reference to the Company means any Person that directly or indirectly is controlled by, or is under common control with, the Company, including each subsidiary of the Company.  For purposes of this definition the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.
 
 
(b)
Base Salary ” means, at any time, the then regular annual rate of pay which Executive is receiving as annual salary, excluding amounts (i) designated by the Company as payment toward reimbursement of expenses or (ii) received under incentive or other bonus plans, regardless of whether or not the amounts are deferred.
 
 
(c)
Business ” means (i) the snack food industry and (ii) the business(es) in which the Company or its Affiliates are or were engaged at the time of, or during the 12 month period prior to, the Termination Date.
 
 
(d)
Cause ” means:
 
 
(i)
Executive’s failure to devote his best efforts and substantially full time during normal business hours to the discharge of the duties and responsibilities of Executive’s position reasonably assigned to him, other than during reasonable periods of vacation and other reasonable leaves of absence commensurate with Executive’s position and length of service; or
 
 
 

 

 
(ii)
A material and willful breach of Executive’s fiduciary duties to the Company and its stockholders; or
 
 
(iii)
In connection with the discharge of Executive’s duties with the Company, one or more material acts of fraud or dishonesty or gross abuse of authority; or
 
 
(iv)
Executive’s commission of any willful act involving moral turpitude which materially and adversely affects (A) the name and good will of the Company or (B) the Company’s relationship with its employees, customers or suppliers; or
 
 
(v)
Executive’s habitual and intemperate use of alcohol or drugs to the extent that the same materially interferes with Executive’s ability to competently, diligently and substantially perform the duties of his employment.
 
 
“Cause” shall be determined in the discretion of the Board in the exercise of good faith and reasonable judgment.

 
(e)
Company Employee ” means any Person who is or was an employee of the Company or its Affiliates at the time of, or during the 12 month period prior to, the Termination Date.
 
 
(f)
Competitive Position ” means any employment with or service to be performed outside of California (whether as owner, member, manager, lender, partner, shareholder, consultant, agent, employee, co-venturer, or otherwise) for a Competitor in which Executive (A) will use or disclose or could reasonably be expected to use or disclose any Confidential Information or Trade Secrets (as defined below) for the purpose of providing, or attempting to provide, such Competitor with a competitive advantage in the Business; (B) will hold a position, will have duties, or will perform or be expected to perform services for such Competitor, that is or are the same as or substantially similar to the position held by Executive with the Company or those duties or services actually performed by Executive for the Company in connection with the provision of Services by the Company, or (C) will otherwise engage in the Business or market, sell or provide Products or Services in competition with the Company.
 
 
(g)
Competitor ” means any third-party (A) whose business is the same as or substantially similar to the Business or major segment thereof, or (B) who owns or operates, intends to own or operate, or is preparing to own or operate a subsidiary, affiliate, or business line or business segment whose business is or is expected to be the same as or substantially similar to the Business or major segment thereof.
 
 
(h)
Customer ” means any Person who is or was a customer or client of the Company or its Affiliates at the time of, or during the 12 month period prior to, the Termination Date.
 
 
(i)
Effective Date ” means the date of this Agreement.
 
 
(j)
Good Reason ” means the occurrence of any one or more of the following, without Executive’s prior express written consent:
 
 
(i)
A material reduction by the Company of Executive’s Base Salary in effect on the date hereof, or as the same shall be increased from time to time;
 
 
2

 
 
 
(ii)
The assignment of Executive to duties materially inconsistent with Executive’s authorities, duties, responsibilities, and status as an officer of the Company, or a material reduction or alteration in the nature or status of Executive’s title, authorities, duties or responsibilities from those in effect as the Effective Date; or
 
 
(iii)
The Company’s requiring Executive to be based at a location in excess of fifty (50) miles from the location of Executive’s principal job location or office in effect on the Effective Date, except for required travel on the Company’s business to an extent consistent with Executive’s then present business travel obligations.
 
Notwithstanding any provision herein to the contrary, Good Reason shall not be deemed to have occurred unless (i) Executive reasonably determines in good faith that a Good Reason condition has occurred; (ii) Executive notifies the Company in writing of the occurrence of the Good Reason condition within sixty (60) days of such occurrence; (iii) Executive cooperates in good faith with the Company's efforts, for a period of not less than thirty (30) days following such notice (the “ Cure Period ”), to remedy the condition; (iv) notwithstanding such efforts, the Good Reason condition continues to exist following the Cure Period; and (v) Executive terminates his employment for Good Reason within sixty (60) days after the end of the Cure Period.  If the Company cures the Good Reason condition during the Cure Period, and Executive terminates his employment with the Company due to such condition (notwithstanding its cure), then Executive will not be deemed to have terminated his employment for Good Reason.

 
(k)
Person ” means any individual, corporation, association, partnership, business trust, joint stock company, limited liability company, foundation, trust, estate or other entity or organization of whatever nature.
 
 
(l)
Products and Services ” means (i) snack foods and (ii) the products and/or services offered by the Company or its Affiliates at the time of, or during the 12 month period prior to, the Termination Date.
 
 
(m)
Representative ” of a Person means (i) a shareholder, director, officer, member, manager, partner, joint venturer, owner, employee, agent, broker, representative, independent contractor, consultant, advisor, licensor or licensee of, for, to or with such Person, (ii) an investor in such Person or a lender (irrespective of whether interest is charged) to such Person or (iii) any Person acting for, on behalf of or together with such Person.
 
 
(n)
Restricted Period ” means the period commencing on the Termination Date and ending eighteen (18) full calendar months following the Termination Date.
 
 
(o)
Restricted Territory ” means (i) North Carolina, (ii) Massachusetts, (iii) Georgia, (iv) South Carolina, (v) Florida, (vi) Pennsylvania, (vii) any other State in which the Company or its Affiliates does or did business at the time of, or during the 12 month period prior to, the Termination Date, and (viii) the United States of America.
 
 
(p)
“Section 409A” means Section 409A of the Internal Revenue Code of 1986, as amended, and includes any valid and binding governmental regulations, court decisions and other regulatory and judicial authority issued or rendered thereunder.
 
 
3

 
 
 
(q)
Termination Date ” means the date of Executive’s Termination of Employment, regardless of the date, cause, or manner of that termination.
 
 
(r)
Termination of Employment ” means any termination of Executive’s employment with either the Company or any successor to the Company that acquires all or substantially all of the business and/or assets of the Company (whether direct or indirect, by purchase, merger, consolidation or otherwise); provided, however, no termination of Executive’s employment shall be deemed to have occurred by reason of such an acquisition unless there is either (i) a termination of Executive’s employment with both the Company and such successor or (ii) a termination of Executive’s employment with the Company and no successive employment by such successor.  For purposes of this Agreement, whether a Termination of Employment has occurred shall be determined consistent with the requirements of Section 409A.
 
2.
Term of Agreement.
 
 
(a)
This Agreement will commence on the Effective Date and shall continue in effect until the third anniversary of the Effective Date (the “Initial Term”).
 
 
(b)
The Initial Term of this Agreement automatically shall be extended for one additional year at the end of the Initial Term, and then again after each successive one (1) year period thereafter (each such one (1) year period following the Initial Term being hereinafter referred to as a “Successive Period”).  However, either party may terminate this Agreement effective at the end of the Initial Term or at the end of any Successive Period thereafter (the “Expiration Date”) by giving the other party written notice of such termination and intent not to renew, delivered at least one (1) year prior to the Expiration Date.  If such notice is properly delivered by either party, this Agreement, along with all corresponding rights, duties, and covenants shall automatically expire on the Expiration Date; provided, however, that Executive’s obligations under Sections 6 through 10 hereof shall survive the termination of this Agreement.
 
3.
Severance Benefits Upon Involuntary Termination of Employment by the Company Without Cause or Termination of Employment by Executive with Good Reason.   In the event of Termination of Employment of Executive which is (a) involuntary on Executive’s part and without Cause, or (b) by Executive for Good Reason, and contingent upon (1) execution by Executive of a full release of claims, in a form satisfactory to the Company and Executive not revoking that release, and (2) Executive’s agreeing to comply and in fact fully complying with the covenants set forth in Sections 6 through 11 hereof, the Company shall pay to or provide Executive with the following:
 
 
(a)
A single cash payment in an amount equal to Executive’s unpaid Base Salary, accrued vacation pay, unreimbursed business expenses, and all other items earned by and owed to Executive through the Termination Date.
 
 
(b)
Eighteen substantially equal monthly cash payments in an aggregate amount equal to 1.5 multiplied by the sum of (i) Executive’s Base Salary in effect on the Termination Date plus (ii) the amount of Executive’s then-current target bonus opportunity established under the Company’s Annual Corporate Performance Incentive Plan for Officers (or any successor plan thereto), if any, in effect on the Termination Date, which payments shall commence on or about the sixtieth (60 th ) day after the Termination Date.
 
 
4

 
 
 
(c)
A single cash payment in an amount equal to the annual incentive award and any outstanding long-term performance awards based on actual performance for the applicable performance period and pro rated for the number of days completed in the applicable performance period through the Termination Date.  Such payment(s) shall be made at the same time as awards are made to other participants after the end of the applicable performance period.
 
 
(d)
Indemnification of Executive from any claims asserted against Executive arising out of the prior performance of Executive’s duties with the Company or its Affiliates to the same extent as the Company indemnifies retired officers or directors of the Company.
 
 
(e)
One year of outplacement assistance with a mutually agreeable provider for an amount not exceeding 10% of Executive’s Base Salary, provided that Executive must initiate such services within the three (3) month period following the Termination Date.  In the event Executive elects not to receive the outplacement services as provided herein, no amount will be payable to Executive under this Section 3(f).
 
 
(f)
Any outstanding, unvested stock options, restricted stock or other equity compensation awards shall vest upon the Termination Date only as provided in each stock option, restricted stock or other equity compensation award agreement between the Company and Executive; provided, however, that any vested, unexercised stock options shall remain exercisable for at least one year following the Termination Date (not to exceed the original expiration date of the stock option).  The post-employment exercisability provisions contained in the foregoing sentence shall control, notwithstanding more restrictive post-employment exercisability provisions in any stock option award agreement between the Company and Executive.
 
4.
Other Termination of Employment. Executive shall not be entitled to any payments or benefits under Section 3, upon the Termination of Employment for any reason other than as set forth in Section 3 hereof, including without limitation, the following:
 
 
(a)
Any Termination of Employment which is voluntary on the part of Executive without Good Reason; or
 
 
(b)
Any Termination of Employment for Cause; or
 
 
(c)
Any Termination of Employment which is the result of the death or disability of Executive.
 
5.
Mitigation.   In no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement, nor shall the amount of any payment hereunder be reduced by any compensation earned by Executive as a result of employment by another employer.
 
6.
Representations and Acknowledgements Concerning Restrictive Covenants.    In consideration for the Company’s willingness to enter into this Agreement and to provide the severance benefits set forth in this Agreement under its terms and conditions, Executive agrees not to engage in any activities competitive with the Company or its Affiliates as set forth below.
 
 
5

 
 
 
Executive and the Company understand and agree that the restrictions set forth in Sections 6, 7, 8, 9 and 10 hereof apply to Executive and impose post-employment obligations on Executive regardless of (A) the date, cause, or manner of the termination of Executive’s employment with the Company, (B) whether such termination occurs with or without Cause or is a result of Executive’s resignation, or (C) whether Executive receives severance benefits pursuant to Section 3 of this Agreement.
 
 
Executive and the Company understand and agree that the sole purpose of Sections 6, 7, 8, 9 and 10 hereof is to protect the Company’s legitimate business interests, including, but not limited to, the Company’s Customer and business associate relationships and goodwill, its Confidential Information and Trade Secrets, and the Company’s competitive advantage within the snack food industry.  The restrictions set forth herein are not intended to impair, nor will they impair, Executive’s ability or right to work or earn a living.
 
Executive and the Company further understand and agree that these Sections 6, 7, 8, 9 and 10 represent an important element of this Agreement, and are a material inducement to the Company entering into this Agreement, without which the Company would not have entered into this Agreement.
 
Executive understands that the Company is headquartered in North Carolina and the Company operates the Business across the United States, including in states that permit post-termination non-compete covenants.  Executive acknowledges that Executive’s duties with the Company have entailed involvement with the entire range of the Company’s operations and that Executive’s extensive familiarity with the Business and the Company’s Confidential Information and Trade Secrets justifies a restriction across the entire geographic footprint occupied by the Company.
 
Consequently, Executive acknowledges and agrees that (i) the restrictive covenants contained in this Agreement are reasonable in time, territory, and scope, and in all other respects; (ii) should any part or provision of any covenant be held invalid, void, or unenforceable in any court of competent jurisdiction, such invalidity, voidness, or unenforceability shall not render invalid, void, or unenforceable any other part or provision of this Agreement; and (iii) if any portion of any restrictive covenant provisions herein is found to be invalid or unenforceable by a court of competent jurisdiction because its duration, territory, definition of activities, or definition of information covered is considered to be invalid or unreasonable in scope, the invalid or unreasonable terms shall be redefined to carry out the Company’s and Executive’s intent in agreeing to these restrictive covenants.  These restrictive covenants shall be construed as agreements independent of any other provision in this Agreement and the existence of any claim or cause of action of Executive against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of these restrictive covenants.
 
7.
Covenant Not to Compete.
 
 
(a)
To the fullest extent permitted by any applicable state law, Executive agrees that during Executive’s employment with the Company, and for the full duration of the Restricted Period following Termination of Employment, Executive shall not, without the prior written consent of the Company, directly or indirectly, obtain or hold a Competitive Position with a Competitor in the Restricted Territory, as these terms are defined herein.
 
 
(b)
Executive shall be deemed to be in a Competitive Position with a Competitor, in the Restricted Territory, if Executive obtains or holds a Competitive Position with a Competitor that conducts its business within the Restricted Territory (and Executive’s responsibilities relate to that Competitor’s business in the Restricted Territory), even if Executive’s residence or principal place of work (other than California) is not within the Restricted Territory.
 
 
6

 
 
 
(c)
Notwithstanding the foregoing, Executive may, as a passive investor, own capital stock of a publicly held corporation, which is actively traded in the over-the-counter market or is listed and traded on a national securities exchange, which constitutes or is affiliated with a Competitor, so long as Executive’s ownership is not in excess of five percent (5%) of the total outstanding capital stock of the Competitor.
 
8.
Non-Solicitation / No Interference Provisions.
 
 
(a)
Customers and Other Business Partners.   Executive understands and agrees that the Company’s good will and established relationships between the Company and each of its Customers, and potential customers, and its licensors, licensees, suppliers, vendors, contractors, subcontractors, and consultants related to the Business (collectively, the “ Partners ”) constitute valuable assets of the Company, and may not be misappropriated for Executive’s own use or benefit or for the use or benefit of any other third-party.  Accordingly, Executive hereby agrees that during Executive’s employment with the Company and for the full duration of the Restricted Period following Termination of Employment, Executive shall not, without the prior written consent of the Company, directly or indirectly, on Executive’s own behalf or on behalf of any other third-party:
 
 
(i)
call-on, solicit, divert, take away or attempt to call-on, solicit, divert, or take away any of the Partners (1) with whom or with which Executive had communications on the Company’s behalf about the Partner’s existing or potential business relationship with the Company with respect to the Business; (2) whose business dealings with the Company are or were managed or supervised by Executive as part of his duties for the Company; or (3) about whom or about which Executive obtained Confidential Information or Trade Secrets solely as a result of Executive’s employment with the Company; or
 
 
(ii)
interfere or engage in any conduct that would otherwise have the effect of interfering, in any manner with the business relationship between the Company and any of the Partners, including, but not limited to, urging or inducing, or attempting to urge or induce, any Partner to terminate its relationship with the Company or to cancel, withdraw, reduce, limit, or modify in any manner such Partner’s business or relationship with the Company.
 
 
(b)
Company Employees.   Executive understands and agrees that the relationship between the Company and Company Employees constitutes a valuable asset of the Company and such assets may not be converted to Executive’s own use or benefit or for the use or benefit of any other third-party.  Accordingly, Executive hereby agrees that during Executive’s employment with the Company and for the full duration of the Restricted Period following Termination of Employment, Executive shall not, without the Company’s prior written consent, directly or indirectly, solicit or recruit for employment; attempt to solicit or recruit for employment; or attempt to hire or accept as an employee, consultant, contractor, or otherwise, any Company Employee.
 
 
7

 
 
9.
Enforcement of Restrictive Covenants.   Notwithstanding any other provision of this Agreement, in the event of Executive’s actual or threatened breach of any provision of Sections 7 and 8 hereof, the Company shall be entitled to an injunction restraining Executive from such breach or threatened breach, it being agreed that any breach or threatened breach of these restrictive covenants would cause immediate and irreparable injury to the Company and that money damages would not provide an adequate remedy to the Company.  Nothing herein shall be construed as prohibiting the Company from pursuing any other equitable or legal remedies for such breach or threatened breach, including the recovery of monetary damages from Executive pursuant to Section 14 below.
 
10.
Confidential Information and Company Property.
 
 
(a)
Executive and the Company recognize that due to the nature of Executive’s employment and Executive’s relationship with the Company, Executive has had access to, has acquired, or has assisted in developing confidential and proprietary information relating to the business, technology, financial, marketing, sales, strategic planning, methods, processes and manufacturing operations of the Company, and that the Company is entitled to protection for this information.
 
 
(b)
Executive recognizes and acknowledges that, unless otherwise available to the public, or otherwise generally known to the public,
 
 
(i)
all information relating to the business, technology, financial, marketing, sales, strategic planning, methods, processes and manufacturing operations of the Company, and
 
 
(ii)
all information of a technical or proprietary nature made available to the Company and its employees by customers, suppliers and vendors on a confidential basis in order to foster and facilitate the operation and success of the Company in conducting business,
 
 
(iii)
as such information may exist from time to time (hereinafter collectively referred to as “ Confidential Information ”), and whether in electronic, print or other form, all copies, compilations, notes, or other reproductions thereof are valuable, special and unique assets of the Company.
 
 
(c)
Executive therefore agrees that Executive shall not disclose any Confidential Information or any part thereof to any Person not employed by or affiliated with the Company for any reason or purpose whatsoever and shall not use such Confidential Information except on behalf of the Company at any time during the term of Executive’s employment with the Company, or at any time during the three (3) year period which immediately follows the Termination Date.
 
 
(d)
In addition, throughout the term of this Agreement and at all times after the Termination Date, Executive shall not directly or indirectly transmit or disclose any Trade Secret of the Company to any Person, not employed by or affiliated with the Company for any reason or purpose whatsoever and shall not make use of any Trade Secret, except on behalf of the Company.  For purposes of this Agreement, the term “ Trade Secret ” means any item of Confidential Information that constitutes a trade secret of the Company under the common law or statutory law of the state in which the Employee is domiciled.  The Parties acknowledge and agree that this Agreement is not intended to, and does not, alter either the Company’s rights or Employee’s obligations under any state or federal statutory or common law regarding trade secrets and unfair trade practices.
 
 
8

 
 
 
(e)
It is hereby acknowledged and agreed that any breach or threatened breach of the provisions of this Section 10 would cause irreparable injury to the Company and that money damages would not provide an adequate remedy to the Company.  In the event of a breach or threatened breach by Executive of the provisions of this Section 10, the Company shall be entitled to an injunction restraining Executive from disclosing, in whole or in part, any such Confidential Information or Trade Secrets, and, further, an injunction restraining Executive from accepting any employment with or rendering any services to any such person, firm, corporation, association or other entity to whom any such Confidential Information or Trade Secrets, in whole or in part, has been disclosed or is threatened to be disclosed.
 
 
(f)
Nothing contained herein shall be construed as prohibiting the Company from pursuing any other equitable or legal remedies for any such breach or threatened breach, including recovery from Executive of any monetary damages from Executive pursuant to Section 14 below.
 
 
(g)
Executive represents that upon Termination of Employment, Executive will return to the Company all property of the Company, including all Confidential Information, which is now or may hereafter come into his possession.
 
11.
Additional Post-Termination Covenants.
 
 
(a)
Upon Termination of Employment hereunder, regardless of the date, cause, or manner of such termination, Executive shall resign and does resign from all positions as an officer of the Company and from any other positions with the Company, with such resignations to be effective upon the Termination Date.
 
 
(b)
From and after the Termination Date, Executive agrees not to make any statements to the Company’s employees, customers, vendors, or suppliers or to any public or media source, whether written or oral, regarding Executive’s employment hereunder or termination from the Company’s employment, except as may be approved in writing by an executive officer of the Company in advance.  Executive further agrees not to make any statement (including to any media source, or to the Company’s suppliers, customers or employees) or take any action that would disrupt, impair, embarrass, harm or affect adversely the Company or any of the employees, officers, directors, or customers of the Company or place the Company or such individuals in any negative light.
 
 
(c)
Executive agrees to make himself available at reasonable times during normal business hours and upon reasonable notice to consult with and provide assistance and cooperation to the Company from time to time, as necessary, regarding management transition, licensing issues, pending and potential disputes, claims, litigation, and other matters relating to the Company’s corporate or professional liabilities.  Executive’s assistance and cooperation in litigation matters shall include, but not be limited to, as requested by the Company, providing informal interviews with the Company or its representatives; supplying affidavits; and appearing at and providing truthful testimony in depositions, hearings, arbitrations, administrative proceedings and trials.  Executive agrees to notify the Company in the event he is contacted by opposing counsel in any lawsuit naming the Company as a defendant.
 
 
9

 
 
 
Both parties agree to act reasonably and in good faith in scheduling the dates, times and length of time during which Executive will perform consulting services and provide assistance and cooperation in litigation.  In connection with such litigation or investigation, the Company shall attempt to accommodate Executive’s schedule, shall reimburse Executive (unless prohibited by law) for any actual loss of wages in connection therewith, shall provide Executive with reasonable notice in advance of the times in which Executive’s cooperation or assistance is needed, and shall reimburse Executive for any reasonable expenses incurred in connection with such matters.
 
12.
Adjustments to Payments.
 
 
(a)
Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Company to Executive or for Executive’s benefit (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise) (the “Payments”) would be subject to the excise tax imposed by Section 4999 (or any successor provisions) of the Internal Revenue Code of 1986, as amended (the “Code”), or any interest or penalty is incurred by Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, is hereinafter collectively referred to as the “Excise Tax”), then the Payments shall be reduced (but not below zero) if and to the extent that such reduction would result in Executive retaining a larger amount, on an after-tax basis (taking into account federal, state and local income taxes and the imposition of the Excise Tax), than if Executive received all of the Payments.  The Company shall reduce or eliminate the Payments, by first reducing or eliminating the portion of the Payments which are not payable in cash and then by reducing or eliminating cash payments, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the determination.
 
 
(b)
All determinations required to be made under this Section 12, including whether and when an adjustment to any Payments is required and, if applicable, which Payments are to be so adjusted, shall be made by a nationally recognized accounting firm selected by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and to Executive within fifteen (15) business days of the receipt of notice from Executive that there has been a Payment, or such earlier time as is requested by the Company.  All fees and expenses of the Accounting Firm shall be borne solely by the Company. If the Accounting Firm determines that no Excise Tax is payable by Executive, it shall furnish Executive with a written opinion that failure to report the Excise Tax on Executive’s applicable federal income tax return would not result in the imposition of a negligence or similar penalty. Any determination by the Accounting Firm shall be binding upon the Company and Executive.
 
13.
Employment Taxes and Withholdings.   Executive acknowledges and agrees that the Company shall withhold from the payments and benefits described in this Agreement all taxes, including income and employment taxes, required to be so deducted or withheld under applicable law.
 
14.
Forfeiture of Severance Benefits.   In the event that Executive violates the terms of this Agreement, including but not limited to the provisions of Sections 6, 7, 8, 10 and 11, then Executive shall forfeit any benefit to which Executive may be entitled pursuant to Section 3 hereof, and, within 30 days of a written request of the Company, shall reimburse the Company for any benefit paid to Executive hereunder.
 
 
10

 
 
 
Nothing herein shall be construed as prohibiting the Company from pursuing any other remedies available to the Company in the event of any breach or threatened breach, or as a waiver of the Company’s right to seek injunctive relief to enforce this Agreement’s restrictive covenants.
 
15.
Applicable Law. This Agreement is made and executed with the intention that the construction, interpretation and validity hereof shall be determined in accordance with and governed by the laws of the State of North Carolina, without giving any effect to choice or conflict of law principles of any jurisdiction.
 
16.
Binding Effect.   This Agreement shall be binding upon and inure to the benefit of the Company, its successors and assigns.  This Agreement shall be binding upon and inure to the benefit of Executive, his heirs, executors and administrators.
 
17.
Survival.   To the extent that it is necessary or advisable for the provisions of this Agreement to survive the termination of Executive’s employment, in order to carry out the full intent and purpose thereof, the same shall survive such termination, regardless of the date, cause or manner of such termination, such provisions to include, without limitation, Section 6, 7 and 8 hereof.
 
18.
Compliance With Section 409A.   To the extent applicable, it is intended that this Agreement comply with the provisions of Section 409A. This Agreement shall be administered in a manner consistent with this intent, and any provision that would cause the Agreement to fail to satisfy Section 409A shall have no force and effect until amended to comply with Section 409A. Notwithstanding any provision of this Agreement to the contrary, in the event any payment or benefit hereunder is determined to constitute nonqualified deferred compensation subject to Section 409A, then to the extent necessary to comply with Section 409A, such payment or benefit shall not be made, provided or commenced until six months after Executive’s Termination Date. Lump sum payments will be made, without interest, as soon as administratively practicable following the six-month delay. Any installments otherwise due during the six-month delay will be paid in a lump sum, without interest, as soon as administratively practicable following the six-month delay, and the remaining installments will be paid in accordance with the original schedule. For purposes of Section 409A, the right to a series of installment payments shall be treated as a right to a series of separate payments. Each separate payment in the series of separate payments shall be analyzed separately for purposes of determining whether such payment is subject to, or exempt from compliance with, the requirements of Section 409A. In any event, the Company makes no representations or warranty and will have no liability to Executive or any other person, other than with respect to payments made by the Company in violation of the provisions of this Agreement, if any provisions of or payments under this Agreement are determined to constitute deferred compensation subject to Section 409A but not to satisfy the conditions of Section 409A.
 
19.
Entire Agreement.   This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes and cancels all prior or contemporaneous oral or written agreements and understandings between them with respect to the subject matter hereof.
 
 
11

 

IN WITNESS WHEREOF , the Company has caused this Agreement to be signed by its duly authorized officers and its corporate seal to be hereunto affixed, and Executive has hereunto set his hand and seal, all as of the day and year first above written.
 
 
SNYDER’S-LANCE, INC.
 
[CORPORATE SEAL]      
       
ATTEST:
By
   
    Name   
_____________________________________   Title   
  Secretary
 
     
 
  EXECUTIVE  
     
     
  _____________________________[SEAL]  
  [Executive’s Printed Name]  
 
 
12



                                                      









SNYDER’S-LANCE, INC. AND SUBSIDIARIES
 
EXHIBIT 31.1

MANAGEMENT CERTIFICATION

I, David V. Singer, certify that:

1.           I have reviewed this quarterly report on Form 10-Q of Snyder’s-Lance, Inc.;

2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 
c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 
d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

  Date:  May 5, 2011  
     
 
/s/ David V. Singer
 
 
David V. Singer
 
 
Chief Executive Officer
 
 
 


SNYDER’S-LANCE, INC. AND SUBSIDIARIES
 
EXHIBIT 31.2

MANAGEMENT CERTIFICATION

I, Rick D. Puckett, certify that:
1.           I have reviewed this quarterly report on Form 10-Q of Snyder’s-Lance, Inc.;

2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 
c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 
d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 
  Date:  May 5, 2011  
     
 
/s/ Rick D. Puckett
 
 
Rick D. Puckett
 
 
Executive Vice President, Chief Financial Officer, Treasurer and Secretary
 

 


SNYDER’S-LANCE, INC. AND SUBSIDIARIES
 
EXHIBIT 32

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Quarterly Report of Snyder’s-Lance, Inc. (the “Company”) on Form 10-Q for the period ended April 2, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, David V. Singer, President and Chief Executive Officer of the Company, and Rick D. Puckett, Executive Vice President, Chief Financial Officer, Treasurer and Secretary of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
 
 
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of1934; and

 
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
A signed original of this written statement required by Section 906 has been provided to Snyder’s-Lance, Inc. and will be retained by Snyder’s-Lance, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
 

/s/ David V. Singer
 
/s/ Rick D. Puckett
David V. Singer
 
Rick D. Puckett
Chief Executive Officer
 
Executive Vice President, Chief Financial
May 5, 2011
 
Officer, Treasurer and Secretary
   
May 5, 2011