Snyder's-Lance, Inc.
LANCE INC (Form: 10-Q, Received: 07/25/2008 16:41:13)
Table of Contents

 
 
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 June 28, 2008
Commission File Number 0-398
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.)
     
14120 Ballantyne Corporate Place
Suite 350
Charlotte, North Carolina
(Address of principal executive offices)
   

28277
(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 is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer  þ Accelerated filer  o   Non-accelerated filer  o
(Do not check if a smaller reporting company)
Smaller reporting company  o
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 July 18, 2008, was 31,474,662 shares.
 
 

 


 

LANCE, INC. AND SUBSIDIARIES
INDEX
         
    Page  
 
       
       
 
       
       
 
       
    3  
 
       
    4  
 
       
    5  
 
       
    6  
 
       
    7  
 
       
    10  
 
       
    14  
 
       
    14  
 
       
       
 
       
    15  
 
       
    15  
 
       
    15  
 
       
    15  
 
       
    16  
 
       
    17  
  Exhibit 10.2
  Exhibit 10.3
  Exhibit 10.4
  Exhibit 10.5
  Exhibit 10.6
  Exhibit 31.1
  Exhibit 31.2
  Exhibit 32

2


Table of Contents

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
LANCE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income (Unaudited)
For the Quarters and Six Months Ended June 28, 2008 and June 30, 2007

(in thousands, except share and per share data)
                                 
    Quarter Ended     Six Months Ended  
    June 28,     June 30,     June 28,     June 30,  
    2008     2007     2008     2007  
                                 
Net sales and other operating revenue
  $ 213,614     $ 197,036     $ 411,582     $ 379,463  
                                 
Cost of sales and operating expenses:
                               
Cost of sales
    133,691       109,435       257,152       212,412  
Selling, general and administrative
    74,568       71,467       147,425       141,082  
Other expense, net
    161       973       157       884  
 
                       
Total costs and expenses
    208,420       181,875       404,734       354,378  
 
                       
 
                               
Income from continuing operations before interest and income taxes
    5,194       15,161       6,848       25,085  
Interest expense, net
    860       615       1,465       1,219  
 
                       
Income from continuing operations before income taxes
    4,334       14,546       5,383       23,866  
Income tax expense
    1,626       5,277       2,030       8,725  
 
                       
Net income from continuing operations
    2,708       9,269       3,353       15,141  
 
(Loss)/income from discontinued operations
          (346 )           190  
Income tax (benefit)/expense
          (129 )           69  
 
                       
Net (loss)/income from discontinued operations
          (217 )           121  
 
                       
 
                               
Net income
  $ 2,708     $ 9,052     $ 3,353     $ 15,262  
 
                       
 
                               
Basic earnings/(loss) per share:
                               
From continuing operations
  $ 0.09     $ 0.30     $ 0.11     $ 0.49  
From discontinued operations
        $ (0.01 )         $  
 
                       
Basic earnings per share
  $ 0.09     $ 0.29     $ 0.11     $ 0.49  
 
                       
 
                               
Weighted average shares outstanding — basic
    31,181,000       30,927,000       31,142,000       30,866,000  
 
                               
Diluted earnings/(loss) per share:
                               
From continuing operations
  $ 0.09     $ 0.30     $ 0.11     $ 0.49  
From discontinued operations
        $ (0.01 )         $  
 
                       
Diluted earnings per share
  $ 0.09     $ 0.29     $ 0.11     $ 0.49  
 
                       
 
                               
Weighted average shares outstanding — diluted
    31,807,000       31,414,000       31,701,000       31,308,000  
See Notes to the Condensed Consolidated Financial Statements (Unaudited).

3


Table of Contents

LANCE, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
As of June 28, 2008 (Unaudited) and December 29, 2007

(in thousands, except share data)
                 
    June 28,     December 29,  
    2008     2007  
ASSETS
               
Current assets
               
Cash and cash equivalents
  $ 1,086     $ 8,647  
Accounts receivable, net
    77,127       64,081  
Inventories
    45,048       38,659  
Deferred income taxes
    10,184       9,335  
Prepaid expenses and other current assets
    14,415       12,367  
 
           
Total current assets
    147,860       133,089  
 
               
Other assets
               
Fixed assets, net
    211,879       205,075  
Goodwill and other intangible assets, net
    87,549       69,127  
Other noncurrent assets
    6,058       5,712  
 
           
Total assets
  $ 453,346     $ 413,003  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current liabilities
               
Accounts payable
  $ 29,030     $ 21,169  
Other payables and accrued liabilities
    53,379       53,468  
Short-term debt
    13,958        
 
           
Total current liabilities
    96,367       74,637  
 
               
Other liabilities
               
Long-term debt
    74,000       50,000  
Deferred income taxes
    26,296       26,874  
Other noncurrent liabilities
    14,223       14,395  
 
           
Total liabilities
    210,886       165,906  
 
           
 
               
Commitments and contingencies
               
 
               
Stockholders’ equity
               
Common stock, 31,474,662 and 31,214,743 shares outstanding, respectively
    26,228       26,011  
Preferred stock, no shares outstanding
           
Additional paid-in capital
    45,933       41,430  
Retained earnings
    156,665       163,356  
Accumulated other comprehensive income
    13,634       16,300  
 
           
Total stockholders’ equity
    242,460       247,097  
 
           
Total liabilities and stockholders’ equity
  $ 453,346     $ 413,003  
 
           
See Notes to the Condensed Consolidated Financial Statements (Unaudited).

4


Table of Contents

LANCE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders’ Equity and Comprehensive Income (Unaudited)
For the Quarters Ended June 28, 2008 and June 30, 2007

(in thousands, except share data)
                                                 
                    Additional           Accumulated Other    
                    Paid-in   Retained   Comprehensive    
    Shares   Common Stock   Capital   Earnings   Income   Total
 
Balance, December 30, 2006
    30,855,891     $ 25,714     $ 32,129     $ 159,329     $ 5,228     $ 222,400  
 
Comprehensive income:
                                               
Net income
                      15,262             15,262  
Foreign currency translation adjustment
                            5,678       5,678  
Net unrealized losses on derivatives, net of $401 tax effect
                            710       710  
Actuarial gains recognized in net income, net of $45 tax effect
                            (105 )     (105 )
 
                                               
Total comprehensive income
                                            21,545  
 
                                               
 
Cash dividends paid to stockholders
                      (9,900 )           (9,900 )
 
Stock options exercised, including $517 excess tax benefit
    162,025       133       2,636                   2,769  
 
Cumulative adjustment from adoption of FIN 48
                      61             61  
 
Equity-based incentive expense previously recognized under a liability plan
    54,900       46       1,220                   1,266  
 
Amortization of nonqualified stock options
                303                   303  
 
Issuances and amortization of restricted stock and units, net of forfeitures
    28,100       23       1,440                   1,463  
 
     
Balance, June 30, 2007
    31,100,916     $ 25,916     $ 37,728     $ 164,752     $ 11,511     $ 239,907  
     
 
Balance, December 29, 2007
    31,214,743     $ 26,011     $ 41,430     $ 163,356     $ 16,300     $ 247,097  
 
                                               
Comprehensive income:
                                               
Net income
                      3,353             3,353  
Foreign currency translation adjustment
                            (2,246 )     (2,246 )
Net unrealized losses on derivatives, net of $198 tax effect
                            (366 )     (366 )
Actuarial gains recognized in net income, net of $32 tax effect
                            (54 )     (54 )
 
                                               
Total comprehensive income
                                            687  
 
                                               
 
Cash dividends paid to stockholders
                      (10,044 )           (10,044 )
 
Stock options exercised, including $267 excess tax benefit
    98,638       82       1,559                   1,641  
 
Equity-based incentive expense previously recognized under a liability plan
    39,250       33       876                   909  
 
Amortization of nonqualified stock options
                542                   542  
 
Issuances and amortization of restricted stock and units, net of forfeitures
    122,031       102       1,526                   1,628  
 
     
Balance, June 28, 2008
    31,474,662     $ 26,228     $ 45,933     $ 156,665     $ 13,634     $ 242,460  
     
See Notes to the Condensed Consolidated Financial Statements (Unaudited).

5


Table of Contents

LANCE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
For the Six Months Ended June 28, 2008 and June 30, 2007

(in thousands)
                 
    Six Months Ended  
    June 28, 2008     June 30, 2007  
 
Operating activities
               
Net income
  $ 3,353     $ 15,262  
Adjustments to reconcile net income to cash from operating activities:
               
Depreciation and amortization
    16,105       14,461  
Stock-based compensation expense
    2,170       1,767  
Loss on sale of fixed assets
    195       518  
Changes in operating assets and liabilities, excluding business acquisition
    (11,503 )     (3,057 )
 
           
Net cash from operating activities
    10,320       28,951  
 
           
 
               
Investing activities
               
Purchases of fixed assets
    (21,603 )     (22,608 )
Proceeds from sale of fixed assets
    321       3,319  
Business acquisition, net of cash acquired
    (23,931 )      
Purchase of investment
          (2,090 )
 
           
Net cash used in investing activities
    (45,213 )     (21,379 )
 
           
 
               
Financing activities
               
Dividends paid
    (10,044 )     (9,900 )
Issuance of common stock
    1,641       2,769  
Proceeds from debt
    38,014        
Repayments of acquired debt from business acquisition
    (2,239 )      
 
           
Net cash from/(used in) financing activities
    27,372       (7,131 )
 
           
 
               
Effect of exchange rate changes on cash
    (40 )     87  
 
           
 
               
(Decrease)/increase in cash and cash equivalents
    (7,561 )     528  
Cash and cash equivalents at beginning of period
    8,647       5,504  
 
           
Cash and cash equivalents at end of period
  $ 1,086     $ 6,032  
 
           
 
               
Supplemental information:
               
Cash paid for income taxes
  $ 1,371     $ 5,389  
Cash paid for interest
  $ 1,500     $ 1,442  
See Notes to the Condensed Consolidated Financial Statements (Unaudited).

6


Table of Contents

LANCE, INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements (Unaudited)
1.  
The accompanying unaudited condensed consolidated financial statements of 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 December 29, 2007 filed with the Securities and Exchange Commission (the “SEC”) on February 22, 2008. 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 position as of June 28, 2008 and December 29, 2007 and the condensed consolidated statements of income for the quarters and six months ended June 28, 2008 and June 30, 2007 and the condensed consolidated statements of stockholders’ equity and comprehensive income and cash flows for the six months ended June 28, 2008 and June 30, 2007. Prior year amounts shown in the accompanying condensed consolidated financial statements have been reclassified for consistent presentation.
 
2.  
The consolidated results of operations for the quarter and six months ended June 28, 2008 are not necessarily indicative of the results to be expected for the year ending December 27, 2008.
 
3.  
Preparing financial statements requires management to make estimates and judgments 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 promotions, provisions for bad debts, inventory valuations, useful lives of fixed assets, hedge transactions, supplemental retirement benefits, intangible asset valuations, incentive compensation, income taxes, insurance, post-retirement benefits, contingencies and legal proceedings. Actual results may differ from these estimates under different assumptions or conditions.
 
4.  
On March 14, 2008, we acquired 100% of the outstanding common stock of Brent & Sam’s, Inc. Brent & Sam’s is a producer of branded and private brand premium gourmet cookies with operations in North Little Rock, Arkansas. This acquisition enhances our portfolio of branded products and extends our product offering into the premium private brand category. We paid $24.1 million to acquire Brent & Sam’s, mostly funded from borrowings under our existing Credit Agreement. Since the acquisition date, we have repaid all of the $2.2 million assumed debt. Approximately $19.9 million of the acquisition price was assigned to goodwill and other intangible assets.
 
5.  
We own a non-controlling equity interest in Late July Snacks, LLC, an organic snack food company. We also manufacture products for Late July. During the first six months of 2008, non-branded sales to Late July were approximately $2.0 million. As of June 28, 2008, accounts receivable due from Late July totaled $0.7 million.
 
6.  
The following tables provide a reconciliation of the common shares used for basic earnings per share and diluted earnings per share:
                                 
    Quarter Ended   Six Months Ended
    June 28,   June 30,   June 28,   June 30,
(in thousands)   2008   2007   2008   2007
 
                               
Weighted average number of common shares used for basic earnings per share
    31,181       30,927       31,142       30,866  
Effect of potential dilutive shares
    626       487       559       442  
 
                               
Weighted average number of common shares and potential dilutive shares used for diluted earnings per share
    31,807       31,414       31,701       31,308  
 
                               
Anti-dilutive shares excluded from the above reconciliation
    95             867       19  
 
                               

7


Table of Contents

LANCE, INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements (Unaudited)
7.    
During the first quarter of 2008, we granted approximately 175,000 vested nonqualified stock options, 19,500 restricted shares and 19,750 shares of common stock related to a long-term incentive plan for key employees that were previously accounted for as a liability. This resulted in an increase in equity and a decrease in accrued liabilities of $0.9 million during the first quarter of 2008. During the first quarter of 2007, we granted 114,000 vested nonqualified stock options, 27,450 restricted shares and 27,450 of common stock related to a long-term incentive plan for key employees that were previously accounted for as a liability. This resulted in an increase in equity and a decrease in accrued liabilities of $1.3 million during the first quarter of 2007.
 
8.    
Sales to our largest customer, Wal-Mart Stores, Inc., were 20% of revenue for both quarters and six months ended June 28, 2008 and June 30, 2007. Accounts receivable at June 28, 2008 and December 29, 2007 included receivables from Wal-Mart Stores, Inc. totaling $20.6 million and $14.7 million, respectively.
 
9.    
In accordance with FIN 48, “ Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement 109, ” we have recorded gross unrecognized tax benefits as of June 28, 2008 totaling $1.5 million and related interest and penalties of $0.5 million in other noncurrent liabilities of the condensed consolidated balance sheet. Of this amount, $1.7 million would affect the effective tax rate if subsequently recognized. Various taxing authorities’ statutes of limitations related to the computation of our unrecognized tax benefits will expire within twelve months of our prior year-end resulting in a potential $0.5 million reduction of the unrecognized tax benefit amount. We classify interest and penalties associated with income tax positions within income tax expense. The interest and penalty component of the unrecognized tax benefits as of June 28, 2008 was $0.5 million.
 
   
We have open years for income tax audit purposes in our major taxing jurisdictions according to statutes as follows:
       
  Jurisdiction   Open years
 
US federal
  2004 and forward
 
Canada federal
  2003 and forward
 
Ontario provincial
  2001 and forward
 
Massachusetts
  2001 and forward
 
North Carolina
  2004 and forward
 
Iowa
  2004 and forward
10.  
At June 28, 2008 and December 29, 2007, we had $2.3 million and $0.5 million, respectively, of assets held for sale included in other current assets on the condensed consolidated balance sheets. The assets at June 28, 2008 primarily consist of land and buildings to be sold related to the consolidation of sugar wafer facilities in Ontario, Canada, and certain properties in Columbus, Georgia.

8


Table of Contents

LANCE, INC. AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements (Unaudited)
11.  
The principal raw materials used in the manufacture of our products are flour, vegetable oil, sugar, potatoes, peanuts, other nuts, cheese and seasonings. The principal supplies used are flexible film, cartons, trays, boxes, and bags. These raw materials and supplies are generally available in adequate quantities in the open market either from sources in the United States or from other countries.
 
   
We utilize the dollar value last-in, first-out (“LIFO”) method of determining the cost of approximately one third of our inventories. Because inventory valuations under the LIFO method are based on annual determinations, the interim LIFO valuations require management to estimate year-end costs and levels of inventories. The variation between estimated year-end costs and levels of LIFO inventories compared to the actual year-end amounts may materially affect the results of operations for the full year. During the second quarter of 2008, we recorded a favorable valuation adjustment of $0.8 million ($0.4 million after tax) related to LIFO layers generated in prior periods. Inventories consist of:
                 
    June 28,     December 29,  
(in thousands)   2008     2007  
 
               
Finished goods
  $ 25,307     $ 21,910  
Raw materials
    8,981       7,701  
Supplies, etc.
    15,854       14,297  
 
           
Total inventories at FIFO cost
    50,142       43,908  
Less adjustments to reduce FIFO cost to LIFO cost
    (5,094 )     (5,249 )
 
           
Total inventories
  $ 45,048     $ 38,659  
 
           
12.  
Our Board of Directors adopted a Preferred Shares Rights Agreement on July 14, 1998. The rights granted under this agreement were designed to protect all of our stockholders and ensure they receive fair and equal treatment in the event of an attempted takeover or certain takeover tactics. None of these rights were redeemed and all expired on July 14, 2008 in accordance with the terms of the Rights Agreement.

9


Table of Contents

LANCE, INC. AND SUBSIDIARIES
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements and Risk Factors
We, from time to time, make “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, those set forth under Item 1A — Risk Factors in our Annual Report on Form 10-K for the year ended December 29, 2007.
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. We undertake no obligation to update publicly or revise any forward-looking statement, whether due to 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. 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, provisions for bad debts, inventory valuations, useful lives of fixed assets, hedge transactions, supplemental retirement benefits, intangible asset valuations, incentive compensation, income taxes, insurance, post-retirement benefits, contingencies and legal proceedings. Actual results may differ from these estimates under different assumptions or conditions.
Quarter Ended June 28, 2008 Compared to Quarter Ended June 30, 2007
                                                 
                                    Favorable/
  Quarter Ended   (Unfavorable)
(dollars in thousands)   June 28, 2008   June 30, 2007   Variance
     
 
                                               
Revenue
  $ 213,614       100.0 %   $ 197,036       100.0 %   $ 16,578       8.4 %
Cost of sales
    133,691       62.6 %     109,435       55.5 %     (24,256 )     (22.2 %)
     
Gross margin
    79,923       37.4 %     87,601       44.5 %     (7,678 )     (8.8 %)
Selling, general and administrative
    74,568       34.9 %     71,467       36.3 %     (3,101 )     (4.3 %)
Other expense/(income), net
    161       0.1 %     973       0.5 %     812       83.5 %
     
Earnings before interest and taxes
    5,194       2.4 %     15,161       7.7 %     (9,967 )     (65.7 %
Interest expense, net
    860       0.4 %     615       0.3 %     (245 )     (39.8 %)
Income tax expense
    1,626       0.8 %     5,277       2.7 %     3,651       69.2 %
     
Income from continuing operations
  $ 2,708       1.3 %   $ 9,269       4.7 %   $ (6,561 )     (70.8 %)
     
For the second quarter of 2008, revenue increased $16.6 million or 8%, but income from continuing operations decreased $6.6 million compared to the second quarter of 2007. The results of operations were significantly impacted by the unprecedented increases in ingredient and energy costs, which have not yet been fully offset by price increases. During the first quarter of 2008, we acquired Brent & Sam’s, a producer of branded and private brand premium gourmet cookies located in North Little Rock, Arkansas. The addition of Brent & Sam’s increased revenue by 2% compared to the second quarter of 2007, but did not have a significant impact on our income from operations. This acquisition is expected to generate approximately $10 million in revenue and positive net earnings during the remainder of 2008.

10


Table of Contents

LANCE, INC. AND SUBSIDIARIES
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Branded product revenue increased $8.1 million or 6% compared to the second quarter of last year. Approximately 3% of this percentage growth was due to price increases, 2% was due to higher unit volume and favorable product mix, and 1% was due to the addition of Brent & Sam’s. From a product line perspective, Lance® home pack sandwich crackers and Cape Cod ® potato chips product revenue experienced strong growth, which was partially offset by declines in certain salty snacks and cakes. Branded product revenue represented 63% and 64% of total revenue for the second quarter of 2008 and 2007, respectively.
From a trade channel perspective and consistent with our overall strategy, sales to grocery stores/mass merchandisers, distributors, and club stores generated the majority of the growth in branded product revenues. These increases in revenue were partially offset by anticipated declines in less profitable trade channels.
Non-branded product revenue, which includes private brands and contract manufacturing, increased $8.5 million or 12% compared to the second quarter of 2007. The growth in revenue was the result of increased pricing of 12%, increased revenue from the addition of Brent & Sam’s of 4%, and higher volume from new and existing customers and new product offerings of approximately 2%. Unfavorable product mix and volume declines from certain contract manufacturing customers reduced non-branded revenue by 6%. Non-branded product revenue represented 37% and 36% of total revenue for the second quarter of 2008 and 2007, respectively.
Gross margin decreased $7.7 million or 7% as a percentage of revenue compared to the second quarter of 2007. The impact of higher ingredient costs, and unfavorable foreign exchange and natural gas rates reduced gross margin approximately 9% as a percentage of revenue, and unfavorable product mix and costs associated with the consolidation of our Canadian plant operations accounted for an additional 4% decline in gross margin as a percentage of revenue. This decline was partially offset by a 6% increase in gross margin as a percent of revenue due to price increases and improved manufacturing efficiencies compared to the second quarter of 2007. Price increases will continue to be implemented through the third and fourth quarters of 2008 to offset significantly higher ingredient costs.
Selling, general and administrative costs increased $3.1 million, but decreased 1% as a percentage of revenue compared to the second quarter of 2007. These increased costs were driven by a number of factors: strategic growth and infrastructure initiatives generated $2.0 million in higher employee and information technology costs; transportation-related fuel costs increased $1.4 million; and selling costs, such as displays and commissions, increased $2.1 million compared to the second quarter of 2007. These cost increases incurred in 2008 were partially offset by reductions in advertising costs and lower professional fees of $2.4 million as compared to the second quarter of 2007.
Compared to the second quarter of 2007, the effective tax rate increased from 36.3% to 37.5% due to a combination of lower earnings and the impact of accounting for uncertain tax positions. We expect the full year effective tax rate to be between 35% and 36%.
Six Months Ended June 28, 2008 Compared to Six Months Ended June 30, 2007
                                                 
                                    Favorable/
  Six Months Ended   (Unfavorable)
(dollars in thousands)   June 28, 2008   June 30, 2007   Variance
     
 
                                               
Revenue
  $ 411,582       100.0 %   $ 379,463       100.0 %   $ 32,119       8.5 %
Cost of sales
    257,152       62.5 %     212,412       56.0 %     (44,740 )     (21.1 %)
     
Gross margin
    154,430       37.5 %     167,051       44.0 %     (12,621 )     (7.6 %)
Selling, general and administrative
    147,425       35.8 %     141,082       37.2 %     (6,343 )     (4.5 %)
Other expense/(income), net
    157             884       0.2 %     727       (82.2 %)
     
Earnings before interest and taxes
    6,848       1.7 %     25,085       6.6 %     (18,237 )     (72.7 %)
Interest expense, net
    1,465       0.4 %     1,219       0.3 %     (246 )     (20.2 %)
Income tax expense
    2,030       0.5 %     8,725       2.3 %     6,695       76.7 %
     
Income from continuing operations
  $ 3,353       0.8 %     15,141       4.0 %   $ (11,788 )     (77.9 %)
     

11


Table of Contents

LANCE, INC. AND SUBSIDIARIES
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
For the six months ended June 28, 2008, revenue increased $32.1 million or 9%, but income from continuing operations decreased $11.8 million compared to the first six months in 2007. The results of operations were significantly impacted by the unprecedented increase in ingredient and energy costs, which have not yet been fully offset by price increases. Since March 14, 2008, Brent & Sam’s has been included in our results of operations and represents 1% of the increased revenue compared to 2007. Brent & Sam’s did not have a significant impact on our income from operations for the first six months of 2008.
Branded product revenue increased $14.2 million or 6% compared to the first six months of 2007. Approximately 3% of this percentage growth was due to price increases, 3% was due to favorable product mix and 1% was due to the addition of Brent & Sam’s. This increase was offset slightly by an approximate 1% decline in branded unit volume. From a product line perspective, Lance ® home pack sandwich crackers and Cape Cod ® potato chips product revenue experienced strong growth, which was partially offset by declines in certain salty snacks and cakes. Branded product revenue represented 62% and 64% of total revenue for the first six months of 2008 and 2007, respectively.
From a trade channel perspective and consistent with our overall strategy, sales to grocery stores/mass merchandisers, distributors, and club stores generated the majority of the growth in branded product revenues. These increases in revenue were partially offset by anticipated declines in less profitable trade channels.
Non-branded product revenue, which includes private brands and contract manufacturing, increased $17.9 million or 13% compared to the first six months of 2007. The growth in revenue was the result of increased pricing of 9%, higher volume from private brand sales from new and existing customers and new product offerings of approximately 5%, and increased revenue from the addition of Brent & Sam’s of approximately 2%. Volume declines from certain contract manufacturing customers and unfavorable product mix reduced non-branded revenue by 3%. Non-branded product revenue represented 38% and 36% of total revenue for the first six months of 2008 and 2007, respectively.
Gross margin decreased $12.6 million or 7% as a percentage of revenue compared to the first six months of 2007. The impact of higher ingredient costs, unfavorable foreign exchange and increased natural gas rates reduced gross margin approximately 8% as a percentage of revenue, and unfavorable product mix and costs associated with the consolidation of our Canadian plant operations accounted for an additional 4% decline in gross margin as a percentage of revenue. This decline was partially offset by a 5% increase in gross margin as a percent of revenue, due to price increases and improved manufacturing efficiencies compared to the first six months of 2007. Price increases will continue to be implemented through the third and fourth quarter of 2008 to offset significantly higher ingredient costs.
Selling, general and administrative costs increased $6.3 million, but decreased 1% as a percentage of revenue compared to the first six months of 2007. These increased costs were driven by a number of factors: strategic growth and infrastructure initiatives generated $4.0 million in higher employee and information technology costs; transportation-related fuel costs increased $2.5 million; and selling costs, such as displays, market research, and commissions, increased $3.8 million compared to the first six months of 2007. These cost increases were partially offset by reductions in advertising costs, shipping efficiencies, and lower professional fees of $4.0 million as compared to the first six months of 2007.
Compared to the first six months of 2007, the effective tax rate increased from 36.6% to 37.7% due to a combination of lower earnings and the impact of accounting for uncertain tax positions.
Liquidity and Capital Resources
Liquidity
The principal sources of liquidity for operations during the first six months of 2008 were provided by proceeds from debt, operating activities and cash on hand. Cash flow from operating activities, cash on hand and existing borrowing facilities are believed to be sufficient for the foreseeable future to enable us to meet obligations, fund capital expenditures and pay cash dividends to our stockholders.
Operating Cash Flows
Net cash from operating activities was $10.3 million and $29.0 million for the first six months of 2008 and 2007, respectively. The decrease was due to lower net income, predominately driven by higher ingredient costs, and higher levels of working capital. Working capital, excluding cash and short-term debt, increased $14.6 million predominately from increased accounts receivable due to higher revenue and increased inventory due to higher ingredient costs.

12


Table of Contents

LANCE, INC. AND SUBSIDIARIES
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Investing Cash Flows
Net cash used in investing activities was $45.2 million for the first six months of 2008. On March 14, 2008, we acquired Brent and Sam’s, Inc. for approximately $23.9 million, net of cash acquired of $0.2 million. Capital expenditures for fixed assets, principally manufacturing equipment, delivery vans for field sales representatives, and information system implementation costs, totaled $21.6 million during the first six months of 2008, partially funded by proceeds from the sale of assets of $0.3 million. Capital expenditures are expected to continue at a level sufficient to support our strategic and operating needs. Capital expenditures for fiscal 2008 are projected to be approximately $40 million and funded by net cash flow from operating activities, cash on hand and borrowing facilities.
Net cash used in investing activities during the first six months of 2007 represented capital expenditures of $22.6 million and a purchase of a noncontrolling equity interest in an organic snack food company for $2.1 million Proceeds from the sale of fixed assets were $3.3 million. For the full year ended December 29, 2007, capital expenditures for purchases of property and equipment were $39.5 million.
Financing Cash Flows
During the first six months of 2008, net cash from financing activities was impacted by $24.0 million of additional borrowings under our existing Credit Agreement for the acquisition of Brent & Sam’s. Since the acquisition date, we have repaid all of the $2.2 million acquired debt. In the second quarter of 2008, we made additional short-term borrowings of $14.0 million to purchase fixed assets.
During the first six months of 2008 and 2007, we paid dividends of $0.32 per share totaling $10.0 million and $9.9 million, respectively. In addition, we received cash and related tax benefits of $1.6 million and $2.8 million during the first six months of 2008 and 2007, respectively, due to stock option exercises. On July 24, 2008, the Board of Directors declared a quarterly cash dividend of $0.16 per share, payable on August 20, 2008 to stockholders of record on August 11, 2008.
Debt
Additional borrowings available under all existing credit facilities totaled $56.7 million as of June 28, 2008. We have complied with all financial covenants contained in the credit facilities. 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 $20.2 million as of June 28, 2008.
Contractual Obligations
Purchase commitments for inventory increased from $58.9 million as of December 29, 2007, to approximately $119.3 million as of June 28, 2008 due to the increased cost of certain raw materials and the duration of purchase contracts.
Market Risks
The principal market risks that may adversely impact results of operations and financial position are changes in raw material prices, energy costs, interest and foreign exchange rates and credit risks. We selectively use derivative financial instruments to manage these risks. There are no market risk sensitive instruments held for trading purposes.
At times, we may enter into commodity futures and option contracts to manage fluctuations in prices of anticipated purchases of ingredients. Our policy is to use these commodity derivative financial instruments only to the extent necessary to manage these exposures. We do not use these financial instruments for trading purposes. As of June 28, 2008, there were no outstanding commodity futures or option contracts. For the first six months of 2008, increases in ingredients costs reduced our gross margin by $30.8 million as compared to the first six months of 2007.
Our variable-rate debt obligations incur interest at floating rates based on changes in the Eurodollar rate, Canadian Bankers’ Acceptance discount rate, Canadian prime 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. In November 2006, we entered into an interest rate swap agreement in order to manage the risk associated with variable interest rates. The variable-to-fixed interest rate swap is accounted for as a cash flow hedge. The interest rate on the swap is 5.4%, including applicable margin. The underlying notional amount of the swap agreement is $35.0 million. The fair value of the interest rate swap liability as determined by a third-party financial institution was $1.3 million on June 28, 2008. While this swap fixed a portion of the interest rate at a predictable level, pre-tax interest expense would have been $0.3 million lower without this swap during the first six months of 2008.

13


Table of Contents

LANCE, INC. AND SUBSIDIARIES
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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 six months of 2008, net bad debt expense was $0.3 million. Net bad debt income was $0.1 million for the first six months of 2007. Allowances for doubtful accounts were $0.7 million and $0.5 million at June 28, 2008 and December 29, 2007, respectively.
Through the operations of our Canadian subsidiary, there is an exposure to foreign exchange rate fluctuations, primarily between U.S. dollars and Canadian dollars. 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 forward contracts to mitigate a portion of this foreign exchange rate exposure. These contracts have maturities through December 2008. As of June 28, 2008, the fair value of the liability related to the forward contracts as determined by a third party financial institution was less than $0.1 million. During the first six months of 2008, foreign exchange rate fluctuations negatively impacted the results of operations by $1.6 million compared to the first six months of 2007.
Due to foreign currency fluctuations during the first six months of 2008 and 2007, we recorded losses of $2.2 million and gains of $5.7 million, respectively, in other comprehensive income because of the translation of the subsidiary’s financial statements into U.S. dollars.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The principal market risks to which we are exposed that may adversely impact results of operations and financial position include changes in raw material prices, energy costs, interest and foreign exchange rates and credit risks. 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, we carried out 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 pursuant to Rule 13a-15(b) of the Securities and Exchange Act of 1934 (the “Exchange Act”). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective for the purpose of providing reasonable assurance that the information required to be disclosed in the reports we file or submit under the Exchange Act (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (2) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.
There have been no changes in our internal control over financial reporting during the quarter ended June 28, 2008 that have materially affected, or that are reasonably likely to materially affect, our internal controls over financial reporting.

14


Table of Contents

LANCE, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Lance, Inc. was one of several companies sued in August 2005 in the Superior Court for the State of California for the County of Los Angeles by the Attorney General of the State of California for alleged violations of California Proposition 65. California Proposition 65 is a state law that, in part, requires companies to warn California residents if a product contains chemicals listed within the statute. All of the parties, including Lance, Inc., have reached agreements in principle with the Attorney General of California on terms of settlement. Our agreement is subject to approval by the court and is not expected to have a material adverse effect upon our consolidated financial statements taken as a whole.
In addition, we are subject to routine litigation and claims incidental to our business. In our opinion, such routine litigation and claims should not have a material adverse effect upon our consolidated financial statements taken as a whole.
Item 1A. Risk Factors
There have been no material changes to the factors disclosed in Item 1A — Risk Factors in our Annual Report on Form 10-K for the year ended December 29, 2007.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Our Credit Agreement dated October 20, 2006, restricts our payment of cash dividends and repurchases of common stock if, after payment of any dividends or any repurchases of common stock, our consolidated stockholders’ equity would be less than $125.0 million. At June 28, 2008, our consolidated stockholders’ equity was $242.5 million.
Item 4. Submission of Matters to a Vote of Security Holders
The following proposals were submitted and approved by stockholders at the Annual Meeting of Stockholders held on April 24, 2008:
  1.  
Election of nominees to the Board of Directors to serve until the Annual Meeting of Stockholders in 2011:
                 
    Votes For   Votes Withheld
William R. Holland
    28,936,029       457,605  
James W. Johnston
    29,110,950       282,683  
W. J. Prezzano
    28,944,208       449,425  
  2.  
Adoption of the Lance, Inc. 2008 Director Stock Plan (22,528,710 for, 3,692,101 against, 117,482 abstaining, 3,055,341 broker non-votes).
  3.  
Ratification of the selection of KPMG LLP as independent public accountants for fiscal 2008 (29,211,881 for, 149,270 against, 32,483 abstaining).

15


Table of Contents

LANCE, INC. AND SUBSIDIARIES
Item 6. Exhibits
Exhibit Index
     
No.   Description
 
   
3.1
 
Restated Articles of Incorporation of 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 of Lance, Inc. dated July, 14 1998 designating rights, preferences and privileges of the Registrant’s Series A Junior Participating Preferred Stock, incorporated herein by reference to Exhibit 3.2 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 26, 1998 (File No. 0-398).
 
   
3.3
 
Bylaws of Lance, Inc., as amended through November 1, 2007, incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on November 7, 2007 (File No. 0-398).
 
   
10.1*
 
Lance, Inc. 2008 Director Stock Plan, incorporated herein by reference to Exhibit 4.8 to the Registrant’s Registration Statement on Form S-8 filed on May 15, 2008 (File No. 333-150931).
 
   
10.2*
 
Executive Employment Agreement Amendment dated April 24, 2008 between the Registrant and David V. Singer, filed herewith.
 
   
10.3*
 
Amended and Restated Compensation and Benefits Assurance Agreement dated April 24, 2008 between the Registrant and David V. Singer, filed herewith.
 
   
10.4*
 
Restricted Stock Unit Award Agreement Amendment Number Two dated April 24, 2008 between the Registrant and David V. Singer, filed herewith.
 
   
10.5*
 
Form of Amended and Restated Compensation and Benefits Assurance Agreement between the Registrant and each of Rick D. Puckett, Glenn A. Patcha, Blake W. Thompson, Frank I. Lewis and Earl D. Leake, filed herewith.
 
   
10.6*
 
Amended and Restated Executive Severance Agreement dated April 24, 2008 between the Registrant and Earl D. Leake, filed herewith.
 
   
31.1
 
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a), filed herewith.
 
   
31.2
 
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a), filed herewith.
 
   
32
 
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.
 
*  
Management contract.
Items 3 and 5 are not applicable and have been omitted.

16


Table of Contents

LANCE, INC. AND SUBSIDIARIES
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused the report to be signed on its behalf by the undersigned thereunto duly authorized.
         
  LANCE, INC.
 
 
  By:   /s/ Rick D. Puckett   
    Rick D. Puckett   
    Executive Vice President, Chief Financial Officer, Treasurer and Secretary   
 
Dated: July 25, 2008

17

Exhibit 10.2
EXECUTIVE EMPLOYMENT AGREEMENT AMENDMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT AMENDMENT (the “Amendment”) is made and entered into as of April 24, 2008, by and between LANCE, INC., a North Carolina corporation (the “Company”), and DAVID V. SINGER (the “Executive”).
Statement of Purpose
     The Company and Executive entered into an Executive Employment Agreement dated May 11, 2005 (the “Employment Agreement”). The purposes of this Amendment are to amend the Employment Agreement for compliance with Section 409A of the Internal Revenue Code and to modify the terms of the Guaranteed LTIP Amount as defined in the Employment Agreement and in this Amendment.
     NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, the parties hereto hereby agree that the Employment Agreement is amended effective as of the date hereof as follows:
     1. Section 7(b)(iii) of the Employment Agreement is amended in its entirety to read as follows:
“A single cash payment in an amount equal to the sum of two (2) times the Executive’s annual Base Salary in effect on the Termination Date plus two (2) times the Executive’s target bonus under the Company’s Annual Corporate Performance Incentive Plan for Officers (or any successor plan thereto) in effect on the Termination Date.”
     2. The following sentence is added to the end of the first paragraph of Section 7(b)(iv) of the Employment Agreement:
“Commencing with the end of the Executive’s COBRA period and until the end of the (24) month benefit continuation period, for each month that such coverage is in place, Executive will recognize taxable income equal to the difference between the premium actually paid by the Executive and the premium that would be paid by a similarly situated COBRA participant.”
     3. A new Section 9(n) is added to the Employment Agreement to read as follows:
“(n) Compliance with Section 409A of the Internal Revenue Code. This Agreement is intended to comply with Section 409A of the Internal Revenue Code, to the extent applicable. Notwithstanding any provisions herein to the contrary, this Agreement shall be interpreted, operated, and administered consistent with this intent. In that regard, any payments required by this Agreement in connection with the Executive’s termination of employment shall not be made earlier than six (6) months after the date of termination to the extent required by Code Section 409A(a)(2)(B)(i).”

 


 

     4. The third paragraph of Section 2(B) of Schedule 1 to the Employment Agreement is deleted in its entirety and the following is substituted in lieu thereof:
Annual long-term incentive opportunity following 2007 . The Executive shall have a total annual long-term incentive opportunity for each year during the Employment Term beginning after 2007 equal to 120% of the Executive’s Base Salary for the year ( “the Guaranteed LTIP Amount” ) which Guaranteed LTIP Amount shall be a target incentive award for the performance cycle under the Company’s Long-Term Incentive Plan for Officers beginning in the applicable year to be delivered in such form (e.g., awards of stock options, restricted stock, performance awards, etc.) and subject to such conditions (e.g., time-based or performance-based vesting requirements) as generally applicable to other executive officers of the Company and as approved by the Compensation Committee of the Board of Directors.”
     5. Except as expressly or by necessary implication amended hereby, the Employment Agreement shall remain in full force and effect.
     IN WITNESS WHEREOF, the Company has caused this Amendment 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”

LANCE, INC.
 
 
  By   s/ Earl D. Leake    
    Earl D. Leake   
    Senior Vice President   
 
  “Executive”
 
 
  s/ David V. Singer    
  David V. Singer   
     
 

2

Exhibit 10.3
     
STATE OF NORTH CAROLINA   AMENDED AND RESTATED
    COMPENSATION AND BENEFITS
COUNTY OF MECKLENBURG   ASSURANCE AGREEMENT
      THIS AMENDED AND RESTATED COMPENSATION AND BENEFITS ASSURANCE AGREEMENT , entered into as of April 24, 2008, by and between Lance, Inc., a North Carolina corporation (the “Company”) and David V. Singer (the “Executive”);
STATEMENT OF PURPOSE
     Contemporaneously with the execution of this Agreement, Executive is being employed pursuant to an Executive Employment Agreement (the “Executive Employment Agreement”) as a key employee of the Company. Executive is expected to contribute materially to the successful operation of the Company’s business and will render valuable services to the Company. Moreover, as a result of his former service on the Board of Directors of the Company and of his new employment with the Company, Executive possesses or will possess intimate knowledge of the Company, its history, operating methods, manufacturing and distribution systems, personnel and products. Therefore, it is important to the continued success of the Company that the Company continue to have the benefit of Executive’s advice, counsel and services, and for such reasons the Company desires to provide Executive with the benefits set forth in this Amended and Restated Compensation and Benefits Assurance Agreement (as amended and restated, this “Agreement”). The Executive and the Company previously entered into a Compensation and Benefits Assurance Agreement dated May 11, 2005 (the “Prior Agreement”). The Executive and the Company now desire to amend and restate the Prior Agreement for purposes of compliance with Internal Revenue Code Section 409A and the final regulations issued thereunder.
      NOW, THEREFORE , in consideration of the Statement of Purpose and of the mutual covenants and agreements herein set forth and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and Executive do hereby agree as follows:
     1.  Definitions . As used in this Agreement, unless the context expressly indicates otherwise, the following terms have the following meanings:
     (a) “ Affiliates ” of an entity means any and all corporations and other business entities which, directly or indirectly, control, are controlled by, or are under common control with such entity.
     (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) “ Beneficial Owner ” has the meaning ascribed to such term in Section 13(d) of the Exchange Act and Rule 13d-3 of the General Rules and Regulations under the Exchange Act.

 


 

     (d) “ Board ” means the Board of Directors of the Company or any committee of the Board to which the Board has delegated, either specifically or generally, the duties and authority of the Board for the particular action or determination required or permitted to be made by the Board.
     (e) “ Cause ” means the occurrence of any one or more of the following:
  (i)  
A demonstrably willful and deliberate act or failure to act by Executive (other than as a result of incapacity due to physical or mental illness) which is committed in bad faith, without reasonable belief that such action or inaction is in the best interests of the Company, which causes actual material financial injury to the Company and which act or inaction is not remedied within fifteen (15) business days of written notice from the Company; or
 
  (ii)  
Executive’s conviction for committing an act of fraud, embezzlement, theft, or any other act constituting a felony or involving moral turpitude or causing material harm, financial or otherwise, to the Company.
“Cause” must be determined by the Board in the exercise of good faith and reasonable judgment and be evidenced by a written resolution adopted prior to any termination of Executive specifying the conduct of Executive giving rise to a determination of Cause.
     (f) “ Change in Control ” means, and shall be deemed to have occurred upon, the first to occur of any of the following events:
  (i)  
Any Outside Person becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing twenty-five percent (25%) or more of the combined voting power of the Company’s then outstanding securities; or
 
  (ii)  
During any period of two (2) consecutive years (not including any period prior to the date hereof), individuals who at the beginning of such period constitute the Board of Directors of the Company (and any new Director, whose nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the Directors then in office who either were Directors at the beginning of the period or whose nomination for election was so approved) cease for any reason to constitute a majority of the members of the Board of Directors of the Company; or
 
  (iii)  
The stockholders of the Company approve a plan of complete liquidation of the Company; or

2


 

  (iv)  
The consummation of the sale or disposition of all or substantially all of the Company’s assets other than a sale or disposition of all or substantially all of the Company’s assets to an entity at least sixty percent (60%) of the combined voting power of the voting securities of which are owned by the stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale or disposition; or
 
  (v)  
The consummation of a merger, consolidation, or reorganization of the Company with or involving any other corporation, other than a merger, consolidation, or reorganization that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) or any parent thereof at least sixty percent (60%) of the combined voting power of the voting securities of the Company (or such surviving entity) outstanding immediately after such merger, consolidation, or reorganization.
However, in no event shall a “Change in Control” be deemed to have occurred if Executive is part of a purchasing group which consummates the Change in Control transaction. Executive shall be deemed “part of a purchasing group” for purposes of the preceding sentence if Executive is an equity participant in the acquiring company or group or surviving entity (the “Purchaser”) except for ownership of less than one percent (1%) of the equity of the Purchaser.
     (g) “ Code ” means the Internal Revenue Code of 1986, as amended.
     (h) “ Company ” means Lance, Inc., a North Carolina corporation, and such term includes any or all of its Affiliates.
     (i) “ Effective Date ” means the date of the Prior Agreement.
     (j) “ Excess Parachute Payment ” means “excess parachute payment” within the meaning of Section 280G of the Code.
     (k) “ Exchange Act ” means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.
     (l) “ Excise Tax ” means the tax imposed on Excess Parachute Payments pursuant to Section 280G and Section 4999 of the Code or any successor provision.
     (m) “ Good Reason ” means the occurrence of any one or more of the following, without Executive’s prior express written consent, within the thirty-six (36) calendar months immediately following a Change in Control:

3


 

  (i)  
As determined in the reasonable, good faith judgment of Executive, the assignment to Executive of any duties inconsistent with Executive’s authorities, duties, responsibilities, and status as Chief Executive Officer of the Company, or a reduction or alteration in the nature or status of any of Executive’s authorities, duties or responsibilities (including those as a director of the Company) from those in effect or practice as of one hundred eighty (180) calendar days prior to the Change in Control, other than an insubstantial and inadvertent act that is remedied by the Company promptly after receipt of notice thereof given by Executive;
 
  (ii)  
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 immediately prior to the Change in Control, except for required travel on the Company’s business to an extent consistent with Executive’s then present business travel obligations;
 
  (iii)  
A 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;
 
  (iv)  
The failure of the Company to keep in effect any of the Company’s compensation, incentive, health and welfare benefits, or perquisite programs under which Executive receives value, as such programs exist immediately prior to the Change in Control; provided, however, the replacement of an existing program with a new program will be permissible (and not grounds for a Good Reason termination) if done for all employees generally and the value to be delivered to Executive under the new program is at least as great as the value delivered to Executive under the existing program; or
 
  (v)  
Any breach by the Company of its obligations under Paragraph 6 herein or any failure of a successor company to assume and agree to perform the Company’s entire obligations under this Agreement as required by Paragraph 6 herein, or under the Executive Employment Agreement or the Restricted Stock Unit Award Agreement.
“Good Reason” shall be determined by Executive in the exercise of good faith and reasonable judgment. Executive’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason herein, and any such consent or waiver must be in writing and signed by Executive.
     (n) “ Member of the Van Every Family ” means (i) a lineal descendant of Salem A. Van Every, Sr., including adopted persons as well as persons related by blood, (ii) a spouse of an

4


 

individual described in clause (i) of this Paragraph 1(n) or (iii) a trust, estate, custodian and other fiduciary or similar account for an individual described in clause (i) or (ii) of this Paragraph 1(n).
     (o) “ Outside Person ” means any Person other than (i) a Member of the Van Every Family, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or (iii) a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.
     (p) “ Person ” has the meaning ascribed to said term in Section 3(a)(9) of the Exchange Act as modified and used in Sections 13(d) and 14(d) of the Exchange Act, including a “group” as defined in Section 13(d) of the Exchange Act.
     (q) “ Qualifying Termination ” has the meaning ascribed to said term in Paragraph 4(b) hereof.
     (r) “ Severance Benefits ” has the meaning ascribed to said term in Paragraph 4(c) hereof.
     (s) “ Termination of Employment ” means any termination of employment (as defined in Section 409A of the Code and the Company’s administrative policies, if any) 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 employment shall be deemed to have occurred by reason of such an acquisition unless there is either (i) a termination of employment with both the Company and such successor or (ii) a termination of employment with the Company and no successive employment by such successor.
     2.  Term of Agreement .
     (a) The term of this Agreement will commence on the Effective Date and shall continue for so long as Executive is employed with the Company under the terms of the Executive Employment Agreement.
     (b) Notwithstanding the foregoing, in the event that a Change in Control occurs during the Employment Term (as defined in the Executive Employment Agreement), upon the effective date of such Change in Control the term of this Agreement shall automatically and irrevocably be renewed and extended for a period of thirty-six (36) full calendar months from the closing date of the transaction giving rise to such Change in Control (the “Change in Control Renewal Period”), and this Agreement shall automatically terminate upon the expiration of the Change in Control Renewal Period. Further, this Agreement shall be assigned to, and shall be assumed by, the successor to the Company in such Change in Control as further provided in Paragraph 6 herein.
     3.  Employment . The Company shall employ Executive under an Executive Employment Agreement (which is to be executed contemporaneously with this Agreement) to perform such tasks as the Company shall specify from time to time. Nothing in this Agreement

5


 

shall give Executive any right to be retained in the employ of the Company or, upon dismissal, any rights except as expressly otherwise provided herein.
     4.  Change in Control Severance Benefits .
     (a) The Company shall pay Executive the Severance Benefits described in Paragraph 4(c) herein if during Executive’s employment a Change in Control occurs and if within the thirty-six (36) calendar months immediately following such Change in Control, Executive experiences a Qualifying Termination. The Severance Benefits described in Subparagraphs (4)(c)(i) through (iv) herein shall be paid to Executive in cash in a single lump sum as soon as practicable following Executive’s Qualifying Termination, but in no event later than thirty (30) calendar days after such date. Notwithstanding the foregoing, however, Severance Benefits which become due pursuant to Paragraphs 4(b)(iii) and 6(a) herein shall be paid immediately.
     (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 that occurs during the term of this Agreement 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 Executive Employment Agreement (or any successor agreement thereto)], Executive’s voluntary Termination of Employment without Good Reason except as otherwise expressly provided in Paragraph 4(b)(iii) above, or Executive’s involuntary Termination of Employment for Cause. Except as provided in the last sentence of this subparagraph (b), 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. Notwithstanding anything herein to the contrary, a Qualifying Termination shall be deemed to have occurred upon the occurrence of a Change in Control if (x) Executive’s Termination of Employment occurs prior to the date of a Change in Control but after the date an agreement is entered into by the Company, the consummation of which would result in a Change in Control, (y) such Change in Control is in fact consummated within 12 months after the date such agreement is entered into and (z) the Termination of Employment would otherwise be under the circumstances described in clause (i), (ii) or (iii) above; provided, however, that in the event Executive receives any severance or similar benefits pursuant to any other agreement or arrangement between Executive and the Company prior to the consummation of the Change in

6


 

Control, such severance or similar benefits actually received by Executive shall be offset from any amount otherwise payable to Executive hereunder following the Change in Control.
     (c) The “Severance Benefits” provided for in Paragraphs 4(a) and (b) herein are as follows:
  (i)  
A lump-sum cash amount equal to the Executive’s unpaid Base Salary, accrued vacation pay, unreimbursed business expenses, and all other items earned by and owed to Executive through and including the date of Executive’s Qualifying Termination. Such payment shall constitute full satisfaction for these amounts owed to Executive.
 
  (ii)  
A lump-sum cash amount equal to the sum of (A) three (3) multiplied by Executive’s Base Salary in effect upon the date of the Qualifying Termination or, if greater, by Executive’s Base Salary in effect immediately prior to the occurrence of the Change in Control plus (B) three (3) multiplied by the greater of (I) Executive’s annual bonus actually earned by Executive (whether or not deferred) during the bonus plan year which ended immediately prior to the Qualifying Termination or (II) Executive’s then-current target bonus opportunity (stated in terms of a percentage of Base Salary) established under the Company’s Annual Corporate Performance Incentive Plan for Officers (or any successor plan thereto), if any, for the incentive plan year in which the date of Executive’s Qualifying Termination occurs.
 
  (iii)  
A lump-sum cash amount equal to the greater of (A) Executive’s then-current target bonus opportunity (stated in terms of a percentage of Base Salary) established under the Company’s Annual Corporate Performance Incentive Plan for Officers (or any successor plan thereto), if any, for the incentive plan year in which the date of Executive’s Qualifying Termination occurs, adjusted on a pro rata basis based on the number of days Executive was actually employed during such incentive plan year (but in no event shall such target bonus be less than that in effect for the period immediately prior to the occurrence of the Change in Control); or (B) the actual bonus earned through the date of the Qualifying Termination under the Company’s Annual Corporate Performance Incentive Plan for Officers (or any successor plan thereto), if any, based on the then-current level of goal achievement. Such payment shall constitute full satisfaction for these amounts owed to Executive.
 
  (iv)  
A lump-sum cash amount equal to the product determined by multiplying (A) the sum of the amounts payable under

7


 

     
Subparagraphs 4(c) (i), (ii) and (iii) herein by (B) the highest percentage of Executive’s compensation (eligible for such contributions) contributed to Executive’s account under the Lance, Inc. Profit-Sharing Retirement Plan and Trust (the “Retirement Plan”) during the three (3) consecutive plan years ended immediately prior to the Qualifying Termination. The source of payment of this sum shall be the general assets of the Company unless the payment of such amounts is otherwise permissible from the Retirement Plan without violating any governmental regulations or statutes including, but not limited to, ERISA discrimination testing requirements.
 
  (v)  
At the exact same cost to Executive, and at the same coverage level as in effect as of the date of Executive’s Qualifying Termination (subject to changes in coverage levels applicable to all employees generally), a continuation of Executive’s (and Executive’s eligible dependents’) health and dental plan benefits for thirty-six (36) months from the date of the Qualifying Termination. The applicable COBRA health and dental benefit continuation period shall begin coincident with the beginning of this thirty-six (36) month benefit continuation period. Commencing with the end of the Executive’s COBRA period and until the end of the thirty-six (36) month benefit continuation period, the Executive will recognize taxable income equal to the difference between the premium actually paid by the Executive and the premium that would have been paid by a similarly situated COBRA participant.
 
     
Provided, however, the provision of these health and medical benefits shall be discontinued prior to the end of the thirty-six (36) month continuation period to the extent that Executive becomes covered under the health insurance coverage of a subsequent employer which does not contain any exclusion or limitation with respect to any preexisting condition of Executive or Executive’s eligible dependents and provides substantially the same coverage as the plan sponsored by the Company. For purposes of enforcing this offset provision, Executive shall have a duty to inform the Company if Executive becomes covered under any such health plan of a subsequent employer. Executive shall provide, or cause to provide, to the Company in writing correct, complete, and timely information concerning the same.
 
  (vi)  
At no expense to Executive, standard outplacement services for Executive from a nationally recognized outplacement firm of Executive’s selection, for a period of up to one (1) year from the date of Executive’s Qualifying Termination. However, such

8


 

     
services shall be at the Company’s expense to a maximum amount not to exceed ten percent (10%) of Executive’s Base Salary as of the date of Executive’s Qualifying Termination. In no event shall reimbursement for eligible outplacement expenses be made to the Executive later than the end of the third calendar year following the year of the Executive’s Termination of Employment.
 
  (vii)  
Notwithstanding the provisions of any stock plan or award agreement to the contrary, all stock options held by Executive shall vest upon a Qualifying Termination and, with respect to all such vested stock options then held by Executive, Executive shall have a post-termination exercise period of one year following the Qualifying Termination, or such greater period as provided by the applicable stock plan or award agreement, but in no event exceeding the original expiration date of the stock options.
     5.  Excise Tax Payment
     (a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 5) (a “Payment” or “Payments”) would be subject to the excise tax imposed by Section 4999 of the Code (or any successor provision) or any interest or penalties are incurred by Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing provisions of this Section 5(a), if it shall be determined that Executive is entitled to a Gross-Up Payment, but that the Payments do not exceed by more than $100,000 the greatest amount (the “Reduced Amount”) that could be paid to Executive such that the receipt of Payments would not give rise to any Excise Tax, then no Gross-Up Payment shall be made to Executive and the Payments, in the aggregate, shall be reduced to the Reduced Amount.
     (b) Subject to the provisions of Section 5(c), all determinations required to be made under this Section 5, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by KPMG, LLP or such other certified public accounting firm reasonably acceptable to the Company as may be designated by Executive (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Executive within 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

9


 

Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 5, shall be paid by the Company to Executive within five days of the later of (i) the due date for the payment of any Excise Tax or (ii) the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon the Company and Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 5(c) and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of Executive. However, in no event shall any Gross-Up Payments to Executive be made later than the end of the calendar year following the calendar year in which Executive remits the Excise Taxes.
     (c) Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after Executive receives written notification of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies Executive in writing prior to the expiration of such period that it desires to contest such claim, Executive shall:
          (i) give the Company any information reasonably requested by the Company relating to such claim;
          (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time; provided, however , that the Company’s selection of one or more attorneys to provide legal representation with respect to such claim shall be subject to Executive’s prior written approval;
          (iii) cooperate with the Company in good faith in order to contest such claim effectively; and
          (iv) permit the Company to participate in any proceedings relating to such claim;
provided, however , that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 5(c), the Company shall control all proceedings taken in connection with such contest, and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings,

10


 

hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either pay the tax claimed to the appropriate taxing authority on behalf of Executive and direct Executive to sue for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however , that, if the Company pays such claim and directs Executive to sue for a refund, the Company shall indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such payment or with respect to any imputed income in connection with such payment; and provided, further , that any extension of the statute of limitations relating to payment of taxes for the taxable year of Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which the Gross-Up Payment would be payable hereunder, and Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.
     (d) If, after payment by the Company of an amount on Executive’s behalf pursuant to Section 5(c), Executive becomes entitled to receive any refund with respect to such claim, Executive shall (subject to the Company’s complying with the requirements of Section 5(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after payment by the Company of an amount on Executive’s behalf pursuant to Section 5(c), a determination is made that Executive shall not be entitled to any refund with respect to such claim and the Company does not notify Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then the amount of such payment shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
     6.  Assignment of This Agreement or Benefits Hereunder .
     (a)  Successors . The Company will require any successor (whether via a Change in Control, direct or indirect, by purchase, merger, consolidation, or otherwise) of the Company to expressly assume and agree to perform the obligations under this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall, as of the date immediately preceding the date of a Change in Control, automatically provide Executive with Good Reason to collect, immediately, full benefits hereunder as a Qualifying Termination.
     (b)  Assignment by Executive . This Agreement shall inure to the benefit of and be enforceable by Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees. If an Executive should die while any amount is still payable to Executive hereunder had Executive continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Compensation and Assurance Benefits Agreement to Executive’s estate. Executive’s rights hereunder shall not otherwise be assignable.

11


 

     7.  Notices . Any notice required to be delivered to the Company by Executive hereunder shall be properly delivered to the Company when personally delivered to (including by a reputable overnight courier), or actually received through the U.S. mail, postage prepaid, by:
Lance, Inc.
P. O. Box 32368
14120 Ballantyne Corporate Place, Suite 350
Charlotte, NC 28232
Attn: Senior Vice President—Human Resources
     Any notice required to be delivered to Executive by the Company hereunder shall be properly delivered to Executive when personally delivered to (including by a reputable overnight courier), or actually received through the U.S. mail, postage prepaid, by, Executive at his last known address as reflected on the books and records of the Company.
     8.  Contractual Rights to Benefits . This Agreement establishes in Executive a right to the benefits to which Executive is entitled hereunder. However, except as expressly stated herein, nothing herein contained shall require or be deemed to require, or prohibit or be deemed to prohibit, the Company to segregate, earmark, or otherwise set aside any funds or other assets, in trust or otherwise, to provide for any payments to be made or required hereunder. This Agreement is intended to be an unfunded general asset promise for a select, highly compensated member of the Company’s management and, therefore, is intended to be exempt from the substantive provisions of the Employee Retirement Income Security Act of 1974, as amended.
     9.  Legal Fees and Expenses . The Company shall pay all legal fees, costs of litigation, prejudgment interest, and other expenses which are incurred in good faith by Executive as a result of the Company’s refusal to provide the benefits to which Executive becomes entitled under this Compensation and Assurance Benefits Agreement or under any other agreement with or plan of the Company which would provide Executive with benefits or payments following a Qualifying Termination (collectively “Termination Benefit Arrangements”), or as a result of the Company’s (or any third party’s) contesting the validity, enforceability, or interpretation of this Agreement or any Termination Benefits Arrangement, or as a result of any conflict between the parties pertaining to this Agreement or any Termination Benefits Arrangement. In no event will any payments to Executive under this Section 9 be paid later than the end of the calendar year following the year in which the expense was incurred.
     10.  Exclusivity of Benefits . Unless specifically provided herein, neither the provisions of this Agreement nor the benefits provided hereunder shall reduce any amounts otherwise payable, or in any way diminish Executive’s rights as an employee of the Company, whether existing now or hereafter, under any compensation and/or benefit plans, programs, policies, or practices provided by the Company, for which Executive may qualify. Vested benefits or other amounts which Executive is otherwise entitled to receive under any plan, policy, practice, or program of the Company (i.e., including, but not limited to, vested benefits under the Company’s qualified employee benefit plans), at or subsequent to the date of

12


 

Executive’s Qualifying Termination shall be payable in accordance with such plan, policy, practice, or program except as expressly modified by this Agreement.
     11.  Includable Compensation . Severance Benefits provided hereunder shall not be considered “includable compensation” for purposes of determining Executive’s benefits under any other plan or program of the Company unless otherwise provided by such other plan or program.
     12.  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, other than as provided in Subparagraph 4(c)(v) herein.
     13.  Entire Agreement . This Agreement represents the entire agreement between the parties with respect to the subject matter hereof, and supersedes all prior discussions, negotiations, and agreements concerning the subject matter hereof, including, but not limited to, any prior severance agreement made between Executive and the Company, other than (i) the Executive Employment Agreement and (ii) the Executive Severance Agreement between Executive and the Company entered into on the date hereof.
     14.  Tax Withholding . The Company shall withhold from any amounts payable under this Agreement all federal, state, city, or other taxes as legally required to be withheld.
     15.  Waiver of Rights . Except as otherwise provided herein, Executive’s acceptance of Severance Benefits, the Gross-Up Payment (if applicable) and any other payments required hereunder shall be deemed to be a waiver of all rights and claims of Executive against the Company pertaining to any matters arising under this Agreement.
     16.  Severability . In the event any provision of this Agreement shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of this Agreement, and this Agreement shall be construed and enforced as if the illegal or invalid provision had not been included.
     17.  Applicable Law . To the extent not preempted by the laws of the United States, the laws of the State of North Carolina shall be the controlling law in all matters relating to this Agreement.
     18.  Execution . This Agreement is hereby executed in duplicate originals, one of which is being retained by each of the parties hereto.
     19.  Compliance with Section 409A of the Internal Revenue Code . This Agreement is intended to comply with Section 409A of the Internal Revenue Code, to the extent applicable. Notwithstanding any provisions herein to the contrary, this Agreement shall be interpreted, operated, and administered consistent with this intent. In that regard, any payments required by this Agreement in connection with the Executive’s Termination of Employment shall not be

13


 

made earlier than six (6) months after the date of termination to the extent required by Code Section 409A(a)(2)(B)(i).
     IN WITNESS WHEREOF, Lance, Inc. has caused this Amended and Restated Compensation and Benefits Assurance 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”

Lance, Inc.
 
 
  By   s/ Earl D. Leake    
    Earl D. Leake   
    Senior Vice President   
 
  “Executive”
 
 
  s/ David V. Singer    
  David V. Singer   
     
 

14

Exhibit 10.4
RESTRICTED STOCK UNIT AWARD AGREEMENT AMENDMENT NUMBER TWO
     THIS RESTRICTED STOCK UNIT AWARD AGREEMENT AMENDMENT NUMBER TWO (the “Amendment”) is made and entered into as of April 24, 2008, by and between LANCE, INC., a North Carolina corporation (the “Company”), and DAVID V. SINGER (the “Executive”).
Statement of Purpose
     The Company and Executive entered into a Restricted Stock Unit Award Agreement dated May 11, 2005 (the “RSU Agreement”). The parties have previously amended the RSU Agreement to re-designate certain “Cash-Settled Units” under the RSU Agreement as “Stock-Settled Units” pursuant to the Restricted Stock Unit Award Agreement Amendment dated April 27, 2006. The purpose of this Amendment is to amend the RSU Agreement for compliance with Section 409A of the Internal Revenue Code.
     NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, the parties hereto hereby agree that the RSU Agreement is amended effective as of the date hereof as follows:
     1. The following clause is added to the end of the second sentence of Section 5(a) of the RSU Agreement:
     “, but in no event later than 90 days after the fifth anniversary date.”
     2. The following clause is added to the end of the third sentence of Section 5(a) of the RSU Agreement (prior to the parenthetical):
     “, but in no event later than 90 days after the Executive’s termination of employment.”
     3. Section 11(c) of the RSU Agreement is amended in its entirety to read as follows:
“(c) Compliance with Section 409A of the Internal Revenue Code . This Agreement is intended to comply with Section 409A of the Internal Revenue Code, to the extent applicable. Notwithstanding any provisions herein to the contrary, this Agreement shall be interpreted, operated, and administered consistent with this intent. In that regard, any payments required by this Agreement in connection with the Executive’s termination of employment shall not be made earlier than six (6) months after the date of termination to the extent required by Code Section 409A(a)(2)(B)(i).”
     4. Except as expressly or by necessary implication amended hereby, the RSU Agreement shall remain in full force and effect.
[Signatures on Next Page]

 


 

     IN WITNESS WHEREOF, the Company has caused this Amendment 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”

LANCE, INC.
 
 
  By   s/ Earl D. Leake    
    Earl D. Leake   
    Senior Vice President   
 
  “Executive”
 
 
  s/ David V. Singer    
  David V. Singer   
     
 

2

Exhibit 10.5
     
STATE OF NORTH CAROLINA
  AMENDED AND RESTATED
 
  COMPENSATION AND BENEFITS
COUNTY OF MECKLENBURG
  ASSURANCE AGREEMENT
      THIS AMENDED AND RESTATED COMPENSATION AND BENEFITS ASSURANCE AGREEMENT , entered into as of April 24, 2008, by and between Lance, Inc., a North Carolina corporation, (the “Company,”) and                      (the “Executive”);
STATEMENT OF PURPOSE
     Executive is a key employee of the Company and has the ability and experience to contribute materially to the successful operation of the Company’s business. Therefore, it is important to the continued success of the Company that the Company continue to have the benefit of Executive’s advice, counsel and services, and for such reasons the Company desires to provide Executive with the benefits set forth in this Amended and Restated Compensation and Benefits Assurance Agreement (as amended and restated, this “Agreement”). The Executive and the Company previously entered into a Compensation and Benefits Assurance Agreement dated                                  (the “Prior Agreement”). The Executive and the Company now desire to amend and restate the Prior Agreement for purposes of compliance with Internal Revenue Code Section 409A and the final regulations issued thereunder.
      NOW, THEREFORE , in consideration of the Statement of Purpose and of the mutual covenants and agreements herein set forth and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and Executive do hereby agree as follows:
     1.  Definitions . As used in this Agreement, unless the context expressly indicates otherwise, the following terms have the following meanings:
     (a) “ Affiliates ” of an entity means any and all corporations and other business entities which, directly or indirectly, control, are controlled by, or are under common control with such entity.
     (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) “ Beneficial Owner ” has the meaning ascribed to such term in Section 13(d) of the Exchange Act and Rule 13d-3 of the General Rules and Regulations under the Exchange Act.
     (d) “ Board ” means the Board of Directors of the Company or any committee of the Board to which the Board has delegated, either specifically or generally, the duties and authority of the Board for the particular action or determination required or permitted to be made by the Board.

 


 

     (e) “ Cause ” means the occurrence of any one or more of the following:
  (i)  
A demonstrably willful and deliberate act or failure to act by Executive (other than as a result of incapacity due to physical or mental illness) which is committed in bad faith, without reasonable belief that such action or inaction is in the best interests of the Company, which causes actual material financial injury to the Company and which act or inaction is not remedied within fifteen (15) business days of written notice from the Company; or
 
  (ii)  
The Executive’s conviction for committing an act of fraud, embezzlement, theft, or any other act constituting a felony involving moral turpitude or causing material harm, financial or otherwise, to the Company.
“Cause” must be determined by the Board in the exercise of good faith and reasonable judgment.
     (f) “ Change in Control ” means, and shall be deemed to have occurred upon, the first to occur of any of the following events:
  (i)  
Any Outside Person becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing twenty-five percent (25%) or more of the combined voting power of the Company’s then outstanding securities; or
 
  (ii)  
During any period of two (2) consecutive years (not including any period prior to the date hereof), individuals who at the beginning of such period constitute the Board of Directors of the Company (and any new Director, whose nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the Directors then in office who either were Directors at the beginning of the period or whose nomination for election was so approved) cease for any reason to constitute a majority of the members of the Board of Directors of the Company; or
 
  (iii)  
The stockholders of the Company approve: (i) a plan of complete liquidation of the Company; or (ii) an agreement for the sale or disposition of all or substantially all of the Company’s assets other than a sale or disposition of all or substantially all of the Company’s assets to an entity at least sixty percent (60%) of the combined voting power of the voting securities of which are owned by the stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale or disposition; or

2


 

  (iv)  
The stockholders of the Company approve a merger, consolidation, or reorganization of the Company with or involving any other corporation, other than a merger, consolidation, or reorganization that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) or any parent thereof at least sixty percent (60%) of the combined voting power of the voting securities of the Company (or such surviving entity) outstanding immediately after such merger, consolidation, or reorganization.
However, in no event shall a “Change in Control” be deemed to have occurred if Executive is part of a purchasing group which consummates the Change in Control transaction. Executive shall be deemed “part of a purchasing group” for purposes of the preceding sentence if Executive is an equity participant in the acquiring company or group or surviving entity (the “Purchaser”) except for ownership of less than one percent (1%) of the equity of the Purchaser.
     (g) “ Code ” means the Internal Revenue Code of 1986, as amended.
     (h) “ Company ” means Lance, Inc., a North Carolina corporation, and such term includes any or all of its Affiliates.
     (i) “ Effective Date ” means the date of the Prior Agreement.
     (j) “ Excess Parachute Payment ” means “excess parachute payment” within the meaning of Section 280G of the Code.
     (k) “ Exchange Act ” means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.
     (l) “ Excise Tax ” means the tax imposed on Excess Parachute Payments pursuant to Section 280G and Section 4999 of the Code.
     (m) “ Good Reason ” means the occurrence of any one or more of the following, without Executive’s prior express written consent, within the thirty-six (36) calendar months immediately following a Change in Control:
  (i)  
The assignment of Executive to duties inconsistent with Executive’s authorities, duties, responsibilities, and status as an officer of the Company, or a reduction or alteration in the nature or status of Executive’s authorities, duties or responsibilities from those in effect as of one hundred eighty (180) calendar days prior to the Change in Control, other than an insubstantial and inadvertent act that is remedied by the Company promptly after receipt of notice thereof given by Executive;

3


 

  (ii)  
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 immediately prior to the Change in Control, except for required travel on the Company’s business to an extent consistent with Executive’s then present business travel obligations;
 
  (iii)  
A 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;
 
  (iv)  
The failure of the Company to keep in effect any of the Company’s compensation, health and welfare benefits, or perquisite programs under which Executive receives value, as such programs exist immediately prior to the Change in Control; provided, however, the replacement of an existing program with a new program will be permissible (and not grounds for a Good Reason termination if done for all employees generally and the value to be delivered to Executive under the new program is at least as great as the value delivered to Executive under the existing program); or
 
  (v)  
Any breach by the Company of its obligations under Paragraph 6 herein or any failure of a successor company to assume and agree to perform the Company’s entire obligations under this Agreement as required by Paragraph 6 herein.
“Good Reason” shall be determined by Executive in the exercise of good faith and reasonable judgment. Executive’s right to terminate employment for Good Reason shall not be affected by Executive’s incapacity due to physical or mental illness. Executive’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason herein, and any such consent or waiver must be in writing and signed by Executive.
     (n) “ Member of the Van Every Family ” means (i) a lineal descendant of Salem A. Van Every, Sr., including adopted persons as well as persons related by blood, (ii) a spouse of an individual described in clause (i) of this Paragraph 1(n) or (iii) a trust, estate, custodian and other fiduciary or similar account for an individual described in clause (i) or (ii) of this Paragraph 1(n).
     (o) “ Outside Person ” means any Person other than (i) a Member of the Van Every Family, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or (iii) a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

4


 

     (p) “ Person ” has the meaning ascribed to said term in Section 3(a)(9) of the Exchange Act as modified and used in Sections 13(d) and 14(d) of the Exchange Act, including a “group” as defined in Section 13(d) of the Exchange Act.
     (q) “ Qualifying Termination ” has the meaning ascribed to said term in Paragraph 4(b) hereof.
     (r) “ Severance Benefits ” has the meaning ascribed to said term in Paragraph 4(c) hereof.
     (s) “ Termination of Employment ” means any termination of employment (as defined in Section 409A of the Code and the Company’s administrative policies, if any) 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 employment shall be deemed to have occurred by reason of such an acquisition unless there is either (i) a termination of employment with both the Company and such successor or (ii) a termination of employment with the Company and no successive employment by such successor.
     2.  Term of Agreement .
     (a) The term of 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 one (1) year period thereafter (each such one (1) year period following the Initial Term being hereinafter referred to as a “Successive Period”). However, subject to Paragraph 2(c) herein 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.
     (c) Notwithstanding the foregoing, in the event that a Change in Control occurs during the Initial Term or any Successive Period, upon the effective date of such Change in Control the term of this Agreement shall automatically and irrevocably be renewed and extended for a period of thirty-six (36) full calendar months from the effective date of such Change in Control (the “Change in Control Renewal Period”), and this Agreement shall automatically terminate upon the expiration of the Change in Control Renewal Period. Further, this Agreement shall be assigned to, and shall be assumed by, the successor to the Company in such Change in Control as further provided in Paragraph 6 herein.
     3.  Employment . The Company shall employ Executive to perform such tasks as the Company shall specify from time to time. Executive agrees to devote his full time during customary business hours and his best efforts to the business and affairs of the Company.

5


 

Executive’s employment with the Company, however, may be terminated by either Executive or the Company at any time, with or without Cause, upon notice by the party wishing to terminate such employment to the other party, and nothing in this Agreement shall give Executive any right to be retained in the employ of the Company or, upon dismissal, any rights except as expressly otherwise provided herein.
     4.  Change in Control Severance Benefits .
     (a) The Company shall pay Executive the Severance Benefits described in Paragraph 4(c) herein if during the Initial Term or any Successive Period a Change in Control occurs and if within the thirty-six (36) calendar months immediately following such Change in Control, Executive incurs a Qualifying Termination. The Severance Benefits described in Subparagraphs (4)(c)(i) through (iv) herein shall be paid to Executive in cash in a single lump sum as soon as practicable following Executive’s Qualifying Termination, but in no event later than thirty (30) calendar days after such date. Notwithstanding the foregoing, however, Severance Benefits which become due pursuant to Paragraphs 4(b)(iv) and 6(a) herein shall be paid immediately.
     (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;
 
  (iii)  
Executive’s voluntary Termination of Employment, with or without Good Reason, during the thirteenth (13th) calendar month following the month during which the Change in Control occurs; or
 
  (iv)  
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 except as otherwise expressly provided in Paragraph 4(b)(iii) above, 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.

6


 

     (c) The “Severance Benefits” provided for in Paragraphs 4(a) and (b) herein are as follows:
  (i)  
A lump-sum cash amount equal to the Executive’s unpaid Base Salary , accrued vacation pay, unreimbursed business expenses, and all other items earned by and owed to the Executive through and including the date of Executive’s Qualifying Termination. Such payment shall constitute full satisfaction for these amounts owed to Executive.
 
  (ii)  
A lump-sum cash amount equal to the sum of (A) three (3) multiplied by the Executive’s Base Salary in effect upon the date of the Qualifying Termination or, if greater, by Executive’s Base Salary in effect immediately prior to the occurrence of the Change in Control plus (B) three (3) multiplied by the greater of (I) Executive’s annual bonus actually earned by Executive (whether or not deferred) during the bonus plan year which ended immediately prior to the Qualifying Termination or (II) Executive’s then-current target bonus opportunity (stated in terms of a percentage of Base Salary) established under the Company’s Annual Corporate Performance Incentive Plan for Officers (or any successor plan thereto), if any, for the incentive plan year in which the date of Executive’s Qualifying Termination occurs.
 
  (iii)  
A lump-sum cash amount equal to the greater of (A) the Executive’s then-current target bonus opportunity (stated in terms of a percentage of Base Salary) established under the Company’s Annual Corporate Performance Incentive Plan for Officers (or any successor plan thereto), if any, for the incentive plan year in which the date of Executive’s Qualifying Termination occurs, adjusted on a pro rata basis based on the number of days Executive was actually employed during such incentive plan year (but in no event shall such target bonus be less than that in effect for the period immediately prior to the occurrence of the Change in Control); or (B) the actual bonus earned through the date of the Qualifying Termination under the Company’s Annual Corporate Performance Incentive Plan for Officers (or any successor plan thereto), if any, based on the then-current level of goal achievement. Such payment shall constitute full satisfaction for these amounts owed to Executive.
 
  (iv)  
A lump-sum cash amount equal to the product determined by multiplying (A) the sum of the amounts payable under Subparagraphs 4(c) (i), (ii) and (iii) herein by (B) the highest percentage of Executive’s compensation (eligible for such contributions) contributed to the Executive’s account under the

7


 

     
Lance, Inc. Profit-Sharing Retirement Plan and Trust (the “Retirement Plan”) during the three (3) consecutive plan years ended immediately prior to the Qualifying Termination. The source of payment of this sum shall be the general assets of the Company unless the payment of such amounts is otherwise permissible from the Retirement Plan without violating any governmental regulations or statutes including, but not limited to, ERISA discrimination testing requirements.
 
  (v)  
At the exact same cost to Executive, and at the same coverage level as in effect as of the date of Executive’s Qualifying Termination (subject to changes in coverage levels applicable to all employees generally), a continuation of the Executive’s (and Executive’s eligible dependents’) health insurance coverage for thirty-six (36) months from the date of the Qualifying Termination. The applicable COBRA health insurance benefit continuation period shall begin coincident with the beginning of this thirty-six (36) month benefit continuation period. Commencing with the end of the Executive’s COBRA period and until the end of the thirty-six (36) month benefit continuation period, the Executive will recognize taxable income equal to the difference between the premium that the Executive actually pays and the premium that would be paid by a similarly situated COBRA participant.
 
     
Provided, however, the provision of these health insurance benefits shall be discontinued prior to the end of the thirty-six (36) month continuation period to the extent that Executive becomes covered under the health insurance coverage of a subsequent employer which does not contain any exclusion or limitation with respect to any preexisting condition of Executive or Executive’s eligible dependents. For purposes of enforcing this offset provision, Executive shall have a duty to inform the Company if Executive becomes covered under any such health insurance of a subsequent employer. Executive shall provide, or cause to provide, to the Company in writing correct, complete, and timely information concerning the same.
 
  (vi)  
At no expense to Executive, standard outplacement services for Executive from a nationally recognized outplacement firm of Executive’s selection, for a period of up to two (2) years from the date of Executive’s Qualifying Termination. However, such services shall be at the Company’s expense to a maximum amount not to exceed twenty percent (20%) of the Executive’s Base Salary as of the date of Executive’s Qualifying Termination . In no event shall reimbursement for eligible outplacement expenses be made to

8


 

     
the Executive later than the end of the third calendar year following the year of the Executive’s Termination of Employment.
 
  (vii)  
For the purposes of calculating Severance Benefits, Executive’s employment bonus of $             shall not be considered an annual or target bonus.
     5.  Excise Tax Payment .
     (a) Following a Qualifying Termination, if any portion of the Severance Benefits or any other payment or benefits under any agreement with or plan of the Company, including but not limited to stock options and other long-term incentives, (hereinafter referred to in the aggregate as “Total Payments”) will be subject to the Excise Tax, the Company shall pay to Executive, in cash, an additional amount (the “Gross-Up Payment”) sufficient to cover the full cost of all Excise Taxes and Executive’s federal, state and local income and employment taxes on this additional payment so that the net amount retained by Executive, after the payment of all Excise Taxes on the Total Payments and all federal, state and local income and employment taxes and Excise Taxes on the Gross-Up Payment, shall be equal to the Total Payments. The Total Payments, however, shall be subject to any federal, state and local income and employment taxes thereon. For this purpose, Executive shall be deemed to be in the highest marginal rate of federal, state and local taxes. The Gross-Up Payment shall be made at the same time as the Severance Benefits described in Subparagraphs 4(c)(i) through (iv) herein are due.
     (b) In the event the Internal Revenue Service subsequently adjusts the Excise Tax computation made pursuant to Paragraph 5(a) above, the Company shall pay Executive an additional Gross-Up Payment in the full amount necessary to make Executive whole on an after-tax basis (less any amounts received by Executive that Executive would not have received had the computations initially been computed as subsequently adjusted), including the amount of any underpaid Excise Tax, and any related interest and/or penalties due to the Internal Revenue Service. However, in no event shall any Gross-Up Payments to Executive be made later than the end of the calendar year following the calendar year in which Executive remits the Excise Taxes.
     6.  Assignment of This Agreement or Benefits Hereunder .
     (a)  Successors . The Company will require any successor (whether via a Change in Control, direct or indirect, by purchase, merger, consolidation, or otherwise) of the Company to expressly assume and agree to perform the obligations under this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall, as of the date immediately preceding the date of a Change in Control, automatically provide Executive with Good Reason to collect, immediately, full benefits hereunder as a Qualifying Termination.
     (b)  Assignment by Executive . This Agreement shall inure to the benefit of and be enforceable by Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees. If an Executive should die while any

9


 

amount is still payable to Executive hereunder had the Executive continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Compensation and Assurance Benefits Agreement to Executive’s estate. Executive’s rights hereunder shall not otherwise be assignable.
     7.  Notices . Any notice required to be delivered to the Company by Executive hereunder shall be properly delivered to the Company when personally delivered to (including by a reputable overnight courier), or actually received through the U.S. mail, postage prepaid, by:
Lance, Inc.
P. O. Box 32368
14120 Ballantyne Corporate Place, Suite 350
Charlotte, NC 28232
Attn: Senior Vice President—Human Resources
     Any notice required to be delivered to Executive by the Company hereunder shall be properly delivered to Executive when personally delivered to (including by a reputable overnight courier), or actually received through the U.S. mail, postage prepaid, by, Executive at his last known address as reflected on the books and records of the Company.
     8.  Contractual Rights to Benefits . This Agreement establishes in Executive a right to the benefits to which Executive is entitled hereunder. However, except as expressly stated herein, nothing herein contained shall require or be deemed to require, or prohibit or be deemed to prohibit, the Company to segregate, earmark, or otherwise set aside any funds or other assets, in trust or otherwise, to provide for any payments to be made or required hereunder. This Agreement is intended to be an unfunded general asset promise for a select, highly compensated member of the Company’s management and, therefore, is intended to be exempt from the substantive provisions of the Employee Retirement Income Security Act of 1974, as amended.
     9.  Legal Fees and Expenses . The Company shall pay all legal fees, costs of litigation, prejudgment interest, and other expenses which are incurred in good faith by Executive as a result of the Company’s refusal to provide the benefits to which Executive becomes entitled under this Agreement or under any other agreement with or plan of the Company which would provide Executive with benefits or payments following a Qualifying Termination (collectively “Termination Benefit Arrangements”), or as a result of the Company’s (or any third party’s) contesting the validity, enforceability, or interpretation of this Agreement or any Termination Benefits Arrangement, or as a result of any conflict between the parties pertaining to this Agreement or any Termination Benefits Arrangement. In no event will any payments to Executive under this Section 9 be paid later than the end of the calendar year following the year in which the expense was incurred.
     10.  Exclusivity of Benefits . Unless specifically provided herein, neither the provisions of this Agreement nor the benefits provided hereunder shall reduce any amounts otherwise payable, or in any way diminish Executive’s rights as an employee of the Company, whether existing now or hereafter, under any compensation and/or benefit plans, programs,

10


 

policies, or practices provided by the Company, for which Executive may qualify. Vested benefits or other amounts which Executive is otherwise entitled to receive under any plan, policy, practice, or program of the Company (i.e., including, but not limited to, vested benefits under the Company’s qualified employee benefit plans), at or subsequent to the date of Executive’s Qualifying Termination shall be payable in accordance with such plan, policy, practice, or program except as expressly modified by this Agreement.
     11.  Includable Compensation . Severance Benefits provided hereunder shall not be considered “includable compensation” for purposes of determining Executive’s benefits under any other plan or program of the Company unless otherwise provided by such other plan or program.
     12.  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, other than as provided in Subparagraph 4(c)(v) herein.
     13.  Entire Agreement . This Agreement represents the entire agreement between the parties with respect to the subject matter hereof, and supersedes all prior discussions, negotiations, and agreements concerning the subject matter hereof, including, but not limited to, any prior severance agreement made between Executive and the Company other than the Executive Severance Agreement between Executive and the Company entered into on the date hereof.
     14.  Tax Withholding . The Company shall withhold from any amounts payable under this Agreement all federal, state, city, or other taxes as legally required to be withheld.
     15.  Waiver of Rights . Except as otherwise provided herein, Executive’s acceptance of Severance Benefits, the Gross-Up Payment (if applicable) and any other payments required hereunder shall be deemed to be a waiver of all rights and claims of Executive against the Company pertaining to any matters arising under this Agreement.
     16.  Severability . In the event any provision of this Agreement shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of this Agreement, and this Agreement shall be construed and enforced as if the illegal or invalid provision had not been included.
     17.  Applicable Law . To the extent not preempted by the laws of the United States, the laws of the State of North Carolina shall be the controlling law in all matters relating to this Agreement.
     18.  Execution . This Agreement is hereby executed in duplicate originals, one of which is being retained by each of the parties hereto.

11


 

     19.  Compliance with Section 409A of the Internal Revenue Code. This Agreement is intended to comply with Section 409A of the Internal Revenue Code, to the extent applicable. Notwithstanding any provisions herein to the contrary, this Agreement shall be interpreted, operated, and administered consistent with this intent. In that regard, any payments required by this Agreement in connection with the Executive’s Termination of Employment shall not be made earlier than six (6) months after the date of termination to the extent required by Code Section 409A(a)(2)(B)(i).
     IN WITNESS WHEREOF, Lance, Inc. has caused this Amended and Restated Compensation and Benefits Assurance Agreement to be signed by its duly authorized officer, and Executive has hereunto set his hand and seal, all as of the day and year first above written.
         
  “Company”

Lance, Inc.
 
 
  By      
       
       
  “Executive”
 
 
    [SEAL]   
     
     
 

12

Exhibit 10.6
     
STATE OF NORTH CAROLINA
  AMENDED AND RESTATED
EXECUTIVE
COUNTY OF MECKLENBURG   SEVERANCE AGREEMENT
      THIS AMENDED AND RESTATED EXECUTIVE SEVERANCE AGREEMENT , entered into as of April 24, 2008, by and between Lance, Inc., a North Carolina corporation, hereinafter referred to as the “Company”, and Earl D. Leake, hereinafter referred to as “Executive”;
STATEMENT OF PURPOSE
     On November 7, 1997, the Company and Executive entered into an Executive Severance Agreement (the “Prior Agreement”) pursuant to which the Company continued Executive’s employment as Treasurer and Assistant Secretary of the Company and provided Executive with certain benefits under the Lance, Inc. Key Executive Employee Benefit Plan. Executive currently holds the title of Senior Vice President of Human Resources and holds various other positions with the Company and its Affiliates. The Prior Agreement provides Executive certain benefits in the event of Executive’s termination of employment under certain circumstances prior to a Change in Control and in the event of Executive’s Retirement. The Executive and the Company previously amended the Prior Agreement by Amendments dated July 26, 2001 and October 21, 2004 to (i) modify the methodology for determining the “current value” of the retirement benefits payable under the Executive Severance Agreement and (ii) provide for the funding of a “grantor” trust related to the retirement benefits payable under the Executive Severance Agreement in certain circumstances following a “Change in Control.”
     The Executive and the Company now desire to amend and restate the Prior Agreement, as previously amended, for purposes of compliance with Internal Revenue Code Section 409A and the final regulations issued thereunder.
      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 (i) are not expressly defined herein and (ii) are defined in the Compensation and Benefits Assurance Agreement shall have the respective meanings given to those terms in the Compensation and Benefits Assurance Agreement. In addition, as used herein, the following terms shall have the following meanings:
  (a)  
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.
  (b)  
Compensation and Benefits Assurance Agreement ” means that certain Compensation and Benefits Assurance Agreement between Executive and the Company entered into on November 7, 1997, as amended.
 
  (c)  
Current Annual Salary ” means the amount of Base Salary actually paid to Executive during the 52-week year immediately prior to his Termination of Employment.
 
  (d)  
Disability ” means the inability, by reason of physical or mental infirmity or both, of an apparently permanent nature of Executive to perform satisfactorily the duties then assigned to him or the duties of any other executive position to which the Board is willing to assign him; Disability must be determined by the Board and shall be based upon certification of such Disability by an independent qualified physician or other credible medical evidence, if available.

2


 

  (e)  
Payment Period ” means the time beginning with the Period following the Period in which Executive’s Termination of Employment occurs and ending upon the earlier of (i) the end of the Period during which occurs the fifteenth anniversary of the date of Executive’s Termination of Employment or (ii) the last day of the Company’s fiscal year during which occurs the seventy-fifth anniversary of Executive’s birth.
 
  (f)  
Period ” means the Company’s accounting period as hereinafter described. In accordance with the provisions of §441(f) of the Internal Revenue Code of 1986, as amended, the Company uses a fiscal year varying from 52 to 53 weeks ending on the last Saturday in December in each year, which fiscal year consists of 13 accounting periods of 4 weeks each, except that in a year consisting of 53 weeks, the last accounting period consists of 5 weeks. In the event that the Company changes its fiscal year for income tax purposes, the Company shall have the right to alter and adjust payment dates under Paragraph 3 of this Agreement to coincide with its then existing accounting period, provided, however, that under no circumstances shall the Company have the right to adjust such payment dates hereunder to dates more than 31 days apart.
 
  (g)  
Retire ” and “ Retirement ” mean any Termination of Employment (including on account of death or Disability) on or after the Retirement Date.
 
  (h)  
Retirement Benefit ” means a lump sum amount equal to the “current value” of a stream of periodic payments payable to Executive in each Period during the Payment Period, such periodic payments determined as follows:
  (i)  
multiplying Executive’s Current Annual Salary by five (5), and
 
  (ii)  
divide said product so obtained by the number of full Periods during the Payment Period.
The “current value” of such stream of periodic payments shall be the present value on the Termination Date of such payments based on the following assumptions:
  (i)  
Such stream of payments would commence with the Period following the Period in which the Termination Date occurred and would continue through the end of the Payment Period;

3


 

  (ii)  
Such present value shall be determined by using the interest rate equal to the yield on the 10-year United States Treasury Bond on the Termination Date; and
 
  (iii)  
Such present value shall be determined without any discount for mortality.
Notwithstanding the forgoing, in the case of Executive’s Termination of Employment by reason of his death, the amount of the Retirement Benefit shall be seventy-five (75%) of the amount determined above.
  (i)  
Retirement Date ” means the earlier of:
  (i)  
the last day of the Company’s fiscal year during which Executive attains the age of sixty (60) years (i.e., December 31, 2011);
 
  (ii)  
the date of Executive’s death while employed by the Company; or
 
  (iii)  
the date of Executive’s Termination of Employment by reason of Executive’s Disability.
  (j)  
Severance Multiple ” means the lesser of (i) two and one half (2 1 / 2 ) or (ii) the quotient obtained by dividing (A) the number of full months between Executive’s Termination of Employment and the last day of the Company’s fiscal year during which Executive will attain the age of sixty (60) years (i.e., December 31, 2011) by (B) 12.
 
  (k)  
Stock Options ” means Executive’s options to purchase shares of the Company’s common stock pursuant to options granted to Executive by the Company prior to Executive’s Termination of Employment, which options are otherwise vested in Executive on the date of his Termination of Employment and remain unexercised upon the expiration of such options in accordance with their terms upon or subsequent to Executive’s Termination of Employment.
 
  (l)  
Termination Date ” means the date of Executive’s Termination of Employment.
 
  (m)  
Termination of Employment ” means any termination of employment (as defined in Section 409A of the Code and the

4


 

     
Company’s administrative policies, if any) 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 employment shall be deemed to have occurred by reason of such an acquisition unless there is either (i) a termination of employment with both the Company and such successor or (ii) a termination of employment with the Company and no successive employment by such successor.
 
  (n)  
Value ” with reference to Executive’s Stock Options means the estimated present value of the Stock Options determined on the basis of a “Black-Scholes” valuation calculation using the price of the shares of the Company’s common stock and comparable U.S. Treasury Strip Rates with a term equivalent to the remaining term of the respective Stock Options as reported in the Wall Street Journal for the date of Executive’s Termination of Employment, using the dividends paid during the twelve month period immediately prior to the date of Executive’s Termination of Employment and using a stock price volatility factor as reflected in the Company’s most recent proxy statement.
     2.  Retirement Benefit .
(a) Retirement Benefit Payment . In the event of Executive’s (i) Retirement, (ii) Termination of Employment, whether voluntary or involuntary, with or without Cause, after a Change in Control but prior to Executive’s Retirement Date, or (iii) involuntary Termination of Employment without Cause prior to the earlier of a Change in Control or Executive’s Retirement Date, the Company agrees to pay Executive (or Executive’s beneficiary in the case of his death) a lump sum payment of the Retirement Benefit within 30 days after the Executive’s Termination of Employment.
(b) Designation of Beneficiary . Executive may designate a beneficiary to receive payments payable hereunder after his death by filing with the Company a beneficiary designation on a form approved by the Company, bearing the name, address and relationship of the beneficiary, which beneficiary designation form shall be acknowledged by Executive before a Notary Public or other officer authorized to administer oaths, and shall be in such other form and shall contain such other information as shall be satisfactory to the Company. The beneficiary may be changed by Executive at any time by filing a new beneficiary designation form with the Company, said new beneficiary designation form to comply with the provisions of this Paragraph 3(b). If Executive shall not be survived by

5


 

the beneficiary designated in accordance with the provisions herein set forth, then upon Executive’s death, any and all payments provided for herein shall be made to Executive’s estate. If Executive shall be survived by the beneficiary designated as provided herein, and such beneficiary shall die prior to receiving all amounts payable hereunder to such deceased beneficiary if such beneficiary had lived, then all remaining amounts that would have been paid to such deceased beneficiary if living shall be paid to the estate of such deceased beneficiary.
     3.  Termination of Employment After a Change in Control and Prior to Retirement .
  (a)  
Benefits Payable . The Company and Executive have previously entered into the Compensation and Benefits Assurance Agreement. In no event shall any payments or benefits be made to or provided to Executive under the terms of this Agreement upon Executive’s Termination of Employment after a Change in Control and prior to Executive’s Retirement Date except for the benefits expressly provided for in Paragraph 2 of this Agreement.
 
  (b)  
Funding of Grantor Trust . Upon the occurrence of a Change in Control, in order to provide a source of payment of the benefits payable under Paragraph 2, the Company shall fund an irrevocable “grantor” trust maintained pursuant to a trust agreement with an institutional trustee selected by the Company. The amount funded by the Company shall equal the “current value” of the retirement benefits determined as of the date of the Change in Control pursuant to the provisions of Paragraph 1(h) above
     4.  Involuntary Termination of Employment Prior to a Change in Control or Executive’s Retirement Date . In the event of Executive’s involuntary Termination of Employment without Cause prior to the earlier of a Change in Control or Executive’s Retirement Date, the Company agrees to pay to or provide Executive with the following:
  (a)  
A single cash payment in an amount equal to the Severance Multiple multiplied by the sum of (i) the highest Base Salary paid to Executive during his employment by the Company plus (ii) the Executive’s then-current target bonus opportunity (stated in terms of a percentage of Base Salary) 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 payment shall be made within thirty (30) days after the Termination Date.

6


 

  (b)  
Payment of the benefits expressly provided for in Paragraph 2 of this Agreement.
 
  (c)  
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.
 
  (d)  
A single cash payment in an amount equal to the greater of (i) the Executive’s then-current target bonus opportunity (stated in terms of a percentage of Base Salary) established under the Company’s Annual Corporate Performance Incentive Plan for Officers (or any successor plan thereto), if any, for the incentive plan year in which the Termination Date occurs, adjusted on a pro-rata basis based on the number of days Executive was actually employed during such incentive plan year or (ii) the actual bonus earned through the Termination Date under the Company’s Annual Corporate Performance Incentive Plan for Officers (or any successor plan thereto), if any, based on the then-current level of goal achievement; which payment shall be made at the same time as the payments are made to the Company’s other employees under the Company’s Annual Corporate Performance Incentive Plan for Officers (or any successor plan thereto), if any, for the incentive plan year during which the Termination Date occurs.
 
  (e)  
Conveyance of possession and title to the Company-owned automobile, if any, used by Executive in connection with his employment immediately prior to the Termination Date within thirty (30) days after such Termination Date.
 
  (f)  
A single cash payment of the Value of the Stock Options, which payment shall be paid within ten (10) days following the expiration of such Stock Options.
 
  (g)  
Medical Insurance coverage for Executive until Executive reaches the age of sixty (60) (July 24, 2011) or his earlier death under such terms and conditions as are most closely comparable to the “Plan B” or HMO coverage option provided Executive under the Company’s Group Medical Benefits Plan on the Termination Date and as shall be thereafter customarily provided by the Company to the Company’s executives from time to time during such period. During this period, Executive shall be entitled to obtain at Executive’s expense such optional coverages, such as dental coverage and family/dependent medical coverage, under the Company’s Group Medical Benefits Plan as are available for the Company’s employees generally. After age sixty (60) Executive

7


 

     
may elect to obtain at Executive’s expense coverage as a “retiree” under such Group Medical Benefits Plan, if any, as may be then available to the Company’s retired executives. Commencing with the end of the Executive’s COBRA period and until the Executive reaches age sixty (60), for each month that such coverage is in place, Executive will recognize taxable income equal to the difference between the premium actually paid by the Executive and the premium that would be paid by a similarly situated COBRA participant.
 
  (h)  
Life Insurance, accidental death and dismemberment insurance and disability insurance for Executive until Executive reaches age sixty (60) (July 24, 2011) or his earlier death under such terms and conditions that are reasonably comparable to the coverages provided Executive under the Company’s plans for such insurance on the Termination Date and as shall be thereafter customarily provided by the Company to Company’s executives from time to time during such period.
 
  (i)  
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.
 
  (j)  
Payment of Executive’s vested interest under the Company sponsored qualified profit sharing and 401(k) Plans when and as provided in, and otherwise subject to, the terms, provisions and conditions of said Plans, and nothing in this Agreement shall modify or override the terms, provisions and conditions of such Plans.
 
  (k)  
At no expense to Executive, standard outplacement services for Executive from a nationally recognized outplacement firm of Executive’s selection, for a period of up to two (2) years from the Termination Date. However, such services shall be at the Company’s expense to a maximum amount not to exceed twenty percent (20%) of the Executive’s Base Salary as of the Termination Date. In no event shall reimbursement for eligible outplacement expenses be made to the Executive later than the end of the third calendar year following the year of the Termination Date.
     5.  Other Termination of Employment . Except as otherwise expressly provided to the contrary in the Compensation and Benefits Assurance Agreement and in Paragraph 2 of this Agreement, Executive shall not be entitled to any payments or benefits upon his Termination of Employment in the following events:

8


 

  (a)  
Executive’s voluntary Termination of Employment prior to his Retirement Date, or
 
  (b)  
Executive’s involuntary Termination of Employment for Cause prior to his Retirement Date, or
 
  (c)  
Executive’s Termination of Employment, whether voluntary or involuntary, with or without Cause, prior to his Retirement Date and following a Change in Control.
     6.  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.
     7.  ADEA Waiver . Executive understands that the severance benefits provided in Paragraph 4 will decline as Executive approaches the age of sixty (60) years and will be eliminated at the end of the Company’s fiscal year during which Executive attains the age of sixty (60) years. Moreover, the Compensation and Benefits Assurance Agreement may be terminated by the Company at the end of the Company’s fiscal year during which Executive attains the age of sixty (60) years. If such reduction and/or elimination of benefits are construed to violate the Age Discrimination in Employment Act of 1967, as amended, Executive does hereby release and waive any claim he may have by reason of such violation. Executive acknowledges that this Agreement and the Compensation and Benefits Agreement provide new consideration which he was not previously entitled to receive, that he has consulted an attorney before executing the agreements, and that he has been given up to twenty-one (21) days within which to consider the agreements. This Agreement will not become effective or enforceable until seven (7) days following Executive’s execution of this Agreement, and Executive may revoke this Agreement at any time during such seven-day period by delivering (or causing to be delivered) to the principal office of the Company a notice of his revocation of this Agreement. The execution of the Compensation and Benefits Assurance Agreement is in part consideration for and an integral part of this Agreement, and therefore, any such revocation of this Agreement will also constitute a revocation and cancellation of the Compensation and Benefits Assurance Agreement.
     8.  Legal Fees and Expenses . The Company shall pay all legal fees, costs of litigation, prejudgment interest, and other expenses (“Legal Expenses”) which are incurred in good faith by Executive as a result of the Company’s refusal to provide the benefits to which Executive becomes entitled under this Agreement, or as a result of the Company’s (or any third party’s) contesting the validity, enforceability, or interpretation of this Agreement, or as a result of any conflict between the parties pertaining to this Agreement; provided, however, in no event shall the Company be required to pay any such expenses if it is finally determined that Executive’s Termination of Employment

9


 

was for Cause. In no event will any payments to Executive under this Section 8 be paid later than the end of the calendar year following the year in which the expense was incurred.
     9.  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.
     10.  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.
     11.  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.
     12.  Compliance with Section 409A of the Internal Revenue Code . This Agreement is intended to comply with Section 409A of the Internal Revenue Code, to the extent applicable. Notwithstanding any provisions herein to the contrary, this Agreement shall be interpreted, operated, and administered consistent with this intent. In that regard, any payments required by this Agreement in connection with the Executive’s termination of employment shall not be made earlier than six (6) months after the date of termination to the extent required by Code Section 409A(a)(2)(B)(i).
      IN WITNESS WHEREOF , the Company has caused this Amended and Restated Executive Severance 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.
                 
[CORPORATE SEAL]       Lance, Inc.    
 
               
ATTEST:
      By   s/ David V. Singer    
 
               

s/ R. D. Puckett
          David V. Singer
President
   
Secretary
               
 
               
        s/ Earl D. Leake SEAL]   
             
        Earl D. Leake    

10

EXHIBIT 31.1
LANCE, INC. AND SUBSIDIARIES
MANAGEMENT CERTIFICATION
I, David V. Singer, certify that:
1.  
I have reviewed this quarterly report on Form 10-Q of 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: July 25, 2008
         
/s/ David V. Singer      
David V. Singer     
President and Chief Executive Officer     

 

EXHIBIT 31.2
LANCE, INC. AND SUBSIDIARIES
MANAGEMENT CERTIFICATION
I, Rick D. Puckett, certify that:
1.  
I have reviewed this quarterly report on Form 10-Q of 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: July 25, 2008
         
/s/ Rick D. Puckett      
Rick D. Puckett     
Executive Vice President, Chief Financial Officer, Treasurer and Secretary     

 

EXHIBIT 32
LANCE, INC. AND SUBSIDIARIES
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 Lance, Inc. (the “Company”) on Form 10-Q for the period ended June 28, 2008 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 of 1934; 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 Lance, Inc. and will be retained by 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
President and Chief Executive Officer
  Executive Vice President, Chief Financial Officer,
July 25, 2008
  Treasurer and Secretary
 
  July 25, 2008