North Carolina
(State or other jurisdiction of
incorporation or organization)
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56-0292920
(I.R.S. Employer Identification No.)
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13024 Ballantyne Corporate Place
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||
Suite 900
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Charlotte, North Carolina
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28277
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
þ
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Accelerated filer
¨
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Non-accelerated filer
¨
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Smaller reporting company
¨
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(Do not check if a smaller reporting company)
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SNYDER’S-LANCE, INC. AND SUBSIDIARIES | ||
I NDEX | ||
PART I. FINANCIAL INFORMATION
|
Page | |
Item 1. Financial Statements
|
||
3 | ||
4 | ||
5 | ||
6 | ||
14 | ||
19 | ||
19 | ||
PART II. OTHER INFORMATION
|
||
19 | ||
19 | ||
19 | ||
20 | ||
21 |
Quarter Ended
|
||||||||
April 2,
2011
|
March 27,
2010*
|
|||||||
Net revenue
|
$ | 388,471 | $ | 221,617 | ||||
Cost of sales
|
247,299 | 137,742 | ||||||
Gross margin
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141,172 | 83,875 | ||||||
Selling, general and administrative
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120,905 | 80,420 | ||||||
Other expense, net
|
39 | 3,610 | ||||||
Income/(loss) before interest and income taxes
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20,228 | (155 | ) | |||||
Interest expense, net
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2,660 | 860 | ||||||
Income/(loss) before income taxes
|
17,568 | (1,015 | ) | |||||
Income tax expense/(benefit)
|
6,525 | (330 | ) | |||||
Net income/(loss)
|
11,043 | (685 | ) | |||||
Net income attributable to noncontrolling interests
|
194 | - | ||||||
Net income/(loss) attributable to Snyder’s-Lance, Inc.
|
$ | 10,849 | $ | (685 | ) | |||
Basic earnings/(loss) per share
|
$ | 0.16 | $ | (0.02 | ) | |||
Weighted average shares outstanding – basic
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66,732 | 31,758 | ||||||
Diluted earnings/(loss) per share
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$ | 0.16 | $ | (0.02 | ) | |||
Weighted average shares outstanding – diluted
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68,060 | 31,758 | ||||||
Cash dividends declared per share
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$ | 0.16 | $ | 0.16 |
April 2, 2011
|
January 1, 2011
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 6,362 | $ | 27,877 | ||||
Accounts receivable, net of allowances of $3,289 and $2,899, respectively
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142,248 | 128,556 | ||||||
Inventories
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102,947 | 96,936 | ||||||
Income tax receivable
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32,743 | 29,304 | ||||||
Deferred income taxes
|
9,905 | 14,346 | ||||||
Prepaid expenses and other current assets
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24,248 | 26,748 | ||||||
Total current assets
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318,453 | 323,767 | ||||||
Noncurrent assets:
|
||||||||
Fixed assets, net of accumulated depreciation of $311,015 and $299,877, respectively
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340,947 | 336,673 | ||||||
Goodwill, net
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377,895 | 376,281 | ||||||
Other intangible assets, net
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406,693 | 407,579 | ||||||
Other noncurrent assets
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18,796 | 18,056 | ||||||
Total assets
|
$ | 1,462,784 | $ | 1,462,356 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
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$ | 49,535 | $ | 39,938 | ||||
Accrued compensation
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28,611 | 31,564 | ||||||
Other payables and accrued liabilities
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58,851 | 64,000 | ||||||
Current portion of long-term debt
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58,666 | 57,767 | ||||||
Total current liabilities
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195,663 | 193,269 | ||||||
Noncurrent liabilities:
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||||||||
Long-term debt
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217,320 | 227,462 | ||||||
Deferred income taxes
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186,047 | 180,812 | ||||||
Other noncurrent liabilities
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21,836 | 24,198 | ||||||
Total liabilities
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620,866 | 625,741 | ||||||
Commitments and contingencies
|
- | - | ||||||
Stockholders’ equity:
|
||||||||
Common stock, 67,189,213 and 66,336,807 shares outstanding, respectively
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55,989 | 55,278 | ||||||
Preferred stock, no shares outstanding
|
- | - | ||||||
Additional paid-in capital
|
723,568 | 722,007 | ||||||
Retained earnings
|
40,463 | 40,199 | ||||||
Accumulated other comprehensive income
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17,859 | 15,104 | ||||||
Total Snyder’s-Lance, Inc. stockholders' equity
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837,879 | 832,588 | ||||||
Noncontrolling interests
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4,039 | 4,027 | ||||||
Total stockholders’ equity
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841,918 | 836,615 | ||||||
Total liabilities and stockholders’ equity
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$ | 1,462,784 | $ | 1,462,356 |
Quarter Ended
|
||||||||
April 2,
2011
|
March 27,
2010*
|
|||||||
Operating activities
|
||||||||
Net income/(loss)
|
$ | 11,043 | $ | (685 | ) | |||
Adjustments to reconcile net income/(loss) to cash from operating activities:
|
||||||||
Depreciation and amortization
|
14,061 | 9,596 | ||||||
Stock-based compensation expense
|
338 | 1,821 | ||||||
(Gain)/loss on sale of fixed and intangible assets
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(48 | ) | 54 | |||||
Impairment of fixed assets
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- | 584 | ||||||
Changes in operating assets and liabilities
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(12,982 | ) | (12,904 | ) | ||||
Net cash provided by/(used in) operating activities
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12,412 | (1,534 | ) | |||||
Investing activities
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||||||||
Purchases of fixed assets
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(17,471 | ) | (7,605 | ) | ||||
Purchases of routes
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(622 | ) | - | |||||
Proceeds from sale of fixed assets
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521 | 61 | ||||||
Proceeds from sale of routes
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676 | - | ||||||
Proceeds from sale of investments
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960 | - | ||||||
Net cash used in investing activities
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(15,936 | ) | (7,544 | ) | ||||
Financing activities
|
||||||||
Dividends paid to stockholders
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(10,584 | ) | (5,134 | ) | ||||
Dividends paid to noncontrolling interests
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(182 | ) | - | |||||
Issuances of common stock
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1,935 | 748 | ||||||
Repurchases of common stock
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- | (1,261 | ) | |||||
Net (repayments)/proceeds on existing credit facilities
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(9,243 | ) | 15,000 | |||||
Net cash (used in)/provided by financing activities
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(18,074 | ) | 9,353 | |||||
Effect of exchange rate changes on cash
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83 | 133 | ||||||
(Decrease)/increase in cash and cash equivalents
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(21,515 | ) | 408 | |||||
Cash and cash equivalents at beginning of period
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27,877 | 5,418 | ||||||
Cash and cash equivalents at end of period
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$ | 6,362 | $ | 5,826 | ||||
Supplemental information:
|
||||||||
Cash paid for income taxes, net of refunds of $2 and $12, respectively
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$ | 449 | $ | 842 | ||||
Cash paid for interest
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$ | 1,478 | $ | 831 |
1.
|
BASIS OF PRESENTATION
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2.
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NEW ACCOUNTING STANDARDS
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3.
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CHANGE IN ACCOUNTING METHOD
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4.
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MERGERS & ACQUISITIONS
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(in thousands, except per share data)
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Quarter Ended
March 27, 2010 |
|||
Net revenue
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$ | 378,716 | ||
Income before interest and income taxes
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$ | 7,566 | ||
Net income attributable to Snyder’s-Lance, Inc.
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$ | 4,231 | ||
Weighted average diluted shares
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66,186 | |||
Diluted earnings per share
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$ | 0.06 |
5.
|
EARNINGS PER SHARE
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Quarter Ended
|
||||||||
(in thousands, except per share data)
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April 2,
2011
|
March 27,
2010
|
||||||
Basic Earnings/(Loss) Per Share:
|
||||||||
Net income/(loss) attributable to Snyder’s-Lance, Inc.
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$ | 10,849 | $ | (685 | ) | |||
Weighted average number of shares outstanding
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66,732 | 31,758 | ||||||
Basic earnings/(loss) per share
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$ | 0.16 | $ | (0.02 | ) | |||
Diluted Earnings/(Loss) Per Share:
|
||||||||
Net income/(loss) attributable to Snyder’s-Lance, Inc.
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$ | 10,849 | $ | (685 | ) | |||
Weighted average number of shares outstanding
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66,732 | 31,758 | ||||||
Effect of dilutive securities
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1,328 | - | ||||||
Weighted average shares – diluted
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68,060 | 31,758 | ||||||
Diluted earnings/(loss) per share
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$ | 0.16 | $ | (0.02 | ) |
6.
|
EQUITY-BASED INCENTIVES
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7.
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INVENTORIES
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(in thousands)
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April 2,
2011
|
January 1,
2011
|
||||||
Finished goods
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$ | 58,711 | $ | 55,658 | ||||
Raw materials
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18,567 | 17,015 | ||||||
Supplies, etc.
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25,669 | 24,263 | ||||||
Total inventories.
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$ | 102,947 | $ | 96,936 |
8.
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TARGETED ACQUISITION COSTS
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9.
|
INVESTMENTS
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10.
|
GOODWILL AND OTHER INTANGIBLE ASSETS
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(in thousands)
|
Carrying Amount
|
|||
Balance as of January 1, 2011
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$ | 376,281 | ||
Purchase price adjustments
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120 | |||
Change in foreign currency exchange rate
|
1,494 | |||
Balance as of April 2, 2011
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$ | 377,895 |
(in thousands)
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Gross
Carrying
Amount
|
Accumulated Amortization
|
Net
Carrying Amount
|
|||||||||
As of April 2, 2011:
|
||||||||||||
Customer relationships - amortized
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$ | 64,168 | $ | (2,256 | ) | $ | 61,912 | |||||
Non-compete agreement - amortized
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500 | (500 | ) | - | ||||||||
Routes - unamortized
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50,520 | - | 50,520 | |||||||||
Trademarks - unamortized
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294,787 | (526 | ) | 294,261 | ||||||||
Balance as of April 2, 2011
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$ | 409,975 | $ | (3,282 | ) | $ | 406,693 | |||||
As of January 1, 2011:
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||||||||||||
Customer relationships - amortized
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$ | 64,168 | $ | (1,384 | ) | $ | 62,784 | |||||
Non-compete agreement - amortized
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500 | (451 | ) | 49 | ||||||||
Routes - unamortized
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50,485 | - | 50,485 | |||||||||
Trademarks - unamortized
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294,787 | (526 | ) | 294,261 | ||||||||
Balance as of January 1, 2011
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$ | 409,940 | $ | (2,361 | ) | $ | 407,579 |
11.
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INCOME TAXES
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Jurisdiction
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Open Years
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U.S. federal
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2007 and forward
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Canada federal
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2006 and forward
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Ontario provincial
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2004 and forward
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Massachusetts
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2001 and forward
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North Carolina
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2006 and forward
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Iowa
|
2007 and forward
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Missouri
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2007 and forward |
New York
|
2007 and forward
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California
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2006 and forward
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Pennsylvania
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2007 and forward
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Michigan
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2006 and forward
|
12.
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FAIR VALUE MEASUREMENTS
|
|
Level 1
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- quoted prices in active markets for identical assets and liabilities.
|
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Level 2
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- observable inputs other than quoted prices for identical assets and liabilities.
|
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Level 3
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- unobservable inputs in which there is little or no market data available, which requires us to develop our own assumptions.
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13.
|
DERIVATIVE INSTRUMENTS
|
Fair Value of Asset/(Liability) at
|
||||||||
(in thousands)
|
April 2, 2011
|
January 1, 2011
|
||||||
Derivatives designated as hedging instruments:
|
||||||||
Interest rate swaps (included in Other noncurrent liabilities)
|
$ | (737 | ) | $ | (2,630 | ) | ||
Interest rate swaps (included in Other payables and accrued liabilities)
|
(1,214 | ) | - | |||||
Foreign currency forwards (included in Prepaid expenses and other
current assets)
|
181 | 256 | ||||||
Total derivatives designated as hedging instruments
|
$ | (1,770 | ) | $ | (2,374 | ) |
Quarter Ended
|
||||||||
(in thousands)
|
April 2, 2011
|
March 27, 2010
|
||||||
Interest rate swaps (included in Interest expense, net)
|
$ | (702 | ) | $ | (614 | ) | ||
Foreign currency forwards (included in Net revenue)
|
198 | 636 | ||||||
Foreign currency forwards (included in Other expense, net)
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(14 | ) | (8 | ) | ||||
Total net pre-tax income/(expense) from derivative instruments
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$ | (518 | ) | $ | 14 |
Quarter Ended
|
||||||||
(in thousands)
|
April 2, 2011
|
March 27, 2010
|
||||||
Interest rate swaps
|
$ | 679 | $ | 256 | ||||
Foreign currency forwards
|
(75 | ) | (368 | ) | ||||
Total change in unrealized pre-tax gains/(losses) from derivative instruments
(effective portion)
|
$ | 604 | $ | (112 | ) |
Fair Value of Asset/(Liability) at
|
||||||||
(in thousands)
|
April 2, 2011
|
January 1, 2011
|
||||||
Derivatives not designated as hedging instruments:
|
||||||||
Interest rate swaps (included in Other noncurrent liabilities)
|
$ | (424 | ) | $ | (485 | ) | ||
Commodity hedges (included in Prepaid expenses and other
current assets)
|
- | 538 | ||||||
Total derivatives not designated as hedging instruments
|
$ | (424 | ) | $ | 53 |
(in thousands) | Quarter Ended | |||||||
April 2, 2011
|
March 27, 2010
|
|||||||
Interest rate swaps (included in Interest expense, net)
|
$ | 61 | $ | - |
14.
|
COMMITMENTS AND CONTINGENCIES
|
15.
|
RELATED PARTY TRANSACTIONS
|
16.
|
COMPREHENSIVE INCOME AND NONCONTROLLING INTERESTS
|
Quarter Ended
|
||||||||
(in thousands)
|
April 2,
2011
|
March 27,
2010*
|
||||||
Net income/(loss)
|
$ | 11,043 | $ | (685 | ) | |||
Foreign currency translation adjustment
|
2,389 | 1,476 | ||||||
Net unrealized gain/(loss) on derivatives, net of tax
|
366 | (96 | ) | |||||
Total comprehensive income | 13,798 | 695 | ||||||
Comprehensive income attributable to noncontrolling interests | (194) | - | ||||||
Comprehensive income attributable to Snyder’s-Lance, Inc.
|
$ | 13,604 | $ | 695 |
Quarter Ended
|
Favorable/
|
|||||||||||||||||||||||
(dollars in thousands)
|
April 2, 2011
|
March 27, 2010*
|
(Unfavorable)
Variance
|
|||||||||||||||||||||
Net revenue
|
$ | 388,471 | 100.0 | % | $ | 221,617 | 100.0 | % | $ | 166,854 | 75.3 | % | ||||||||||||
Cost of sales
|
247,299 | 63.7 | % | 137,742 | 62.2 | % | (109,557 | ) | -79.5 | % | ||||||||||||||
Gross margin
|
141,172 | 36.3 | % | 83,875 | 37.8 | % | 57,297 | 68.3 | % | |||||||||||||||
Selling, general and administrative
|
120,905 | 31.1 | % | 80,420 | 36.3 | % | (40,485 | ) | -50.3 | % | ||||||||||||||
Other expense, net
|
39 | 0.0 | % | 3,610 | 1.6 | % | 3,571 | 98.9 | % | |||||||||||||||
Income/(loss) before interest and taxes
|
20,228 | 5.2 | % | (155 | ) | -0.1 | % | 20,383 |
nm
|
|||||||||||||||
Interest expense, net
|
2,660 | 0.7 | % | 860 | 0.4 | % | (1,800 | ) | -209.3 | % | ||||||||||||||
Income tax expense/(benefit)
|
6,525 | 1.7 | % | (330 | ) | -0.1 | % | (6,855 | ) |
nm
|
||||||||||||||
Net income/(loss)
|
$ | 11,043 | 2.8 | % | $ | (685 | ) | -0.3 | % | $ | 11,728 |
nm
|
||||||||||||
|
·
|
We had solid growth in our core branded product lines, including sandwich crackers and kettle chips;
|
|
·
|
From a channel perspective, we experienced revenue growth in grocery, mass merchandiser and convenience store channels, slightly offset by declines in food service and up-and-down-the-street channels; however,
|
|
·
|
We experienced revenue declines in non-branded products primarily due to:
|
|
o
|
Selling price adjustments resulting from changes in shipping terms, and
|
|
o
|
Lower volume due to the heavy promotional activity from national brand competitors.
|
Quarter Ended
|
||||||||
April 2,
2011
|
March 27,
2010
|
|||||||
Branded Products
|
$ | 228.5 | $ | 126.6 | ||||
Non-Branded Products
|
160.0 | 95.0 | ||||||
Total Revenue
|
$ | 388.5 | $ | 221.6 |
No.
|
Description
|
|
3.1
|
Restated Articles of Incorporation of Snyder’s-Lance, Inc., as amended through April 17, 1998, incorporated herein by reference to Exhibit 3 to the Registrant's Quarterly Report on Form 10-Q for the twelve weeks ended June 13, 1998 (File No. 0-398).
|
|
3.2
|
Articles of Amendment to Amended and Restated Articles of Incorporation of Snyder’s-Lance, Inc., incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on December 6, 2010 (File No. 0-398).
|
|
3.2
|
Bylaws of Snyder’s-Lance, Inc., as amended through December 6, 2010, incorporated herein by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed on December 6, 2010 (File No. 0-398).
|
|
2011 Annual Performance Incentive Plan for Officers, filed herewith.
|
||
2011 Three-Year Performance Incentive Plan for Officers and Key Managers, filed herewith.
|
||
Retention and Amendment Agreement, effective as of February 21, 2011, between the Registrant and Rick D. Puckett, filed herewith.
|
||
Form of Executive Severance Agreement between the Registrant and each of Carl E. Lee, Jr. and Kevin P. Henry, filed herewith.
|
||
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a), filed herewith.
|
||
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a), filed herewith.
|
||
Certification pursuant to Rule 13a-14(b), as required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
|
||
101
|
Financial Statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended April 2, 2011, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Income/(Loss), (ii) the Condensed Consolidated Balance Sheets, (iii) the Condensed Consolidated Statements of Cash Flows, and (iv) the Notes to the Condensed Consolidated Financial Statements.
|
SNYDER’S-LANCE, INC.
|
||
By:
|
/s/ Rick D. Puckett
|
|
|
Rick D. Puckett
|
|
|
Executive Vice President, Chief Financial Officer,
|
|
|
Treasurer and Secretary
|
Purposes and
Introduction
|
The 2011 Annual Performance Incentive Plan provides for Performance Awards under the Snyder’s-Lance, Inc. 2007 Key Employee Incentive Plan (the “Incentive Plan”). Except as otherwise expressly defined herein, capitalized terms shall be as defined in the Incentive Plan.
|
|
The primary purposes of the 2011 Annual Performance Incentive Plan for Officers (the “2011 Plan”) are to:
|
||
•
|
Motivate behaviors that lead to the successful achievement of specific sales, financial and operations goals that support Snyder’s-Lance, Inc. stated business strategy and to align participants’ interests with those of stockholders.
|
|
•
|
Emphasize link between participants’ performance and rewards for meeting predetermined, specific goals.
|
|
•
|
Focus participant’s attention on operational effectiveness from both an earnings and an investment perspective.
|
|
•
|
Promote the performance orientation at Snyder’s-Lance, Inc. and communicate to employees that greater responsibility carries greater rewards.
|
|
For 2011, participants will be eligible to earn incentive awards based on the performance measures listed on Exhibit A hereto and defined as follows:
|
||
1
|
Net Revenue is defined as sales and other operating revenue, net of returns, allowances, discounts and other sales deduction items for the 2011 fiscal year, as audited and reported in the Company’s Form 10-K for the 2011 fiscal year.
|
|
2
|
Corporate Earnings Per Share (“EPS”) is defined as the fully diluted earnings per share, excluding special items, of the Company for the 2011 fiscal year, as audited and reported in the Company’s Form 10-K for the 2011 fiscal year.
|
3
|
Free Cash Flow is defined as the net cash flow from operating activities less capital expenditures, excluding special items, for the 2011 fiscal year as audited and reported in the Company’s Form 10-K for the 2011 fiscal year, excluding special items.
|
|
Certain executive officers have an additional performance condition based on pre-tax operating profit for 2011, as described further below. To achieve the maximum motivational impact, plan goals and the awards that will be received for meeting those goals will be communicated to participants as soon as practical after the 2011 Plan and the performance measures are approved by the Compensation Committee of the Board of Directors.
|
||
Each participant will be assigned a Target Incentive, stated as a percent of base salary. The Target Incentive Award, or a greater or lesser amount, will be earned at the end of the Plan Year based on the attainment of predetermined goals.
|
||
Base salary shall be the annual rate of base compensation for the Plan Year which is set no later than April of such Plan Year; provided that for any award intended to satisfy the Performance-Based Exception, base salary shall be the annual rate of base compensation for the Plan Year which is set no later than March 31 of such Plan Year.
|
||
Not later than 75 days after fiscal year-end, 100% of the awards earned will be payable to participants in cash.
|
Plan Year |
The period over which performance will be measured is the Company’s 2011 fiscal year (the “Plan Year”).
|
Eligibility and
Participation
|
Eligibility in the Plan is limited to Officers of Snyder’s-Lance, Inc. who are key to Snyder’s-Lance, Inc. success. The Compensation Committee of the Board of Directors will review and approve participants nominated by the Chief Executive Officer. Participation in one year does not guarantee participation in a following year, but instead will be reevaluated and determined on an annual basis.
|
Participants in the Plan may not participate in any other annual incentive plan (e.g., sales incentives, etc.) offered by Snyder’s-Lance, Inc. or its affiliates. Exhibit B includes the list of 2011 participants approved by the Compensation Committee at its February 7, 2011 meeting.
|
Target Incentives
Awards
|
Each participant will be assigned a Target Incentive expressed as a percentage of his or her base salary. Participants may be assigned Target Incentives by position, by salary level or based on other factors as determined by the Compensation Committee.
|
|
Target Incentives will be reevaluated at least every other year, if not annually. If the job responsibility of a position changes during the year, or base salary is increased significantly, the Target Incentive shall be revised as appropriate.
|
||
Exhibit B lists the Target Incentive for each participant for the Plan Year. Target Incentives will be communicated to each participant as close to the beginning of the year as practicable, in writing. Final awards will be calculated by multiplying each participant’s Target Incentive by the appropriate percentage (based on performance for the year, as described below).
|
||
Performance Measures
and Award Funding
|
The 2011 performance measures are on Exhibit A attached hereto. |
Threshold
|
Target
|
Maximum
|
||
Award Level Funded |
0%
|
100%
|
200%
|
Percent of payout will be determined on a straight line basis from Threshold to Target and from Target to Maximum. There will be no payout unless the Threshold for the applicable performance measure is reached.
|
||
The payout for the Net Revenue performance measure shall not exceed Target if the EPS performance measure does not equal or exceed its Threshold.
|
||
The performance measures will be communicated to each participant as soon as practicable after they have been established. Final Target Incentive Awards will be calculated after the Compensation Committee has reviewed the Company’s audited financial statements for 2011 and determined the performance level achieved.
|
||
Threshold, Target and Maximum levels will be defined at the beginning of each Plan Year for each performance measure.
|
||
The following definitions for the terms Maximum, Target and Threshold should help set the goals for each year, as well as evaluate the payouts:
|
•
|
Maximum: Excellent; deserves an above-market incentive
|
|
•
|
Target: Normal or expected performance; deserves market-level incentive
|
|
•
|
Threshold: Lowest level of performance deserving payment above base salary; deserves below-market incentive
|
|
Individual
Performance
|
Each participant will receive 40% of his or her Target Incentive Award based on Net Revenue, 40% of his or her Target Incentive Award based on EPS, excluding special items, and 20% of his or her Target Incentive Award based on Free Cash Flow, excluding special items. Notwithstanding the foregoing, for each of Messrs. Warehime, Singer and Lee, the award to each such participant for 2011 shall be equal to %, % and %, respectively, of pre-tax operating profit for 2011, excluding special items, subject to such discretionary reductions as may be made by the Compensation Committee. In considering such reductions, the Committee may take into account the results based on the performance measures set forth on Exhibit A. For this purpose, “pre-tax operating profit” means the Company’s Net Revenue less total cost of goods and operating expenses.
|
|
Form and Timing of
Payments
|
Final award payments will be made in cash as soon as practicable after award amounts are approved by the Compensation Committee of the Board of Directors, but not more than 75 days after the end of the Company’s 2011 fiscal year. All awards will be rounded to the nearest $100.
|
|
Change in Status
|
An employee hired into an eligible position during the Plan Year may participate in the Plan for the balance of the Plan Year on a pro rata basis.
|
|
Certain Terminations
of Employment
|
In the event a participant voluntarily terminates employment (other than Retirement) or is terminated involuntarily during the Plan Year, any Award will be forfeited. In the event of death, Disability or Retirement during the Plan Year, the Award will be paid on a pro rata basis based on the actual performance determined after the end of the Plan Year. In the event of any termination of employment after the end of the Plan Year (including death, Disability, Retirement, voluntary termination or involuntary termination for any reason), any Award will be determined based on actual performance and paid at the same time as Awards are paid to all other participants.
|
“Retirement” is defined under the Incentive Plan to mean the participant’s termination of employment with the Company either (i) after attainment of age 65 or (ii) after attainment of age 55 with the prior consent of the Compensation Committee.
|
||
Change In Control
|
In the event of a Change in Control (which will occur only in the event of the closing of the relevant transaction), pro rata payouts will be made at target for the year-to-date, based on the number of days in the Plan Year preceding the closing of the Change in Control transaction. Payouts will be made within 30 days after the relevant transaction has been completed.
|
|
Withholding |
The Company shall withhold from award payments any Federal, foreign, state or local income or other taxes required to be withheld.
|
Governance |
The Compensation Committee of the Board of Directors of Snyder’s-Lance, Inc. is ultimately responsible for the administration and governance of the Plan. Actions requiring Committee approval include final determination of plan eligibility and participation, identification of performance measures, performance objectives and final award determination. The Committee may adjust any award due to extraordinary events such as acquisitions, dispositions, discontinued operations, required accounting adjustments or similar events, all as specified in Section 11(d) of the Incentive Plan; provided, however, that the Committee shall at all times be required to exercise this discretionary power in a manner, and subject to such limitations, as will permit all payments under the Plan to “covered employees,” as defined in Section 162(m) of the Internal Revenue Code, to continue to qualify as “performance-based compensation” for purposes of Section 162(m) of the Code. In addition, under the Incentive Plan, the Committee retains the discretion to reduce any award amount from the amount otherwise determined under the applicable formula. Subject to the foregoing, the decisions of the Committee shall be conclusive and binding on all participants.
|
|
Award
|
Target
|
|
Name
|
Title |
Percentage
|
Incentive
|
Purposes and
Introduction
|
The 2011 Three-Year Performance Incentive Plan for Officers and Key Managers provides for Stock Options, Restricted Stock and Performance Awards under the Snyder’s-Lance, Inc. 2007 Key Employee Incentive Plan (the “Incentive Plan”). Except as otherwise expressly defined herein, capitalized terms shall be as defined in the Incentive Plan.
|
|
The primary purposes of the 2011 Three-Year Performance Incentive Plan for Officers and Key Managers (the “2011 Plan”) are to:
|
||
•
|
Align officers’ and managers’ interests with those of stockholders by linking a substantial portion of compensation to the price of the Company’s Common Stock and to the Company’s financial performance based on the performance measures specified below.
|
|
•
|
Provide a way to attract and retain key executives and managers who are critical to Snyder’s-Lance, Inc. future success.
|
|
•
|
Provide competitive total compensation for executives and managers commensurate with Company performance.
|
|
To achieve the maximum motivational impact, the Plan and the awards opportunities will be communicated to participants as soon as practical after the 2011 Plan is approved by the Compensation Committee of the Board of Directors.
|
||
Each officer will be assigned a Target Incentive based on market and peer group data and each other participant will be assigned a Target Incentive, stated as a percent of base salary. The Chief Executive Officer is assigned a Target Incentive based on his Employment Agreement. Concurrently with the approval of the 2011 Plan, 25% of the Target Incentive will be awarded in the form of Nonqualified Stock Options and 25% will be awarded in the form of Restricted Stock. The final 50% of the Target Incentive will be in the form of a Performance Award payable in cash after the completion of the 2012 and 2013 fiscal years (the “Performance Period”), based on the attainment of predetermined goals.
|
For the 2011 Plan, participants will be eligible to earn the Performance Award based on the matrix on Exhibit A-1 hereto which incorporates the financial performance measures on Exhibit A-2 hereto, excluding special items and adjusted for any acquisition or divestiture related activity, and relative total shareholder return of the peer companies listed on Exhibit A-3 hereto. The financial performance measures and relative total shareholder return are defined as follows:
|
||
1. |
Net Revenue (“Net Revenue”) is defined as the cumulative total of the revenue and other operating revenue, net of returns, allowances, discounts and other sales deduction items for the 2012 and 2013 fiscal years, as audited and reported in the Company’s Forms 10-K for the 2012 and 2013 fiscal years.
|
|
2. |
Corporate Earnings Per Share (“EPS”) is defined as the cumulative total of the fully diluted earnings per share of the Company for the 2012 and 2013 fiscal years, excluding special items, as audited and reported in the Company’s Forms 10-K for the 2012 and 2013 fiscal years.
|
|
3. |
Return on Invested Capital (“ROIC”) is defined as the average of the ROIC for the 2012 and 2013 fiscal years, excluding special items as audited and reported in the Company’s Forms 10-K for the 2012 and 2013 fiscal years, calculated as follows:
|
|
Operating Income x (1 - Tax Rate)
|
||
Average Equity + Average Net Debt
|
||
Operating Income shall be the Company’s actual earnings before interest and taxes, excluding special items, and excluding other income and expense.
|
||
Tax Rate for ROIC shall be the Company’s actual total effective income tax rate for each year.
|
||
Average Net Debt shall be the Company’s average debt less average cash for each year.
|
||
4. |
Relative Total Shareholder Return (“RTSR”) is defined as the total shareholder return for Snyder’s-Lance, Inc. relative to a peer group of 24 companies. Each peer company, including Snyder’s-Lance, Inc. will be compared to each other and put into four quadrants ranked from highest total shareholder return to lowest, with the highest in Quadrant One and the lowest in Quadrant Four.
|
Total Shareholder Return is defined as the return of $100 invested in each stock at the beginning of the Performance Period compared to the value of that $100, with dividends reinvested, at the end of the measurement period. The starting number of shares purchased for each peer company, including Snyder’s-Lance, Inc., with $100 will be based on the average weekly stock price for the preceding year 2010 as set forth on Exhibit A-3 hereto. The number of shares for each peer company will be adjusted for stock dividends, stock splits and other similar reorganizations and for special cash dividends. The value of Snyder’s-Lance, Inc. stock has been adjusted for the special cash dividend paid on December 10, 2010.
|
|
If any peer company ceases to be publicly traded during the Performance Period, the Russell 2000 Index will be inserted in its place; if a second peer company ceases to be publicly traded, the S&P 500 Index will be inserted in its place; if a third peer company ceases to be publicly traded, the S&P Food & Beverage Select Industry Index will be substituted in its place and if a fourth peer company ceases to be publicly traded, the Russell 1000 Index will be inserted in its place.
|
|
Certain executive officers have an additional performance condition based on total pre-tax operating profit, excluding special items, for 2012 and 2013, as described further below.
|
|
Base salary shall be the annual rate of base compensation for the 2011 fiscal year which is in effect on February 21, 2011; provided that for any award intended to satisfy the Performance-Based Exception, base salary shall be the annual rate of base compensation for the fiscal year which is set no later than March 31 of such fiscal year.
|
|
Notwithstanding the foregoing, for each of Messrs. Singer and Lee, the award to each such participant for the Performance Period shall be equal to % and %, respectively, of the cumulative pre-tax operating profit, excluding special items, for 2012 and 2013, subject to such discretionary reductions as may be made by the Compensation Committee. In considering such reductions, the Committee may take into account the results based on the matrix and performance measures set forth on Exhibits A-1 and A-2 hereto. For this purpose, “pre-tax operating profit” means the Company’s Net Revenue less total cost of goods and operating expenses for the 2012 and 2013 fiscal years.
|
For the Performance Awards, the 2012-2013 financial performance measures are on Exhibit A-2 hereto. Percent of payout will be determined according to the matrix on Exhibit A-1 hereto which encompasses RTSR and the financial performance measures.
|
|
The performance measures will be communicated to each participant as soon as practicable after they have been established. Final Performance Awards will be calculated after the Compensation Committee has reviewed the Company’s audited financial statements for 2012 and 2013 and determined the performance level achieved.
|
|
Exhibits A-4 and A-5 hereto list the Target Incentives for each participant for the 2011 Plan as determined by the Compensation Committee. Target Incentives will be communicated to each participant as close to the beginning of the year as practicable, in writing. Target Incentives, except for Officers, will be calculated by multiplying each participant’s base salary by the appropriate Performance Tiers and percentages, as described below.
|
Performance Tier
|
Percentage of Base Salary
for 2011 Target Incentives
|
||
2
|
35 - 40%
|
||
3
|
15 - 30%
|
Awards
|
Final Performance Awards will be interpolated and calculated, paid and granted after the Compensation Committee has reviewed the Company’s audited financial statements for 2012 and 2013 and determined the performance levels achieved. Interpolation will be required relative to the financial performance measures but the relative shareholder return quadrant will determine the percentage to be applied. As further specified on Exhibits B-1 and B-2 hereto, the Awards under the 2011 Plan shall be as follows:
|
|
|
||
1.
Stock Options
. Each participant shall receive Stock Options equal to 25% in value of his or her Target Incentive. The number of Stock Options awarded to each participant will equal the dollar value of the participant’s Stock Option Incentive divided by the Black-Scholes value of the Stock Options, with the result rounded up to the nearest multiple of three shares.
|
||
The grant date for Stock Options will be the date specified by the Compensation Committee upon approval of the awards and the exercise price will be the Fair Market Value of the Common Stock, which is the closing price of the Common Stock, on the grant date. Each Stock Option will vest in three substantially equal annual installments beginning one year after the date of grant and the term of each Stock Option will be ten years.
|
||
2.
Restricted Stock
. Each participant shall receive Restricted Stock equal to 25% in value of his or her Target Incentive. The number of shares of Restricted Stock awarded to each participant will equal the dollar value of the participant’s Restricted Stock Incentive divided by the closing price of the Common Stock on the award date, with the results rounded up to the nearest multiple of three shares.
|
||
The award date for Restricted Stock will be the date specified by the Compensation Committee upon approval of the awards and the value shall be the Fair Market Value of the Common Stock on the award date. Each award of Restricted Stock will vest in three substantially equal annual installments beginning one year after the award date. |
3.
Performance Awards
. Each participant shall receive a Performance Award equal to 50% in value of his or her Target Incentive.
|
||
For purposes of the 2011 Plan, the award date for cash as a Performance Award will be the date established by the Compensation Committee after completion of the Performance Period and the applicable performance level has been determined.
|
||
Form and Timing of
Awards
|
Awards will be made as soon as practicable after the performance level has been determined and approved by the Compensation Committee. All awards will be rounded to the nearest $100.
|
|
Change in Status
|
An employee hired or promoted into an eligible position during the Performance Period will not participate in the 2011 Plan.
|
|
Certain Terminations
of Employment
|
Performance Awards | |
In the event a participant voluntarily terminates employment (other than by Retirement) or is terminated involuntarily during or after the end of the Performance Period but before the applicable award date, the participant shall not receive any Performance Award hereunder.
|
||
In the event of a participant’s death or Disability before the end of the Performance Period, any Performance Award will be determined on and prorated to the date of such event based on target performance and paid out all in cash as soon as administratively practicable (but in no event more than 75 days) after the date of such event. In the event of a participant’s death or Disability on or after the end of the Performance Period but before the applicable award date, any Performance Award will be determined based on actual performance and paid out all in cash on or about the applicable award date.
|
||
If the event of a participant’s Retirement during or after the end of the Performance Period but before the applicable award date, any Performance Award will be determined based on actual performance and paid out all in cash on or about the applicable award date.
|
Stock Options
|
||
In the event a participant voluntarily terminates employment (other than by Retirement) or is terminated involuntarily or in the event of death, Disability or Retirement, vesting and the post-termination exercise period for Stock Options will be as follows:
|
||
Voluntary termination (other than Retirement)
:
Vested Stock Options will remain exercisable for a period of 90 days following the date of termination (or, if earlier, the original expiration date of the option); unvested Stock Options will be forfeited as of the date of termination.
|
||
Involuntary termination
:
Vested Stock Options will remain exercisable for a period of 30 days following the date of termination (or, if earlier, the original expiration date of the option); unvested Stock Options will be forfeited as of the date of termination.
|
||
Death
:
Stock Options will remain exercisable for a period of one year following the date of death (or, if earlier, the original expiration date of the option); unvested Stock Options will become fully vested as of the date of termination.
|
||
Disability
:
Vested Stock Options will remain exercisable through the original expiration date of the option; unvested Stock Options will become fully vested as of the date of termination.
|
||
Retirement
:
Vested Stock Options will remain exercisable for a period of three years following retirement (or, if earlier, the original expiration date of the option); unvested Stock Options will continue to vest for a period of six months after Retirement and any remaining unvested Stock Options will be forfeited as of such date.
|
||
Restricted Shares
|
||
In the event a participant voluntarily terminates employment (other than by Retirement) or is terminated involuntarily or in the event of death, Disability or Retirement, vesting for Restricted Stock (including any Restricted Stock granted in connection with a Performance Award following completion of the Performance Period) will be as follows:
|
||
Voluntary termination (other than Retirement)
:
Unvested Restricted Stock will be forfeited as of the date of termination.
|
||
Involuntary termination
:
Unvested Restricted Stock will be forfeited as of the date of termination.
|
Death
:
Unvested Restricted Stock will become fully vested on the date of such event.
|
||
Disability
:
Unvested Restricted Stock will become fully vested on the date of such event.
|
||
Retirement : Unvested Restricted Stock will become vested pro rata based on the number of full months elapsed on the date of such event since the award date and any remaining unvested Restricted Stock will be forfeited as of such date. | ||
“Retirement” is defined under the Incentive Plan to mean the participant’s termination of employment with the Company either (i) after attainment of age 65 or (ii) after attainment of age 55 with the prior consent of the Compensation Committee.
|
||
Change in Control and
Withholding
|
In the event of a Change in Control (which will occur only upon the closing of the relevant transaction), (i) unvested Stock Options and unvested Restricted Stock will vest as provided in the Incentive Plan upon the closing of the Change in Control transaction and (ii) for outstanding Performance Awards pro rata payouts will be made all in cash at target through the closing date with such proration based on the number of days in the Performance Period preceding the closing of the Change in Control transaction. Payouts will be made within 30 days after the relevant transaction has been closed. The Company shall withhold from awards any Federal, foreign, state or local income or other taxes required to be withheld.
|
|
Progress reports should be made to participants annually, showing performance results.
|
||
Executive Officers
|
Notwithstanding any provisions to the contrary above, participation, awards and pro-rations for Executive Officers, including the Chief Executive Officer, shall be approved by the Compensation Committee.
|
|
Stockholder Approval
|
The 2011 Plan and the awards hereunder are made pursuant to the Incentive Plan, which was approved by the Company’s stockholders at the Annual Meeting of Stockholders held on April 26, 2007. |
Governance
|
The Compensation Committee of the Board of Directors of Snyder’s-Lance, Inc. is ultimately responsible for the administration and governance of the Plan. Actions requiring Committee approval include final determination of plan eligibility and participation, identification of performance measures and goals, final award components and determination and amendments to the Plan. For purposes of the Plan, acquisition performance will be excluded for the first twelve months after the acquisition and included in the results thereafter. The Committee may adjust any award due to extraordinary events such as acquisitions, dispositions, required accounting adjustments or similar events, all as specified in Section 11(d) of the Incentive Plan; provided, however, that the Committee shall at all times be required to exercise this discretionary power in a manner, and subject to such limitations, as will permit all payments under the Plan to “covered employees,” as defined in Section 162(m) of the Internal Revenue Code, to continue to qualify as “performance-based compensation” for purposes of Section 162(m) of the Code. In addition, under the Incentive Plan, the Committee retains the discretion to reduce any award amount from the amount otherwise determined under the applicable formula. Subject to the foregoing, the decisions of the Committee shall be conclusive and binding on all participants.
|
Target
|
||
Name
|
Title |
Incentive
|
Name
|
Stock Option
Incentive
|
Nonqualified
Stock
Options
|
Restricted
Stock
Awards
|
Restricted
Stock
Shares
|
Performance
Award
Opportunity
|
|
(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.
|
|
(i)
|
call-on, solicit, divert, take away or attempt to call-on, solicit, divert, or take away any of the Partners (1) with whom or with which Executive had communications on the Company’s behalf about the Partner’s existing or potential business relationship with the Company with respect to the Business; (2) whose business dealings with the Company are or were managed or supervised by Executive as part of his duties for the Company; or (3) about whom or about which Executive obtained Confidential Information or Trade Secrets solely as a result of Executive’s employment with the Company; or
|
|
(ii)
|
interfere or engage in any conduct that would otherwise have the effect of interfering, in any manner with the business relationship between the Company and any of the Partners, including, but not limited to, urging or inducing, or attempting to urge or induce, any Partner to terminate its relationship with the Company or to cancel, withdraw, reduce, limit, or modify in any manner such Partner’s business or relationship with the Company.
|
|
(i)
|
all information relating to the business, technology, financial, marketing, sales, strategic planning, methods, processes and manufacturing operations of the Company, and
|
|
(ii)
|
all information of a technical or proprietary nature made available to the Company and its employees by customers, suppliers and vendors on a confidential basis in order to foster and facilitate the operation and success of the Company in conducting business,
|
|
(iii)
|
as such information may exist from time to time (hereinafter collectively referred to as “
Confidential Information
”), and whether in electronic, print or other form, all copies, compilations, notes, or other reproductions thereof are valuable, special and unique assets of the Company.
|
“Company”
|
|||
SNYDER’S-LANCE, INC. | |||
\
|
|
By: /s/ David V. Singer | |
David V. Singer | |||
Title | |||
Chief Executive Officer | |||
“Executive” | |||
/s/ Rick D. Puckett | |||
Rick D. Puckett |
STATE OF NORTH CAROLINA | FORM OF EXECUTIVE | |
SEVERANCE AGREEMENT | ||
COUNTY OF MECKLENBURG |
1.
|
Definitions.
Capitalized terms used in this Agreement that are not otherwise defined herein shall have the following meanings:
|
|
(a)
|
“
Affiliate
” with reference to the Company means any Person that directly or indirectly is controlled by, or is under common control with, the Company, including each subsidiary of the Company. For purposes of this definition the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.
|
|
(b)
|
“
Base Salary
” means, at any time, the then regular annual rate of pay which Executive is receiving as annual salary, excluding amounts (i) designated by the Company as payment toward reimbursement of expenses or (ii) received under incentive or other bonus plans, regardless of whether or not the amounts are deferred.
|
|
(c)
|
“
Business
” means (i) the snack food industry and (ii) the business(es) in which the Company or its Affiliates are or were engaged at the time of, or during the 12 month period prior to, the Termination Date.
|
|
(d)
|
“
Cause
” means:
|
|
(i)
|
Executive’s failure to devote his best efforts and substantially full time during normal business hours to the discharge of the duties and responsibilities of Executive’s position reasonably assigned to him, other than during reasonable periods of vacation and other reasonable leaves of absence commensurate with Executive’s position and length of service; or
|
|
(ii)
|
A material and willful breach of Executive’s fiduciary duties to the Company and its stockholders; or
|
|
(iii)
|
In connection with the discharge of Executive’s duties with the Company, one or more material acts of fraud or dishonesty or gross abuse of authority; or
|
|
(iv)
|
Executive’s commission of any willful act involving moral turpitude which materially and adversely affects (A) the name and good will of the Company or (B) the Company’s relationship with its employees, customers or suppliers; or
|
|
(v)
|
Executive’s habitual and intemperate use of alcohol or drugs to the extent that the same materially interferes with Executive’s ability to competently, diligently and substantially perform the duties of his employment.
|
|
“Cause” shall be determined in the discretion of the Board in the exercise of good faith and reasonable judgment.
|
|
(e)
|
“
Company Employee
” means any Person who is or was an employee of the Company or its Affiliates at the time of, or during the 12 month period prior to, the Termination Date.
|
|
(f)
|
“
Competitive Position
” means any employment with or service to be performed outside of California (whether as owner, member, manager, lender, partner, shareholder, consultant, agent, employee, co-venturer, or otherwise) for a Competitor in which Executive (A) will use or disclose or could reasonably be expected to use or disclose any Confidential Information or Trade Secrets (as defined below) for the purpose of providing, or attempting to provide, such Competitor with a competitive advantage in the Business; (B) will hold a position, will have duties, or will perform or be expected to perform services for such Competitor, that is or are the same as or substantially similar to the position held by Executive with the Company or those duties or services actually performed by Executive for the Company in connection with the provision of Services by the Company, or (C) will otherwise engage in the Business or market, sell or provide Products or Services in competition with the Company.
|
|
(g)
|
“
Competitor
” means any third-party (A) whose business is the same as or substantially similar to the Business or major segment thereof, or (B) who owns or operates, intends to own or operate, or is preparing to own or operate a subsidiary, affiliate, or business line or business segment whose business is or is expected to be the same as or substantially similar to the Business or major segment thereof.
|
|
(h)
|
“
Customer
” means any Person who is or was a customer or client of the Company or its Affiliates at the time of, or during the 12 month period prior to, the Termination Date.
|
|
(i)
|
“
Effective Date
” means the date of this Agreement.
|
|
(j)
|
“
Good Reason
” means the occurrence of any one or more of the following, without Executive’s prior express written consent:
|
|
(i)
|
A material reduction by the Company of Executive’s Base Salary in effect on the date hereof, or as the same shall be increased from time to time;
|
|
(ii)
|
The assignment of Executive to duties materially inconsistent with Executive’s authorities, duties, responsibilities, and status as an officer of the Company, or a material reduction or alteration in the nature or status of Executive’s title, authorities, duties or responsibilities from those in effect as the Effective Date; or
|
|
(iii)
|
The Company’s requiring Executive to be based at a location in excess of fifty (50) miles from the location of Executive’s principal job location or office in effect on the Effective Date, except for required travel on the Company’s business to an extent consistent with Executive’s then present business travel obligations.
|
|
(k)
|
“
Person
” means any individual, corporation, association, partnership, business trust, joint stock company, limited liability company, foundation, trust, estate or other entity or organization of whatever nature.
|
|
(l)
|
“
Products and Services
” means (i) snack foods and (ii) the products and/or services offered by the Company or its Affiliates at the time of, or during the 12 month period prior to, the Termination Date.
|
|
(m)
|
“
Representative
” of a Person means (i) a shareholder, director, officer, member, manager, partner, joint venturer, owner, employee, agent, broker, representative, independent contractor, consultant, advisor, licensor or licensee of, for, to or with such Person, (ii) an investor in such Person or a lender (irrespective of whether interest is charged) to such Person or (iii) any Person acting for, on behalf of or together with such Person.
|
|
(n)
|
“
Restricted Period
” means the period commencing on the Termination Date and ending eighteen (18) full calendar months following the Termination Date.
|
|
(o)
|
“
Restricted Territory
” means (i) North Carolina, (ii) Massachusetts, (iii) Georgia, (iv) South Carolina, (v) Florida, (vi) Pennsylvania, (vii) any other State in which the Company or its Affiliates does or did business at the time of, or during the 12 month period prior to, the Termination Date, and (viii) the United States of America.
|
|
(p)
|
“Section 409A” means Section 409A of the Internal Revenue Code of 1986, as amended, and includes any valid and binding governmental regulations, court decisions and other regulatory and judicial authority issued or rendered thereunder.
|
|
(q)
|
“
Termination Date
” means the date of Executive’s Termination of Employment, regardless of the date, cause, or manner of that termination.
|
|
(r)
|
“
Termination of Employment
” means any termination of Executive’s employment with either the Company or any successor to the Company that acquires all or substantially all of the business and/or assets of the Company (whether direct or indirect, by purchase, merger, consolidation or otherwise); provided, however, no termination of Executive’s employment shall be deemed to have occurred by reason of such an acquisition unless there is either (i) a termination of Executive’s employment with both the Company and such successor or (ii) a termination of Executive’s employment with the Company and no successive employment by such successor. For purposes of this Agreement, whether a Termination of Employment has occurred shall be determined consistent with the requirements of Section 409A.
|
2.
|
Term of Agreement.
|
|
(a)
|
This Agreement will commence on the Effective Date and shall continue in effect until the third anniversary of the Effective Date (the “Initial Term”).
|
|
(b)
|
The Initial Term of this Agreement automatically shall be extended for one additional year at the end of the Initial Term, and then again after each successive one (1) year period thereafter (each such one (1) year period following the Initial Term being hereinafter referred to as a “Successive Period”). However, either party may terminate this Agreement effective at the end of the Initial Term or at the end of any Successive Period thereafter (the “Expiration Date”) by giving the other party written notice of such termination and intent not to renew, delivered at least one (1) year prior to the Expiration Date. If such notice is properly delivered by either party, this Agreement, along with all corresponding rights, duties, and covenants shall automatically expire on the Expiration Date; provided, however, that Executive’s obligations under Sections 6 through 10 hereof shall survive the termination of this Agreement.
|
3.
|
Severance Benefits Upon Involuntary Termination of Employment by the Company Without Cause or Termination of Employment by Executive with Good Reason.
In the event of Termination of Employment of Executive which is (a) involuntary on Executive’s part and without Cause, or (b) by Executive for Good Reason, and contingent upon (1) execution by Executive of a full release of claims, in a form satisfactory to the Company and Executive not revoking that release, and (2) Executive’s agreeing to comply and in fact fully complying with the covenants set forth in Sections 6 through 11 hereof, the Company shall pay to or provide Executive with the following:
|
|
(a)
|
A single cash payment in an amount equal to Executive’s unpaid Base Salary, accrued vacation pay, unreimbursed business expenses, and all other items earned by and owed to Executive through the Termination Date.
|
|
(b)
|
Eighteen substantially equal monthly cash payments in an aggregate amount equal to 1.5 multiplied by the sum of (i) Executive’s Base Salary in effect on the Termination Date plus (ii) the amount of Executive’s then-current target bonus opportunity established under the Company’s Annual Corporate Performance Incentive Plan for Officers (or any successor plan thereto), if any, in effect on the Termination Date, which payments shall commence on or about the sixtieth (60
th
) day after the Termination Date.
|
|
(c)
|
A single cash payment in an amount equal to the annual incentive award and any outstanding long-term performance awards based on actual performance for the applicable performance period and pro rated for the number of days completed in the applicable performance period through the Termination Date. Such payment(s) shall be made at the same time as awards are made to other participants after the end of the applicable performance period.
|
|
(d)
|
Indemnification of Executive from any claims asserted against Executive arising out of the prior performance of Executive’s duties with the Company or its Affiliates to the same extent as the Company indemnifies retired officers or directors of the Company.
|
|
(e)
|
One year of outplacement assistance with a mutually agreeable provider for an amount not exceeding 10% of Executive’s Base Salary, provided that Executive must initiate such services within the three (3) month period following the Termination Date. In the event Executive elects not to receive the outplacement services as provided herein, no amount will be payable to Executive under this Section 3(f).
|
|
(f)
|
Any outstanding, unvested stock options, restricted stock or other equity compensation awards shall vest upon the Termination Date only as provided in each stock option, restricted stock or other equity compensation award agreement between the Company and Executive; provided, however, that any vested, unexercised stock options shall remain exercisable for at least one year following the Termination Date (not to exceed the original expiration date of the stock option). The post-employment exercisability provisions contained in the foregoing sentence shall control, notwithstanding more restrictive post-employment exercisability provisions in any stock option award agreement between the Company and Executive.
|
4.
|
Other Termination of Employment.
Executive shall not be entitled to any payments or benefits under Section 3, upon the Termination of Employment for any reason other than as set forth in Section 3 hereof, including without limitation, the following:
|
|
(a)
|
Any Termination of Employment which is voluntary on the part of Executive without Good Reason; or
|
|
(b)
|
Any Termination of Employment for Cause; or
|
|
(c)
|
Any Termination of Employment which is the result of the death or disability of Executive.
|
5.
|
Mitigation.
In no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement, nor shall the amount of any payment hereunder be reduced by any compensation earned by Executive as a result of employment by another employer.
|
6.
|
Representations and Acknowledgements Concerning Restrictive Covenants.
In consideration for the Company’s willingness to enter into this Agreement and to provide the severance benefits set forth in this Agreement under its terms and conditions, Executive agrees not to engage in any activities competitive with the Company or its Affiliates as set forth below.
|
|
Executive and the Company understand and agree that the restrictions set forth in Sections 6, 7, 8, 9 and 10 hereof apply to Executive and impose post-employment obligations on Executive regardless of (A) the date, cause, or manner of the termination of Executive’s employment with the Company, (B) whether such termination occurs with or without Cause or is a result of Executive’s resignation, or (C) whether Executive receives severance benefits pursuant to Section 3 of this Agreement.
|
|
Executive and the Company understand and agree that the sole purpose of Sections 6, 7, 8, 9 and 10 hereof is to protect the Company’s legitimate business interests, including, but not limited to, the Company’s Customer and business associate relationships and goodwill, its Confidential Information and Trade Secrets, and the Company’s competitive advantage within the snack food industry. The restrictions set forth herein are not intended to impair, nor will they impair, Executive’s ability or right to work or earn a living.
|
7.
|
Covenant Not to Compete.
|
|
(a)
|
To the fullest extent permitted by any applicable state law, Executive agrees that during Executive’s employment with the Company, and for the full duration of the Restricted Period following Termination of Employment, Executive shall not, without the prior written consent of the Company, directly or indirectly, obtain or hold a Competitive Position with a Competitor in the Restricted Territory, as these terms are defined herein.
|
|
(b)
|
Executive shall be deemed to be in a Competitive Position with a Competitor, in the Restricted Territory, if Executive obtains or holds a Competitive Position with a Competitor that conducts its business within the Restricted Territory (and Executive’s responsibilities relate to that Competitor’s business in the Restricted Territory), even if Executive’s residence or principal place of work (other than California) is not within the Restricted Territory.
|
|
(c)
|
Notwithstanding the foregoing, Executive may, as a passive investor, own capital stock of a publicly held corporation, which is actively traded in the over-the-counter market or is listed and traded on a national securities exchange, which constitutes or is affiliated with a Competitor, so long as Executive’s ownership is not in excess of five percent (5%) of the total outstanding capital stock of the Competitor.
|
8.
|
Non-Solicitation / No Interference Provisions.
|
|
(a)
|
Customers and Other Business Partners.
Executive understands and agrees that the Company’s good will and established relationships between the Company and each of its Customers, and potential customers, and its licensors, licensees, suppliers, vendors, contractors, subcontractors, and consultants related to the Business (collectively, the “
Partners
”) constitute valuable assets of the Company, and may not be misappropriated for Executive’s own use or benefit or for the use or benefit of any other third-party. Accordingly, Executive hereby agrees that during Executive’s employment with the Company and for the full duration of the Restricted Period following Termination of Employment, Executive shall not, without the prior written consent of the Company, directly or indirectly, on Executive’s own behalf or on behalf of any other third-party:
|
|
(i)
|
call-on, solicit, divert, take away or attempt to call-on, solicit, divert, or take away any of the Partners (1) with whom or with which Executive had communications on the Company’s behalf about the Partner’s existing or potential business relationship with the Company with respect to the Business; (2) whose business dealings with the Company are or were managed or supervised by Executive as part of his duties for the Company; or (3) about whom or about which Executive obtained Confidential Information or Trade Secrets solely as a result of Executive’s employment with the Company; or
|
|
(ii)
|
interfere or engage in any conduct that would otherwise have the effect of interfering, in any manner with the business relationship between the Company and any of the Partners, including, but not limited to, urging or inducing, or attempting to urge or induce, any Partner to terminate its relationship with the Company or to cancel, withdraw, reduce, limit, or modify in any manner such Partner’s business or relationship with the Company.
|
|
(b)
|
Company Employees.
Executive understands and agrees that the relationship between the Company and Company Employees constitutes a valuable asset of the Company and such assets may not be converted to Executive’s own use or benefit or for the use or benefit of any other third-party. Accordingly, Executive hereby agrees that during Executive’s employment with the Company and for the full duration of the Restricted Period following Termination of Employment, Executive shall not, without the Company’s prior written consent, directly or indirectly, solicit or recruit for employment; attempt to solicit or recruit for employment; or attempt to hire or accept as an employee, consultant, contractor, or otherwise, any Company Employee.
|
9.
|
Enforcement of Restrictive Covenants.
Notwithstanding any other provision of this Agreement, in the event of Executive’s actual or threatened breach of any provision of Sections 7 and 8 hereof, the Company shall be entitled to an injunction restraining Executive from such breach or threatened breach, it being agreed that any breach or threatened breach of these restrictive covenants would cause immediate and irreparable injury to the Company and that money damages would not provide an adequate remedy to the Company. Nothing herein shall be construed as prohibiting the Company from pursuing any other equitable or legal remedies for such breach or threatened breach, including the recovery of monetary damages from Executive pursuant to Section 14 below.
|
10.
|
Confidential Information and Company Property.
|
|
(a)
|
Executive and the Company recognize that due to the nature of Executive’s employment and Executive’s relationship with the Company, Executive has had access to, has acquired, or has assisted in developing confidential and proprietary information relating to the business, technology, financial, marketing, sales, strategic planning, methods, processes and manufacturing operations of the Company, and that the Company is entitled to protection for this information.
|
|
(b)
|
Executive recognizes and acknowledges that, unless otherwise available to the public, or otherwise generally known to the public,
|
|
(i)
|
all information relating to the business, technology, financial, marketing, sales, strategic planning, methods, processes and manufacturing operations of the Company, and
|
|
(ii)
|
all information of a technical or proprietary nature made available to the Company and its employees by customers, suppliers and vendors on a confidential basis in order to foster and facilitate the operation and success of the Company in conducting business,
|
|
(iii)
|
as such information may exist from time to time (hereinafter collectively referred to as “
Confidential Information
”), and whether in electronic, print or other form, all copies, compilations, notes, or other reproductions thereof are valuable, special and unique assets of the Company.
|
|
(c)
|
Executive therefore agrees that Executive shall not disclose any Confidential Information or any part thereof to any Person not employed by or affiliated with the Company for any reason or purpose whatsoever and shall not use such Confidential Information except on behalf of the Company at any time during the term of Executive’s employment with the Company, or at any time during the three (3) year period which immediately follows the Termination Date.
|
|
(d)
|
In addition, throughout the term of this Agreement and at all times after the Termination Date, Executive shall not directly or indirectly transmit or disclose any Trade Secret of the Company to any Person, not employed by or affiliated with the Company for any reason or purpose whatsoever and shall not make use of any Trade Secret, except on behalf of the Company. For purposes of this Agreement, the term “
Trade Secret
” means any item of Confidential Information that constitutes a trade secret of the Company under the common law or statutory law of the state in which the Employee is domiciled. The Parties acknowledge and agree that this Agreement is not intended to, and does not, alter either the Company’s rights or Employee’s obligations under any state or federal statutory or common law regarding trade secrets and unfair trade practices.
|
|
(e)
|
It is hereby acknowledged and agreed that any breach or threatened breach of the provisions of this Section 10 would cause irreparable injury to the Company and that money damages would not provide an adequate remedy to the Company. In the event of a breach or threatened breach by Executive of the provisions of this Section 10, the Company shall be entitled to an injunction restraining Executive from disclosing, in whole or in part, any such Confidential Information or Trade Secrets, and, further, an injunction restraining Executive from accepting any employment with or rendering any services to any such person, firm, corporation, association or other entity to whom any such Confidential Information or Trade Secrets, in whole or in part, has been disclosed or is threatened to be disclosed.
|
|
(f)
|
Nothing contained herein shall be construed as prohibiting the Company from pursuing any other equitable or legal remedies for any such breach or threatened breach, including recovery from Executive of any monetary damages from Executive pursuant to Section 14 below.
|
|
(g)
|
Executive represents that upon Termination of Employment, Executive will return to the Company all property of the Company, including all Confidential Information, which is now or may hereafter come into his possession.
|
11.
|
Additional Post-Termination Covenants.
|
|
(a)
|
Upon Termination of Employment hereunder, regardless of the date, cause, or manner of such termination, Executive shall resign and does resign from all positions as an officer of the Company and from any other positions with the Company, with such resignations to be effective upon the Termination Date.
|
|
(b)
|
From and after the Termination Date, Executive agrees not to make any statements to the Company’s employees, customers, vendors, or suppliers or to any public or media source, whether written or oral, regarding Executive’s employment hereunder or termination from the Company’s employment, except as may be approved in writing by an executive officer of the Company in advance. Executive further agrees not to make any statement (including to any media source, or to the Company’s suppliers, customers or employees) or take any action that would disrupt, impair, embarrass, harm or affect adversely the Company or any of the employees, officers, directors, or customers of the Company or place the Company or such individuals in any negative light.
|
|
(c)
|
Executive agrees to make himself available at reasonable times during normal business hours and upon reasonable notice to consult with and provide assistance and cooperation to the Company from time to time, as necessary, regarding management transition, licensing issues, pending and potential disputes, claims, litigation, and other matters relating to the Company’s corporate or professional liabilities. Executive’s assistance and cooperation in litigation matters shall include, but not be limited to, as requested by the Company, providing informal interviews with the Company or its representatives; supplying affidavits; and appearing at and providing truthful testimony in depositions, hearings, arbitrations, administrative proceedings and trials. Executive agrees to notify the Company in the event he is contacted by opposing counsel in any lawsuit naming the Company as a defendant.
|
|
Both parties agree to act reasonably and in good faith in scheduling the dates, times and length of time during which Executive will perform consulting services and provide assistance and cooperation in litigation. In connection with such litigation or investigation, the Company shall attempt to accommodate Executive’s schedule, shall reimburse Executive (unless prohibited by law) for any actual loss of wages in connection therewith, shall provide Executive with reasonable notice in advance of the times in which Executive’s cooperation or assistance is needed, and shall reimburse Executive for any reasonable expenses incurred in connection with such matters.
|
12.
|
Adjustments to Payments.
|
|
(a)
|
Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Company to Executive or for Executive’s benefit (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise) (the “Payments”) would be subject to the excise tax imposed by Section 4999 (or any successor provisions) of the Internal Revenue Code of 1986, as amended (the “Code”), or any interest or penalty is incurred by Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, is hereinafter collectively referred to as the “Excise Tax”), then the Payments shall be reduced (but not below zero) if and to the extent that such reduction would result in Executive retaining a larger amount, on an after-tax basis (taking into account federal, state and local income taxes and the imposition of the Excise Tax), than if Executive received all of the Payments. The Company shall reduce or eliminate the Payments, by first reducing or eliminating the portion of the Payments which are not payable in cash and then by reducing or eliminating cash payments, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the determination.
|
|
(b)
|
All determinations required to be made under this Section 12, including whether and when an adjustment to any Payments is required and, if applicable, which Payments are to be so adjusted, shall be made by a nationally recognized accounting firm selected by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and to Executive within fifteen (15) business days of the receipt of notice from Executive that there has been a Payment, or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely by the Company. If the Accounting Firm determines that no Excise Tax is payable by Executive, it shall furnish Executive with a written opinion that failure to report the Excise Tax on Executive’s applicable federal income tax return would not result in the imposition of a negligence or similar penalty. Any determination by the Accounting Firm shall be binding upon the Company and Executive.
|
13.
|
Employment Taxes and Withholdings.
Executive acknowledges and agrees that the Company shall withhold from the payments and benefits described in this Agreement all taxes, including income and employment taxes, required to be so deducted or withheld under applicable law.
|
14.
|
Forfeiture of Severance Benefits.
In the event that Executive violates the terms of this Agreement, including but not limited to the provisions of Sections 6, 7, 8, 10 and 11, then Executive shall forfeit any benefit to which Executive may be entitled pursuant to Section 3 hereof, and, within 30 days of a written request of the Company, shall reimburse the Company for any benefit paid to Executive hereunder.
|
|
Nothing herein shall be construed as prohibiting the Company from pursuing any other remedies available to the Company in the event of any breach or threatened breach, or as a waiver of the Company’s right to seek injunctive relief to enforce this Agreement’s restrictive covenants.
|
15.
|
Applicable Law.
This Agreement is made and executed with the intention that the construction, interpretation and validity hereof shall be determined in accordance with and governed by the laws of the State of North Carolina, without giving any effect to choice or conflict of law principles of any jurisdiction.
|
16.
|
Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the Company, its successors and assigns. This Agreement shall be binding upon and inure to the benefit of Executive, his heirs, executors and administrators.
|
17.
|
Survival.
To the extent that it is necessary or advisable for the provisions of this Agreement to survive the termination of Executive’s employment, in order to carry out the full intent and purpose thereof, the same shall survive such termination, regardless of the date, cause or manner of such termination, such provisions to include, without limitation, Section 6, 7 and 8 hereof.
|
18.
|
Compliance With Section 409A.
To the extent applicable, it is intended that this Agreement comply with the provisions of Section 409A. This Agreement shall be administered in a manner consistent with this intent, and any provision that would cause the Agreement to fail to satisfy Section 409A shall have no force and effect until amended to comply with Section 409A. Notwithstanding any provision of this Agreement to the contrary, in the event any payment or benefit hereunder is determined to constitute nonqualified deferred compensation subject to Section 409A, then to the extent necessary to comply with Section 409A, such payment or benefit shall not be made, provided or commenced until six months after Executive’s Termination Date. Lump sum payments will be made, without interest, as soon as administratively practicable following the six-month delay. Any installments otherwise due during the six-month delay will be paid in a lump sum, without interest, as soon as administratively practicable following the six-month delay, and the remaining installments will be paid in accordance with the original schedule. For purposes of Section 409A, the right to a series of installment payments shall be treated as a right to a series of separate payments. Each separate payment in the series of separate payments shall be analyzed separately for purposes of determining whether such payment is subject to, or exempt from compliance with, the requirements of Section 409A. In any event, the Company makes no representations or warranty and will have no liability to Executive or any other person, other than with respect to payments made by the Company in violation of the provisions of this Agreement, if any provisions of or payments under this Agreement are determined to constitute deferred compensation subject to Section 409A but not to satisfy the conditions of Section 409A.
|
19.
|
Entire Agreement.
This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes and cancels all prior or contemporaneous oral or written agreements and understandings between them with respect to the subject matter hereof.
|
SNYDER’S-LANCE, INC.
|
|||
[CORPORATE SEAL] | |||
ATTEST:
|
By
|
||
Name | |||
_____________________________________ | Title | ||
Secretary
|
EXECUTIVE | ||
_____________________________[SEAL] | ||
[Executive’s Printed Name] |
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: May 5, 2011 | ||
/s/ David V. Singer
|
||
David V. Singer
|
||
Chief Executive Officer
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: May 5, 2011 | ||
/s/ Rick D. Puckett
|
||
Rick D. Puckett
|
||
Executive Vice President, Chief Financial Officer, Treasurer and Secretary
|
|
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of1934; and
|
|
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ David V. Singer
|
/s/ Rick D. Puckett
|
|
David V. Singer
|
Rick D. Puckett
|
|
Chief Executive Officer
|
Executive Vice President, Chief Financial
|
|
May 5, 2011
|
Officer, Treasurer and Secretary
|
|
May 5, 2011
|