RETENTION AND AMENDMENT AGREEMENT
THIS RETENTION AND AMENDMENT AGREEMENT (the “Agreement”) is made and entered into as of February 21, 2011, by and between SNYDER’S-LANCE, INC., a North Carolina corporation (the “Company”), and RICK D. PUCKETT (“Executive”).
Statement of Purpose
The Company and Executive entered into an Amended and Restated Compensation and Benefits Assurance Agreement dated April 24, 2008 (the “CIC Agreement”). Under the CIC Agreement, Executive may receive severance benefits if his employment is terminated under certain circumstances during a specified period following a change in control of the Company, including a voluntary termination of employment by Executive during the 13 th month following a change in control.
The Company entered into an Agreement and Plan of Merger with Snyder’s of Hanover, Inc. resulting in a merger of Snyder’s of Hanover, Inc. into a wholly-owned subsidiary of the Company (the “Merger”) that was consummated on December 6, 2010. The Merger constituted a change in control for purposes of the CIC Agreement. As a result, under the CIC Agreement, Executive has a contractual right to voluntarily terminate employment with the Company in January 2012 (the 13 th month after the Merger) and receive the severance benefits thereunder.
Executive is an important member of the Company’s leadership team. The Company wishes to retain Executive, to appropriately motivate Executive’s future performance and to eliminate Executive’s contractual right to receive severance benefits under the CIC Agreement for a voluntary termination of employment in January 2012. Accordingly, the purpose of this Agreement is to (i) provide for a retention award of performance-related compensation intended to retain Executive and appropriately motivate Executive’s future performance, (ii) amend the CIC Agreement to eliminate the provision permitting Executive to collect severance benefits through a voluntary termination of employment during the 13 th month following a change in control and (iii) provide for additional covenants and agreements by Executive.
NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, the parties hereto hereby agree as follows:
1. Definitions. Capitalized terms used in this Agreement that are not otherwise defined herein or in the CIC Agreement shall have the following meanings:
(a) “ Business ” means (i) the manufacture, distribution and sale of sandwich cracker snacks (as that term is used within the Company’s business), private label cookies and crackers, kettle cooked potato chips and pretzels and (ii) the business(es) in which the Company or its Affiliates are or were engaged at the time of, or during the 12 month period prior to, the Termination Date.
(b) “ Company Employee ” means any Person who is or was an employee of the Company or its Affiliates at the time of, or during the 12 month period prior to, the Termination Date.
(c) “ Competitive Position ” means any employment with or service to be performed outside of California (whether as owner, member, manager, lender, partner, shareholder, consultant, agent, employee, co-venturer, or otherwise) for a Competitor in which Executive (A) will use or disclose or could reasonably be expected to use or disclose any Confidential Information or Trade Secrets (as defined below) for the purpose of providing, or attempting to provide, such Competitor with a competitive advantage in the Business; (B) will hold a position, will have duties, or will perform or be expected to perform services for such Competitor, that is or are the same as or substantially similar to the position held by Executive with the Company or those duties or services actually performed by Executive for the Company in connection with the provision of Services by the Company, or (C) will otherwise engage in the Business or market, sell or provide Products or Services in competition with the Company; provided, however, service solely as a member of the Board of Directors of a Competitor shall not be deemed to be a Competitive Position.
(d) “ Competitor ” means any third-party (A) whose business is the same as or substantially similar to the Business or major segment thereof, or (B) who owns or operates, intends to own or operate, or is preparing to own or operate a subsidiary, affiliate, or business line or business segment whose business is or is expected to be the same as or substantially similar to the Business or major segment thereof.
(e) “ Customer ” means any Person who is or was a customer or client of the Company or its Affiliates at the time of, or during the 12 month period prior to, the Termination Date.
(f) “ Products and Services ” means (i) sandwich cracker snacks, private label cookies and crackers, kettle cooked potato chips and pretzels and (ii) the products and/or services offered by the Company or its Affiliates at the time of, or during the 12 month period prior to, the Termination Date.
(g) “ Restricted Period ” means the period commencing on the Termination Date and ending twelve (12) full calendar months following the Termination Date.
(h) “ Restricted Territory ” means all states in the United States of America in which the Company currently is engaged in the Business or provides Products and Services.
(i) “ Termination Date ” means the date of Executive’s Termination of Employment, regardless of the date, cause, or manner of that termination.
2. Awards . The Company shall make the following retention and performance-related compensation awards to Executive:
(a) The Company shall grant Executive restricted shares under the Company’s 2007 Key Employee Incentive Plan with a grant date value of $300,000. This award shall be in addition to any award of restricted shares to Executive under the Company’s 2011 Three-Year Performance Incentive Plan for Officers and Key Managers (the
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“Three-Year Plan”). The grant date and the calculation of the number of restricted shares based on the value above shall be determined in the same manner as awards of restricted shares under the Three-Year Plan. The award shall vest in full on the third anniversary of the grant date and otherwise be subject to provisions (e.g., treatment upon termination of employment) consistent with awards of restricted shares under the Three-Year Plan.
(b) The Company shall grant Executive nonqualified stock options under the Company’s 2007 Key Employee Incentive Plan with a grant date value of $350,000. This award shall be in addition to any award of stock options to Executive under the Three-Year Plan. The grant date and the calculation of the number of stock options based on the value above shall be determined in the same manner as awards of stock options under the Three-Year Plan and the term of the stock options shall be ten years. The award shall vest in full on the third anniversary of the grant date and otherwise be subject to provisions (e.g., treatment upon termination of employment) consistent with awards of stock options under the Three-Year Plan.
3. Amendment. In consideration for a lump sum cash payment to Executive in the amount of $250,000 payable coincident with the execution of this Agreement (less any required tax withholdings), Section 4(b) of the CIC Agreement is hereby amended to read as follows:
“(b) The occurrence of any one or more of the following events (a “Qualifying Termination”) within the thirty-six (36) calendar months immediately following a Change in Control of the Company which occurred during the Term or any Successive Period shall entitle Executive to receive the Severance Benefits:
A Qualifying Termination shall not include Executive’s Termination of Employment within thirty-six (36) calendar months following a Change in Control by reason of death, disability [as such term is defined under the Company’s governing disability plan (or any successor plan thereto)], Executive’s voluntary Termination of Employment without Good Reason or Executive’s involuntary Termination of Employment for Cause. Moreover, a Termination of Employment which occurs before a Change in Control or later than thirty-six (36) months following a Change in Control shall not constitute a Qualifying Termination.”
4. Representations and Acknowledgements Concerning Restrictive Covenants. In consideration for the Company’s willingness to enter into this Agreement and to provide the awards, payments and benefits set forth in this Agreement under its terms and conditions,
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Executive agrees not to engage in any activities competitive with the Company or its Affiliates as set forth below.
Executive and the Company understand and agree that the restrictions set forth in Sections 4, 5, 6, 7 and 8 hereof apply to Executive and impose post-employment obligations on Executive regardless of (A) the date, cause, or manner of the termination of Executive’s employment with the Company, (B) whether such termination occurs with or without Cause or is a result of Executive’s resignation, or (C) whether Executive receives severance benefits pursuant to Section 4 of the CIC Agreement.
Executive and the Company understand and agree that the sole purpose of Sections 4, 5, 6, 7 and 8 hereof is to protect the Company’s legitimate business interests, including, but not limited to, the Company’s Customer and business associate relationships and goodwill, its Confidential Information and Trade Secrets, and the Company’s competitive advantage within the snack food industry. The restrictions set forth herein are not intended to impair, nor will they impair, Executive’s ability or right to work or earn a living.
Executive and the Company further understand and agree that these Sections 4, 5, 6,