Exhibit 10.01

 

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Diamond Foods, Inc.

600 Montgomery Street

13th Floor

San Francisco, CA 94111

 

    

    

diamondfoods.com

NASDAQ: DMND

June 7, 2013

Raymond P. Silcock

[address omitted]

Dear Ray:

We are pleased to offer you the position of Executive Vice President and Chief
Financial Officer with Diamond Foods, Inc. (“Diamond” or the “Company”). In this
position you will report to Brian Driscoll, President & CEO. The terms and
conditions of our offer are as follows:

Start Date:

We anticipate that your start date will be June 11, 2013.

Annual Base Salary:

$525,000 annualized salary, payable in accordance with standard Company payroll
practices.

Bonus Incentive Program:

You will be eligible to participate in the annual bonus program, which is
designed to reward outstanding performance. Your bonus potential will be based
on financial metrics established by the Company and individual performance goals
established by you and your supervisor. Your position is eligible for a target
bonus potential of 70% of base salary. Your bonus award will be based on a
combination of achieving both company financial metrics and annual individual
performance objectives. For exceptional Corporate and individual performance you
may be eligible for a bonus up to 140% of base salary. You will be provided a
bonus at target for fiscal 2013, prorated for the portion of the fiscal year you
are employed. You must continue to be an active employee through the end of the
fiscal year for eligibility in the bonus program. The bonus program is subject
to design changes as may be determined by the Company in its sole discretion.

Equity Awards:

Equity Awards: You will be awarded the equivalent of $1,300,000 of economic
value of equity subject to approval by the Board of Directors, with half the
value in the form of restricted stock and half the value in the form of options
to purchase common stock. The restricted stock award will be for a number of
shares with an aggregate value equal to $650,000 divided by the closing price of
the Company’s common stock on the Nasdaq Global Select Market on the grant date
(“Restricted Award”). The stock option shall be granted at an exercise price
equal to the closing price of the

 

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Company’s common stock on the Nasdaq Global Select Market on the grant date and
will be for a number of shares with an aggregate value of $650,000 divided by
the fair value of the Company’s stock options (using the company’s Black Scholes
methodology) and utilizing the closing price of the Company’s common stock on
the Nasdaq Global Select Market on the grant date. The options will vest and
become exercisable over a four-year period, with 25% of shares vesting on the
first anniversary of the date of grant, and the remaining shares vesting ratably
on a quarterly basis over the 36-month period following the first anniversary of
the date of grant. The restricted stock will vest over a four-year period, with
25% of the restricted stock vesting on each anniversary of your date of grant.
The options and restricted stock will require your completion of applicable
grant documents, which provide that vesting is subject to you remaining in
continuous service an as employee of Diamond through each vest date.

You will be eligible for consideration for annual equity grants starting in
calendar 2013, as administered by the Compensation Committee and Board. The
annual equity grant cycle typically occurs in the fall.

Performance Evaluation/Salary Review:

An evaluation of your performance against the Company’s expectations, along with
financial consideration, will be conducted in accordance with the annual salary
plan around October 2014.

Health & Welfare Benefits:

Eligibility for Diamond Foods, Inc. Health & Welfare Benefits commences on the
first day of employment. Plan description of these benefits will be provided
under separate cover during orientation.

Group Medical: Blue Cross

Group Dental Insurance: Ameritas Dental

Group Vision Insurance: Vision Service Plan (VSP)

Group Life & AD&D Insurance: The Company provides basic life and AD&D insurance
at one and a half (1 1/2) times your annual base salary. We offer the option to
purchase additional voluntary life insurance at competitive group rates.

Long & Short Term Disability: The Company will provide both of these plans for
you at no cost.

IRS Section 125: You will be provided the opportunity to participate in three
(3) optional plans – (a) for pre-tax employee co-share premiums; (b)Tax-free
Medical Flexible Spending Account (FSA) up to $2,600 per year; or (c) Tax-free
Dependent Care Flexible Spending Account (FSA) up to $5,000 per year.

 

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Executive Premium Health Benefit:

You will be eligible to participate in the Company’s Exec-u-Care program, which
provides for additional health and medical reimbursements that are not otherwise
covered by our Group Medical program.

The Retirement Program:

Diamond has a Savings and Investment Plan which is a 401k plan with the
following terms:

 

  a. You will be vested at 100% on your first day of eligibility after 6 months
of employment and worked 1,000 hours.

 

  b. Company will make a contribution equal to 3% of employee’s base salary on a
quarterly basis after six (6) months of employment.

Other Benefits:

Holidays: Ten (10) paid holidays per year.

Paid Time Off (PTO) Annual Accrual:

 

Date of Hire – completing 4 yrs.    4.615 hrs/pay period = 3 weeks/year 5 years
– completing 14 yrs.    6.154 hrs/pay period = 4 weeks/year 15 or more years   
7.692 hrs/pay period = 5 weeks/year

Health Club Membership: Diamond will provide you with a membership in a health
club. Currently, the company provides memberships for senior executives at the
Bay Club in San Francisco.

Company Car Allowance: Diamond will provide you a monthly car allowance of
$1,000, subject to all normal tax withholdings.

Relocation: You will be provided with an Executive Homeowner relocation package.

Change of Control: Upon approval by the Board of Directors, the Company will
enter into its standard form of Change of Control Agreement with you.

Severance upon Termination without “Cause”: In the event the Company terminates
your employment during your first three years of service, without Cause as
defined below, you will be entitled to receive the following termination
benefits:

 

  a. Payment of 12 months of base salary, based on your base salary on the date
of termination;

 

  b. Payment of your target bonus amount for the year in which the termination
occurs;

 

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  c. Provided you were employed on the first anniversary of your start date,
then the vested portion of your Restricted Award will be calculated as if the
Restricted Award had been subject to quarterly vesting following the Employment
Date;

 

  d. Provided you validly elect to continue coverage under COBRA, a lump-sum
payment equal to twelve (12) months of your portion of premiums for you and your
eligible dependents paid for continued health benefits.

 

  e. “Cause” means a good faith determination, that any of the following has
occurred: (a) your commission of a felony or an act constituting common law
fraud, which has a material adverse effect on the business or affairs of the
Company or its affiliates or stockholders; (b) your intentional or willful
misconduct or refusal to follow the lawful instructions of your supervisor the
Board; or (c) your intentional breach of the Company confidential information
obligations, which has an adverse effect on the Company or its affiliates or
stockholders or (d) your material breach of this Agreement. For purposes of this
definition, no act or failure to act shall be considered “intentional or
willful” unless it is done, or omitted to be done, in bad faith without a
reasonable belief that the action or omission is in the best interests of the
Company.

In the event of a termination in connection with a Change of Control for which
you are eligible to receive benefits pursuant to the Change of Control
Agreement, the foregoing provisions in Severance upon Termination without
“Cause” shall not apply. Compensation payable to you in this letter is subject
to recoupment pursuant to the Company’s compensation recoupment policy, if any,
adopted by the Board or required by law during the term of your employment with
the Company that is applicable generally to executive officers of the Company.
Compensation is also subject to withholdings and all applicable taxes.

Parachute Payments. In the event that the severance and other benefits provided
for in this Agreement or otherwise payable to you (i) constitute “parachute
payments” within the meaning of Section 280G of the Code and (ii) but for this
Section, would be subject to the excise tax imposed by Section 4999 of the Code,
then, at your discretion, your severance and other benefits under this Agreement
shall be payable either (i) in full, or (ii) as to such lesser amount which
would result in no portion of such severance and other benefits being subject to
the excise tax under Section 4999 of the Code, whichever of the foregoing
amounts, taking into account the applicable federal, state and local income
taxes and the excise tax imposed by Section 4999, results in the receipt by you
on an after-tax basis, of the greatest amount of severance benefits under this
Agreement, notwithstanding that all or some portion of such severance benefits
may be taxable under Section 4999 of the Code. Any reduction shall be made in
the following manner: first a pro-rata reduction of (i) cash payments subject to
Section 409A of the Code as deferred compensation and (ii) cash payments not
subject to Section 409A of the Code, and second a pro rata cancellation of
(i) equity-based compensation subject to Section 409A of the Code as deferred
compensation and (ii) equity-based compensation not subject to Section 409A of
the Code. Reduction in either cash payments or equity compensation benefits
shall be made pro-rata between and among benefits which are subject to
Section 409A of the Code and benefits which are exempt from Section 409A of the
Code. Unless the Company and you otherwise agree in writing, any determination
required under this Section shall be made in writing by the Company’s
independent public accountants (the “Accountants”), whose determination shall be
conclusive and binding upon you and the Company for all purposes. For purposes
of making

 

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the calculations required by this Section, the Accountants may make reasonable
assumptions and approximations concerning applicable taxes and may rely on
reasonable, good faith interpretations concerning the application of Sections
280G and 4999 of the Code. The Company and you shall furnish to the Accountants
such information and documents as the Accountants may reasonably request in
order to make a determination under this Section. The Company shall bear all
costs the Accountants may reasonably incur in connection with any calculations
contemplated by this Section.

Section 409A. To the extent (a) any payments or benefits to which you become
entitled under this Agreement, or under any other agreement or Company plan, in
connection with your termination of employment with the Company constitute
deferred compensation subject to Section 409A of the Code and (b) you are deemed
at the time of such termination of employment to be a “specified employee” under
Section 409A of the Code, then such payments shall not be made or commence until
the earliest of (i) the expiration of the six (6)-month period measured from the
date of your “separation from service” (as such term is at the time defined in
Treasury Regulations under Section 409A of the Code) from the Company; or
(ii) the date of your death following such separation from service; provided,
however, that such deferral shall only be effected to the extent required to
avoid adverse tax treatment to you, including (without limitation) the
additional twenty percent (20%) tax for which you would otherwise be liable
under Section 409A(a)(1)(B) of the Code in the absence of such deferral. Upon
the expiration of the applicable deferral period, any payments which would have
otherwise been made during that period (whether in a single sum or in
installments) in the absence of this paragraph shall be paid to you or your
beneficiary in one lump sum (without interest). Any termination of your
employment is intended to constitute a “separation from service” and will be
determined consistent with the rules relating to a “separation from service” as
such term is defined in Treasury Regulation Section 1.409A-1.

This Agreement shall be interpreted and administered in a manner so that any
amount or benefit payable hereunder shall be paid or provided in a manner that
is either exempt from or compliant with the requirements of Section 409A of the
Code and applicable regulations thereunder. It is intended that each installment
of the payments provided hereunder constitute separate “payments” for purposes
of Treasury Regulation Section 1.409A-2(b)(2)(i). It is further intended that
payments hereunder satisfy, to the greatest extent possible, the exemptions from
the application of Section 409A of the Code (and any state law of similar
effect) provided under Treasury Regulations Section 1.409A-1(b)(4) (as a
“short-term deferral”) and Section 1.409A-1(b)(9) (as a “separation pay due to
involuntary separation”). To the extent any payment hereunder may be classified
as a “short-term deferral” within the meaning of Section 409A, such payment
shall be deemed a short-term deferral, even if it may also qualify for an
exemption from Section 409A of the Code under another provision of Section 409A
of the Code. To the extent that any payment under this Agreement is subject to
Section 409A of the Code and ambiguous as to its compliance with Section 409A of
the Code, the provision will be read in such a manner so that all payments
hereunder comply with Section 409A of the Code

Except as otherwise expressly provided herein, to the extent any expense
reimbursement or the provision of any in-kind benefit under this Agreement is
determined to be subject to Section 409A of the Code, the amount of any such
expenses eligible for reimbursement, or the provision of any in-kind benefit, in
one calendar year shall not affect the expenses eligible for reimbursement in
any other taxable year (except for any lifetime or other aggregate

 

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limitation applicable to medical expenses), in no event shall any expenses be
reimbursed after the last day of the calendar year following the calendar year
in which you incurred such expenses, and in no event shall any right to
reimbursement or the provision of any in-kind benefit be subject to liquidation
or exchange for another benefit.

Competitors of Diamond Foods, Inc.:

You acknowledge that you have acquired and will acquire knowledge regarding
confidential, proprietary and/or trade secret information in the course of
performing your responsibilities for Diamond Foods, Inc., and you further
acknowledge that such knowledge and information is the sole and exclusive
property of Diamond Foods, Inc. You recognize that disclosure of such knowledge
and information, or use of such knowledge and information, to or by a competitor
could cause serious and irreparable harm to Diamond Foods, Inc. You therefore
agree that you shall not accept employment with, nor provide any form of service
for any direct competitor of Diamond in sales, distribution, processing or
related businesses during your employment with Diamond Foods, Inc.

Obligations of Employee During & After Employment:

Records: All records, files, documents and the like, or abstracts, summaries or
copies thereof, relating to the business of the Company or the business of any
subsidiary or affiliated companies, which the Company or you shall prepare or
use or come into contract with, shall remain the sole property of the Company or
the affiliated or subsidiary company, as the case may be, and shall not be
removed from the premises without the written consent of the Company, and shall
be promptly returned upon termination of employment.

Non-Solicitation: During your employment with the Company and for a period of
one year after termination, for any reason, you agree that you will not,
directly or indirectly (i) solicit any employee of the Company to leave the
employment of the Company or (ii) induce or attempt to induce, any customer or
supplier of the Company to cease doing business with the Company.

Ray, we believe this outlines the primary components related to your employment
with the Company. It is our practice to make this offer contingent upon a
successful post-offer drug screen, background and reference check. We are
looking forward to having the opportunity of developing a meaningful business
relationship. If you have any questions, please feel free to contact the Human
Resource Department or myself. Should you accept our offer of employment, please
sign, date and return the original copy of this letter to the Company, we have
included a copy of this letter for your files.

Sincerely,

 

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DIAMOND FOODS, INC.

/s/ Brian Driscoll

Brian Driscoll President & CEO

Diamond Foods, Inc. operates under an employment-at-will concept, which means
either party may terminate the employment relationship at any time, with or
without cause and with or without notice. In addition, no statements made in
this offer letter are meant to imply or state a guarantee of continued
employment. It is also understood that this is a contingent offer, contingent on
a successful drug screen and background check. If any parts of the terms set
forth in this letter are determined to be unenforceable, the remaining terms
shall not be affected and shall remain fully enforceable.

 

Acceptance:  

/s/ Raymond P. Silcock

    Date: June 7, 2013   Raymond P. Silcock    

 

cc: Personnel File

 

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   Diamond Foods, Inc.

600 Montgomery Street, 13th Floor
San Francisco, CA 94111
diamondfoods.com
NASDAQ: DMND

June 7, 2013

Raymond P. Silcock

[address omitted]

Dear Ray:

This letter outlines the agreement pertaining to your relocation from Greenwich,
Connecticut to the San Francisco Bay Area.

Diamond will provide you a gross relocation amount (subject to normal
withholdings) of $300,000 to be used at your discretion to cover relocation
related expenses. The payment will be made in two weeks following your first day
of employment.

In addition, Diamond will cover the following expenses:

Movement of Household Goods

 

  •  

A professional van line will be selected by Diamond to move your household goods
from Greenwich to your destination in California.

 

  •  

The van line will pack, load, and unload goods, including normal appliance
servicing.

 

  •  

Storage up to 60 days.

 

  •  

Shipment up to two vehicles.

 

  •  

This move can occur in two separate occasions with one smaller move (1-2
bedrooms of household goods and one vehicle) and one larger move (an entire
household of multiple bedrooms and one vehicle).

Transition Assistance

 

  •  

Up to 10 nights of lodging in San Francisco at a hotel as you search for
temporary living accommodations.

 

  •  

Reasonable expenses including rental car, meals, dry cleaning.

Return Trips (in the first 60 days)

 

  •  

During your first 60 days you may expense up to 5 return trips home.

All other relocation expenses, other than those identified above, should be
covered at your discretion and expense.

 

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By signing this you agree that as a condition of receiving financial assistance
for your relocation from Greenwich, Connecticut to the San Francisco Bay Area,
you agree to the following stipulations.

All expenses paid are contingent upon you remaining employed by Diamond Foods
for a minimum of 12 full months from your date of hire. In the event you
voluntarily terminate your employment or are terminated for cause (as defined in
your offer letter dated 6/7/13) within 12 months of your date you hire, you
promise to repay 100% of all relocation expenses paid or reimbursed on your
behalf.

To assist you in your transition, you will have access to Diamond’s relocation
provider – Global Mobility Solutions (GMS). The phone number is: 800.617.1904

 

/s/ Raymond P. Silcock

   

June 7, 2013

Raymond P. Silcock     Date EVP, Chief Financial Officer    

 

Sincerely, /s/ Linda B. Segre Linda B. Segre Senior Vice President, Corporate
Strategy and HR

 

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