AGREEMENT AND PLAN OF CONVERSION
Exhibit 2.01
THIS AGREEMENT AND PLAN OF CONVERSION (this
“Agreement”) is made and entered into as
of ,
2005, by and among DIAMOND FOODS, INC. (“Diamond
Foods”), a Delaware corporation, and DIAMOND WALNUT
GROWERS, INC., a California cooperative marketing association
(“Diamond Growers”).
RECITALS
A. Diamond Foods is a corporation duly organized and
existing under the Delaware General Corporation Law
(“DGCL”) and is a wholly owned
subsidiary of Diamond Growers. Diamond Growers is a cooperative
marketing association organized and existing under the
California Food & Agricultural Code and the California
General Corporation Law (“CGCL”).
B. The respective boards of directors of Diamond Foods and
Diamond Growers have determined that it is advisable and in the
best interests of Diamond Foods, Diamond Growers and their
respective stockholders and members (within the meaning of the
Diamond Growers bylaws) (“Members”) for
Diamond Growers to convert from a cooperative marketing
association to a corporation organized under the DGCL.
C. The board of directors of Diamond Growers has determined
that it is fair to, advisable and in the best interests of
Diamond Growers to effect such conversion through a transaction
in which Diamond Growers will merge with and into Diamond Foods
upon the terms and subject to the conditions of this Agreement
(“Merger”).
D. The respective boards of directors of Diamond Foods and
Diamond Growers have been duly advised of the terms and
conditions of the Merger and by resolutions duly adopted, have
authorized, approved and adopted the Merger and this Agreement.
E. This Agreement will be submitted for the approval of the
Members of Diamond Growers at a special meeting to be called by
the Board of Directors of Diamond Growers (“Special
Meeting”). The sole stockholder of Diamond Foods
will approve and adopt this Agreement by written consent in lieu
of a meeting.
F. The Parties intend for the Merger to qualify as a
tax-free “reorganization” under
Section 368(a)(1)(F) of the Internal Revenue Code.
Certain capitalized terms used in this Agreement are defined in
Article I of this Agreement.
NOW, THEREFORE, in consideration of the above and the
mutual warranties, representations, covenants and agreements set
forth herein, the Parties agree as follows:
ARTICLE I
Terms of the Merger
1.1 Definitions.
(a) Except as otherwise provided herein, the capitalized
terms set forth below shall have the following meanings:
| “Cash Conversion Request Maximum Amount” means an amount of cash up to but not exceeding the amount equal to: (x) (A) that number of shares of Diamond Foods Common Stock sold in the Initial Public Offering (not including any shares sold by Diamond Foods pursuant to the Overallotment Option), less (B) 4,000,000 shares, multiplied by (y) the Initial Public Offering Price less applicable underwriting discounts and commissions, less (z) any cash paid to Members who properly assert their dissenters’ rights under California law, all as finally determined by the Board of Directors of Diamond Foods prior to the Effective Time. |
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| “Conversion Request Form” means a form distributed by the Parties to the Members, pursuant to which each Member indicates the amount of cash, if any, instead of shares of Diamond Foods Common Stock that such Member wishes to receive after the Merger, subject to an aggregate maximum amount equal to the Cash Conversion Request Maximum Amount. | |
| “Diamond Foods Common Stock” means the common stock, par value $0.001 per share, of Diamond Foods, together with any associated stockholder protection rights. | |
| “Exchange Agent” means EquiServe Trust Company, N.A., or such other person appointed by Diamond Foods to act as Exchange Agent in connection with the Merger. | |
| “Initial Public Offering” means the initial public offering of Diamond Foods Common Stock pursuant to a firm commitment underwriting registered under the Securities Act. | |
| “Initial Public Offering Price” means the price per share of Diamond Foods Common Stock sold to investors in the Initial Public Offering. | |
| “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended. | |
| “Overallotment Option” means the option, granted by Diamond Foods to the underwriters in the Initial Public Offering, to acquire additional shares to cover overallotments. | |
| “Party” means any of Diamond Foods and Diamond Growers and “Parties” means both Diamond Foods and Diamond Growers. | |
| “Property Interest” means the proportional ownership interest in Diamond Growers attributable to a Member, calculated by Diamond Growers pursuant to Section 2.11 of Diamond Growers’ bylaws. Such calculations by Diamond Growers shall be final and conclusive and binding on the Members. | |
| “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. |
(b) Any singular term in this Agreement shall be deemed to
include the plural, and any plural term the singular. Whenever
the words “include,” “includes” or
“including” are used in this Agreement, they shall be
deemed followed by the words “without limitation.”
1.2 Merger. Subject to the terms and conditions of
this Agreement, at the Effective Time (defined in
Section 1.3 of this Agreement), Diamond Growers shall be
merged with and into Diamond Foods in accordance with the
provisions of Section 1108 of the CGCL and Section 258
of the DGCL and with the effect provided in Section 1107 of
the CGCL and Section 259 of the DGCL. Diamond Foods shall
be the Surviving Corporation resulting from the Merger
(“Surviving Corporation”), shall have
the name “Diamond Foods, Inc.” and shall continue to
be governed by the DGCL.
1.3 Effective Time. The Merger shall become
effective on the date and at the time the Certificate of Merger
(“Certificate of Merger”) reflecting the
Merger shall become effective with the Secretaries of State of
the States of Delaware and California (“Effective
Time”). Subject to the terms and conditions hereof,
unless otherwise mutually agreed in writing by the authorized
officers of each Party, the Parties shall use their reasonable
efforts to cause the Effective Time to occur immediately
following or concurrent with the satisfaction or waiver of each
of the conditions set forth in Article 6 of this Agreement.
ARTICLE II
Terms of Merger
2.1 Certificate of Incorporation. The Amended and
Restated Certificate of Incorporation of Diamond Foods attached
as Exhibit 1 to this Agreement shall be the
Certificate of Incorporation of the
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Surviving Corporation upon the effectiveness of the registration
statement under the Securities Act relating to the Initial
Public Offering, until duly amended.
2.2 Bylaws. The Amended and Restated Bylaws of
Diamond Foods attached as Exhibit 2 to this
Agreement shall be the Bylaws of the Surviving Corporation upon
the effectiveness of the registration statement under the
Securities Act relating to the Initial Public Offering, until
duly amended.
2.3 Directors and Officers. The Board of Directors
of the Surviving Corporation upon the effectiveness of the
registration statement under the Securities Act relating to the
Initial Public Offering shall consist initially of nine
(9) members, of whom three (3) shall be selected from
the current directors of Diamond Growers by Diamond Growers, one
(1) shall be Xxxxxxx X. Xxxxxx, the president and chief
executive officer of Diamond Growers, and five (5) shall be
independent directors as defined under the rules of The NASDAQ
Stock Market. Such initial directors shall serve as the
directors of the Surviving Corporation in accordance with the
Bylaws of the Surviving Corporation. The officers of Diamond
Growers in office immediately prior to effectiveness of the
registration statement under the Securities Act relating to the
Initial Public Offering, together with such additional persons
as may thereafter be appointed, shall serve as the officers of
the Surviving Corporation in accordance with the Bylaws of the
Surviving Corporation.
ARTICLE III
Manner of Converting Equity
3.1 Conversion of Property Interests. Subject to the
provisions of this Article 3, at the Effective Time, by
virtue of the Merger and without any additional action on the
part of Diamond Foods or Diamond Growers or the stockholders or
Members, the equity of the constituent corporations shall be
converted as follows:
| (a) The Property Interest of each Member shall be converted into the right to receive merger consideration (“Merger Consideration”) consisting of: |
| (i) that number of shares of Diamond Foods Common Stock that is equal to |
| (A) the product of (x) the proportion that such Member’s Property Interest represents relative to the Property Interests of all Members multiplied by (y) 8,060,207 shares, less | |
| (B) that number of shares with respect to which such Member received cash after the Merger pursuant to such Member’s Cash Conversion Request and Article III of this Agreement, plus |
| (ii) that amount of cash paid to such Member pursuant to Sections 3.2 and 3.3 of this Agreement; |
having in the aggregate a value equal to the value of such
Member’s Property Interest.
| (b) If a Member has not submitted a completed Conversion Request Form as of the Special Meeting, such Member’s entire Property Interest will be converted into shares of Diamond Foods Common Stock, and no cash. | |
| (c) All Property Interests of Diamond Growers issued and outstanding immediately prior to the Effective Time shall be cancelled. | |
| (d) Each share of Diamond Foods Common Stock issued and outstanding immediately prior to the Effective Time shall be cancelled. |
3.2 Fractional Shares. Notwithstanding any other
provision of this Agreement, each Member who would be entitled
to receive a fraction of a share of Diamond Foods Common Stock
pursuant to Section 3.1 shall instead receive cash (without
interest) in an amount equal to such fractional part of a
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share of Diamond Foods Common Stock multiplied by the Initial
Public Offering Price less applicable underwriting discounts.
3.3 Cash Conversion Requests.
(a) Diamond Growers will provide Members with Conversion
Request Forms prior to the Special Meeting. Members wishing to
receive cash after the Merger instead of some or all of the
shares of Diamond Foods Common Stock to which they are entitled
will be required to complete and execute a Conversion Request
Form and the amount of cash so requested will be deemed a
“Cash Conversion Request.” Subject to
the terms and conditions of this Agreement, following the
Effective Time, and after determination of any dissenters’
rights under California law, Diamond Foods will issue cash (up
to the Cash Conversion Request Maximum Amount) to Members from
whom a Conversion Request Form has been received and not
withdrawn.
(b) To the extent Members elect to receive cash following
the Merger (subject to the Cash Conversion Request Maximum
Amount), such Members will be treated as receiving shares of
Diamond Foods Common Stock for their Property Interests at the
Effective Time by virtue of the Merger and then following the
Effective Time such shares will be treated as redeemed by
Diamond Foods for cash representing such Member’s cash
request as stated in the Conversion Request Form.
(c) If the aggregate amount of all Cash Conversion Requests
exceeds the Cash Conversion Request Maximum Amount, the amounts
of cash paid to Members pursuant to Cash Conversion Requests
shall be determined as follows:
| First, for each Member submitting a Cash Conversion Request, the Member will be entitled to an amount of cash up to the Cash Conversion Request Maximum Amount divided by the total number of Members at the record date for the Special Meeting, but not more than the amount specified in such Member’s Cash Conversion Request; and | |
| Second, for each Member submitting a Cash Conversion Request that has not been paid in full, the Member will be entitled to an amount of cash equal to the Member’s proportion of all such remaining Cash Conversion Requests represented by such Member’s respective Cash Conversion Request, to the full extent of the remaining Cash Conversion Request Maximum Amount, if any. |
(d) A Conversion Request Form may be submitted, revoked or
changed prior to the date of the Special Meeting, but not after
the Special Meeting. Subject to the terms of this Agreement, the
Exchange Agent and Diamond Growers shall have the discretion to
determine whether any request, revocation or change has been
properly or timely made and to disregard any immaterial defect
on a Conversion Request Form, and any good faith decision of the
Exchange Agent or Diamond Growers regarding such matters shall
be binding and conclusive.
(e) Diamond Foods shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this
Section 3.3 to any Member such amounts, if any, as it is
required to deduct and withhold with respect to the making of
such payment under the Internal Revenue Code or any provision of
state, local or foreign tax law. To the extent that any amounts
are so withheld by Diamond Foods, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid
to such Member in respect of which such deduction and
withholding was made by Diamond Foods.
ARTICLE IV
Issuance of Shares;
Transfer Restrictions
4.1 Procedures. As promptly as practicable after the
Effective Time, the Exchange Agent shall issue to each Member,
in book-entry form as uncertificated shares, the number of
shares of Diamond Foods Common Stock to which such Member is
entitled. The Exchange Agent shall deliver to each Member as
soon as reasonably practicable (i) a notice setting forth
the number of shares of Diamond
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Foods Common Stock issued to such Member pursuant to this
Agreement and (ii) any cash to which such Member is
entitled.
4.2 General.
(a) Except as provided in this Article IV, no Member
may, for a period of three hundred sixty (360) days after
the Effective Time, offer, pledge, sell, or contract to sell, or
sell any option or contract to purchase, or purchase any option
or contract to sell, or grant any option, right or warrant for
the sale of, or lend or otherwise dispose of or transfer any
shares of, Diamond Foods Common Stock received pursuant to this
Agreement, or enter into any swap or other agreement or any
transaction that transfers, in whole or in part, the economic
consequences of ownership of Diamond Foods Common Stock received
pursuant to this Agreement, whether any such swap or transaction
is to be settled by delivery of shares of Diamond Foods Common
Stock or other securities, in cash or otherwise (each, a
“Transfer”).
(b) Permitted Transfers. Section 4.2(a) of this
Agreement shall not apply to the following Transfers:
| (i) Beginning two hundred seventy (270) days after the Effective Time, any Transfer of up to (A) fifty percent (50%) of the shares of Diamond Foods Common Stock received by any Member pursuant to this Agreement minus (B) any shares of Diamond Foods Common Stock that were Transferred by such Member pursuant to Section 4.3; | |
| (ii) any bona fide gift or gifts, provided that the donee or donees thereof agree to be bound in writing by the restrictions set forth in this Section 4.2; | |
| (iii) any Transfer to any trust for the direct or indirect benefit of the transferor or the immediate family of the transferor or to any corporation, limited or general partnership, or limited liability company, the equity interests of which are owned entirely by the transferor or the immediate family of the transferor, provided that the trustee of the trust, or such corporation, limited or general partnership or limited liability company, agrees in writing that the trust is bound by the restrictions set forth in this Section 4.2, and provided further that any such transfer shall not involve a disposition for value (for purposes of this section, “immediate family” shall mean any relationship by blood, marriage or adoption, not more remote than first cousin); | |
| (iv) any Transfer that occurs by operation of law; or | |
| (v) any Transfer made with the prior written consent of the managing underwriter for the Initial Public Offering. |
4.3 Underwritten Sale.
(a) Beginning one hundred eighty one (181) days after
the Effective Time, Section 4.2(a) of this Agreement shall
not apply to a Transfer of shares of Diamond Foods Common Stock
received by any Member pursuant to this Agreement that are
offered and sold as part of an underwritten registered public
offering of Diamond Foods Common Stock that is organized by
Diamond Foods (a “Secondary Offering”).
(b) Diamond Foods shall give reasonable written notice to
each Member at the current address appearing for each Member on
the books and records of Diamond Foods of Diamond Foods’
intention to undertake a Secondary Offering. Each Member who
desires to include shares of Diamond Foods Common Stock in such
Secondary Offering shall give notice to Diamond Foods, prior to
fifteen (15) days after the date such notice is mailed or
otherwise delivered by Diamond Foods, of the Member’s
desire to include shares of Diamond Foods Common Stock. The
participation of any Member in a Secondary Offering may be
conditioned upon the execution by such Member of all agreements,
documents and instruments, including a custody agreement, an
irrevocable power of attorney, a lock-up agreement or an
underwriting agreement in customary form, necessary to effect
such Secondary Offering.
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4.4 Restrictive Legend.
(a) Each certificate representing shares of Diamond Foods
Common Stock issued pursuant to this Agreement shall bear the
following legend:
| THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER CONTAINED IN AN AGREEMENT AND PLAN OF CONVERSION, DATED AS OF , 2005, A COPY OF WHICH MAY BE OBTAINED FROM THE ISSUER. |
(b) In the case of shares of Diamond Foods Common Stock
issued pursuant to this Agreement that are uncertificated,
Diamond Foods shall direct any transfer agent for Diamond Foods
Common Stock to make a book-entry notation reflecting that such
shares of Diamond Foods Common Stock are subject to the
restrictions on transfer contained in this Agreement.
ARTICLE V
Conditions to the Merger
5.1 Conditions to Obligations of Each Party. The
respective obligations of each Party to perform under this
Agreement and consummate the transactions contemplated hereby
are subject to the satisfaction of the following conditions,
unless waived by both Parties pursuant to Section 6.2:
| (a) Member Approval. Members holding a majority of all of the voting interests of Diamond Growers (as calculated pursuant to Section 3.01 of the Diamond Growers bylaws and Article 8 of the Diamond Growers articles of incorporation) shall have voted to approve and adopt this Agreement. | |
| (b) Initial Public Offering. Diamond Foods shall have completed the Initial Public Offering. | |
| (c) Regulatory Approvals. The Secretaries of State of the States of Delaware and California shall each have accepted the filing of the Certificate of Merger. | |
| (d) Registration Statement. The registration statement of Diamond Foods filed under the Securities Act with respect to the offer, sale and issuance of Diamond Foods Common Stock in the Merger shall have become effective and shall not be the subject of any stop order suspending its effectiveness or to any proceeding seeking such an order. | |
| (e) Legal Proceedings. No court or governmental authority of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any law or order (whether temporary, preliminary or permanent) or taken any other action which prohibits, restricts in any material respect or makes illegal consummation of the transactions contemplated by this Agreement. |
ARTICLE VI
Miscellaneous
6.1 Entire Agreement. This Agreement (including the
documents and instruments referred to herein) constitutes the
entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereto, written or
oral. Nothing in this Agreement expressed or implied is intended
to confer upon any person, other than the Parties, or their
respective successors, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
6.2 Amendments; Waiver. At any time, Diamond Growers
and Diamond Foods may, to the extent not prohibited by the
California Food & Agricultural Code, the CGCL and the
DGCL, by written agreement, amend, modify, supplement or waive
any provision of this Agreement.
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6.3 Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned
by a Party hereto (whether by operation of Law or otherwise)
without the prior written consent of the other Party.
6.4 Notices. All notices or other communications
which are required or permitted hereunder shall be in writing
and sufficient if delivered by hand, by facsimile transmission,
by registered or certified mail, or by courier or overnight
carrier, to the persons at the addresses set forth below (or at
such other address as may be provided hereunder), and shall be
deemed to have been delivered as of the date so delivered:
| Diamond Growers/ Diamond Foods: |
| Diamond Walnut Growers, Inc. | |
| 0000 Xxxxx Xxxxxxx Xxxxxx | |
| Xxxxxxxx, XX 00000-0000 | |
| Facsimile Number: (000) 000-0000 | |
| Attention: President & Chief Executive Officer |
In each case with a copy to:
| Fenwick & West LLP | |
| Silicon Valley Center | |
| 000 Xxxxxxxxxx Xxxxxx | |
| Xxxxxxxx Xxxx, Xxxxxxxxxx 00000 | |
| Facsimile Number: (000) 000-0000 | |
| Attention: Xxxxxx X. Xxxx |
6.5 Governing Law. The Parties agree that this
Agreement shall be governed by and construed in all respects in
accordance with the laws of the State of Delaware.
6.6 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the
same instrument. This Agreement may be executed and delivered by
facsimile.
6.7 Captions; Articles and Sections. The captions
contained in this Agreement are for reference purposes only and
are not part of this Agreement. Unless otherwise indicated, all
references to particular Articles or Sections shall mean and
refer to the referenced Articles and Sections of this Agreement.
6.8 Abandonment. At any time before the Effective
Time, this Agreement may be terminated and the Merger may be
abandoned by the Board of Directors of Diamond Foods or Diamond
Growers.
6.9 Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction
shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of
the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as
to be unenforceable, the provision shall be interpreted to be
only so broad as is enforceable.
Remainder of page intentionally left blank.
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IN WITNESS WHEREOF, each of the Parties has caused this
Agreement to be executed on its behalf by its duly authorized
officers as of the day and year first above written.
| DIAMOND FOODS, INC. |
| By: |
|
|
|
| President and Chief Executive Officer | |
| DIAMOND WALNUT GROWERS, INC. |
| By: |
|
|
|
| President and Chief Executive Officer |
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