Start Date :
 Compensation :
 Annual Base Salary:
$390,000.00 annualized base salary (Exempt), payable in accordance with standard Company
payroll practices.Sign-on Bonus:
The Company will pay you a sign-on bonus of $50,000, with $25,000 payable three months after
commencement of your employment and $25,000 payable nine months after commencement of your
employment.Bonus Incentive Program:
You will participate in the annual bonus program, which is designed to reward outstanding
performance. Your position is eligible for a maximum bonus potential of 140% of base salary,
with a target bonus potential of 70% of base salary. The bonus amount will be based on
individual objectives and Company financial metrics, as will be established after
commencement of your employment and approved by the Compensation Committee of the Board of
Directors and/or the full Board of Directors. You will be eligible for this non-guaranteed
bonus in fiscal 2009. You must continue to be an active employee through July 31 for
eligibility in the bonus program and be an active employee on the day of the payout.Equity Awards: You will be granted an option to purchase 33,000 shares of common
stock and 33,000 shares of restricted stock (subject to Board approval at the next Board
meeting, scheduled for September 25, 2008). The exercise price for the options will be
Diamonds closing price on the date the Board approves your grant, and your purchase price
for the restricted stock would be $0.001 per share.
 
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The options will vest and become exercisable over a four-year period, with 25% of the 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 option and
restricted stock will require your completion of applicable grant documents, which provide
that vesting is subject to you remaining in continuous service as an employee of Diamond
through each vest date.
 Performance Evaluation/Salary Review :
  Health & Welfare Benefits :
  Group Medical: Blue CrossGroup Dental Insurance: Delta DentalGroup Vision Insurance: Vision Service Plan (VSP)Group Life Insurance: The Company provides basic life insurance at one (1) 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.
 Executive Premium Health Benefit
 
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The Retirement Program
 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
 Paid Time Off (PTO) Annual Accrual: Date of Hire  completing 14 yrs. 6.154 hrs/pay period = 4 weeks/year
15 or more years 7.692 hrs/pay period = 5 weeks/yearChange of Control/Severance Agreement: Upon approval by the Board of Directors, the
Company will enter into its standard form of Change of Control/Severance Agreement with you.
The form of the agreement is attached to this letter.Severance upon Termination without Cause: In the event the Company terminates your
employment without Cause, as defined below, you will be entitled to receive the following
termination benefits:· Payment of 12 months of base salary, based on your base salary on the date of
termination;· Payment of your target bonus amount for the year in which the termination occurs;· Acceleration of any stock options, restricted stock or other equity grant that
would have otherwise vested in the 12 months following the date of termination; and· The Company will offer to you the ability to elect coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) under the Companys
medical or dental plans as in effect immediately prior to the date of termination.
If you elect timely continuation of coverage under COBRA, provided that you pay the
amount required to continue coverage, the Company will maintain coverage for you and
your dependants for up to the maximum period of time allowed under COBRA.As used in this letter, Cause shall mean commission of a felony, fraud, crime of moral
terpitude, or intentional or willful misconduct.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.
 
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Car Allowance: Diamond will pay you a monthly car allowance of $1,000 to cover a
car and car expenses.Financial Planning: Diamond provides its senior level executives with a financial
planning service for tax preparation, financial consulting and education. We partner with
Ayco, a Goldman Sachs company, to provide these services.Relocation: Diamond will reimburse you for real estate broker commissions you incur
in connection with the sale of your home and relocation to the San Francisco Bay Area,
provided that you relocate within 12 months of commencement of your employment. This
reimbursement will not exceed 5% of the selling price of your home. In addition, the
Company will arrange for and bear the cost of a moving company to relocate your household
goods.Temporary Housing: For a period of 12 months, Diamond will provide temporary
housing for you, not to exceed $3,500 per month.
 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.Competitors of the Company: 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 the Company, and you further acknowledge that such
knowledge and information is the sole and exclusive property of the Company. 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 the Company. You therefore agree that you shall not accept employment with, nor
provide any form of service for, any company that competes with the business of the Company
during and for one year after termination of your employment with the Company.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)
 
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DIAMOND FOODS, INC.
 /s/ Michael J. Mendes
  Acceptance:
/s/ Lloyd Johnson

Date:
August 17, 2008Lloyd Johnson  
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