Document:

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                                                                   Exhibit 10.01

                               INDEMNITY AGREEMENT

     This Indemnity Agreement (this "AGREEMENT"), dated as of
____________________ 2005, is made by and between Diamond Foods, Inc., a
Delaware corporation (the "COMPANY"), and ________________________, a director
and/or officer of the Company (the "INDEMNITEE").

                                    RECITALS

     A. The Company is aware that competent and experienced persons are
increasingly reluctant to serve as directors or officers of corporations unless
they are protected by comprehensive liability insurance and/or indemnification,
due to increased exposure to litigation costs and risks resulting from their
service to such corporations, and because the exposure frequently bears no
reasonable relationship to the compensation of such directors and officers;

     B. Based on their experience as business managers, the Board of Directors
of the Company ("BOARD") has concluded that, to retain and attract talented and
experienced individuals to serve as officers and directors of the Company, and
to encourage such individuals to take the business risks necessary for the
success of the Company, it is necessary for the Company contractually to
indemnify officers and directors and to assume for itself maximum liability for
expenses and damages in connection with claims against such officers and
directors in connection with their service to the Company;

     C. Section 145 of the General Corporation Law of Delaware under which the
Company is organized ("LAW"), empowers the Company to indemnify by agreement its
officers, directors, employees and agents, and persons who serve, at the request
of the Company, as directors, officers, employees or agents of other
corporations or enterprises, and expressly provides that the indemnification
provided by the Law is not exclusive; and

     D. The Company desires and has requested the Indemnitee to serve or
continue to serve as a director or officer of the Company free from undue
concern for claims for damages arising out of or related to such services to the
Company.

     NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:

     1. DEFINITIONS.

          1.1 AGENT. For the purposes of this Agreement, "AGENT" of the Company
means any person who is or was a director or officer of the Company or a
subsidiary of the Company; or is or was serving at the request of, for the
convenience of, or to represent the interest of the Company or a subsidiary of
the Company, including without limitation, Diamond Walnut Growers, Inc., a
California incorporated non-profit cooperative marketing association, as a
director or officer of another foreign or domestic corporation, partnership,
joint venture, trust or other enterprise or an affiliate of the Company; or was
a director or officer of a foreign or domestic corporation which was a
predecessor corporation of the Company, or was a director or

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officer of another enterprise or affiliate of the Company at the request of, for
the convenience of, or to represent the interests of such predecessor
corporation. The term "ENTERPRISE" includes any employee benefit plan of the
Company, its subsidiaries, affiliates and predecessor corporations.

          1.2 EXPENSES. For purposes of this Agreement, "EXPENSES" includes all
direct and indirect costs of any type or nature whatsoever (including, without
limitation, all attorneys' fees and related disbursements and other
out-of-pocket costs) actually and reasonably incurred by the Indemnitee in
connection with the investigation, defense or appeal of a proceeding or
establishing or enforcing a right to indemnification or advancement of expenses
under this Agreement, the Law or otherwise.

          1.3 PROCEEDING. For the purposes of this Agreement, "PROCEEDING" means
any threatened, pending or completed action, suit or other proceeding, whether
civil, criminal, administrative, investigative or any other type whatsoever.

          1.4 SUBSIDIARY. For purposes of this Agreement, "SUBSIDIARY" means any
corporation of which more than fifty percent (50%) of the outstanding voting
securities is owned directly or indirectly by the Company, by the Company and
one or more of its subsidiaries or by one or more of the Company's subsidiaries.

     2. AGREEMENT TO SERVE. The Indemnitee agrees to serve and/or continue to
serve as an agent of the Company, at the will of the Company (or under separate
agreement, if such agreement exists), in the capacity the Indemnitee currently
serves as an agent of the Company, faithfully and to the best of his ability, so
long as he or she is duly appointed or elected and qualified in accordance with
the applicable provisions of the charter documents of the Company or any
subsidiary of the Company; provided, however, that the Indemnitee may at any
time and for any reason resign from such position (subject to any contractual
obligation that the Indemnitee may have assumed apart from this Agreement), and
the Company or any subsidiary shall have no obligation under this Agreement to
continue the Indemnitee in any such position.

     3. DIRECTORS' AND OFFICERS' INSURANCE. The Company shall, to the extent
that the Board determines it to be economically reasonable, maintain a policy of
directors' and officers' liability insurance ("D&O INSURANCE"), on such terms
and conditions as may be approved by the Board.

     4. MANDATORY INDEMNIFICATION. Subject to Section 9 below, the Company shall
indemnify the Indemnitee:

          4.1 THIRD PARTY ACTIONS. If the Indemnitee is a person who was or is a
party or is threatened to be made a party to any proceeding (other than an
action by or in the right of the Company) by reason of the fact that he is or
was an agent of the Company, or by reason of anything done or not done by him in
any such capacity, against any and all expenses and liabilities of any type
whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes
or penalties and amounts paid in settlement) actually and reasonably incurred by
him in connection with the investigation, defense, settlement or appeal of such
proceeding if he acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests

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of the Company and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful;

          4.2 DERIVATIVE ACTIONS. If the Indemnitee is a person who was or is a
party or is threatened to be made a party to any proceeding by or in the right
of the Company to procure a judgment in its favor by reason of the fact that he
is or was an agent of the Company, or by reason of anything done or not done by
him in any such capacity, against any amounts paid in settlement of any such
proceeding and all expenses actually and reasonably incurred by him in
connection with the investigation, defense, settlement or appeal of such
proceeding if he acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the Company; except that no
indemnification under this subsection shall be made in respect of any claim,
issue or matter as to which such person shall have been finally adjudged to be
liable to the Company by a court of competent jurisdiction due to willful
misconduct of a culpable nature in the performance of his duty to the Company,
unless and only to the extent that the Court of Chancery or the court in which
such proceeding was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such amounts which the
Court of Chancery or such other court shall deem proper; and

          4.3 EXCEPTION FOR AMOUNTS COVERED BY INSURANCE. Notwithstanding the
foregoing, the Company shall not be obligated to indemnify the Indemnitee for
expenses or liabilities of any type whatsoever (including, but not limited to,
judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) to the extent such have been paid directly to the Indemnitee by D&O
Insurance.

     5. PARTIAL INDEMNIFICATION AND CONTRIBUTION.

          5.1 PARTIAL INDEMNIFICATION. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of any expenses or liabilities of any type whatsoever (including, but
not limited to, judgments, fines, ERISA excise taxes or penalties and amounts
paid in settlement) incurred by him or her in the investigation, defense,
settlement or appeal of a proceeding but is not entitled, however, to
indemnification for all of the total amount thereof, then the Company shall
nevertheless indemnify the Indemnitee for such total amount except as to the
portion thereof to which the Indemnitee is not entitled to indemnification.

          5.2 CONTRIBUTION. If the Indemnitee is not entitled to the
indemnification provided in Section 4 for any reason other than the statutory
limitations set forth in the Law, then in respect of any threatened, pending or
completed proceeding in which the Company is jointly liable with the Indemnitee
(or would be if joined in such proceeding), the Company shall contribute to the
amount of expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred and paid or payable by the
Indemnitee in such proportion as is appropriate to reflect (i) the relative
benefits received by the Company on the one hand and the Indemnitee on the other
hand from the transaction from which such proceeding arose and (ii) the relative
fault of the Company on the one hand and of the Indemnitee on the other hand in
connection with the events which resulted in such expenses, judgments, fines or
settlement amounts, as well as any other relevant equitable considerations.

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The relative fault of the Company on the one hand and of the Indemnitee on the
other hand shall be determined by reference to, among other things, the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent the circumstances resulting in such expenses, judgments, fines or
settlement amounts. The Company agrees that it would not be just and equitable
if contribution pursuant to this Section 5 were determined by pro rata
allocation or any other method of allocation that does not take account of the
foregoing equitable considerations.

     6. MANDATORY ADVANCEMENT OF EXPENSES.

          6.1 ADVANCEMENT. Subject to Section 9 below and except as prohibited
by law, the Company shall advance all expenses incurred by the Indemnitee in
connection with the investigation, defense, settlement or appeal of any
proceeding to which the Indemnitee is a party or is threatened to be made a
party by reason of the fact that the Indemnitee is or was an agent of the
Company or by reason of anything done or not done by him in any such capacity.
The Indemnitee hereby undertakes to promptly repay such amounts advanced only
if, and to the extent that, it shall ultimately be determined that the
Indemnitee is not entitled to be indemnified by the Company under the provisions
of this Agreement, the Certificate of Incorporation or Bylaws of the Company,
the Law or otherwise. The advances to be made hereunder shall be paid by the
Company to the Indemnitee within thirty (30) days following delivery of a
written request therefor by the Indemnitee to the Company.

          6.2 EXCEPTION. Notwithstanding the foregoing provisions of this
Section 6, the Company shall not be obligated to advance any expenses to the
Indemnitee arising from a lawsuit filed directly by the Company against the
Indemnitee if an absolute majority of the members of the Board reasonably
determines in good faith, within thirty (30) days of the Indemnitee's request to
be advanced expenses, that the facts known to them at the time such
determination is made demonstrate clearly and convincingly that the Indemnitee
acted in bad faith. If such a determination is made, the Indemnitee may have
such decision reviewed by another forum, in the manner set forth in Sections
8.3, 8.4 and 8.5 hereof, with all references therein to "indemnification" being
deemed to refer to "advancement of expenses," and the burden of proof shall be
on the Company to demonstrate clearly and convincingly that, based on the facts
known at the time, the Indemnitee acted in bad faith. The Company may not avail
itself of this Section 6.2 as to a given lawsuit if, at any time after the
occurrence of the activities or omissions that are the primary focus of the
lawsuit, the Company has undergone a change in control. For this purpose, a
change in control shall mean a given person or group of affiliated persons or
groups increasing their beneficial ownership interest in the Company by at least
twenty (20) percentage points without advance Board approval.

     7. NOTICE AND OTHER INDEMNIFICATION PROCEDURES.

          7.1 Promptly after receipt by the Indemnitee of notice of the
commencement of or the threat of commencement of any proceeding, the Indemnitee
shall, if the Indemnitee believes that indemnification with respect thereto may
be sought from the Company under this Agreement, notify the Company of the
commencement or threat of commencement thereof.

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          7.2 If, at the time of the receipt of a notice of the commencement of
a proceeding pursuant to Section 7.1 hereof, the Company has D&O Insurance in
effect, the Company shall give prompt notice of the commencement of such
proceeding to the insurers in accordance with the procedures set forth in the
respective policies. The Company shall thereafter take all necessary or
desirable action to cause such insurers to pay, on behalf of the Indemnitee, all
amounts payable as a result of such proceeding in accordance with the terms of
such D&O Insurance policies.

          7.3 In the event the Company shall be obligated to advance the
expenses for any proceeding against the Indemnitee, the Company, if appropriate,
shall be entitled to assume the defense of such proceeding, with counsel
approved by the Indemnitee (which approval shall not be unreasonably withheld),
upon the delivery to the Indemnitee of written notice of its election to do so.
After delivery of such notice, approval of such counsel by the Indemnitee and
the retention of such counsel by the Company, the Company will not be liable to
the Indemnitee under this Agreement for any fees of counsel subsequently
incurred by the Indemnitee with respect to the same proceeding, provided that:
(a) the Indemnitee shall have the right to employ his or her own counsel in any
such proceeding at the Indemnitee's expense; (b) the Indemnitee shall have the
right to employ his or her own counsel in connection with any such proceeding,
at the expense of the Company, if such counsel serves in a review, observer,
advice and counseling capacity and does not otherwise materially control or
participate in the defense of such proceeding; and (c) if (i) the employment of
counsel by the Indemnitee has been previously authorized by the Company, (ii)
the Indemnitee shall have reasonably concluded that there may be a conflict of
interest between the Company and the Indemnitee in the conduct of any such
defense or (iii) the Company shall not, in fact, have employed counsel to assume
the defense of such proceeding, then the fees and expenses of the Indemnitee's
counsel shall be at the expense of the Company.

     8. DETERMINATION OF RIGHT TO INDEMNIFICATION.

          8.1 To the extent the Indemnitee has been successful on the merits or
otherwise in defense of any proceeding referred to in Section 4.1 or 4.2 of this
Agreement or in the defense of any claim, issue or matter described therein, the
Company shall indemnify the Indemnitee against expenses actually and reasonably
incurred by him or her in connection with the investigation, defense or appeal
of such proceeding, or such claim, issue or matter, as the case may be.

          8.2 In the event that Section 8.1 is inapplicable, or does not apply
to the entire proceeding, the Company shall nonetheless indemnify the Indemnitee
unless the Company shall prove by clear and convincing evidence to a forum
listed in Section 8.3 below that the Indemnitee has not met the applicable
standard of conduct required to entitle the Indemnitee to such indemnification.

          8.3 The Indemnitee shall be entitled to select the forum in which the
validity of the Company's claim under Section 8.2 hereof that the Indemnitee is
not entitled to indemnification will be heard from among the following, except
that the Indemnitee can select a forum consisting of the stockholders of the
Company only with the approval of the Company:

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               (a) A quorum of the Board consisting of directors who are not
parties to the proceeding for which indemnification is being sought;

               (b) The stockholders of the Company;

               (c) Legal counsel mutually agreed upon by the Indemnitee and the
Board, which counsel shall make such determination in a written opinion;

               (d) A panel of three arbitrators, one of whom is selected by the
Company, another of whom is selected by the Indemnitee and the last of whom is
selected by the first two arbitrators so selected; or

               (e) The Court of Chancery of Delaware.

          8.4 As soon as practicable, and in no event later than thirty (30)
days after the forum has been selected pursuant to Section 8.3 above, the
Company shall, at its own expense, submit to the selected forum its claim that
the Indemnitee is not entitled to indemnification, and the Company shall act in
the utmost good faith to assure the Indemnitee a complete opportunity to defend
against such claim.

          8.5 If the forum selected in accordance with Section 8.3 hereof is not
a court, then after the final decision of such forum is rendered, the Company or
the Indemnitee shall have the right to apply to the Court of Chancery of
Delaware, for the purpose of appealing the decision of such forum, provided that
such right is executed within sixty (60) days after the final decision of such
forum is rendered. If the forum selected in accordance with Section 8.3 hereof
is a court, then the rights of the Company or the Indemnitee to appeal any
decision of such court shall be governed by the applicable laws and rules
governing appeals of the decision of such court.

          8.6 Notwithstanding any other provision in this Agreement to the
contrary, the Company shall indemnify the Indemnitee against all expenses
incurred by the Indemnitee in connection with any hearing or proceeding under
this Section 8 involving the Indemnitee and against all expenses incurred by the
Indemnitee in connection with any other proceeding between the Company and the
Indemnitee involving the interpretation or enforcement of the rights of the
Indemnitee under this Agreement unless a court of competent jurisdiction finds
that each of the material claims and/or defenses of the Indemnitee in any such
proceeding was frivolous or not made in good faith.

     9. EXCEPTIONS. Any other provision herein to the contrary notwithstanding,
the Company shall not be obligated pursuant to the terms of this Agreement:

          9.1 CLAIMS INITIATED BY INDEMNITEE. To indemnify or advance expenses
to the Indemnitee with respect to proceedings or claims initiated or brought
voluntarily by the Indemnitee and not by way of defense, except with respect to
proceedings specifically authorized by the Board or brought to establish or
enforce a right to indemnification and/or advancement of expenses arising under
this Agreement, the charter documents of the Company or any subsidiary or any
statute or law or otherwise, but such indemnification or advancement of expenses
may be provided by the Company in specific cases if the Board finds it to be
appropriate;

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          9.2 UNAUTHORIZED SETTLEMENTS. To indemnify the Indemnitee hereunder
for any amounts paid in settlement of a proceeding unless the Company consents
in advance in writing to such settlement, which consent shall not be
unreasonably withheld;

          9.3 SECURITIES LAW ACTIONS. To indemnify the Indemnitee on account of
any suit in which judgment is rendered against the Indemnitee for an accounting
of profits made from the purchase or sale by the Indemnitee of securities of the
Company pursuant to the provisions of Section 16(b) of the Securities Exchange
Act of 1934 and amendments thereto or similar provisions of any federal, state
or local statutory law; or

          9.4 UNLAWFUL INDEMNIFICATION. To indemnify the Indemnitee if a final
decision by a court having jurisdiction in the matter shall determine that such
indemnification is not lawful. In this respect, the Company and the Indemnitee
have been advised that the Securities and Exchange Commission takes the position
that indemnification for liabilities arising under the federal securities laws
is against public policy and is, therefore, unenforceable and that claims for
indemnification should be submitted to appropriate courts for adjudication.

     10. NON-EXCLUSIVITY. The provisions for indemnification and advancement of
expenses set forth in this Agreement shall not be deemed exclusive of any other
rights which the Indemnitee may have under any provision of law, the Company's
Certificate of Incorporation or Bylaws, the vote of the Company's stockholders
or disinterested directors, other agreements or otherwise, both as to action in
the Indemnitee's official capacity and to action in another capacity while
occupying his position as an agent of the Company, and the Indemnitee's rights
hereunder shall continue after the Indemnitee has ceased acting as an agent of
the Company and shall inure to the benefit of the heirs, executors and
administrators of the Indemnitee.

     11. GENERAL PROVISIONS.

          11.1 INTERPRETATION OF AGREEMENT. It is understood that the parties
hereto intend this Agreement to be interpreted and enforced so as to provide
indemnification and advancement of expenses to the Indemnitee to the fullest
extent now or hereafter permitted by law, except as expressly limited herein.

          11.2 SEVERABILITY. If any provision or provisions of this Agreement
shall be held to be invalid, illegal or unenforceable for any reason whatsoever,
then: (a) the validity, legality and enforceability of the remaining provisions
of this Agreement (including, without limitation, all portions of any paragraphs
of this Agreement containing any such provision held to be invalid, illegal or
unenforceable that are not themselves invalid, illegal or unenforceable) shall
not in any way be affected or impaired thereby; and (b) to the fullest extent
possible, the provisions of this Agreement (including, without limitation, all
portions of any paragraphs of this Agreement containing any such provision held
to be invalid, illegal or unenforceable, that are not themselves invalid,
illegal or unenforceable) shall be construed so as to give effect to the intent
manifested by the provision held invalid, illegal or unenforceable and to give
effect to Section 11.1 hereof.

          11.3 MODIFICATION AND WAIVER. No supplement, modification or amendment
of this Agreement shall be binding unless executed in writing by both of the
parties hereto. No

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waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof (whether or not similar), nor
shall such waiver constitute a continuing waiver.

          11.4 SUBROGATION. In the event of full payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all of the
rights of recovery of the Indemnitee, who shall execute all documents required
and shall do all acts that may be necessary or desirable to secure such rights
and to enable the Company effectively to bring suit to enforce such rights.

          11.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, which shall together constitute one agreement.

          11.6 SUCCESSORS AND ASSIGNS. The terms of this Agreement shall bind,
and shall inure to the benefit of, the successors and assigns of the parties
hereto.

          11.7 NOTICE. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given: (a) if
delivered by hand and signed for by the party addressee; or (b) if mailed by
certified or registered mail, with postage prepaid, on the third business day
after the mailing date. Addresses for notice to either party are as shown on the
signature page of this Agreement or as subsequently modified by written notice.

          11.8 GOVERNING LAW. This Agreement shall be governed exclusively by
and construed according to the laws of the State of Delaware, without giving
effect to that body of laws pertaining to conflict of laws.

          11.9 CONSENT TO JURISDICTION. The Company and the Indemnitee each
hereby irrevocably consent to the jurisdiction of the courts of the State of
Delaware for all purposes in connection with any action or proceeding that
arises out of or relates to this Agreement.

          11.10 ATTORNEYS' FEES. In the event Indemnitee is required to bring
any action to enforce rights under this Agreement (including, without
limitation, the expenses of any Proceeding described in Section 1.3) the
Indemnitee shall be entitled to all reasonable fees and expenses in bringing and
pursuing such action, unless a court of competent jurisdiction finds each of the
material claims of the Indemnitee in any such action was frivolous and not made
in good faith.

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     IN WITNESS WHEREOF, the parties hereto have entered into this Indemnity
Agreement effective as of the date first written above.

DIAMOND FOODS, INC.                     INDEMNITEE:

By:                                     By:
    ---------------------------------       ------------------------------------
Name:                                   Name:
      -------------------------------         ----------------------------------
Title:
       ------------------------------

                      SIGNATURE PAGE TO INDEMNITY AGREEMENT<PAGE>

                                                                   EXHIBIT 10.02

                               DIAMOND FOODS, INC.

                           2005 EQUITY INCENTIVE PLAN

      1. PURPOSE. The purpose of the Plan is to provide incentives to attract,
retain and motivate eligible persons whose present and potential contributions
are important to the success of the Company, its Parent or Subsidiaries and to
do so in a way that more closely aligns their interests with the interests of
the Company's stockholders, by offering them an opportunity to participate in
the Company's future performance through awards of Options, Restricted Stock,
Stock Bonuses, Stock Appreciation Rights and Restricted Stock Units. Capitalized
terms not defined elsewhere in the Plan are defined in Section 26.

      2. SHARES SUBJECT TO THE PLAN.

            2.1 Number of Shares Available. Subject to Sections 2.2 and 21
below, two million five hundred thousand (2,500,000) Shares are available for
grant and issuance under the Plan. Shares that are subject to: (a) issuance upon
exercise of an Option or SAR granted under this Plan but which cease to be
subject to the Option or SAR for any reason other than exercise of the Option or
SAR; (b) Awards granted under this Plan but are forfeited or are repurchased by
the Company at the original issue price; or (c) Awards granted under this Plan
that otherwise terminate without Shares being issued, will return to the pool of
Shares available for grant and issuance under this Plan. The number of Shares
available for grant and issuance under the Plan shall be increased on the first
day of each of the Company's fiscal years 2006 through 2014, by the lesser of:
(i) two percent (2%) of the number of Shares issued and outstanding on the last
day of the prior fiscal year prior to the date of increase, and (ii) a lesser
number of Shares determined by the Board. In order that ISOs may be granted
under this Plan, no more than twenty-five million (25,000,000) Shares shall be
issued pursuant to the exercise of ISOs. Shares issued pursuant to Awards
granted under this Plan may be either authorized but unissued shares or treasury
shares. At all times the Company will reserve and keep available a sufficient
number of Shares to satisfy the requirements of all outstanding Options and SARs
granted under the Plan and all other outstanding but unvested Awards granted
under the Plan.

            2.2 Adjustment of Shares. If the number of outstanding Shares is
changed by a stock dividend, recapitalization, stock split, reverse stock split,
subdivision, combination, reclassification or similar change in the capital
structure of the Company, without consideration, then (a) the number of Shares
reserved for issuance and future grant under the Plan set forth in Section 2.1,
(b) the Exercise Prices of and number of Shares subject to outstanding Options
and SARs, (c) the number of Shares subject to other outstanding Awards, (d) the
maximum number of shares that may be issued as ISOs set forth in Section 2.1,
(e) the maximum number of shares that may be issued to an individual in any one
calendar year set forth in Section 3, and (f) the number of Shares that are
granted as Options to Non-Employee Directors as set forth in Section 8, will be
proportionately adjusted, subject to any required action by the Board or the
stockholders of the Company and compliance with applicable securities laws;
provided that fractions of a Share will not be issued but will either be
replaced by a cash payment equal to the Fair Market Value of such fraction of a
Share or will be rounded up (down in the case of ISOs) to the nearest whole
Share, as determined by the Committee; and provided further that the Exercise
Price of any Option may not be decreased to below the par value of the Shares.

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      3. ELIGIBILITY. ISOs may be granted only to employees (including officers
and directors who are also employees) of the Company or of a corporation that is
Parent or Subsidiary. All other Awards may be granted to employees, officers,
directors, consultants, independent contractors and advisors of the Company or
any Parent or Subsidiary; provided that such consultants, contractors and
advisors render bona fide services not in connection with the offer and sale of
securities in a capital-raising transaction. The Committee (or its designee
under Section 4.1(c)) will from time to time determine and designate among the
eligible persons who will be granted one or more Awards under the Plan. A person
may be granted more than one Award under the Plan. However, no person will be
eligible to receive more than one million (1,000,000) Shares issuable under
Awards granted in any calendar year, other than new employees of the Company or
of a Parent or Subsidiary (including new employees who are also officers and
directors of the Company or any Parent or Subsidiary), who are eligible to
receive up to a maximum of two million (2,000,000) Shares issuable under Awards
granted in the calendar year in which they commence their employment.

      4. ADMINISTRATION.

            4.1 Committee Authority. The Plan shall be administered by the
Committee or by the Board acting as the Committee. Except for automatic grants
to Non-Employee Directors pursuant to Section 8 hereof, and subject to the
general purposes, terms and conditions of the Plan, the Committee will have full
power to implement and carry out the Plan. Without limiting the previous
sentence, the Committee will have the authority to:

                  (a)   construe and interpret the Plan, any Award Agreement and
                        any other agreement or document executed pursuant to the
                        Plan;

                  (b)   prescribe, amend and rescind rules and regulations
                        relating to the Plan or any Award, including determining
                        the forms and agreements used in connection with the
                        Plan, provided that the Committee may delegate to the
                        President, the Chief Financial Officer or the officer in
                        charge of human resources, in consultation with the
                        Company's General Counsel, the authority to approve
                        revisions to the forms and agreements used in connection
                        with the Plan that are designed to facilitate Plan
                        administration, and that are not inconsistent with the
                        Plan or with any resolutions of the Committee relating
                        to the Plan;

                  (c)   select persons to receive Awards; provided that the
                        Committee may delegate to one or more Executive Officers
                        (who would also be considered "officers" under Delaware
                        law) the authority to grant an Award under the Plan to
                        Participants who are not Insiders;

                  (d)   determine the terms of Awards;

                  (e)   determine the number of Shares or other consideration
                        subject to Awards;

                                       2

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                  (f)   determine whether Awards will be granted singly, in
                        combination, or in tandem with, in replacement of, or as
                        alternatives to, other Awards under the Plan or any
                        other incentive or compensation plan of the Company or
                        any Parent or Subsidiary;

                  (g)   grant waivers of Plan or Award conditions;

                  (h)   determine the vesting, exercisability, transferability,
                        and payment of Awards;

                  (i)   correct any defect, supply any omission, or reconcile
                        any inconsistency in the Plan, any Award or any Award
                        Agreement;

                  (j)   determine whether an Award has been earned;

                  (k)   amend the Plan; or

                  (l)   make all other determinations necessary or advisable for
                        the administration of the Plan.

            4.2 Committee Interpretation and Discretion. Except for automatic
grants to Non-Employee Directors pursuant to Section 8 hereof, any determination
made by the Committee with respect to any Award shall be made in its sole
discretion at the time of grant of the Award or, unless in contravention of any
express term of the Plan or Award, at any later time, and such determination
shall be final and binding on the Company and all persons having an interest in
any Award under the Plan. Any dispute regarding the interpretation of the Plan
or any Award shall be submitted by the Participant or Company to the Committee
for review. The resolution of such a dispute by the Committee shall be final and
binding on the Company and Participant. The Committee may delegate to one or
more Executive Officers, the authority to review and resolve disputes with
respect to Awards held by Participants who are not Insiders, and such resolution
shall be final and binding on the Company and Participant.

      5. OPTIONS. The Committee may grant Options to Participants and will
determine (a) whether the Options will be ISOs or NSOs, (b) the number of Shares
subject to the Option, (c) the Exercise Price of the Option, (d) the period
during which the Option may be exercised, (e) the exercisibility of the Option
and, (f) all other terms and conditions of the Option, subject to the provisions
of the Plan. With respect to Options granted to Non-Employee Directors pursuant
to Section 8 in the event of a conflict between the provisions of Section 8 and
this Section 5, the provisions of Section 8 shall prevail.

            5.1 Form of Option Grant. Each Option granted under the Plan will be
evidenced by a Stock Option Agreement that will expressly identify the Option as
an ISO or NSO. Except as otherwise required by Section 8 regarding the terms of
Options to Non-Employee Directors, the Stock Option Agreement will be
substantially in a form and contain such provisions (which need not be the same
for each Participant) that the Committee has from time to time approved, and
will comply with and be subject to the terms and conditions of the Plan.

                                       3

<PAGE>

            5.2 Date of Grant. The date of grant of an Option will be the date
on which the Committee makes the determination to grant the Option, unless a
later date is otherwise specified by the Committee. The Stock Option Agreement,
and a copy of the Plan (plus any additional documents required to be delivered
under applicable laws), will be delivered to the Participant within a reasonable
time after the Option is granted. The Stock Option Agreement, Plan, and other
documents may be delivered in any manner (including electronic distribution or
posting) that meets applicable legal requirements.

            5.3 Exercise Period and Expiration Date. An Option will vest and
become exercisable within the times or upon the occurrence of events determined
by the Committee and set forth in the Stock Option Agreement governing such
Option, subject to the provisions of Section 5.6, and subject to Company
policies established by the Committee from time to time. The Committee may
provide for Options to vest and become exercisable at one time or from time to
time, periodically or otherwise (including, without limitation, upon the
attainment during a Performance Period of performance goals based on Performance
Factors), in such number of Shares or percentage of Shares subject to the Option
as the Committee determines; but in no event shall an Option that is granted to
an employee who is a non-exempt employee for purposes of overtime pay under the
Fair Labor Standards Act of 1938 be exercisable earlier than six (6) months
after its date of grant. The Stock Option Agreement shall set forth the
Expiration Date; provided that no Option will be exercisable after the
expiration of ten (10) years from the date the Option is granted; and provided
further that no ISO granted to a Ten Percent Stockholder will be exercisable
after the expiration of five years from the date the Option is granted. Options
may be exercisable prior to vesting of Shares thereunder, but subject to
repurchase pursuant to Section 15.2 hereof.

            An Option may only be exercised by the personal representative of a
Participant or an Authorized Transferee or by the person or persons to whom a
Participant's rights under the Option shall pass by such person's will or by the
laws of descent and distribution of the state of such person's domicile at the
time of death, and then only as and to the extent that such person was entitled
to exercise the Option on the date of death.

            5.4 Exercise Price. The Exercise Price of an Option will be
determined by the Committee when the Option is granted; provided that (a) the
Exercise Price of an ISO will not be less than one hundred percent (100%) of the
Fair Market Value of the Shares on the date of grant and (b) the Exercise Price
of any ISO granted to a Ten Percent Stockholder will not be less than one
hundred ten percent (110%) of the Fair Market Value of the Shares on the date of
grant. Payment for the Shares purchased must be made in accordance with Section
11 of the Plan and the Stock Option Agreement.

            5.5 Procedures for Exercise. A Participant or Authorized Transferee
may exercise Options by following the procedures established by the Company, as
communicated and made available to Participants.

            5.6 Termination. Notwithstanding the exercise periods set forth in
the Stock Option Agreement, exercise of an Option will always be subject to the
following:

                                       4

<PAGE>

                  (a)   If the Participant is Terminated for any reason except
                        Cause, death or Disability, then the Participant may
                        exercise such Participant's Options only to the extent
                        that such Options would have been exercisable upon the
                        Termination Date and no later than three (3) months
                        after the Termination Date (or such shorter or longer
                        time period not exceeding five (5) years as may be
                        determined by the Committee, with any such exercise
                        beyond three (3) months after the Termination Date
                        deemed to be an NSO), but in any event, no later than
                        the Expiration Date of the Options.

                  (b)   If the Participant is Terminated because of
                        Participant's death (or the Participant dies within
                        three (3) months after a Termination other than for
                        Cause), then Participant's Options may be exercised only
                        to the extent that such Options would have been
                        exercisable by Participant on the Termination Date and
                        must be exercised by Participant (or Participant's legal
                        representative or authorized assignee) no later than
                        twelve (12) months after the Termination Date (or such
                        shorter or longer time period not exceeding five (5)
                        years as may be determined by the Committee, with any
                        such exercise beyond twelve (12) months after the
                        Termination Date, deemed to be exercise of an NSO), but
                        in any event no later than the Expiration Date of the
                        Options.

                  (c)   If the Participant is Terminated because of
                        Participant's Disability (or the Committee determines
                        that the Participant experiences a Disability within
                        three (3) months after a Termination other than because
                        of Participant's Disability or for Cause), then
                        Participant's Options may be exercised only to the
                        extent that such Options would have been exercisable by
                        Participant on the Termination Date and must be
                        exercised by Participant (or Participant's legal
                        representative or authorized assignee) no later than six
                        (6) months after the Termination Date (or such shorter
                        or longer time period not exceeding five (5) years as
                        may be determined by the Committee, with any such
                        exercise beyond twelve (12) months after the Termination
                        Date, deemed to be exercise of an NSO), but in any event
                        no later than the Expiration Date of the Options.

                  (d)   Notwithstanding the provisions in paragraph 5.6(a)
                        above, if a Participant is terminated for Cause, neither
                        the Participant, the Participant's estate nor such other
                        person who may then hold the Option shall be entitled to
                        exercise any Option with respect to any Shares
                        whatsoever, after termination of service, whether or not
                        after termination of service the Participant may receive
                        payment from the Company or Subsidiary for vacation pay,
                        for services rendered prior to termination, for services
                        rendered for the day on which termination occurs, for
                        salary in lieu of notice, or for any other benefits. For
                        the purpose of this paragraph, termination of

                                       5

<PAGE>

                        service shall be deemed to occur on the date when the
                        Company dispatches notice or advice to the Participant
                        that his service is terminated.

            5.7 Limitations on Exercise. The Committee may specify a reasonable
minimum number of Shares that may be purchased on any exercise of an Option;
provided that the minimum number will not prevent a Participant from exercising
an Option for the full number of Shares for which it is then exercisable.

            5.8 Limitations on ISOs. The aggregate Fair Market Value (determined
as of the date of grant) of Shares with respect to which ISOs are exercisable
for the first time by a Participant during any calendar year (under the Plan or
under any other incentive stock option plan of the Company or any Parent or
Subsidiary) shall not exceed $100,000. If the Fair Market Value of Shares on the
date of grant with respect to which ISOs are exercisable for the first time by a
Participant during any calendar year exceeds $100,000, the Options for the first
$100,000 worth of Shares to become exercisable in that calendar year will be
ISOs, and the Options for the Shares with a Fair Market Value in excess of
$100,000 that become exercisable in that calendar year will be NSOs. If the Code
is amended to provide for a different limit on the Fair Market Value of Shares
permitted to be subject to ISOs, such different limit shall be automatically
incorporated into the Plan and will apply to any Options granted after the date
such amendment takes effect.

            5.9 Notice of Disqualifying Dispositions of Shares Acquired on
Exercise of an ISO. If a Participant sells or otherwise disposes of any Shares
acquired pursuant to the exercise of an ISO on or before the later of (a) the
date two years after the Date of Grant, and (b) the date one year after the
exercise of the ISO (in either case, a "Disqualifying Disposition"), the Company
may require the Participant to immediately notify the Company in writing of such
Disqualifying Disposition.

            5.10 Modification, Extension or Renewal. The Committee may modify,
extend or renew outstanding Options and authorize the grant of new Options in
substitution therefor; provided that any such action may not, without the
written consent of Participant, impair any of Participant's rights under any
Option previously granted; and provided further that without stockholder
approval the modified, extended, renewed or new Option may not have a lower
Exercise Price than the outstanding Option. Any outstanding ISO that is
modified, extended, renewed or otherwise altered shall be treated in accordance
with Section 424(h) of the Code. The Committee may reduce the Exercise Price
(but not below the par value for such Shares) of outstanding Options without the
consent of Participants affected, by a written notice to them.

            5.11 No Disqualification. Notwithstanding any other provision in the
Plan, no term of the Plan relating to ISOs will be interpreted, amended or
altered, and no discretion or authority granted under the Plan will be
exercised, so as to disqualify the Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code.

      6. RESTRICTED STOCK AWARDS.

                                       6

<PAGE>

            6.1 Awards of Restricted Stock. A Restricted Stock Award is an offer
by the Company to sell to a Participant Shares that are subject to restrictions
("Restricted Stock"). The Committee will determine to whom an offer will be
made, the number of Shares the person may purchase, the Purchase Price, the
restrictions under which the Shares will be subject and all other terms and
conditions of the Restricted Stock Award, subject to the Plan. With respect to
Restricted Stock Awards granted to Non-Employee Directors pursuant to Section 8
in the event of a conflict between the provisions of Section 8 and this Section
6, the provisions of Section 8 shall prevail.

            6.2 Restricted Stock Purchase Agreement. All purchases under a
Restricted Stock Award will be evidenced by a Restricted Stock Purchase
Agreement, which will be in substantially a form (which need not be the same for
each Participant) that the Committee has from time to time approved, and will
comply with and be subject to the terms and conditions of the Plan. A
Participant accepts a Restricted Stock Award by signing and delivering to the
Company a Restricted Stock Purchase Agreement with full payment of the Purchase
Price, within thirty (30) days from the date the Restricted Stock Purchase
Agreement was delivered to the Participant. If the Participant does not accept
the Restricted Stock Award within thirty (30) days, then the offer of the
Restricted Stock Award will terminate, unless the Committee determines
otherwise. The Restricted Stock Award, Plan and other documents may be delivered
in any manner (including electronic distribution or posting) that meets
applicable legal requirements.

            6.3 Purchase Price. The Purchase Price for a Restricted Stock Award
will be determined by the Committee and, may be less than Fair Market Value (but
not less than the par value of the Shares) on the date the Restricted Stock
Award is granted. Payment of the Purchase Price must be made in accordance with
Section 11 of the Plan and the Restricted Stock Purchase Agreement, and in
accordance with any procedures established by the Company, as communicated and
made available to Participants.

            6.4 Terms of Restricted Stock Awards. Restricted Stock Awards will
be subject to such restrictions as the Committee may impose or are required by
law. These restrictions may be based on completion of a specified number of
years of service with the Company or upon completion of the performance goals
based on Performance Factors during any Performance Period as set out in advance
in the Participant's Restricted Stock Purchase Agreement. Prior to the grant of
a Restricted Stock Award, the Committee shall: (a) determine the nature, length
and starting date of any Performance Period for the Restricted Stock Award; (b)
select from among the Performance Factors to be used to measure performance
goals, if any; and (c) determine the number of Shares that may be awarded to the
Participant. Prior to the payment for Shares to be purchased under any
Restricted Stock Award, the Committee shall determine the extent to which such
Restricted Stock Award has been earned. Performance Periods may overlap and a
Participant may participate simultaneously with respect to Restricted Stock
Awards that are subject to different Performance Periods and having different
performance goals and other criteria.

            6.5 Termination During Performance Period. Except as may be set
forth in the Participant's Restricted Stock Purchase Agreement, vesting ceases
on such Participant's Termination Date.

                                       7

<PAGE>

      7. STOCK BONUS AWARDS.

            7.1 Awards of Stock Bonuses. A Stock Bonus Award is an award to an
eligible person of Shares (which may consist of Restricted Stock or Restricted
Stock Units) for services to be rendered or for past services already rendered
to the Company or any Parent or Subsidiary. All Stock Bonus Awards shall be made
pursuant to a Stock Bonus Agreement, which shall be in substantially a form
(which need not be the same for each Participant) that the Committee has from
time to time approved, and will comply with and be subject to the terms and
conditions of the Plan. No payment will be required for Shares awarded pursuant
to a Stock Bonus Award.

            7.2 Terms of Stock Bonus Awards. The Committee will determine the
number of Shares to be awarded to the Participant under a Stock Bonus Award and
any restrictions thereon. These restrictions may be based upon completion of a
specified number of years of service with the Company or upon satisfaction of
performance goals based on Performance Factors during any Performance Period as
set out in advance in the Participant's Stock Bonus Agreement. If the Stock
Bonus Award is to be earned upon the satisfaction of performance goals, the
Committee shall: (a) determine the nature, length and starting date of any
Performance Period for the Stock Bonus Award; (b) select from among the
Performance Factors to be used to measure performance goals; and (c) determine
the number of Shares that may be awarded to the Participant. Prior to the
issuance of any Shares or other payment to a Participant pursuant to a Stock
Bonus Award, the Committee will determine the extent to which the Stock Bonus
Award has been earned. Performance Periods may overlap and a Participant may
participate simultaneously with respect to Stock Bonus Awards that are subject
to different Performance Periods and different performance goals and other
criteria. The number of Shares may be fixed or may vary in accordance with such
performance goals and criteria as may be determined by the Committee. The
Committee may adjust the performance goals applicable to a Stock Bonus Award to
take into account changes in law and accounting or tax rules and to make such
adjustments as the Committee deems necessary or appropriate to reflect the
impact of extraordinary or unusual items, events or circumstances to avoid
windfalls or hardships.

            7.3 Form of Payment to Participant. The Stock Bonus Award will be
paid to the Participant currently. Payment may be made in the form of cash,
whole Shares, or a combination thereof, based on the Fair Market Value of the
Shares earned under a Stock Bonus Award on the date of payment, either in a lump
sum payment or in installments, all as the Committee determines.

            7.4 Termination of Participant. In the event of a Participant's
Termination during a Performance Period or vesting period, for any reason, then
such Participant will be entitled to payment (whether in Shares, cash or
otherwise) with respect to the Stock Bonus Award only to the extent earned as of
the date of Termination in accordance with the Stock Bonus Agreement, unless the
Committee determines otherwise.

      8. AUTOMATIC GRANTS TO NON-EMPLOYEE DIRECTORS.

            8.1 Eligibility. Non-Employee Directors are eligible for Awards
granted pursuant to this Section 8.

                                       8

<PAGE>

            8.2 Restricted Stock Grant. Each Non-Employee Director who is a
member of the Board on the IPO Date will on the IPO Date automatically be
granted a Restricted Stock Award of a number of Shares determined by dividing
$120,000 by the price per share at which shares of the Company's Common Stock
are initially offered for sale to the public by the Company's underwriters in
the initial public offering of the Company's Common Stock pursuant to a
registration statement filed with the SEC under the Securities Act. Each
Non-Employee Director who first becomes a member of the Board after the IPO Date
will automatically be granted a Restricted Stock Award of a number of Shares
determined by dividing $120,000 by the Fair Market Value on the date such
Non-Employee Director first becomes a member of the Board. Each Restricted Stock
Award granted pursuant to this Section 8.2 shall be called a "Restricted Stock
Grant".

            8.3 Annual Options. Each Non-Employee Director will automatically be
granted an Option for ten thousand (10,000) Shares on the later of first
becoming a Non-Employee Director and the IPO Date; and on each anniversary of
the date such Non-Employee Director was first granted an Option pursuant to this
Section 8.3. Each Option granted pursuant to this Section 8.3 shall be called an
"Annual Option".

            8.4 Shares in Lieu Cash. Each Non-Employee may choose to receive
fully vested Shares in lieu of all or a portion of any cash payment payable to
such Non-Employee Director for his or her service on the Board. The number of
Shares issued in lieu of any cash payment shall be based on the Fair Market
Value of the Shares on the date the amount becomes payable to such Non-Employee
Director.

            8.5 Vesting and Exercisability.

                  (a) Restricted Stock issued under Restricted Stock Grants
shall vest in three equal annual installments, commencing with the first
anniversary of the date of grant, until fully vested, so long as the
Non-Employee Director continuously remains a Non-Employee Director or a
consultant of the Company. Each Annual Option shall vest and become exercisable
as to one hundred percent (100%) of the Shares covered on the first anniversary
of its date of grant, so long as the Non-Employee Director continuously remains
a Non-Employee Director of, or a consultant to, the Company.

                  (b) In the event of a Corporate Transaction, the vesting of
all Awards granted to Non-Employee Directors pursuant to this Section 8 will
accelerate and such Awards will become vested (and exercisable if applicable) in
full prior to the consummation of such event at such time and on such conditions
as the Committee determines, and to the extent Annual Options are not exercised
on or prior to the consummation of the Corporate Transaction, they shall
terminate.

            8.6 Form and Type of Award. Each Annual Option shall be a NSO and
each Award granted under this Section 8 shall be evidenced by an Award Agreement
in such form as the Committee shall from time to time approve and which shall
comply with and be subject to the terms and conditions of this Plan.

                                       9

<PAGE>

            8.7 Option Exercise Price. The Exercise Price per Share of each
Option granted under this Section 8 shall be the Fair Market Value of the Share
on the date the Option is granted.

            8.8 Expiration and Termination. Each Option granted under this
Section 8 shall expire no later than ten (10) years after its date of grant. The
date on which the Non-Employee Director ceases to be a member of the Board or a
consultant of the Company shall be referred to as the "Non-Employee Director
Termination Date" for purposes of this Section 8. On a Non-Employee Director's
Non-Employee Director Termination Date, all unvested Restricted Stock issued
pursuant to a Restricted Stock Grant to such Non-Employee Director shall
automatically be forfeited to the Company. An Option may be exercised after the
Non-Employee Director Termination Date only as set forth below:

                  (a) Termination Generally. If the Non-Employee Director ceases
to be a member of the Board or consultant of the Company for any reason except
Cause, death or Disability, then each Option, to the extent then vested, then
held by such Non-Employee Director may be exercised by the Non-Employee Director
within six (6) months after the Non-Employee Director Termination Date, but in
no event later than the Expiration Date.

                  (b) Death. If the Non-Employee Director ceases to be a member
of the Board or consultant of the Company because of his or her death, then each
Option, to the extent then vested, then held by such Non-Employee Director may
be exercised by the Non-Employee Director or his or her legal representative
within twelve (12) months after the Non-Employee Director Termination Date, but
in no event later than the Expiration Date.

                  (c) Disability. If the Non-Employee Director ceases to be a
member of the Board or consultant of the Company because of his or her
Disability, then each Option, to the extent then vested, then held by such
Non-Employee Director may be exercised by the Non-Employee Director or his or
her legal representative within twelve (12) months after the Non-Employee
Director Termination Date, but in no event later than the Expiration Date.

                  (d) Cause. Notwithstanding the provisions in paragraph (a) of
this Section 8.8, if a Participant is terminated for Cause, neither the
Participant, the Participant's estate nor such other person who may then hold
the Option shall be entitled to exercise any Option with respect to any Shares
whatsoever, after termination of service, whether or not after termination of
service the Participant may receive payment from the Company or Subsidiary for
vacation pay, for services rendered prior to termination, for services rendered
for the day on which termination occurs, for salary in lieu of notice, or for
any other benefits. For the purpose of this paragraph, the Non-Employee Director
Termination Date shall be deemed to occur on the date when the Company
dispatches notice or advice to the Participant that his service is terminated.

      9. STOCK APPRECIATION RIGHTS.

            9.1 Awards of SARs. A Stock Appreciation Right ("SAR") is an award
to an eligible person that may be settled in cash, or Shares (which may consist
of Restricted Stock), having a value equal to the value determined by
multiplying the difference between the Fair

                                       10

<PAGE>

Market Value on the date of exercise over the Exercise Price and the number of
Shares with respect to which the SAR is being settled (subject to any maximum
number of Shares that may be issuable as specified in a SAR Agreement). The SAR
may be granted for services to be rendered or for past services already rendered
to the Company, or any Parent or Subsidiary. All SARs shall be made pursuant to
a SAR Agreement, which shall be in substantially a form (which need not be the
same for each Participant) that the Committee has from time to time approved,
and will comply with and be subject to the terms and conditions of this Plan.

            9.2 Terms of SARs. The Committee will determine the terms of each
SAR including, without limitation: (a) the number of Shares deemed subject to
the SAR; (b) the Exercise Price and the time or times during which the SAR may
be settled; (c) the consideration to be distributed on settlement of the SAR;
and (d) the effect on each SAR of the Participant's Termination. The Exercise
Price of the SAR will be determined by the Committee when the SAR is granted
and, may be less than Fair Market Value (but not less than the par value of the
Shares). A SAR may be awarded upon satisfaction of such performance goals based
on Performance Factors during any Performance Period as are set out in advance
in the Participant's individual SAR Agreement. If the SAR is being earned upon
the satisfaction of performance goals, then the Committee will: (x) determine
the nature, length and starting date of any Performance Period for each SAR; and
(y) select from among the Performance Factors to be used to measure the
performance, if any. Prior to settlement of any SAR earned upon the satisfaction
of performance goals pursuant to a SAR Agreement, the Committee shall determine
the extent to which such SAR has been earned. Performance Periods may overlap
and Participants may participate simultaneously with respect to SARs that are
subject to different performance goals and other criteria.

            9.3 Exercise Period and Expiration Date. A SAR will be exercisable
within the times or upon the occurrence of events determined by the Committee
and set forth in the SAR Agreement governing such SAR. The SAR Agreement shall
set forth the Expiration Date; provided that no SAR will be exercisable after
the expiration of seven years from the date the SAR is granted. The Committee
may also provide for SARs to become exercisable at one time or from time to
time, periodically or otherwise (including, without limitation, upon the
attainment during a Performance Period of performance goals based on Performance
Factors), in such number of Shares or percentage of the Shares subject to the
SAR as the Committee determines.

            9.4 Form and Timing of Settlement. The portion of a SAR being
settled may be paid currently or on a deferred basis with such interest or
dividend equivalent, if any, as the Committee determines, provided that the
terms of the SAR and any deferral satisfy the requirements of Section 409A of
the Code and any regulations or rulings promulgated by the Internal Revenue
Service. Payment may be made in the form of cash or whole Shares or a
combination thereof, either in a lump sum payment or in installments, as the
Committee determines, provided however, that payment shall always be in a form
that satisfies the requirements of Section 409A of the Code.

                                       11

<PAGE>

      10. RESTRICTED STOCK UNITS.

            10.1 Awards of Restricted Stock Units. A Restricted Stock Unit
("RSU") is an award to an eligible person covering a number of Shares that may
be settled in cash, or by issuance of those Shares (which may consist of
Restricted Stock) for services to be rendered or for past services already
rendered to the Company or any Parent or Subsidiary. All RSUs shall be made
pursuant to a RSU Agreement, which shall be in substantially a form (which need
not be the same for each Participant) that the Committee or an officer of the
Company (pursuant to Section 4.1(b)) has from time to time approved, and will
comply with and be subject to the terms and conditions of the Plan.

            10.2 Terms of RSUs. The Committee will determine the terms of a RSU
including, without limitation: (a) the number of Shares deemed subject to the
RSU; (b) the time or times during which the RSU may be exercised; (c) the
consideration to be distributed on settlement, and the effect on each RSU of the
Participant's Termination. A RSU may be awarded upon satisfaction of such
performance goals based on Performance Factors during any Performance Period as
are set out in advance in the Participant's individual RSU Agreement. If the RSU
is being earned upon satisfaction of performance goals, then the Committee will:
(x) determine the nature, length and starting date of any Performance Period for
the RSU; (y) select from among the Performance Factors to be used to measure the
performance, if any; and (z) determine the number of Shares deemed subject to
the RSU. Prior to settlement of any RSU earned upon the satisfaction of
performance goals pursuant to a RSU Agreement, the Committee shall determine the
extent to which such SAR has been earned. Performance Periods may overlap and
participants may participate simultaneously with respect to RSUs that are
subject to different Performance Periods and different performance goals and
other criteria. The number of Shares may be fixed or may vary in accordance with
such performance goals and criteria as may be determined by the Committee. The
Committee may adjust the performance goals applicable to the RSUs to take into
account changes in law and accounting and to make such adjustments as the
Committee deems necessary or appropriate to reflect the impact of extraordinary
or unusual items, events or circumstances to avoid windfalls or hardships.

            10.3 Form and Timing of Settlement. The portion of a RSU being
settled shall be paid currently. To the extent permissible under law, the
Committee may also permit a Participant to defer payment under a RSU to a date
or dates after the RSU is earned provided that the terms of the RSU and any
deferral satisfy the requirements of Section 409A of the Code and any
regulations or rulings promulgated by the Internal Revenue Service. Payment may
be made in the form of cash or whole Shares or a combination thereof, either in
a lump sum payment or in installments, all as the Committee determines.

      11. PAYMENT FOR SHARE PURCHASES.

            11.1 Payment. Payment for Shares purchased pursuant to the Plan may
be made by any of the following methods (or any combination of such methods)
that are described in the applicable Award Agreement and that are permitted by
law:

                  (a)   in cash (by check);

                                       12

<PAGE>

                  (b)   by surrender of shares of the Company's Common Stock
                        that either: (1) were obtained by the Participant or
                        Authorized Transferee in the public market; or (2) if
                        the shares were not obtained in the public market, they
                        have been owned by the Participant or Authorized
                        Transferee for more than six months and have been paid
                        for within the meaning of SEC Rule 144 (and, if the
                        shares were purchased from the Company by use of a
                        promissory note, the note has been fully paid with
                        respect to the shares);

                  (c)   by tender of property; or

                  (d)   with respect only to purchases upon exercise of an
                        Option, and provided that a public market for the
                        Company's stock exists:

                        (1)   through a "same day sale" commitment from the
                              Participant or Authorized Transferee and an NASD
                              Dealer meeting the requirements of the Company's
                              "same day sale" procedures and in accordance with
                              law; or

                        (2)   through a "margin" commitment from Participant or
                              Authorized Transferee and an NASD Dealer meeting
                              the requirements of the Company's "margin"
                              procedures and in accordance with law.

            11.2 Issuance of Shares. Upon payment of the applicable Purchase
Price or Exercise Price (or a commitment for payment from the NASD Dealer
designated by the Participant or Authorized Transferee in the case of an
exercise by means of a "same-day sale" or "margin" commitment) or payment of the
par value in cash when payment of the par value is required by applicable law
for shares to be validly issued and fully paid, and compliance with other
conditions and procedures established by the Company for the purchase of shares,
the Company shall issue the Shares registered in the name of Participant or
Authorized Transferee (or in the name of the NASD Dealer designated by the
Participant or Authorized Transferee in the case of an exercise by means of a
"same-day sale" or "margin" commitment) and shall deliver certificates
representing the Shares (in physical or electronic form, as appropriate). The
Shares may be subject to legends or other restrictions as described in Section
15 of the Plan.

      12. WITHHOLDING TAXES.

            12.1 Withholding Generally. Whenever Shares are to be issued in
satisfaction of Awards granted under the Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate(s) for the Shares. If a payment in satisfaction of an Award is to be
made in cash, the payment will be net of an amount sufficient to satisfy
federal, state, and local withholding tax requirements.

            12.2 Stock Withholding. When, under applicable tax laws, a
Participant incurs tax liability in connection with the exercise or vesting of
any Award that is subject to tax

                                       13

<PAGE>

withholding and the Participant is obligated to pay the Company the amount
required to be withheld, the Committee may, in its sole discretion, allow the
Participant to satisfy the minimum withholding tax obligation by electing to
have the Company withhold from the Shares to be issued that number of whole
Shares having a Fair Market Value equal to the minimum amount required to be
withheld, determined on the date that the amount of tax to be withheld is to be
determined. All elections by a Participant to have Shares withheld for this
purpose shall be made in accordance with the requirements established by the
Committee and be in writing in a form acceptable to the Committee.

      13. PRIVILEGES OF STOCK OWNERSHIP. No Participant or Authorized Transferee
will have any rights as a stockholder of the Company with respect to any Shares
until the Shares are issued to the Participant or Authorized Transferee. After
Shares are issued to the Participant or Authorized Transferee, the Participant
or Authorized Transferee will be a stockholder and have all the rights of a
stockholder with respect to the Shares including the right to vote and receive
all dividends or other distributions made or paid with respect to such Shares;
provided, that if the Shares are Restricted Stock, any new, additional or
different securities the Participant or Authorized Transferee may become
entitled to receive with respect to the Shares by virtue of a stock dividend,
stock split or any other change in the corporate or capital structure of the
Company will be subject to the same restrictions as the Restricted Stock;
provided further, that the Participant or Authorized Transferee will have no
right to retain such dividends or distributions with respect to Shares that are
repurchased at the Participant's original Exercise Price or Purchase Price
pursuant to Section 15.

      14. TRANSFERABILITY. No Award and no interest therein, shall be sold,
pledged, assigned, hypothecated, transferred or disposed of in any manner other
than by will or by the laws of descent and distribution, and no Award may be
made subject to execution, attachment or similar process; provided, however that
with the consent of the Committee a Participant may transfer a NSO to an
Authorized Transferee. Transfers by the Participant for consideration are
prohibited. Without such consent by the Committee, a NSO shall, like all other
Awards under the Plan, be exercisable (a) during a Participant's lifetime only
by the Participant or the Participant's guardian or legal representative; and
(b) after Participant's death, by the legal representative of the Participant's
heirs or legatees.

      15. RESTRICTIONS ON SHARES. At the discretion of the Committee, the
Company may reserve to itself and/or its assignee(s) in the Award Agreement a
right to repurchase all or a portion of a Participant's Shares that are not
"Vested" (as defined in the Award Agreement), following the Participant's
Termination, at any time within ninety days after the later of (a) the
Participant's Termination Date or (b) the date the Participant purchases Shares
under the Plan, for cash or cancellation of purchase money indebtedness with
respect to Shares, at the Participant's original Exercise Price or Purchase
Price; provided that upon assignment of the right to repurchase, the assignee
must pay the Company cash equal to the excess of the Fair Market Value of the
Shares over the original Purchase Price.

      16. CERTIFICATES. All certificates for Shares or other securities
delivered under the Plan (whether in physical or electronic form, as
appropriate) will be subject to stock transfer orders, legends and other
restrictions that the Committee deems necessary or advisable, including without
limitation restrictions under any applicable federal, state or foreign
securities law, or any

                                       14

<PAGE>

rules, regulations and other requirements of the SEC or any stock exchange or
automated quotation system on which the Shares may be listed.

      17. ESCROW. To enforce any restrictions on a Participant's Shares, the
Committee may require the Participant to deposit all certificates representing
Shares, together with stock powers or other transfer instruments approved by the
Committee, appropriately endorsed in blank, with the Company or an agent
designated by the Company, to hold in escrow until such restrictions have lapsed
or terminated, and the Committee may cause a legend or legends referencing such
restrictions to be placed on the certificates.

      18. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award shall not be
effective unless the Award is in compliance with all applicable state, federal
and foreign securities laws, rules and regulations of any governmental body, and
the requirements of any stock exchange or automated quotation system on which
the Shares may then be listed, as they are in effect on the date of grant of the
Award and also on the date of exercise or other issuance. Notwithstanding any
other provision in the Plan, the Company shall have no obligation to issue or
deliver certificates for Shares under the Plan prior to (a) obtaining any
approvals from governmental agencies that the Company determines are necessary
or advisable, and/or (b) completion of any registration or other qualification
of such shares under any state, federal or foreign law or ruling of any
governmental body that the Company determines to be necessary or advisable. The
Company shall be under no obligation to register the Shares with the SEC or to
effect compliance with the registration, qualification or listing requirements
of any state, federal or foreign securities laws, stock exchange or automated
quotation system, and the Company shall have no liability for any inability or
failure to do so.

      19. NO OBLIGATION TO EMPLOY. Nothing in the Plan or any Award granted
under the Plan shall confer or be deemed to confer on any Participant any right
to continue in the employ of, or to continue any other relationship with, the
Company or any Parent or Subsidiary or limit in any way the right of the Company
or any Parent or Subsidiary to terminate Participant's employment or other
relationship at any time, with or without cause.

      20. REPRICING, EXCHANGE, BUYOUT OF AWARDS. The repricing of Awards or SARs
is permitted without prior stockholder approval, provided that the terms of the
repricing satisfy the requirements of Section 409A of the Code and any
regulations or rulings promulgated by the Internal Revenue Service. The
Committee may, at any time or from time to time authorize the Company, in the
case of an Option or SAR exchange without stockholder approval, and with the
consent of the respective Participants, to issue new Awards in exchange for the
surrender and cancellation of any, or all, outstanding Awards. The Committee may
at any time buy from a Participant an Option previously granted with payment in
cash, Shares or other consideration, based on such terms and conditions as the
Committee and the Participant shall agree.

      21. CORPORATE TRANSACTIONS.

            21.1 Assumption or Replacement of Awards by Successor. In the event
of a Corporate Transaction any, or all, outstanding Awards may be assumed or
replaced by the successor corporation, which assumption or replacement shall be
binding on all Participants. In

                                       15

<PAGE>

the alternative, the successor corporation may substitute equivalent Awards or
provide substantially similar consideration to Participants as was provided to
stockholders (after taking into account the existing provisions of the Awards).
The successor corporation may also issue, in place of outstanding Shares of the
Company held by the Participant, substantially similar shares or other property
subject to repurchase restrictions no less favorable to the Participant. In the
event such successor corporation, if any, refuses to assume or replace the
Awards held by Participants pursuant to a Corporate Transaction, such Awards
shall immediately vest as to 100% of the Shares subject thereto immediately
prior to the consummation of such Corporate Transaction. All Awards that are not
assumed as part of a Corporate Transaction shall expire at the closing of such
Corporate Transaction unless otherwise determined by the Board.

            21.2 Other Treatment of Awards. Subject to any greater rights
granted to Participants under Section 21.1, in the event of a Corporate
Transaction, any outstanding Awards shall be treated as provided in the
applicable agreement or plan of merger, consolidation, dissolution, liquidation
or sale of assets.

            21.3 Assumption of Awards by the Company. The Company, from time to
time, also may substitute or assume outstanding awards granted by another
company, whether in connection with an acquisition of such other company or
otherwise, by either (a) granting an Award under the Plan in substitution of
such other company's award, or (b) assuming such award as if it had been granted
under the Plan if the terms of such assumed award could be applied to an Award
granted under the Plan. Such substitution or assumption shall be permissible if
the holder of the substituted or assumed award would have been eligible to be
granted an Award under the Plan if the other company had applied the rules of
the Plan to such grant. In the event the Company assumes an award granted by
another company, the terms and conditions of such award shall remain unchanged
(except that the exercise price and the number and nature of Shares issuable
upon exercise of any such option will be adjusted appropriately pursuant to
Section 424(a) of the Code). In the event the Company elects to grant a new
Option rather than assuming an existing option, such new Option may be granted
with a similarly adjusted Exercise Price.

      22. ADOPTION AND STOCKHOLDER APPROVAL. The Plan was adopted by the Board
on March 10, 2005, (the "Adoption Date") to take effect on the IPO Date. This
Plan must be approved by the stockholders of the Company (excluding Shares
issued pursuant to this Plan from the determination of whether such approval has
been obtained), consistent with applicable laws, within twelve (12) months
before or after the Adoption Date.

      23. TERM OF PLAN/GOVERNING LAW. The Plan will terminate ten years
following the earlier of the Adoption Date or the date of its approval by the
stockholders of the Company. This Plan and all agreements hereunder shall be
governed by and construed in accordance with the laws of the State of
California, excluding its laws on conflict of laws.

      24. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time terminate
or amend the Plan in any respect, including without limitation amendment of any
form of Award Agreement or instrument to be executed pursuant to the Plan.
Notwithstanding the foregoing, neither the Board nor the Committee shall,
without the approval of the stockholders of the Company, amend the Plan in any
manner that requires such stockholder approval pursuant to

                                       16

<PAGE>

the Code or the regulations promulgated thereunder as such provisions apply to
ISO plans, or pursuant to the Exchange Act or any rule promulgated thereunder.
In addition, no amendment that is detrimental to a Participant may be made to
any outstanding Award without the consent of the Participant.

      25. NONEXCLUSIVITY OF THE PLAN; UNFUNDED PLAN. Neither the adoption of the
Plan by the Board, the submission of the Plan to the stockholders of the Company
for approval, nor any provision of the Plan shall be construed as creating any
limitations on the power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including, without limitation, the
granting of stock Awards and bonuses otherwise than under the Plan, and such
arrangements may be either generally applicable or applicable only in specific
cases. The Plan shall be unfunded. Neither the Company nor the Board shall be
required to segregate any assets that may at any time be represented by Awards
made pursuant to the Plan. Neither the Company, the Committee, nor the Board
shall be deemed to be a trustee of any amounts to be paid under the Plan.

      26. DEFINITIONS. As used in the Plan, the following terms shall have the
following meanings:

            (a) "Authorized Transferee" means the permissible recipient, as
authorized by this Plan and the Committee, of an NSO that is transferred during
the Participant's lifetime by the Participant by gift or domestic relations
order. For purposes of this definition a "permissible recipient" is: (i) a
child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former
spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law or sister-in-law of the Participant, including
any such person with such relationship to the Participant by adoption; (ii) any
person (other than a tenant or employee) sharing the Participant's household;
(iii) a trust in which the persons in (i) or (ii) have more than fifty percent
of the beneficial interest; (iv) a foundation in which the persons in (i) or
(ii) or the Participant control the management of assets; or (v) any other
entity in which the person in (i) or (ii) or the Participant own more than fifty
percent of the voting interest.

            (b) "Award" means any award under the Plan, including any Option,
Restricted Stock, Stock Bonus, Stock Appreciation Right or Restricted Stock
Unit.

            (c) "Award Agreement" means, with respect to each Award, the signed
written agreement between the Company and the Participant setting forth the
terms and conditions of the Award.

            (d) "Board" means the Board of Directors of the Company.

            (e) "Cause" means termination of the Participant's employment on the
basis of the Participant's conviction (or a plea of nolo contendere) of fraud,
misappropriation, embezzlement or any other act or acts of dishonesty
constituting a felony and resulting or intended to result directly or indirectly
in a substantial gain or personal enrichment to the Participant at the expense
of the Company or any Subsidiary.

            (f) "Code" means the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder.

                                       17

<PAGE>

            (g) "Committee" means the Compensation Committee of the Board or
such other committee appointed by the Board to administer the Plan, or if no
committee is appointed, the Board. Each member of the Committee shall be (i) a
"non-employee director" for purposes of Section 16 and Rule 16b-3 of the
Exchange Act, and (ii) an "outside director" for purposes of Section 162(m) of
the Code, unless the Board has fewer than two such outside directors.

            (h) "Company" means Diamond Foods, Inc., a corporation organized
under the laws of the State of Delaware, or any successor corporation.

            (i) "Corporate Transaction" means:

                  (1)   any individual, entity or group (within the meaning of
                        Section 13(d)(3) or 14(d)(2) of the Securities Exchange
                        Act of 1934, as amended) who, by the acquisition or
                        aggregation of securities, becomes the "beneficial
                        owner" (as defined in Rule 13d-3 under the Securities
                        Exchange Act of 1934, as amended), directly or
                        indirectly, of securities of the Company representing
                        50% or more of the combined voting power of the
                        Company's then outstanding securities ordinarily (and
                        apart from rights accruing under special circumstances)
                        having the right to vote on elections of directors (the
                        "Base Capital Stock"); except that any change in the
                        relative beneficial ownership of the Company's
                        securities by any person resulting solely from a
                        reduction in the aggregate number of outstanding shares
                        of Base Capital Stock, and any decrease thereafter in
                        such person's ownership of securities, shall be
                        disregarded until such person increases in any manner,
                        directly or indirectly, such person's beneficial
                        ownership of any securities of the Company; or

                  (2)   the consummation of a merger or consolidation of the
                        Company with or into another entity or any other
                        corporate reorganization, if persons who were not
                        stockholders of the Company immediately prior to such
                        merger, consolidation or other reorganization own
                        immediately after such merger, consolidation or other
                        reorganization 50% or more of the voting power of the
                        outstanding securities of each of (A) the continuing or
                        surviving entity and (B) any direct or indirect parent
                        corporation of such continuing or surviving entity; or

                  (3)   following IPO, a change in the composition of the Board,
                        as a result of which the individuals who, upon
                        consummation of the IPO, constitute the Board (the
                        "Incumbent Board"), cease for any reason to constitute
                        at least a majority of the Board; provided, however,
                        that any individual becoming a director subsequent to
                        the IPO whose election, or nomination for election by
                        the Company's stockholders, was approved by a vote of at
                        least two-thirds of the directors then comprising the
                        Incumbent Board shall be considered as though such an
                        individual were a member of the Incumbent Board; or

                                       18

<PAGE>

                  (4)   the sale, transfer or other disposition of all or
                        substantially all of the Company's assets (including a
                        dissolution of the Company).

Notwithstanding the foregoing, a transaction shall not constitute a Corporate
Transaction if its sole purpose is to change the state of the Company's
incorporation or to create a holding company that will be owned in substantially
the same proportions by the persons who held the Company's securities
immediately before such transaction, and a Corporate Transaction shall not be
deemed to occur from the occurrence of an initial public offering of Company
common stock to the general investing public.

            (j) "Disability" means a disability, whether temporary or permanent,
partial or total, as determined by the Committee (and within the meaning of
Section 22(e)(3) of the Code with respect to ISOs).

            (k) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the regulations promulgated thereunder.

            (l) "Executive Officer" means a person who is an "executive officer"
of the Company as defined in Rule 3b-7 promulgated under the Exchange Act.

            (m) "Exercise Price" means the price at which a Participant who
holds an Option or SAR may purchase the Shares issuable upon exercise of the
Option or SAR.

            (n) "Expiration Date" means the last date on which an Option or SAR
may be exercised as determined by the Committee.

            (o) "Fair Market Value" means, as of any date, the value of a share
of the Company's Common Stock determined as follows:

                  (1)   if such Common Stock is then quoted on the NASDAQ
                        National Market, its closing price on the NASDAQ
                        National Market on such date;

                  (2)   if such Common Stock is publicly traded and is then
                        listed on a national securities exchange, the last
                        reported sale price on such date or, if no such reported
                        sale takes place on such date, the average of the
                        closing bid and asked prices on the principal national
                        securities exchange on which the Common Stock is listed
                        or admitted to trading;

                  (3)   if such Common Stock is publicly traded but is not
                        quoted on the NASDAQ National Market nor listed or
                        admitted to trading on a national securities exchange,
                        the average of the closing bid and asked prices on such
                        date, as reported by The Wall Street Journal, for the
                        over-the-counter market; or

                  (4)   if none of the foregoing is applicable, by the Board of
                        Directors in good faith.

                                       19

<PAGE>

Notwithstanding the foregoing, for Awards granted on the IPO Date "Fair Market
Value" shall mean the price per share at which shares of the Company's Common
Stock are initially offered for sale to the public by the Company's underwriters
in the initial public offering of the Company's Common Stock pursuant to a
registration statement filed with the SEC under the Securities Act.

            (p) "Insider" means an officer or director of the Company or any
other person whose transactions in the Company's Common Stock are subject to
Section 16 of the Exchange Act.

            (q) "IPO" means the underwritten initial public offering of the
Company's Common Stock pursuant to a registration statement that has been
declared effective by the SEC.

            (r) "IPO Date" means the date on which shares of the Company's
Common Stock are initially offered for sale to the public by the Company's
underwriters in the initial public offering of the Company's Common Stock
pursuant to a registration statement filed with the SEC under the Securities
Act.

            (s) "ISO" means an Incentive Stock Option within the meaning of
Section 422 of the Code.

            (t) "NASD Dealer" means broker-dealer that is a member of the
National Association of Securities Dealers, Inc.

            (u) "NSO" means a nonqualified stock option that does not qualify as
an ISO.

            (v) "Option" means an Award pursuant to Section 5 or Section 8 of
the Plan.

            (w) "Non-Employee Director" means a member of the Company's Board of
Directors who is not a current or former employee of the Company or any Parent
or Subsidiary.

            (x) "Parent" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if at the time of the
granting of an Award under the Plan, each of such corporations other than the
Company owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain or such
lesser percentage as determined by the Committee.

            (y) "Participant" means a person who receives an Award under the
Plan.

            (z) "Performance Factors" means the factors selected by the
Committee from among the following measures (whether or not in comparison to
other peer companies) to determine whether the performance goals established by
the Committee and applicable to Awards have been satisfied:

                  (1)   Net revenue and/or net revenue growth;

                  (2)   Earnings per share and/or earnings per share growth;

                                       20

<PAGE>

                  (3)   Earnings before income taxes and amortization and/or
                        earnings before income taxes and amortization growth;

                  (4)   Operating income and/or operating income growth;

                  (5)   Net income and/or net income growth;

                  (6)   Total stockholder return and/or total stockholder return
                        growth;

                  (7)   Return on equity;

                  (8)   Operating cash flow return on income;

                  (9)   Adjusted operating cash flow return on income;

                  (10)  Economic value added;

                  (11)  Individual business objectives; and

                  (12)  Company specific operational metrics.

            (aa) "Performance Period" means the period of service determined by
the Committee, not to exceed five years, during which years of service or
performance is to be measured for the Award.

            (bb) "Plan" means this Diamond Foods, Inc. 2005 Equity Incentive
Plan, as amended from time to time.

            (cc) "Purchase Price" means the price to be paid for Shares acquired
under the Plan, other than Shares acquired upon exercise of an Option.

            (dd) "Restricted Stock Award" means an award of Shares pursuant to
Section 6 of the Plan.

            (ee) "Restricted Stock Purchase Agreement" means an agreement
evidencing a Restricted Stock Award granted pursuant to Section 6 of the Plan.

            (ff) "Restricted Stock Unit" means an Award granted pursuant to
Section 10 of the Plan.

            (gg) "RSU Agreement" means an agreement evidencing a Restricted
Stock Unit Award granted pursuant to Section 10 of the Plan.

            (hh) "SAR Agreement" means an agreement evidencing a Stock
Appreciation Right granted pursuant to Section 9 of the Plan.

            (ii) "SEC" means the Securities and Exchange Commission.

                                       21

<PAGE>

            (jj) "Securities Act" means the Securities Act of 1933, as amended,
and the regulations promulgated thereunder.

            (kk) "Shares" means shares of the Company's Common Stock $0.01 par
value, reserved for issuance under the Plan, as adjusted pursuant to Sections 2
and 21, and any successor security.

            (ll) "Stock Appreciation Right" means an Award granted pursuant to
Section 9 of the Plan.

            (mm) "Stock Bonus" means an Award granted pursuant to Section 7 of
the Plan.

            (nn) "Stock Bonus Agreement" means an agreement evidencing a Stock
Bonus Award granted pursuant to Section 7 of the Plan.

            (oo) "Stock Option Agreement" means the agreement which evidences a
Stock Option, granted pursuant to Section 5 of the Plan.

            (pp) "Subsidiary" means any entity directly or indirectly controlled
by the Company, as determined by the Committee.

            (qq) "Ten Percent Stockholder" means any person who directly or by
attribution owns more than ten percent of the total combined voting power of all
classes of stock of the Company or any Parent or Subsidiary.

            (rr) "Termination" or "Terminated" means, for purposes of the Plan
with respect to a Participant, that the Participant has ceased to provide
services as an employee, director, consultant, independent contractor or
adviser, to the Company or a Parent or Subsidiary; provided that a Participant
shall not be deemed to be Terminated if the Participant is on a leave of absence
approved by the Committee or by an officer of the Company designated by the
Committee; and provided further, that during any approved leave of absence,
vesting of Awards shall be suspended or continue in accordance with guidelines
established from time to time by the Committee. Subject to the foregoing, the
Committee shall have sole discretion to determine whether a Participant has
ceased to provide services and the date on which the Participant ceased to
provide services (the "Termination Date").

                                       22
<PAGE>

                                                                  NO.___________

                               DIAMOND FOODS, INC.

                           2005 EQUITY INCENTIVE PLAN

                             STOCK OPTION AGREEMENT

      This Stock Option Agreement (the "AGREEMENT") is made and entered into as
of the date of grant set forth below (the "DATE OF GRANT") by and between
Diamond Foods, Inc., a Delaware corporation (the "COMPANY"), and the participant
named below (the "PARTICIPANT"). Capitalized terms not defined herein shall have
the meaning ascribed to them in the Company's 2005 Equity Incentive Plan (the
"PLAN").

PARTICIPANT:                         _______________________________________
SOCIAL SECURITY NUMBER:              _______________________________________
ADDRESS:                             _______________________________________
                                     _______________________________________

TOTAL OPTION SHARES:                 _______________________________________
EXERCISE PRICE PER SHARE:            _______________________________________
DATE OF GRANT:                       _______________________________________
FIRST VESTING DATE:                  _______________________________________

EXPIRATION DATE:                     _______________________________________
                                     (unless earlier terminated under Section
                                      5.6 of the Plan)

CLASSIFICATION OF OPTIONEE           [ ] EXEMPT EMPLOYEE
                                     [ ] NONEXEMPT EMPLOYEE

TYPE OF STOCK OPTION
(CHECK ONE):                         [ ] INCENTIVE STOCK OPTION
                                     [ ] NONQUALIFIED STOCK OPTION

      1. GRANT OF OPTION. The Company hereby grants to Participant an option
(this "OPTION") to purchase the total number of shares of Common Stock of the
Company set forth above as Total Option Shares (the "SHARES") at the Exercise
Price Per Share set forth above (the "EXERCISE PRICE"), subject to all of the
terms and conditions of this Agreement and the Plan. If designated as an
Incentive Stock Option above, the Option is intended to qualify as an "incentive
stock option" (the "ISO") within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "CODE").

      2. EXERCISE PERIOD.

            2.1 EXERCISE PERIOD OF OPTION. Provided Participant continues to
provide services to the Company or any Subsidiary or Parent of the Company, the
Option will become vested and exercisable as to portions of the Shares as
follows: (i) this Option shall not vest nor be exercisable with respect to any
of the Shares until the First Vesting Date set forth on the first page of this
Agreement (the "FIRST VESTING DATE" which in the case of an employee whose wages
are not exempt from overtime shall be no earlier than six (6) months after the
Date of Grant

                                        1

<PAGE>

shown above); (ii) on the First Vesting Date the Option will become vested and
exercisable as to twenty-five percent (25%) of the Shares; and (iii) thereafter
at the end of each full succeeding month the Option will become vested and
exercisable as to 2.08333% of the Shares until the Shares are vested with
respect to one hundred percent (100%) of the Shares. If application of the
vesting percentage causes a fractional share, such share shall be rounded down
to the nearest whole share for each month except for the last month in such
vesting period, at the end of which last month this Option shall become
exercisable for the full remainder of the Shares.

            2.2 VESTING OF SHARES. Shares that are vested pursuant to the
schedule set forth in Section 2.1 are "VESTED SHARES." Shares that are not
vested pursuant to the schedule set forth in Section 2.1 are "UNVESTED SHARES."

            2.3 EXPIRATION. The Option shall expire on the Expiration Date set
forth above or earlier as provided in Section 3 below or pursuant to Section 5.6
of the Plan.

      3. TERMINATION.

      3.1 TERMINATION FOR ANY REASON EXCEPT DEATH, DISABILITY OR CAUSE. If
Participant is Terminated for any reason, except death, Disability or for Cause,
the Option, to the extent (and only to the extent) that it would have been
exercisable by Participant on the Termination Date, may be exercised by
Participant no later than three (3) months after the Termination Date, but in
any event no later than the Expiration Date. Any exercise of an ISO beyond (i)
three (3) months after the Termination Date when Termination is for any reason
other than Participant's death or "permanent and total disability" (within the
meaning of Section 22(e)(3) of the Code) is deemed to be the exercise of an
NQSO.

      3.2 TERMINATION BECAUSE OF DEATH. If Participant is Terminated because of
death (or Participant dies within three (3) months of Termination when
Termination is for any reason other than Cause), the Option, to the extent that
it is exercisable by Participant on the Termination Date, may be exercised by
Participant (or Participant's legal representative) no later than twelve (12)
months after the Termination Date, but in any event no later than the Expiration
Date.

      3.3 TERMINATION BECAUSE OF DISABILITY. If Participant is Terminated
because of the Disability of Participant (or the Committee determines that
Participant experiences a Disability within three (3) months of Termination when
Termination is for any reason other than for Cause), the Option, to the extent
that it is exercisable by Participant on the Termination Date, may be exercised
by Participant (or Participant's legal representative) no later than six (6)
months after the Termination Date, but in any event no later than the Expiration
Date.

      3.4 TERMINATION FOR CAUSE. If the Participant is terminated for Cause, the
Option shall immediately cease to be exercisable as to Vested Shares upon the
Termination Date and the Option shall expire on the Termination Date.

      3.5 NO OBLIGATION TO EMPLOY. Nothing in the Plan or this Agreement shall
confer on Participant any right to continue in the employ of, or other
relationship with, the Company or any Parent or Subsidiary of the Company, or
limit in any way the right of the Company or any Parent or Subsidiary of the
Company to terminate Participant's employment or other relationship at any time,
with or without Cause.

                                       2

<PAGE>

      4. MANNER OF EXERCISE.

      4.1 STOCK OPTION EXERCISE AGREEMENT. To exercise this Option, Participant
(or in the case of exercise after Participant's death or incapacity,
Participant's executor, administrator, heir or legatee, as the case may be) must
deliver to the Company an executed stock option exercise agreement in the form
attached hereto as Exhibit A, or in such other form as may be approved by the
Committee from time to time (the "EXERCISE AGREEMENT"), which shall set forth,
inter alia, (i) Participant's election to exercise the Option, (ii) the number
of Shares being purchased, (iii) any restrictions imposed on the Shares and (iv)
any representations, warranties and agreements regarding Participant's
investment intent and access to information as may be required by the Company to
comply with applicable securities laws. If someone other than Participant
exercises the Option, then such person must submit documentation reasonably
acceptable to the Company verifying that such person has the legal right to
exercise the Option and such person shall be subject to all of the restrictions
contained herein as if such person were the Participant.

      4.2 LIMITATIONS ON EXERCISE. The Option may not be exercised unless such
exercise is in compliance with all applicable federal and state securities laws,
as they are in effect on the date of exercise. The Option may not be exercised
as to fewer than one hundred (100) Shares unless it is exercised as to all
Shares as to which the Option is then exercisable.

      4.3 PAYMENT. The Exercise Agreement shall be accompanied by full payment
of the Exercise Price for the shares being purchased in cash (including by
check) or where permitted by law:

      (a) by cancellation of indebtedness of the Company to the Participant;

      (b) by surrender of shares of the Company's Common Stock that (i) either
(A) have been owned by Participant for more than six (6) months and have been
paid for within the meaning of SEC Rule 144 (and, if such shares were purchased
from the Company by use of a promissory note, such note has been fully paid with
respect to such shares); or (B) were obtained by Participant in the open public
market; and (ii) are clear of all liens, claims, encumbrances or security
interests;

      (c) by waiver of compensation due or accrued to Participant for services
rendered;

      (d) provided that a public market for the Company's stock exists: (i)
through a "same day sale" commitment from Participant and a broker-dealer that
is a member of the National Association of Securities Dealers (an "NASD Dealer")
whereby Participant irrevocably elects to exercise the Option and to sell a
portion of the Shares so purchased sufficient to pay for the total Exercise
Price and whereby the NASD Dealer irrevocably commits upon receipt of such
Shares to forward the total Exercise Price directly to the Company, or (ii)
through a "margin" commitment from Participant and an NASD Dealer whereby
Participant irrevocably elects to exercise the Option and to pledge the Shares
so purchased to the NASD Dealer in a margin account as security for a loan from
the NASD Dealer in the amount of the total Exercise Price, and whereby the NASD
Dealer irrevocably commits upon receipt of such Shares to forward the total
Exercise Price directly to the Company;

      (e) any other form of consideration approved by the Committee; or

      (f) by any combination of the foregoing.

                                       3

<PAGE>

      4.4 TAX WITHHOLDING. Prior to the issuance of the Shares upon exercise of
the Option, Participant must pay or provide for any applicable federal, state
and local withholding obligations of the Company. If the Committee permits,
Participant may provide for payment of withholding taxes upon exercise of the
Option by requesting that the Company retain the minimum number of Shares with a
Fair Market Value equal to the minimum amount of taxes required to be withheld;
but in no event will the Company withhold Shares if such withholding would
result in adverse accounting consequences to the Company. In such case, the
Company shall issue the net number of Shares to the Participant by deducting the
Shares retained from the Shares issuable upon exercise.

      4.5 ISSUANCE OF SHARES. Provided that the Exercise Agreement and payment
are in form and substance satisfactory to counsel for the Company, the Company
shall issue the Shares registered in the name of Participant, Participant's
authorized assignee, or Participant's legal representative, and shall deliver
certificates representing the Shares with the appropriate legends affixed
thereto.

      5. NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the Option is an
ISO, and if Participant sells or otherwise disposes of any of the Shares
acquired pursuant to the ISO on or before the later of (i) the date two (2)
years after the Date of Grant, and (ii) the date one (1) year after transfer of
such Shares to Participant upon exercise of the Option, Participant shall
immediately notify the Company in writing of such disqualifying disposition.
Participant understands and agrees that a disqualifying disposition may require
the Company to withhold applicable taxes on the compensation income recognized
by Participant from the disqualifying disposition by payment from the wages or
other compensation then payable to Participant (Participant may be permitted to
make a cash payment to the Company in lieu of such withholding).

      6. COMPLIANCE WITH LAWS AND REGULATIONS. The exercise of the Option and
the issuance and transfer of Shares shall be subject to compliance by the
Company and Participant with all applicable requirements of federal and state
securities laws and with all applicable requirements of any stock exchange on
which the Company's Common Stock may be listed at the time of such issuance or
transfer. Participant understands that the Company is under no obligation to
register or qualify the Shares with the SEC, any state securities commission or
any stock exchange to effect such compliance.

      7. NONTRANSFERABILITY OF OPTION. The Option may not be transferred in any
manner other than by will or by the laws of descent and distribution, and, with
respect to NQSOs, by instrument to an inter vivos or testamentary trust in which
the Option is to be passed to beneficiaries upon the death of the trustor
(settlor), and may be exercised during the lifetime of Participant only by
Participant or in the event of Participant's incapacity, by Participant's legal
representative. The terms of the Option shall be binding upon the executors,
administrators, successors and assigns of Participant.

      8. TAX CONSEQUENCES. Set forth below is a brief summary as of the
Effective Date of the Plan of some of the federal and California tax
consequences of exercise of the Option and disposition of the Shares. THIS
SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT
TO CHANGE. PARTICIPANT SHOULD CONSULT THE PROSPECTUS AND PARTICIPANT'S PERSONAL
TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.

                                       4

<PAGE>

      8.1 EXERCISE OF ISO. If the Option qualifies as an ISO, there will be no
regular federal or California income tax liability upon the exercise of the
Option, although the excess, if any, of the Fair Market Value of the Shares on
the date of exercise over the Exercise Price will be treated as a tax preference
item for federal alternative minimum tax purposes and may subject the
Participant to the alternative minimum tax in the year of exercise.

      8.2 EXERCISE OF NONQUALIFIED STOCK OPTION. If the Option does not qualify
as an ISO, there may be a regular federal and California income tax liability
upon the exercise of the Option. Participant will be treated as having received
compensation income (taxable at ordinary income tax rates) equal to the excess,
if any, of the Fair Market Value of the Shares on the date of exercise over the
Exercise Price. If Participant is a current or former employee of the Company,
the Company may be required to withhold from Participant's compensation or
collect from Participant and pay to the applicable taxing authorities an amount
equal to a percentage of this compensation income at the time of exercise.

      8.3 DISPOSITION OF SHARES. The following tax consequences may apply upon
disposition of the Shares.

      (a) Incentive Stock Options. If the Shares are held for more than twelve
(12) months after the date of the transfer of the Shares pursuant to the
exercise of an ISO and are disposed of more than two (2) years after the Date of
Grant, any gain realized on disposition of the Shares will be treated as long
term capital gain for federal and California income tax purposes. If Shares
purchased under an ISO are disposed of within the applicable one (1) year or two
(2) year period, any gain realized on such disposition will be treated as
compensation income (taxable at ordinary income rates) to the extent of the
excess, if any, of the Fair Market Value of the Shares on the date of exercise
over the Exercise Price.

      (b) Nonqualified Stock Options. If the Shares are held for more than
twelve (12) months after the date of the transfer of the Shares pursuant to the
exercise of an NQSO, any gain realized on disposition of the Shares will be
treated as long-term capital gain.

      (c) Withholding. The Company may be required to withhold from the
Participant's compensation or collect from the Participant and pay to the
applicable taxing authorities an amount equal to a percentage of this
compensation income.

      9. PRIVILEGES OF STOCK OWNERSHIP. Participant shall not have any of the
rights of a stockholder with respect to any Shares until the Shares are issued
to Participant.

      10. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Participant or the Company to the Committee for
review. The resolution of such a dispute by the Committee shall be final and
binding on the Company and Participant.

      11. ENTIRE AGREEMENT. The Plan is incorporated herein by reference. This
Agreement and the Plan constitute the entire agreement and understanding of the
parties with respect to the subject matter of this Agreement, and supersede all
prior understandings and agreements, whether oral or written, between or among
the parties hereto with respect to the specific subject matter hereof.

      12. NOTICES. Any and all notices required or permitted to be given to a
party pursuant to the provisions of this Agreement will be in writing and will
be effective and deemed to

                                       5

<PAGE>

provide such party sufficient notice under this Agreement on the earliest of the
following: (i) at the time of personal delivery, if delivery is in person; (ii)
one (1) business day after deposit with an express overnight courier for United
States deliveries, or two (2) business days after such deposit for deliveries
outside of the United States, with proof of delivery from the courier requested;
or (iii) three (3) business days after deposit in the United States mail by
certified mail (return receipt requested) for United States deliveries. All
notices for delivery outside the United States will be sent by express courier.
All notices not delivered personally will be sent with postage and/or other
charges prepaid and properly addressed to the party to be notified at the
address set forth below the signature lines of this Agreement, or at such other
address as such other party may designate by one of the indicated means of
notice herein to the other parties hereto. Notices to the Company will be marked
"Attention: Stock Plan Administration".

      13. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights under
this Agreement. No other party to this Agreement may assign, whether voluntarily
or by operation of law, any of its rights and obligations under this Agreement,
except with the prior written consent of the Company. This Agreement shall be
binding upon and inure to the benefit of the successors and assigns of the
Company. Subject to the restrictions on transfer set forth herein, this
Agreement shall be binding upon Participant and Participant's heirs, executors,
administrators, legal representatives, successors and assigns.

      14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without giving effect to
that body of laws pertaining to conflict of laws.

      15. ACCEPTANCE. Participant hereby acknowledges receipt of a copy of the
Plan and this Agreement. Participant has read and understands the terms and
provisions thereof, and accepts the Option subject to all the terms and
conditions of the Plan and this Agreement. Participant acknowledges that there
may be adverse tax consequences upon exercise of the Option or disposition of
the Shares and that Participant should consult a tax adviser prior to such
exercise or disposition.

      16. FURTHER ASSURANCES. The parties agree to execute such further
documents and instruments and to take such further actions as may be reasonably
necessary to carry out the purposes and intent of this Agreement.

      17. TITLES AND HEADINGS. The titles, captions and headings of this
Agreement are included for ease of reference only and will be disregarded in
interpreting or construing this Agreement. Unless otherwise specifically stated,
all references herein to "sections" and "exhibits" will mean "sections" and
"exhibits" to this Agreement.

      18. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered will be deemed an
original, and all of which together shall constitute one and the same agreement.

      19. SEVERABILITY. If any provision of this Agreement is determined by any
court or arbitrator of competent jurisdiction to be invalid, illegal or
unenforceable in any respect, such provision will be enforced to the maximum
extent possible given the intent of the parties hereto. If such clause or
provision cannot be so enforced, such provision shall be stricken from this
Agreement and the remainder of this Agreement shall be enforced as if such
invalid, illegal or

                                       6

<PAGE>

unenforceable clause or provision had (to the extent not enforceable) never been
contained in this Agreement. Notwithstanding the forgoing, if the value of this
Agreement based upon the substantial benefit of the bargain for any party is
materially impaired, which determination as made by the presiding court or
arbitrator of competent jurisdiction shall be binding, then both parties agree
to substitute such provision(s) through good faith negotiations.

            IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed IN TRIPLICATE by its duly authorized representative and Participant has
executed this Agreement IN TRIPLICATE, effective as of the Date of Grant.

DIAMOND FOODS, INC.                    PARTICIPANT

By:__________________________________  _________________________________________
                                       Signature

_____________________________________  _________________________________________
(Please print name)                    (Please print name)

_____________________________________
(Please print title)

Address:_____________________________  Address:_________________________________
_____________________________________  _________________________________________
_____________________________________  _________________________________________

Fax No.:_____________________________  Fax No.:_________________________________

Phone No.:___________________________  Phone No.:_______________________________

Attachment:

Exhibit A - Form of Stock Option Exercise Agreement

                                       7

<PAGE>

                                    EXHIBIT A

                     FORM OF STOCK OPTION EXERCISE AGREEMENT

                                       8

<PAGE>

                                                                     NO.________

                               DIAMOND FOODS, INC.

                           2005 EQUITY INCENTIVE PLAN

                         STOCK OPTION EXERCISE AGREEMENT

      This Stock Option Exercise Agreement (the "EXERCISE AGREEMENT") is made
and entered into as of ____________________, _____ (the "EFFECTIVE DATE") by and
between Diamond Foods, Inc., a Delaware corporation (the "COMPANY"), and the
purchaser named below (the "PURCHASER"). Capitalized terms not defined herein
shall have the meanings ascribed to them in the Company's 2005 Equity Incentive
Plan (the "PLAN").

PURCHASER:                 _____________________________________________________

                           _____________________________________________________

SOCIAL SECURITY NUMBER:    _____________________________________________________

ADDRESS:                   _____________________________________________________

                           _____________________________________________________

TOTAL NUMBER OF SHARES:    _____________________________________________________

EXERCISE PRICE PER SHARE:  _____________________________________________________

TYPE OF STOCK OPTION

(CHECK ONE):               [ ] INCENTIVE STOCK OPTION
                           [ ] NONQUALIFIED STOCK OPTION

      1.    EXERCISE OF OPTION.

            1.1 EXERCISE. Pursuant to exercise of that certain option (the
"OPTION") granted to Purchaser under the Plan and subject to the terms and
conditions of this Exercise Agreement, Purchaser hereby purchases from the
Company, and the Company hereby sells to Purchaser, the Total Number of Shares
set forth above (the "SHARES") of the Company's Common Stock, at the Exercise
Price Per Share set forth above (the "EXERCISE PRICE"). As used in this Exercise
Agreement, the term "SHARES" refers to the Shares purchased under this Exercise
Agreement and includes all securities received (i) in replacement of the Shares,
(ii) as a result of stock dividends or stock splits with respect to the Shares,
and (iii) all securities received in replacement of the Shares in a merger,
recapitalization, reorganization or similar corporate transaction.

            1.2 TITLE TO SHARES. The exact spelling of the name(s) under which
Purchaser will take title to the Shares is:

                              __________________________________________________
<PAGE>

                               _________________________________________________

            Purchaser desires to take title to the Shares as follows:

                  [ ] Individual, as separate property

                  [ ] Husband and wife, as community property

                  [ ] Joint Tenants

                  [ ] Other; please specify: ___________________________________

            1.3 PAYMENT. Purchaser hereby delivers payment of the Exercise Price
in the manner permitted in the Stock Option Agreement as follows (check and
complete as appropriate):

                  [ ]   in cash (by check) in the amount of $____________,
                        receipt of which is acknowledged by the Company;

                  [ ]   by delivery of _________ fully-paid, nonassessable and
                        vested shares of the Common Stock of the Company owned
                        by Purchaser for at least six (6) months prior to the
                        date hereof which have been paid for within the meaning
                        of SEC Rule 144, (if purchased by use of a promissory
                        note, such note has been fully paid with respect to such
                        vested shares), or obtained by Purchaser in the open
                        public market, and owned free and clear of all liens,
                        claims, encumbrances or security interests, valued at
                        the current Fair Market Value of $___________ per share;

                  [ ]   through a "same day sale" commitment from the
                        Purchaser or Authorized Transferee and an NASD Dealer
                        meeting the requirements of the Company's "same day
                        sale" procedures and in accordance with law; or

                  [ ]   through a "margin" commitment from Purchaser or
                        Authorized Transferee and an NASD Dealer meeting the
                        requirements of the Company's "margin" procedures and in
                        accordance with law.

      2.    DELIVERY.

            2.1 DELIVERIES BY PURCHASER. Purchaser hereby delivers to the
Company (i) this Exercise Agreement and (ii) the Exercise Price and payment or
other provision for any applicable tax obligations in the form of a check, a
copy of which is attached hereto as Exhibit 1.

            2.2 DELIVERIES BY THE COMPANY. Upon its receipt of the Exercise
Price, payment or other provision for any applicable tax obligations and all the
documents to be executed and delivered by Purchaser to the Company under Section
2.1, the Company will issue a duly executed stock certificate evidencing the
Shares in the name of Purchaser.

                                       2

<PAGE>

      3. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and
warrants to the Company that:

            3.1 AGREES TO TERMS OF THE PLAN. Purchaser has received a copy of
the Plan and the Stock Option Agreement, has read and understands the terms of
the Plan, the Stock Option Agreement and this Exercise Agreement, and agrees to
be bound by their terms and conditions. Purchaser acknowledges that there may be
adverse tax consequences upon exercise of the Option or disposition of the
Shares, and that Purchaser should consult a tax adviser prior to such exercise
or disposition.

            3.2 ACCESS TO INFORMATION. Purchaser has had access to all
information regarding the Company and its present and prospective business,
assets, liabilities and financial condition that Purchaser reasonably considers
important in making the decision to purchase the Shares, and Purchaser has had
ample opportunity to ask questions of the Company's representatives concerning
such matters and this investment.

            3.3 UNDERSTANDING OF RISKS. Purchaser has received and reviewed the
Form S-8 prospectus for the Plan and Shares and is fully aware of: (i) the
highly speculative nature of the investment in the Shares; (ii) the financial
hazards involved; (iii) the qualifications and backgrounds of the management of
the Company; and (iv) the tax consequences of investment in the Shares.
Purchaser is capable of evaluating the merits and risks of this investment, has
the ability to protect Purchaser's own interests in this transaction and is
financially capable of bearing a total loss of this investment.

      4. COMPLIANCE WITH SECURITIES LAWS. Purchaser understands and acknowledges
that the exercise of any rights to purchase any Shares is expressly conditioned
upon compliance with the Securities Act and all applicable state securities
laws. Purchaser agrees to cooperate with the Company to ensure compliance with
such laws.

      5.    RESTRICTED SECURITIES.

            5.1 NO TRANSFER UNLESS REGISTERED OR EXEMPT. Purchaser understands
that Purchaser may not transfer any Shares except when such Shares are
registered under the Securities Act or qualified under applicable state
securities laws or unless, in the opinion of counsel to the Company, exemptions
from such registration and qualification requirements are available. Purchaser
understands that only the Company may file a registration statement with the SEC
and that the Company is under no obligation to do so with respect to the Shares,
and may withdraw any such registration statement at any time after filing.
Purchaser has also been advised that exemptions from registration and
qualification may not be available or may not permit Purchaser to transfer all
or any of the Shares in the amounts or at the times proposed by Purchaser.

            5.2 SEC RULE 144. If Purchaser is an "affiliate" for purposes of
Rule 144 promulgated under the Securities Act, then in addition, Purchaser has
been advised that Rule 144 requires that the Shares be held for a minimum of one
(1) year, and in certain cases two (2) years, after they have been purchased and
paid for (within the meaning of Rule 144). Purchaser understands that Rule 144
may indefinitely restrict transfer of the Shares so long as Purchaser remains an
"affiliate" of the Company or if "current public information" about the Company
(as defined in Rule 144) is not publicly available.

                                       3

<PAGE>

      6. RIGHTS AS A STOCKHOLDER. Subject to the terms and conditions of this
Exercise Agreement, Purchaser will have all of the rights of a stockholder of
the Company with respect to the Shares from and after the date that Shares are
issued to Purchaser until such time as Purchaser disposes of the Shares.

      7.    RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.

            7.1 LEGENDS. Purchaser understands and agrees that the Company will
place any legends that may be required by state or U.S. Federal securities laws,
the Company's Certificate of Incorporation or Bylaws, any other agreement
between Purchaser and the Company or, subject to the assent of the Company, any
agreement between Purchaser and any third party.

            7.2 STOP-TRANSFER INSTRUCTIONS. Purchaser agrees that, to ensure
compliance with any restrictions imposed by this Exercise Agreement, the Company
may issue appropriate "stop-transfer" instructions to its transfer agent, if
any, and if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.

            7.3 REFUSAL TO TRANSFER. The Company will not be required (i) to
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Exercise Agreement or (ii) to treat
as owner of such Shares, or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares have been so transferred.

      8. TAX CONSEQUENCES. PURCHASER UNDERSTANDS AND REPRESENTS: (i) THAT
PURCHASER HAS REVIEWED THE PROSPECTUS PREPARED FOR THE PLAN AND CONSULTED
PURCHASER'S PERSONAL TAX ADVISER IN CONNECTION WITH THE PURCHASE OR DISPOSITION
OF THE SHARES AND (ii) THAT PURCHASER IS NOT RELYING ON THE COMPANY FOR ANY TAX
ADVICE. SET FORTH BELOW IS A BRIEF SUMMARY AS OF THE DATE THE PLAN WAS ADOPTED
BY THE BOARD OF SOME OF THE U.S. FEDERAL AND CALIFORNIA TAX CONSEQUENCES OF
EXERCISE OF THE OPTION AND DISPOSITION OF THE SHARES. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
PURCHASER SHOULD CONSULT THE PROSPECTUS AND PURCHASER'S PERSONAL TAX ADVISER
BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

            8.1 EXERCISE OF INCENTIVE STOCK OPTION. If the Option qualifies as
an ISO, there will be no regular U.S. Federal income tax liability or California
income tax liability upon the exercise of the Option, although the excess, if
any, of the Fair Market Value of the Shares on the date of exercise over the
Exercise Price will be treated as a tax preference item for U.S. Federal
alternative minimum tax purposes and may subject Purchaser to the alternative
minimum tax in the year of exercise.

            8.2 EXERCISE OF NONQUALIFIED STOCK OPTION. If the Option does not
qualify as an ISO, there may be a regular U.S. Federal income tax liability and
a California income tax liability upon the exercise of the Option. Purchaser
will be treated as having received compensation income (taxable at ordinary
income tax rates) equal to the excess, if any, of the Fair Market Value of the
Shares on the date of exercise over the Exercise Price. If Purchaser is or was
an employee of the Company, the Company may be required to withhold from
Purchaser's

                                       4

<PAGE>

compensation or collect from Purchaser and pay to the applicable taxing
authorities an amount equal to a percentage of this compensation income at the
time of exercise.

            8.3 DISPOSITION OF SHARES. The following tax consequences may apply
upon disposition of the Shares.

                  (a) Incentive Stock Options. If the Shares are held for more
than twelve (12) months after the date of the transfer of the Shares pursuant to
the exercise of an ISO and are disposed of more than two (2) years after the
Date of Grant, any gain realized on disposition of the Shares will be treated as
long term capital gain for federal and California income tax purposes. If Shares
purchased under an ISO are disposed of within the applicable one (1) year or two
(2) year period, any gain realized on such disposition will be treated as
compensation income (taxable at ordinary income rates) to the extent of the
excess, if any, of the Fair Market Value of the Shares on the date of exercise
over the Exercise Price.

                  (b) Nonqualified Stock Options. If the Shares are held for
more than twelve (12) months after the date of the transfer of the Shares
pursuant to the exercise of an NQSO, any gain realized on disposition of the
Shares will be treated as long-term capital gain.

                  (c) Withholding. The Company may be required to withhold from
the Purchaser's compensation or collect from the Purchaser and pay to the
applicable taxing authorities an amount equal to a percentage of this
compensation income.

      9. COMPLIANCE WITH LAWS AND REGULATIONS. The issuance and transfer of the
Shares will be subject to and conditioned upon compliance by the Company and
Purchaser with all applicable state and federal laws and regulations and with
all applicable requirements of any stock exchange or automated quotation system
on which the Company's Common Stock may be listed or quoted at the time of such
issuance or transfer.

      10. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights under
this Exercise Agreement. No other party to this Exercise Agreement may assign,
whether voluntarily or by operation of law, any of its rights and obligations
under this Exercise Agreement, except with the prior written consent of the
Company. This Exercise Agreement shall be binding upon and inure to the benefit
of the successors and assigns of the Company. Subject to the restrictions on
transfer herein set forth, this Exercise Agreement will be binding upon
Purchaser and Purchaser's heirs, executors, administrators, legal
representatives, successors and assigns.

      11. GOVERNING LAW. This Exercise Agreement shall be governed by and
construed in accordance with the laws of the State of California, without giving
effect to that body of laws pertaining to conflict of laws.

      12. NOTICES. Any and all notices required or permitted to be given to a
party pursuant to the provisions of this Exercise Agreement will be in writing
and will be effective and deemed to provide such party sufficient notice under
this Exercise Agreement on the earliest of the following: (i) at the time of
personal delivery, if delivery is in person; (ii) one (1) business day after
deposit with an express overnight courier for United States deliveries, or two
(2) business days after such deposit for deliveries outside of the United
States, with proof of delivery from the courier requested; or (iii) three (3)
business days after deposit in the United States mail

                                       5

<PAGE>

by certified mail (return receipt requested) for United States deliveries. All
notices for delivery outside the United States will be sent by express courier.
All notices not delivered personally will be sent with postage and/or other
charges prepaid and properly addressed to the party to be notified at the
address set forth below the signature lines of this Exercise Agreement, or at
such other address as such other party may designate by one of the indicated
means of notice herein to the other parties hereto. Notices to the Company will
be marked "Attention: Stock Plan Administration".

      13. FURTHER ASSURANCES. The parties agree to execute such further
documents and instruments and to take such further actions as may be reasonably
necessary to carry out the purposes and intent of this Exercise Agreement.

      14. TITLES AND HEADINGS. The titles, captions and headings of this
Exercise Agreement are included for ease of reference only and will be
disregarded in interpreting or construing this Exercise Agreement. Unless
otherwise specifically stated, all references herein to "sections" and
"exhibits" will mean "sections" and "exhibits" to this Exercise Agreement.

      15. ENTIRE AGREEMENT. The Plan, the Stock Option Agreement and this
Exercise Agreement, together with all Exhibits thereto, constitute the entire
agreement and understanding of the parties with respect to the subject matter of
this Exercise Agreement, and supersede all prior understandings and agreements,
whether oral or written, between or among the parties hereto with respect to the
specific subject matter hereof.

      16. COUNTERPARTS. This Exercise Agreement may be executed in any number of
counterparts, each of which when so executed and delivered will be deemed an
original, and all of which together shall constitute one and the same agreement.

      17. SEVERABILITY. If any provision of this Exercise Agreement is
determined by any court or arbitrator of competent jurisdiction to be invalid,
illegal or unenforceable in any respect, such provision will be enforced to the
maximum extent possible given the intent of the parties hereto. If such clause
or provision cannot be so enforced, such provision shall be stricken from this
Exercise Agreement and the remainder of this Exercise Agreement shall be
enforced as if such invalid, illegal or unenforceable clause or provision had
(to the extent not enforceable) never been contained in this Exercise Agreement.
Notwithstanding the forgoing, if the value of this Exercise Agreement based upon
the substantial benefit of the bargain for any party is materially impaired,
which determination as made by the presiding court or arbitrator of competent
jurisdiction shall be binding, then both parties agree to substitute such
provision(s) through good faith negotiations.

                    [THIS AREA INTENTIONALLY LEFT BLANK, SIGNATURE PAGE FOLLOWS]

                                       6

<PAGE>

      IN WITNESS WHEREOF, the Company has caused this Exercise Agreement to be
executed in triplicate by its duly authorized representative and Purchaser has
executed this Exercise Agreement in triplicate as of the Effective Date,
indicated above.

DIAMOND FOODS, INC.                    PURCHASER

By:__________________________________  _________________________________________
                                       (Signature)

_____________________________________  _________________________________________
(Please print name)                    (Please print name)

_____________________________________
(Please print title)

Address:                               Address:
_____________________________________  _________________________________________
_____________________________________  _________________________________________
_____________________________________  _________________________________________

Fax No.:_____________________________  Fax No.:_________________________________

Phone No.:___________________________  Phone No.:_______________________________

SIGNATURE PAGE TO DIAMOND FOODS, INC. STOCK OPTION EXERCISE AGREEMENT NO._______

EXHIBIT

Exhibit 1: Copy of Purchaser's Check

                                       7

<PAGE>

                                    EXHIBIT 1

                            COPY OF PURCHASER'S CHECK

                                       1
<PAGE>

                                                                     NO.________

                               DIAMOND FOODS, INC.

                           2005 EQUITY INCENTIVE PLAN

                   STOCK OPTION AGREEMENT FOR AUTOMATIC GRANTS

      This Stock Option Agreement (the "AGREEMENT") is made and entered into as
of the date of grant set forth below (the "DATE OF GRANT") by and between
Diamond Foods, Inc., a Delaware corporation (the "COMPANY"), and the participant
named below (the "PARTICIPANT") for an Annual Option granted under the Plan.
Capitalized terms not defined herein shall have the meaning ascribed to them in
the Company's 2005 Equity Incentive Plan (the "PLAN").

PARTICIPANT:                _______________________________________
SOCIAL SECURITY NUMBER:     _______________________________________
ADDRESS:                    _______________________________________
                            _______________________________________

TOTAL OPTION SHARES:        10,000
EXERCISE PRICE PER SHARE:   _______________________________________
DATE OF GRANT:              _______________________________________
EXPIRATION DATE:            _______________________________________

                            (unless earlier terminated under Section
                             5.6 of the Plan)

CLASSIFICATION OF OPTIONEE: DIRECTOR

TYPE OF STOCK OPTION:       NONQUALIFIED STOCK OPTION

      1. GRANT OF OPTION. The Company hereby grants to Participant an option
(this "OPTION") to purchase the total number of shares of Common Stock of the
Company set forth above as Total Option Shares (the "SHARES") at the Exercise
Price Per Share set forth above (the "EXERCISE PRICE"), subject to all of the
terms and conditions of this Agreement and the Plan.

      2. EXERCISE PERIOD.

            2.1 EXERCISE PERIOD OF OPTION. Provided Participant continues to be
a Non-Employee Director or consultant of the Company, one hundred percent (100%)
of the Shares will become vested (and the Option will then be exercisable for
such Shares) on the first anniversary of the Date of Grant shown above.

            2.2 VESTING OF SHARES. Shares that are vested pursuant to the
schedule set forth in Section 2.1 are "VESTED SHARES." Shares that are not
vested pursuant to the schedule set forth in Section 2.1 are "UNVESTED SHARES."

            2.3 EXPIRATION. The Option shall expire on the Expiration Date set
forth above or earlier as provided in Section 3 below or pursuant to Section 5.6
of the Plan.

                                       1

<PAGE>

      3. TERMINATION.

      3.1 TERMINATION FOR ANY REASON EXCEPT DEATH, DISABILITY OR CAUSE. If
Participant ceases to be a member of the Board or consultant of the Company for
any reason, except death, Disability or for Cause, the Option, to the extent
(and only to the extent) that it would have been exercisable by Participant on
the Non-Employee Director Termination Date, may be exercised by Participant no
later than six (6) months after the Non-Employee Director Termination Date, but
in any event no later than the Expiration Date.

      3.2 TERMINATION BECAUSE OF DEATH OR DISABILITY. If Participant ceases to
be a member of the Board or consultant of the Company because of death or
Disability, the Option, to the extent that it is exercisable by Participant on
the Non-Employee Director Termination Date, may be exercised by Participant (or
Participant's legal representative) no later than twelve (12) months after the
Non-Employee Director Termination Date, but in any event no later than the
Expiration Date.

      3.3 TERMINATION FOR CAUSE. If the Participant ceases to be a member of the
Board or consultant of the Company for Cause, the Option shall immediately cease
to be exercisable as to Vested Shares upon the Non-Employee Director Termination
Date and the Option shall expire on the Non-Employee Director Termination Date.

      3.4 NO OBLIGATION TO EMPLOY. Nothing in the Plan or this Agreement shall
confer on Participant any right to continue in the employ of, or other
relationship with, the Company or any Parent or Subsidiary of the Company, or
limit in any way the right of the Company or any Parent or Subsidiary of the
Company to terminate Participant's employment or other relationship at any time,
with or without Cause.

      4. MANNER OF EXERCISE.

      4.1 STOCK OPTION EXERCISE AGREEMENT. To exercise this Option, Participant
(or in the case of exercise after Participant's death or incapacity,
Participant's executor, administrator, heir or legatee, as the case may be) must
deliver to the Company an executed stock option exercise agreement in the form
attached hereto as Exhibit A, or in such other form as may be approved by the
Committee from time to time (the "EXERCISE AGREEMENT"), which shall set forth,
inter alia, (i) Participant's election to exercise the Option, (ii) the number
of Shares being purchased, (iii) any restrictions imposed on the Shares and (iv)
any representations, warranties and agreements regarding Participant's
investment intent and access to information as may be required by the Company to
comply with applicable securities laws. If someone other than Participant
exercises the Option, then such person must submit documentation reasonably
acceptable to the Company verifying that such person has the legal right to
exercise the Option and such person shall be subject to all of the restrictions
contained herein as if such person were the Participant.

      4.2 LIMITATIONS ON EXERCISE. The Option may not be exercised unless such
exercise is in compliance with all applicable federal and state securities laws,
as they are in effect on the date of exercise. The Option may not be exercised
as to fewer than one hundred (100) Shares unless it is exercised as to all
Shares as to which the Option is then exercisable.

                                       2

<PAGE>

      4.3 PAYMENT. The Exercise Agreement shall be accompanied by full payment
of the Exercise Price for the shares being purchased in cash (including by
check) or where permitted by law:

      (a) by cancellation of indebtedness of the Company to the Participant;

      (b) by surrender of shares of the Company's Common Stock that (i) either
(A) have been owned by Participant for more than six (6) months and have been
paid for within the meaning of SEC Rule 144 (and, if such shares were purchased
from the Company by use of a promissory note, such note has been fully paid with
respect to such shares); or (B) were obtained by Participant in the open public
market; and (ii) are clear of all liens, claims, encumbrances or security
interests;

      (c) by waiver of compensation due or accrued to Participant for services
rendered;

      (d) provided that a public market for the Company's stock exists: (i)
through a "same day sale" commitment from Participant and a broker-dealer that
is a member of the National Association of Securities Dealers (an "NASD Dealer")
whereby Participant irrevocably elects to exercise the Option and to sell a
portion of the Shares so purchased sufficient to pay for the total Exercise
Price and whereby the NASD Dealer irrevocably commits upon receipt of such
Shares to forward the total Exercise Price directly to the Company, or (ii)
through a "margin" commitment from Participant and an NASD Dealer whereby
Participant irrevocably elects to exercise the Option and to pledge the Shares
so purchased to the NASD Dealer in a margin account as security for a loan from
the NASD Dealer in the amount of the total Exercise Price, and whereby the NASD
Dealer irrevocably commits upon receipt of such Shares to forward the total
Exercise Price directly to the Company;

      (e) any other form of consideration approved by the Committee; or

      (f) by any combination of the foregoing.

      4.4 TAX WITHHOLDING. Prior to the issuance of the Shares upon exercise of
the Option, Participant must pay or provide for any applicable federal, state
and local withholding obligations of the Company. If the Committee permits,
Participant may provide for payment of withholding taxes upon exercise of the
Option by requesting that the Company retain the minimum number of Shares with a
Fair Market Value equal to the minimum amount of taxes required to be withheld;
but in no event will the Company withhold Shares if such withholding would
result in adverse accounting consequences to the Company. In such case, the
Company shall issue the net number of Shares to the Participant by deducting the
Shares retained from the Shares issuable upon exercise.

      4.5 ISSUANCE OF SHARES. Provided that the Exercise Agreement and payment
are in form and substance satisfactory to counsel for the Company, the Company
shall issue the Shares registered in the name of Participant, Participant's
authorized assignee, or Participant's legal representative, and shall deliver
certificates representing the Shares with the appropriate legends affixed
thereto.

      5. COMPLIANCE WITH LAWS AND REGULATIONS. The exercise of the Option and
the issuance and transfer of Shares shall be subject to compliance by the
Company and Participant with all applicable requirements of federal and state
securities laws and with all

                                       3

<PAGE>

applicable requirements of any stock exchange on which the Company's Common
Stock may be listed at the time of such issuance or transfer. Participant
understands that the Company is under no obligation to register or qualify the
Shares with the SEC, any state securities commission or any stock exchange to
effect such compliance.

      6. NONTRANSFERABILITY OF OPTION. The Option may not be transferred in any
manner other than by will or by the laws of descent and distribution, and by
instrument to an inter vivos or testamentary trust in which the Option is to be
passed to beneficiaries upon the death of the trustor (settlor), and may be
exercised during the lifetime of Participant only by Participant or in the event
of Participant's incapacity, by Participant's legal representative. The terms of
the Option shall be binding upon the executors, administrators, successors and
assigns of Participant.

      7. TAX CONSEQUENCES. Set forth below is a brief summary as of the
Effective Date of the Plan of some of the federal and California tax
consequences of exercise of the Option and disposition of the Shares. THIS
SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT
TO CHANGE. PARTICIPANT SHOULD CONSULT THE PROSPECTUS AND PARTICIPANT'S PERSONAL
TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.

      7.1 EXERCISE OF NONQUALIFIED STOCK OPTION. Participant will be treated as
having received compensation income (taxable at ordinary income tax rates) equal
to the excess, if any, of the Fair Market Value of the Shares on the date of
exercise over the Exercise Price.

      7.2 DISPOSITION OF SHARES. The following tax consequences may apply upon
disposition of the Shares.

      (a) Nonqualified Stock Options. If the Shares are held for more than
twelve (12) months after the date of the transfer of the Shares pursuant to the
exercise of an NQSO, any gain realized on disposition of the Shares will be
treated as long-term capital gain.

      (b) Withholding. The Company may be required to withhold from the
Participant's compensation or collect from the Participant and pay to the
applicable taxing authorities an amount equal to a percentage of this
compensation income.

      8. PRIVILEGES OF STOCK OWNERSHIP. Participant shall not have any of the
rights of a stockholder with respect to any Shares until the Shares are issued
to Participant.

      9. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Participant or the Company to the Committee for
review. The resolution of such a dispute by the Committee shall be final and
binding on the Company and Participant.

      10. ENTIRE AGREEMENT. The Plan is incorporated herein by reference. This
Agreement and the Plan constitute the entire agreement and understanding of the
parties with respect to the subject matter of this Agreement, and supersede all
prior understandings and agreements, whether oral or written, between or among
the parties hereto with respect to the specific subject matter hereof.

      11. NOTICES. Any and all notices required or permitted to be given to a
party pursuant to the provisions of this Agreement will be in writing and will
be effective and deemed to

                                       4

<PAGE>

provide such party sufficient notice under this Agreement on the earliest of the
following: (i) at the time of personal delivery, if delivery is in person; (ii)
one (1) business day after deposit with an express overnight courier for United
States deliveries, or two (2) business days after such deposit for deliveries
outside of the United States, with proof of delivery from the courier requested;
or (iii) three (3) business days after deposit in the United States mail by
certified mail (return receipt requested) for United States deliveries. All
notices for delivery outside the United States will be sent by express courier.
All notices not delivered personally will be sent with postage and/or other
charges prepaid and properly addressed to the party to be notified at the
address set forth below the signature lines of this Agreement, or at such other
address as such other party may designate by one of the indicated means of
notice herein to the other parties hereto. Notices to the Company will be marked
"Attention: Stock Plan Administration".

      12. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights under
this Agreement. No other party to this Agreement may assign, whether voluntarily
or by operation of law, any of its rights and obligations under this Agreement,
except with the prior written consent of the Company. This Agreement shall be
binding upon and inure to the benefit of the successors and assigns of the
Company. Subject to the restrictions on transfer set forth herein, this
Agreement shall be binding upon Participant and Participant's heirs, executors,
administrators, legal representatives, successors and assigns.

      13. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without giving effect to
that body of laws pertaining to conflict of laws.

      14. ACCEPTANCE. Participant hereby acknowledges receipt of a copy of the
Plan and this Agreement. Participant has read and understands the terms and
provisions thereof, and accepts the Option subject to all the terms and
conditions of the Plan and this Agreement. Participant acknowledges that there
may be adverse tax consequences upon exercise of the Option or disposition of
the Shares and that Participant should consult a tax adviser prior to such
exercise or disposition.

      15. FURTHER ASSURANCES. The parties agree to execute such further
documents and instruments and to take such further actions as may be reasonably
necessary to carry out the purposes and intent of this Agreement.

      16. TITLES AND HEADINGS. The titles, captions and headings of this
Agreement are included for ease of reference only and will be disregarded in
interpreting or construing this Agreement. Unless otherwise specifically stated,
all references herein to "sections" and "exhibits" will mean "sections" and
"exhibits" to this Agreement.

      17. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered will be deemed an
original, and all of which together shall constitute one and the same agreement.

      18. SEVERABILITY. If any provision of this Agreement is determined by any
court or arbitrator of competent jurisdiction to be invalid, illegal or
unenforceable in any respect, such provision will be enforced to the maximum
extent possible given the intent of the parties hereto. If such clause or
provision cannot be so enforced, such provision shall be stricken from this
Agreement and the remainder of this Agreement shall be enforced as if such
invalid, illegal or

                                       5

<PAGE>

unenforceable clause or provision had (to the extent not enforceable) never been
contained in this Agreement. Notwithstanding the forgoing, if the value of this
Agreement based upon the substantial benefit of the bargain for any party is
materially impaired, which determination as made by the presiding court or
arbitrator of competent jurisdiction shall be binding, then both parties agree
to substitute such provision(s) through good faith negotiations.

            IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed IN TRIPLICATE by its duly authorized representative and Participant has
executed this Agreement IN TRIPLICATE, effective as of the Date of Grant.

DIAMOND FOODS, INC.                    PARTICIPANT

By:__________________________________  _________________________________________
                                       Signature
_____________________________________  _________________________________________
(Please print name)                    (Please print name)

_____________________________________
(Please print title)
Address:_____________________________  Address:_________________________________
_____________________________________  _________________________________________
_____________________________________  _________________________________________

Fax No.:_____________________________  Fax No.:_________________________________

Phone No.:___________________________  Phone No.:_______________________________

Attachment:

Exhibit A - Form of Stock Option Exercise Agreement

                                       6

<PAGE>

                                    EXHIBIT A

                     FORM OF STOCK OPTION EXERCISE AGREEMENT

                                       7

<PAGE>

                                                                     NO.________

                               DIAMOND FOODS, INC.

                           2005 EQUITY INCENTIVE PLAN

                         STOCK OPTION EXERCISE AGREEMENT

      This Stock Option Exercise Agreement (the "EXERCISE AGREEMENT") is made
and entered into as of ____________________, _____ (the "EFFECTIVE DATE") by and
between Diamond Foods, Inc., a Delaware corporation (the "COMPANY"), and the
purchaser named below (the "PURCHASER"). Capitalized terms not defined herein
shall have the meanings ascribed to them in the Company's 2005 Equity Incentive
Plan (the "PLAN").

PURCHASER:                ______________________________________________________

                          ______________________________________________________

SOCIAL SECURITY NUMBER:   ______________________________________________________

ADDRESS:                  ______________________________________________________

                          ______________________________________________________

TOTAL NUMBER OF SHARES:   ______________________________________________________

EXERCISE PRICE PER SHARE: ______________________________________________________

TYPE OF STOCK OPTION

(CHECK ONE):              [ ] INCENTIVE STOCK OPTION
                          [ ] NONQUALIFIED STOCK OPTION

      1.    EXERCISE OF OPTION.

            1.1 EXERCISE. Pursuant to exercise of that certain option (the
"OPTION") granted to Purchaser under the Plan and subject to the terms and
conditions of this Exercise Agreement, Purchaser hereby purchases from the
Company, and the Company hereby sells to Purchaser, the Total Number of Shares
set forth above (the "SHARES") of the Company's Common Stock, at the Exercise
Price Per Share set forth above (the "EXERCISE PRICE"). As used in this Exercise
Agreement, the term "SHARES" refers to the Shares purchased under this Exercise
Agreement and includes all securities received (i) in replacement of the Shares,
(ii) as a result of stock dividends or stock splits with respect to the Shares,
and (iii) all securities received in replacement of the Shares in a merger,
recapitalization, reorganization or similar corporate transaction.

            1.2 TITLE TO SHARES. The exact spelling of the name(s) under which
Purchaser will take title to the Shares is:

                       _________________________________________________________

                                       1

<PAGE>

                     ___________________________________________________________

            Purchaser desires to take title to the Shares as follows:

                  [ ]   Individual, as separate property

                  [ ]   Husband and wife, as community property

                  [ ]   Joint Tenants

                  [ ]   Other; please specify: _________________________________

            1.3 PAYMENT. Purchaser hereby delivers payment of the Exercise Price
in the manner permitted in the Stock Option Agreement as follows (check and
complete as appropriate):

                  [ ]   in cash (by check) in the amount of $____________,
                        receipt of which is acknowledged by the Company;

                  [ ]   by delivery of _________ fully-paid, nonassessable and
                        vested shares of the Common Stock of the Company owned
                        by Purchaser for at least six (6) months prior to the
                        date hereof which have been paid for within the meaning
                        of SEC Rule 144, (if purchased by use of a promissory
                        note, such note has been fully paid with respect to such
                        vested shares), or obtained by Purchaser in the open
                        public market, and owned free and clear of all liens,
                        claims, encumbrances or security interests, valued at
                        the current Fair Market Value of $___________ per share;

                  [ ]   through a "same day sale" commitment from the Purchaser
                        or Authorized Transferee and an NASD Dealer meeting the
                        requirements of the Company's "same day sale" procedures
                        and in accordance with law; or

                  [ ]   through a "margin" commitment from Purchaser or
                        Authorized Transferee and an NASD Dealer meeting the
                        requirements of the Company's "margin" procedures and in
                        accordance with law.

      2.    DELIVERY.

            2.1 DELIVERIES BY PURCHASER. Purchaser hereby delivers to the
Company (i) this Exercise Agreement and (ii) the Exercise Price and payment or
other provision for any applicable tax obligations in the form of a check, a
copy of which is attached hereto as Exhibit 1.

            2.2 DELIVERIES BY THE COMPANY. Upon its receipt of the Exercise
Price, payment or other provision for any applicable tax obligations and all the
documents to be executed and delivered by Purchaser to the Company under Section
2.1, the Company will issue a duly executed stock certificate evidencing the
Shares in the name of Purchaser.

                                       2

<PAGE>

      3. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and
warrants to the Company that:

            3.1 AGREES TO TERMS OF THE PLAN. Purchaser has received a copy of
the Plan and the Stock Option Agreement, has read and understands the terms of
the Plan, the Stock Option Agreement and this Exercise Agreement, and agrees to
be bound by their terms and conditions. Purchaser acknowledges that there may be
adverse tax consequences upon exercise of the Option or disposition of the
Shares, and that Purchaser should consult a tax adviser prior to such exercise
or disposition.

            3.2 ACCESS TO INFORMATION. Purchaser has had access to all
information regarding the Company and its present and prospective business,
assets, liabilities and financial condition that Purchaser reasonably considers
important in making the decision to purchase the Shares, and Purchaser has had
ample opportunity to ask questions of the Company's representatives concerning
such matters and this investment.

            3.3 UNDERSTANDING OF RISKS. Purchaser has received and reviewed the
Form S-8 prospectus for the Plan and Shares and is fully aware of: (i) the
highly speculative nature of the investment in the Shares; (ii) the financial
hazards involved; (iii) the qualifications and backgrounds of the management of
the Company; and (iv) the tax consequences of investment in the Shares.
Purchaser is capable of evaluating the merits and risks of this investment, has
the ability to protect Purchaser's own interests in this transaction and is
financially capable of bearing a total loss of this investment.

      4. COMPLIANCE WITH SECURITIES LAWS. Purchaser understands and acknowledges
that the exercise of any rights to purchase any Shares is expressly conditioned
upon compliance with the Securities Act and all applicable state securities
laws. Purchaser agrees to cooperate with the Company to ensure compliance with
such laws.

      5.    RESTRICTED SECURITIES.

            5.1 NO TRANSFER UNLESS REGISTERED OR EXEMPT. Purchaser understands
that Purchaser may not transfer any Shares except when such Shares are
registered under the Securities Act or qualified under applicable state
securities laws or unless, in the opinion of counsel to the Company, exemptions
from such registration and qualification requirements are available. Purchaser
understands that only the Company may file a registration statement with the SEC
and that the Company is under no obligation to do so with respect to the Shares,
and may withdraw any such registration statement at any time after filing.
Purchaser has also been advised that exemptions from registration and
qualification may not be available or may not permit Purchaser to transfer all
or any of the Shares in the amounts or at the times proposed by Purchaser.

            5.2 SEC RULE 144. If Purchaser is an "affiliate" for purposes of
Rule 144 promulgated under the Securities Act, then in addition, Purchaser has
been advised that Rule 144 requires that the Shares be held for a minimum of one
(1) year, and in certain cases two (2) years, after they have been purchased and
paid for (within the meaning of Rule 144). Purchaser understands that Rule 144
may indefinitely restrict transfer of the Shares so long as Purchaser remains an
"affiliate" of the Company or if "current public information" about the Company
(as defined in Rule 144) is not publicly available.

                                       3

<PAGE>

      6. RIGHTS AS A STOCKHOLDER. Subject to the terms and conditions of this
Exercise Agreement, Purchaser will have all of the rights of a stockholder of
the Company with respect to the Shares from and after the date that Shares are
issued to Purchaser until such time as Purchaser disposes of the Shares.

      7. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.

            7.1 LEGENDS. Purchaser understands and agrees that the Company will
place any legends that may be required by state or U.S. Federal securities laws,
the Company's Certificate of Incorporation or Bylaws, any other agreement
between Purchaser and the Company or, subject to the assent of the Company, any
agreement between Purchaser and any third party.

            7.2 STOP-TRANSFER INSTRUCTIONS. Purchaser agrees that, to ensure
compliance with any restrictions imposed by this Exercise Agreement, the Company
may issue appropriate "stop-transfer" instructions to its transfer agent, if
any, and if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.

            7.3 REFUSAL TO TRANSFER. The Company will not be required (i) to
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Exercise Agreement or (ii) to treat
as owner of such Shares, or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares have been so transferred.

      8. TAX CONSEQUENCES. PURCHASER UNDERSTANDS AND REPRESENTS: (i) THAT
PURCHASER HAS REVIEWED THE PROSPECTUS PREPARED FOR THE PLAN AND CONSULTED
PURCHASER'S PERSONAL TAX ADVISER IN CONNECTION WITH THE PURCHASE OR DISPOSITION
OF THE SHARES AND (ii) THAT PURCHASER IS NOT RELYING ON THE COMPANY FOR ANY TAX
ADVICE. SET FORTH BELOW IS A BRIEF SUMMARY AS OF THE DATE THE PLAN WAS ADOPTED
BY THE BOARD OF SOME OF THE U.S. FEDERAL AND CALIFORNIA TAX CONSEQUENCES OF
EXERCISE OF THE OPTION AND DISPOSITION OF THE SHARES. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
PURCHASER SHOULD CONSULT THE PROSPECTUS AND PURCHASER'S PERSONAL TAX ADVISER
BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

            8.1 EXERCISE OF NONQUALIFIED STOCK OPTION. Purchaser will be treated
as having received compensation income (taxable at ordinary income tax rates)
equal to the excess, if any, of the Fair Market Value of the Shares on the date
of exercise over the Exercise Price.

            8.2 DISPOSITION OF SHARES. The following tax consequences may apply
upon disposition of the Shares.

                  (a) Nonqualified Stock Options. If the Shares are held for
more than twelve (12) months after the date of the transfer of the Shares
pursuant to the exercise of an NQSO, any gain realized on disposition of the
Shares will be treated as long-term capital gain.

                  (b) Withholding. The Company may be required to withhold from
the Purchaser's compensation or collect from the Purchaser and pay to the
applicable taxing authorities an amount equal to a percentage of this
compensation income.

                                       4

<PAGE>

      9. COMPLIANCE WITH LAWS AND REGULATIONS. The issuance and transfer of the
Shares will be subject to and conditioned upon compliance by the Company and
Purchaser with all applicable state and federal laws and regulations and with
all applicable requirements of any stock exchange or automated quotation system
on which the Company's Common Stock may be listed or quoted at the time of such
issuance or transfer.

      10. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights under
this Exercise Agreement. No other party to this Exercise Agreement may assign,
whether voluntarily or by operation of law, any of its rights and obligations
under this Exercise Agreement, except with the prior written consent of the
Company. This Exercise Agreement shall be binding upon and inure to the benefit
of the successors and assigns of the Company. Subject to the restrictions on
transfer herein set forth, this Exercise Agreement will be binding upon
Purchaser and Purchaser's heirs, executors, administrators, legal
representatives, successors and assigns.

      11. GOVERNING LAW. This Exercise Agreement shall be governed by and
construed in accordance with the laws of the State of California, without giving
effect to that body of laws pertaining to conflict of laws.

      12. NOTICES. Any and all notices required or permitted to be given to a
party pursuant to the provisions of this Exercise Agreement will be in writing
and will be effective and deemed to provide such party sufficient notice under
this Exercise Agreement on the earliest of the following: (i) at the time of
personal delivery, if delivery is in person; (ii) one (1) business day after
deposit with an express overnight courier for United States deliveries, or two
(2) business days after such deposit for deliveries outside of the United
States, with proof of delivery from the courier requested; or (iii) three (3)
business days after deposit in the United States mail by certified mail (return
receipt requested) for United States deliveries. All notices for delivery
outside the United States will be sent by express courier. All notices not
delivered personally will be sent with postage and/or other charges prepaid and
properly addressed to the party to be notified at the address set forth below
the signature lines of this Exercise Agreement, or at such other address as such
other party may designate by one of the indicated means of notice herein to the
other parties hereto. Notices to the Company will be marked "Attention: Stock
Plan Administration".

      13. FURTHER ASSURANCES. The parties agree to execute such further
documents and instruments and to take such further actions as may be reasonably
necessary to carry out the purposes and intent of this Exercise Agreement.

      14. TITLES AND HEADINGS. The titles, captions and headings of this
Exercise Agreement are included for ease of reference only and will be
disregarded in interpreting or construing this Exercise Agreement. Unless
otherwise specifically stated, all references herein to "sections" and
"exhibits" will mean "sections" and "exhibits" to this Exercise Agreement.

      15. ENTIRE AGREEMENT. The Plan, the Stock Option Agreement and this
Exercise Agreement, together with all Exhibits thereto, constitute the entire
agreement and understanding of the parties with respect to the subject matter of
this Exercise Agreement, and supersede all prior understandings and agreements,
whether oral or written, between or among the parties hereto with respect to the
specific subject matter hereof.

                                       5

<PAGE>

      16. COUNTERPARTS. This Exercise Agreement may be executed in any number of
counterparts, each of which when so executed and delivered will be deemed an
original, and all of which together shall constitute one and the same agreement.

      17. SEVERABILITY. If any provision of this Exercise Agreement is
determined by any court or arbitrator of competent jurisdiction to be invalid,
illegal or unenforceable in any respect, such provision will be enforced to the
maximum extent possible given the intent of the parties hereto. If such clause
or provision cannot be so enforced, such provision shall be stricken from this
Exercise Agreement and the remainder of this Exercise Agreement shall be
enforced as if such invalid, illegal or unenforceable clause or provision had
(to the extent not enforceable) never been contained in this Exercise Agreement.
Notwithstanding the forgoing, if the value of this Exercise Agreement based upon
the substantial benefit of the bargain for any party is materially impaired,
which determination as made by the presiding court or arbitrator of competent
jurisdiction shall be binding, then both parties agree to substitute such
provision(s) through good faith negotiations.

                    [THIS AREA INTENTIONALLY LEFT BLANK, SIGNATURE PAGE FOLLOWS]

                                       6

<PAGE>

      IN WITNESS WHEREOF, the Company has caused this Exercise Agreement to be
executed in triplicate by its duly authorized representative and Purchaser has
executed this Exercise Agreement in triplicate as of the Effective Date,
indicated above.

DIAMOND FOODS, INC.                      PURCHASER

By:___________________________________   _______________________________________
                                         (Signature)

______________________________________   _______________________________________
(Please print name)                      (Please print name)

______________________________________
(Please print title)

Address:                                 Address:
______________________________________   _______________________________________

______________________________________   _______________________________________

______________________________________   _______________________________________

Fax No.:______________________________   Fax No.________________________________

Phone No.:____________________________   Phone No.:_____________________________

SIGNATURE PAGE TO DIAMOND FOODS, INC. STOCK OPTION EXERCISE AGREEMENT NO._______

EXHIBIT

Exhibit 1: Copy of Purchaser's Check

                                       7

<PAGE>

                                    EXHIBIT 1

                            COPY OF PURCHASER'S CHECK

                                       1
<PAGE>

                               DIAMOND FOODS, INC.

                           2005 EQUITY INCENTIVE PLAN

                        NOTICE OF RESTRICTED STOCK GRANT

      You have been granted an award of Restricted Shares of Common Stock of
Diamond Foods, Inc. (the "Company") under the Company's 2005 Equity Incentive
Plan (the "Plan") on the following terms:

1.    Name of Grantee:
                                                        ------------------------

2.    Total Number of Restricted Shares Awarded:
                                                        ------------------------

3.    Fair Market Value per Restricted Share:           $
                                                        ------------------------

4.    Total Fair Market Value of Award:                 $
                                                        ------------------------

5.    Purchase Price per Restricted Share:              $0.01
                                                        ------------------------

6.    Total Purchase Price for all Restricted Shares:   $
                                                        ------------------------

7.    Date of Grant:
                                                        ------------------------

8.    Vesting Commencement Date.
                                                        ------------------------

9.    Vesting Schedule:

      [VESTING SCHEDULE TO BE PROVIDED HERE.]

      By your signature and the signature of the Company's representative below,
you and the Company agree that the Award of Restricted Shares is governed by the
terms and conditions of the Plan and the Restricted Share Agreement (together
with this notice the "RESTRICTED STOCK PURCHASE AGREEMENT"), which is attached
hereto.

                                       DIAMOND FOODS, INC.

                                       By:
                                           -------------------------------------

                                       Its:
                                            ------------------------------------

                                       RECIPIENT:

                                       SIGNATURE
                                                --------------------------------

                                       PLEASE PRINT NAME
                                                        ------------------------
<PAGE>
                               DIAMOND FOODS, INC.

                           2005 EQUITY INCENTIVE PLAN

                           RESTRICTED SHARE AGREEMENT

      THIS RESTRICTED SHARE AGREEMENT (this "Agreement") is made as of
__________________, 20__ by and between Diamond Foods, Inc., a California
corporation (the "Company"), and ___________________________________
("Purchaser") pursuant to the Company's 2005 Equity Incentive Plan (the "Plan").
To the extent any capitalized terms used in this Agreement are not defined, they
shall have the meaning ascribed to them in the Plan.

      1.    Sale of Stock. Subject to the terms and conditions of this
Agreement, on the Purchase Date (as defined below) the Company will issue and
sell to Purchaser, and Purchaser agrees to purchase from the Company the number
of Shares shown on the Notice of Restricted Stock Grant at a purchase price of
$0.01 per Share. The per Share purchase price of the Shares shall be not less
than the par value of the Shares as of the date of the offer of such Shares to
the Purchaser. The term "Shares" refers to the purchased Shares and all
securities received in replacement of or in connection with the Shares pursuant
to stock dividends or splits, all securities received in replacement of the
Shares in a recapitalization, merger, reorganization, exchange or the like, and
all new, substituted or additional securities or other properties to which
Purchaser is entitled by reason of Purchaser's ownership of the Shares.

      2.    Time and Place of Exercise. The purchase and sale of the Shares
under this Agreement shall occur at the principal office of the Company
simultaneously with the execution of this Agreement by the parties, or on such
other date as the Company and Purchaser shall agree (the "Purchase Date"). On
the Purchase Date, the Company will deliver to Purchaser a certificate
representing the Shares to be purchased by Purchaser (which shall be issued in
Purchaser's name) against payment of the purchase price therefor by Purchaser by
(a) check made payable to the Company, (b) cancellation of indebtedness of the
Company to Purchaser, or (c) a combination of the foregoing.

      3.    Restrictions on Resale. By signing this Agreement, Purchaser agrees
not to sell any Shares acquired pursuant to the Plan and this Agreement at a
time when applicable laws, regulations or Company or underwriter trading
policies prohibit exercise or sale. This restriction will apply as long as
Purchaser is providing Service to the Company or a Subsidiary of the Company.

            3.1   Repurchase Right on Termination Other Than for Cause. For the
purposes of this Agreement, a "REPURCHASE EVENT" shall mean an occurrence of one
of:

                  (I)   termination of Purchaser's service, whether voluntary or
involuntary and with or without cause;

                  (II)  resignation, retirement or death of Purchaser or

                                       1
<PAGE>
                  (III) any attempted transfer by Purchaser of the Shares, or
any interest therein, in violation of this Agreement.

Upon the occurrence of a Repurchase Event, the Company shall have the right (but
not an obligation) to purchase the Shares of Purchaser at a price equal to the
Price (the "REPURCHASE RIGHT"). The Repurchase Right shall lapse in accordance
with the vesting schedule as set forth in the Option Agreement. For purposes of
this Agreement, "UNVESTED SHARES" means Stock pursuant to which the Company's
Repurchase Right has not lapsed.

            3.2   Exercise of Repurchase Right. Unless the Company notifies
Purchaser within 90 days from the date of termination of Purchaser's employment
or consulting relationship that it does not intend to exercise its Repurchase
Right with respect to some or all of the Shares, the Repurchase Right shall be
deemed automatically exercised by the Company as of the 90th day following such
termination, provided that the Company may notify Purchaser that it is
exercising its Repurchase Right as of a date prior to such 90th day. Unless
Purchaser is otherwise notified by the Company pursuant to the preceding
sentence that the Company does not intend to exercise its Repurchase Right as to
some or all of the Shares to which it applies at the time of termination,
execution of this Agreement by Purchaser constitutes written notice to Purchaser
of the Company's intention to exercise its Repurchase Right with respect to all
Shares to which such Repurchase Right applies. The Company, at its choice, may
satisfy its payment obligation to Purchaser with respect to exercise of the
Repurchase Right by either (A) delivering a check to Purchaser in the amount of
the purchase price for the Shares being repurchased, or (B) in the event
Purchaser is indebted to the Company, canceling an amount of such indebtedness
equal to the purchase price for the Shares being repurchased, or (C) by a
combination of (A) and (B) so that the combined payment and cancellation of
indebtedness equals such purchase price. In the event of any deemed automatic
exercise of the Repurchase Right by canceling an amount of such indebtedness
equal to the purchase price for the Shares being repurchased, such cancellation
of indebtedness shall be deemed automatically to occur as of the 90th day
following termination of Purchaser's employment or consulting relationship
unless the Company otherwise satisfies its payment obligations. As a result of
any repurchase of Shares pursuant to the Repurchase Right, the Company shall
become the legal and beneficial owner of the Shares being repurchased and shall
have all rights and interest therein or related thereto, and the Company shall
have the right to transfer to its own name the number of Shares being
repurchased by the Company, without further action by Purchaser.

            3.3   Acceptance of Restrictions. Acceptance of the Shares shall
constitute Purchaser's agreement to such restrictions and the legending of his
or her certificates with respect thereto. Notwithstanding such restrictions,
however, so long as Purchaser is the holder of the Shares, or any portion
thereof, he or she shall be entitled to receive all dividends declared on and to
vote the Shares and to all other rights of a stockholder with respect thereto.

            3.4   Non-Transferability of Unvested Shares. In addition to any
other limitation on transfer created by applicable securities laws or any other
agreement between the Company and Purchaser, Purchaser may not transfer any
Unvested Shares, or any interest therein, unless consented to in writing by the
Company. Any purported transfer is void and of no effect, and no purported
transferee thereof will be recognized as a holder of the Unvested Shares for any
purpose whatsoever. Should such a transfer purport to occur, the Company may
refuse to

                                       2
<PAGE>
carry out the transfer on its books, set aside the transfer, or exercise any
other legal or equitable remedy. In the event the Company consents to a transfer
of Unvested Shares, all transferees of Shares or any interest therein will
receive and hold such Shares or interest subject to the provisions of this
Agreement, including, insofar as applicable, the Repurchase Right. In the event
of any purchase by the Company hereunder where the Shares or interest are held
by a transferee, the transferee shall be obligated, if requested by the Company,
to transfer the Shares or interest to the Purchaser for consideration equal to
the amount to be paid by the Company hereunder. In the event the Repurchase
Right is deemed exercised by the Company, the Company may deem any transferee to
have transferred the Shares or interest to Purchaser prior to their purchase by
the Company, and payment of the purchase price by the Company to such transferee
shall be deemed to satisfy Purchaser's obligation to pay such transferee for
such Shares or interest, and also to satisfy the Company's obligation to pay
Purchaser for such Shares or interest.

            3.5   Assignment. The Repurchase Right may be assigned by the
Company in whole or in part to any persons or organization.

      4.    Restrictive Legends and Stop Transfer Orders.

            4.1   Legends. The certificate or certificates representing the
Shares shall bear the following legend (as well as any legends required by
applicable state and federal corporate and securities laws):

            THE SHARE REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
            ACCORDANCE WITH THE TERMS Of AN AGREEMENT BETWEEN THE COMPANY AND
            THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF
            THE COMPANY.

            4.2   Stop-Transfer Notices. Purchaser agrees that, in order to
ensure compliance with the restrictions referred to herein, the Company may
issue appropriate "stop transfer" instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.

            4.3   Refusal to Transfer. The Company shall not be required (i) to
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as the
owner or to accord the right to vote or pay dividends to any purchaser or other
transferee to whom such Shares shall have been so transferred.

      5.    No Rights as Employee, Director or Consultant. Nothing in this
Agreement shall affect in any manner whatsoever the right or power of the
Company, or a Parent or Subsidiary of the Company, to terminate Purchaser's
employment, for any reason, with or without cause.

      6.    Market Standoff Agreement. Upon request of the Company or the
underwriters managing any underwritten public offering of the Company's
securities, Purchaser agrees not to sell, make any short sale of, loan, grant
any option for the purchase of, or otherwise dispose of any Shares (other than
those included in the registration) without the prior written consent of the

                                       3
<PAGE>
Company or such underwriters, as the case may be, for such period of time (not
to exceed 180 days) from the effective date of such registration as may be
requested by the Company or such managing underwriters and to execute such
agreement reflecting the foregoing as may be requested by the underwriters at
the time of the underwritten public offering.

      7.    Miscellaneous.

            7.1   Governing Law. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
California, without giving effect to principles of conflicts of law.

            7.2   The Plan and Other Agreements; Enforcement of Rights. The text
of the Plan and the Notice of Restricted Stock Grant to which this Agreement is
attached are incorporated into this Agreement by reference. This Agreement, the
Plan and the Notice of Restricted Stock Grant to which this Agreement is
attached constitute the entire agreement and understanding of the parties
relating to the subject matter herein and supersede all prior discussions
between them. Any prior agreements, commitments or negotiations concerning the
purchase of the Restricted Shares hereunder are superseded. No modification of
or amendment to this Agreement, nor any waiver of any rights under this
Agreement, shall be effective unless in writing and signed by the parties to
this Agreement. The failure by either party to enforce any rights under this
Agreement shall not be construed as a waiver of any rights of such party.

            7.3   Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (i)such
provision shall be excluded from this Agreement, (ii) the balance of this
Agreement shall be interpreted as if such provision were so excluded and (iii)
the balance of this Agreement shall be enforceable in accordance with its terms.

            7.4   Construction. This Agreement is the result of negotiations
between and has been reviewed by each of the parties hereto and their respective
counsel, if any; accordingly, this Agreement shall be deemed to be the product
of all of the parties hereto, and no ambiguity shall be construed in favor of or
against any one of the parties hereto.

            7.5   Notices. Any notice to be given under the terms of the Plan
shall be addressed to the Company in care or its principal office, and any
notice to be given to the Purchaser shall be addressed to such Purchaser at the
address maintained by the Company for such person or at such other address as
the Purchaser may specify in writing to the Company.

            7.6   Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall he deemed an original and all of which
together shall constitute one instrument.

            7.7   Successors and Assigns. The rights and benefits of this
Agreement shall inure to the benefit of., and be enforceable by, the Company's
successors and assigns. The rights and obligations of Purchaser under this
Agreement may only be assigned with the prior written consent of the Company.

                                       4
<PAGE>
      8.    Section 83(b) Election. Purchaser hereby acknowledges that he or she
has been informed that, with respect to the purchase of the Shares, an election
may be filed by the Purchaser with the Internal Revenue Service, within 30 days
of the purchase of the Shares, electing pursuant to Section 83(b) of the Code to
be taxed currently on any difference between the purchase price of the Shares
and their Fair Market Value on the date of purchase (the "ELECTION"). Making the
Election will result in recognition of taxable income to the Purchaser on the
date of purchase, measured by the excess, if any, of the Fair Market Value of
the Shares over the purchase price for the Shares. Absent such an Election,
taxable income will be measured and recognized by Purchaser at the time or times
on which the Company's Repurchase Right lapses. Purchaser is strongly encouraged
to seek the advice of his or her own tax consultants in connection with the
purchase of the Shares and the advisability of filing of the Election. PURCHASER
ACKNOWLEDGES THAT IT IS PURCHASER'S SOLE RESPONSIBILITY AND NOT THE COMPANY'S TO
TIMELY FILE THE ELECTION UNDER SECTION 83(b) OF THE CODE, EVEN IF PURCHASER
REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO MAKE THIS FILING ON PURCHASER'S
BEHALF.

      [Remainder of page intentionally left blank, Signature Page follows.]

                                       5
<PAGE>
      The parties have executed this Agreement as of the date first set forth
above.

                                       DIAMOND FOODS, INC.

                                       By:
                                           -------------------------------------

                                       Its:
                                            ------------------------------------

                                       RECIPIENT:

                                       (Signature)

                                       (Please Print Name)

      I, _________________________, spouse of __________________________, have
read and hereby approve the foregoing Agreement. In consideration of the
Company's granting my spouse the right to purchase the Shares set forth in the
Agreement, I hereby agree to be irrevocably bound by the Agreement and further
agree that any community property or other such interest shall be similarly
bound by the Agreement. I hereby appoint my spouse as my attorney-in-fact with
respect to any amendment or exercise of any rights under the Agreement.

                                       SPOUSE OF
                                                 -------------------------------

                                       6
<PAGE>
                                     RECEIPT

      Diamond Foods, Inc. hereby acknowledges receipt of (check as applicable):

[ ] A check in the amount of $_______________

[ ] The cancellation of indebtedness in the amount of $_______________

given by _____________________ as consideration for Certificate No. -________
for ________________ shares of Common Stock of Diamond Foods, Inc.

Dated: _____________________

                                       DIAMOND FOODS, INC.

                                       By:
                                           -------------------------------------

                                       Its:
                                            ------------------------------------
<PAGE>
                               RECEIPT AND CONSENT

      The undersigned hereby acknowledges receipt of a photocopy of Certificate
No. -________ for ________________ shares of Common Stock of Diamond Foods, Inc.
(the "Company")

      The undersigned further acknowledges that the Secretary of the Company, or
his or her designee, is acting as escrow holder pursuant to the Restricted
Shares Agreement that Purchaser has previously entered into with the Company. As
escrow holder, the Secretary of the Company, or his or her designee, holds the
original of the aforementioned certificate issued in the undersigned's name.

Dated: _____________________

                                       SIGNATURE

                                       PLEASE PRINT NAME
<PAGE>
                               DIAMOND FOODS, INC.

                           2005 EQUITY INCENTIVE PLAN

                        NOTICE OF RESTRICTED STOCK GRANT

                            (Non-Employee Directors)

         You have been granted an award of Restricted Shares of Common Stock of
Diamond Foods, Inc. (the "Company") under the Company's 2005 Equity Incentive
Plan (the "Plan") on the following terms:

1.    Name of Grantee:
                                                        ------------------------

2.    Total Number of Restricted Shares Awarded:
                                                        ------------------------

3.    Fair Market Value per Restricted Share:           $
                                                        ------------------------

4.    Total Fair Market Value of Award:                 $120,000
                                                        ------------------------

5.    Purchase Price per Restricted Share:              $0.01
                                                        ------------------------

6.    Total Purchase Price for all Restricted Shares:   $
                                                        ------------------------

7.    Date of Grant:
                                                        ------------------------

8.    Vesting Schedule: Shares shall vest in three equal annual installments,
commencing with the first anniversary of the Date of Grant above, until fully
vested, so long as the Non-Employee Director continuously remains a Non-Employee
Director or a consultant of the Company.

      NOTWITHSTANDING THE FOREGOING VESTING SCHEDULE, THE SHARES SHALL BE
SUBJECT TO ACCELERATION AS PROVIDED FOR IN SECTION 8 OF THE PLAN.

      By your signature and the signature of the Company's representative below,
you and the Company agree that the Award of Restricted Shares is governed by the
terms and conditions of the Plan and the Restricted Share Agreement (together
with this notice the "RESTRICTED STOCK PURCHASE AGREEMENT"), which is attached
hereto.

                                       DIAMOND FOODS, INC.

                                       By:
                                           -------------------------------------

                                       Its:
                                            ------------------------------------

                                       RECIPIENT:

                                       SIGNATURE
                                                --------------------------------

                                       PLEASE PRINT NAME
                                                        ------------------------
<PAGE>
                               DIAMOND FOODS, INC.

                           2005 EQUITY INCENTIVE PLAN

                           RESTRICTED SHARE AGREEMENT

                            (Non-Employee Directors)

      THIS RESTRICTED SHARE AGREEMENT (this "Agreement") is made as of
__________________, 20__ by and between Diamond Foods, Inc., a California
corporation (the "Company"), and ___________________________________
("Purchaser") pursuant to the Company's 2005 Equity Incentive Plan (the "Plan").
To the extent any capitalized terms used in this Agreement are not defined, they
shall have the meaning ascribed to them in the Plan.

      1.    Sale of Stock. Subject to the terms and conditions of this
Agreement, on the Purchase Date (as defined below) the Company will issue and
sell to Purchaser, and Purchaser agrees to purchase from the Company the number
of Shares shown on the Notice of Restricted Stock Grant at a purchase price of
$0.01 per Share. The per Share purchase price of the Shares shall be not less
than the par value of the Shares as of the date of the offer of such Shares to
the Purchaser. The term "Shares" refers to the purchased Shares and all
securities received in replacement of or in connection with the Shares pursuant
to stock dividends or splits, all securities received in replacement of the
Shares in a recapitalization, merger, reorganization, exchange or the like, and
all new, substituted or additional securities or other properties to which
Purchaser is entitled by reason of Purchaser's ownership of the Shares.

      2.    Time and Place of Exercise. The purchase and sale of the Shares
under this Agreement shall occur at the principal office of the Company
simultaneously with the execution of this Agreement by the parties, or on such
other date as the Company and Purchaser shall agree (the "Purchase Date"). On
the Purchase Date, the Company will deliver to Purchaser a certificate
representing the Shares to be purchased by Purchaser (which shall be issued in
Purchaser's name) against payment of the purchase price therefor by Purchaser by
(a) check made payable to the Company, (b) cancellation of indebtedness of the
Company to Purchaser, or (c) a combination of the foregoing.

      3.    Restrictions on Resale. By signing this Agreement, Purchaser agrees
not to sell any Shares acquired pursuant to the Plan and this Agreement at a
time when applicable laws, regulations or Company or underwriter trading
policies prohibit exercise or sale. This restriction will apply as long as
Purchaser is providing Service to the Company or a Subsidiary of the Company.

            3.1   Repurchase Right on Termination Other Than for Cause. For the
purposes of this Agreement, a "REPURCHASE EVENT" shall mean an occurrence of one
of:

                  (I)   termination of Purchaser's service, whether voluntary or
involuntary and with or without cause;

                  (II)  resignation, retirement or death of Purchaser or

                                       1
<PAGE>
                  (III) any attempted transfer by Purchaser of the Shares, or
any interest therein, in violation of this Agreement.

Upon the occurrence of a Repurchase Event, the Company shall have the right (but
not an obligation) to purchase the Shares of Purchaser at a price equal to the
Price (the "REPURCHASE RIGHT"). The Repurchase Right shall lapse in accordance
with the vesting schedule as set forth in the Option Agreement. For purposes of
this Agreement, "UNVESTED SHARES" means Stock pursuant to which the Company's
Repurchase Right has not lapsed.

            3.2   Exercise of Repurchase Right. Unless the Company notifies
Purchaser within 90 days from the date of termination of Purchaser's employment
or consulting relationship that it does not intend to exercise its Repurchase
Right with respect to some or all of the Shares, the Repurchase Right shall be
deemed automatically exercised by the Company as of the 90th day following such
termination, provided that the Company may notify Purchaser that it is
exercising its Repurchase Right as of a date prior to such 90th day. Unless
Purchaser is otherwise notified by the Company pursuant to the preceding
sentence that the Company does not intend to exercise its Repurchase Right as to
some or all of the Shares to which it applies at the time of termination,
execution of this Agreement by Purchaser constitutes written notice to Purchaser
of the Company's intention to exercise its Repurchase Right with respect to all
Shares to which such Repurchase Right applies. The Company, at its choice, may
satisfy its payment obligation to Purchaser with respect to exercise of the
Repurchase Right by either (A) delivering a check to Purchaser in the amount of
the purchase price for the Shares being repurchased, or (B) in the event
Purchaser is indebted to the Company, canceling an amount of such indebtedness
equal to the purchase price for the Shares being repurchased, or (C) by a
combination of (A) and (B) so that the combined payment and cancellation of
indebtedness equals such purchase price. In the event of any deemed automatic
exercise of the Repurchase Right by canceling an amount of such indebtedness
equal to the purchase price for the Shares being repurchased, such cancellation
of indebtedness shall be deemed automatically to occur as of the 90th day
following termination of Purchaser's employment or consulting relationship
unless the Company otherwise satisfies its payment obligations. As a result of
any repurchase of Shares pursuant to the Repurchase Right, the Company shall
become the legal and beneficial owner of the Shares being repurchased and shall
have all rights and interest therein or related thereto, and the Company shall
have the right to transfer to its own name the number of Shares being
repurchased by the Company, without further action by Purchaser.

            3.3   Acceptance of Restrictions. Acceptance of the Shares shall
constitute Purchaser's agreement to such restrictions and the legending of his
or her certificates with respect thereto. Notwithstanding such restrictions,
however, so long as Purchaser is the holder of the Shares, or any portion
thereof, he or she shall be entitled to receive all dividends declared on and to
vote the Shares and to all other rights of a stockholder with respect thereto.

            3.4   Non-Transferability of Unvested Shares. In addition to any
other limitation on transfer created by applicable securities laws or any other
agreement between the Company and Purchaser, Purchaser may not transfer any
Unvested Shares, or any interest therein, unless consented to in writing by the
Company. Any purported transfer is void and of no effect, and no purported
transferee thereof will be recognized as a holder of the Unvested Shares for any
purpose whatsoever. Should such a transfer purport to occur, the Company may
refuse to

                                       2
<PAGE>
carry out the transfer on its books, set aside the transfer, or exercise any
other legal or equitable remedy. In the event the Company consents to a transfer
of Unvested Shares, all transferees of Shares or any interest therein will
receive and hold such Shares or interest subject to the provisions of this
Agreement, including, insofar as applicable, the Repurchase Right. In the event
of any purchase by the Company hereunder where the Shares or interest are held
by a transferee, the transferee shall be obligated, if requested by the Company,
to transfer the Shares or interest to the Purchaser for consideration equal to
the amount to be paid by the Company hereunder. In the event the Repurchase
Right is deemed exercised by the Company, the Company may deem any transferee to
have transferred the Shares or interest to Purchaser prior to their purchase by
the Company, and payment of the purchase price by the Company to such transferee
shall be deemed to satisfy Purchaser's obligation to pay such transferee for
such Shares or interest, and also to satisfy the Company's obligation to pay
Purchaser for such Shares or interest.

            3.5   Assignment. The Repurchase Right may be assigned by the
Company in whole or in part to any persons or organization.

      4.    Restrictive Legends and Stop Transfer Orders.

            4.1   Legends. The certificate or certificates representing the
Shares shall bear the following legend (as well as any legends required by
applicable state and federal corporate and securities laws):

            THE SHARE REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
            ACCORDANCE WITH THE TERMS Of AN AGREEMENT BETWEEN THE COMPANY AND
            THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF
            THE COMPANY.

            4.2   Stop-Transfer Notices. Purchaser agrees that, in order to
ensure compliance with the restrictions referred to herein, the Company may
issue appropriate "stop transfer" instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.

            4.3   Refusal to Transfer. The Company shall not be required (i) to
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as the
owner or to accord the right to vote or pay dividends to any purchaser or other
transferee to whom such Shares shall have been so transferred.

      5.    No Rights as Employee, Director or Consultant. Nothing in this
Agreement shall affect in any manner whatsoever the right or power of the
Company, or a Parent or Subsidiary of the Company, to terminate Purchaser's
employment, for any reason, with or without cause.

      6.    Market Standoff Agreement. Upon request of the Company or the
underwriters managing any underwritten public offering of the Company's
securities, Purchaser agrees not to sell, make any short sale of, loan, grant
any option for the purchase of, or otherwise dispose of any Shares (other than
those included in the registration) without the prior written consent of the

                                       3
<PAGE>
Company or such underwriters, as the case may be, for such period of time (not
to exceed 180 days) from the effective date of such registration as may be
requested by the Company or such managing underwriters and to execute such
agreement reflecting the foregoing as may be requested by the underwriters at
the time of the underwritten public offering.

      7.    Miscellaneous.

            7.1   Governing Law. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
California, without giving effect to principles of conflicts of law.

            7.2   The Plan and Other Agreements; Enforcement of Rights. The text
of the Plan and the Notice of Restricted Stock Grant to which this Agreement is
attached are incorporated into this Agreement by reference. This Agreement, the
Plan and the Notice of Restricted Stock Grant to which this Agreement is
attached constitute the entire agreement and understanding of the parties
relating to the subject matter herein and supersede all prior discussions
between them. Any prior agreements, commitments or negotiations concerning the
purchase of the Restricted Shares hereunder are superseded. No modification of
or amendment to this Agreement, nor any waiver of any rights under this
Agreement, shall be effective unless in writing and signed by the parties to
this Agreement. The failure by either party to enforce any rights under this
Agreement shall not be construed as a waiver of any rights of such party.

            7.3   Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (i)such
provision shall be excluded from this Agreement, (ii) the balance of this
Agreement shall be interpreted as if such provision were so excluded and (iii)
the balance of this Agreement shall be enforceable in accordance with its terms.

            7.4   Construction. This Agreement is the result of negotiations
between and has been reviewed by each of the parties hereto and their respective
counsel, if any; accordingly, this Agreement shall be deemed to be the product
of all of the parties hereto, and no ambiguity shall be construed in favor of or
against any one of the parties hereto.

            7.5   Notices. Any notice to be given under the terms of the Plan
shall be addressed to the Company in care or its principal office, and any
notice to be given to the Purchaser shall be addressed to such Purchaser at the
address maintained by the Company for such person or at such other address as
the Purchaser may specify in writing to the Company.

            7.6   Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall he deemed an original and all of which
together shall constitute one instrument.

            7.7   Successors and Assigns. The rights and benefits of this
Agreement shall inure to the benefit of., and be enforceable by, the Company's
successors and assigns. The rights and obligations of Purchaser under this
Agreement may only be assigned with the prior written consent of the Company.

                                       4
<PAGE>
      8.    Section 83(b) Election. Purchaser hereby acknowledges that he or she
has been informed that, with respect to the purchase of the Shares, an election
may be filed by the Purchaser with the Internal Revenue Service, within 30 days
of the purchase of the Shares, electing pursuant to Section 83(b) of the Code to
be taxed currently on any difference between the purchase price of the Shares
and their Fair Market Value on the date of purchase (the "ELECTION"). Making the
Election will result in recognition of taxable income to the Purchaser on the
date of purchase, measured by the excess, if any, of the Fair Market Value of
the Shares over the purchase price for the Shares. Absent such an Election,
taxable income will be measured and recognized by Purchaser at the time or times
on which the Company's Repurchase Right lapses. Purchaser is strongly encouraged
to seek the advice of his or her own tax consultants in connection with the
purchase of the Shares and the advisability of filing of the Election. PURCHASER
ACKNOWLEDGES THAT IT IS PURCHASER'S SOLE RESPONSIBILITY AND NOT THE COMPANY'S TO
TIMELY FILE THE ELECTION UNDER SECTION 83(b) OF THE CODE, EVEN IF PURCHASER
REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO MAKE THIS FILING ON PURCHASER'S
BEHALF.

      [Remainder of page intentionally left blank, Signature Page follows.]

                                       5
<PAGE>
      The parties have executed this Agreement as of the date first set forth
above.

                                       DIAMOND FOODS, INC.

                                       By:
                                           -------------------------------------

                                       Its:
                                            ------------------------------------

                                       RECIPIENT:

                                       (Signature)

                                       (Please Print Name)

      I, _________________________, spouse of __________________________, have
read and hereby approve the foregoing Agreement. In consideration of the
Company's granting my spouse the right to purchase the Shares set forth in the
Agreement, I hereby agree to be irrevocably bound by the Agreement and further
agree that any community property or other such interest shall be similarly
bound by the Agreement. I hereby appoint my spouse as my attorney-in-fact with
respect to any amendment or exercise of any rights under the Agreement.

                                       SPOUSE OF
                                                 -------------------------------

                                       6
<PAGE>
                                     RECEIPT

      Diamond Foods, Inc. hereby acknowledges receipt of (check as applicable):

[ ] A check in the amount of $_______________

[ ] The cancellation of indebtedness in the amount of $_______________

given by _____________________ as consideration for Certificate No. ________ for
________________ shares of Common Stock of Diamond Foods, Inc.

Dated: _____________________

                                       DIAMOND FOODS, INC.

                                       By:
                                           -------------------------------------

                                       Its:
                                            ------------------------------------
<PAGE>
                               RECEIPT AND CONSENT

      The undersigned hereby acknowledges receipt of a photocopy of Certificate
No. ________ for ________________ shares of Common Stock of Diamond Foods, Inc.
(the "Company")

      The undersigned further acknowledges that the Secretary of the Company, or
his or her designee, is acting as escrow holder pursuant to the Restricted
Shares Agreement that Purchaser has previously entered into with the Company. As
escrow holder, the Secretary of the Company, or his or her designee, holds the
original of the aforementioned certificate issued in the undersigned's name.

Dated: _____________________

                                       SIGNATURE

                                       PLEASE PRINT NAME

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