Document:

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                                                                   Exhibit 10.25
                                BANK OF THE WEST
                                   CALIFORNIA

March 17, 2005

Debra Donaghy
Diamond Walnut Growers, Inc.
1050 South Diamond Street
Stockton, CA  95201-1727

Dear Debra,

It is the understanding of Bank of the West that Diamond Walnut Growers, Inc.
intends to convert from a cooperative to a C corporation ("Conversion"). To the
extent that such Conversion would constitute a default under the Credit
Agreement dated December 2, 2004 ("Agreement"), between Bank of the West
("Bank") and Diamond Walnut Growers, Inc. ("Borrower"), the Bank hereby consents
to the Conversion and agrees to waive any provision of the Agreement that would
prohibit such conversion, or cause such Conversion to trigger an event of
default thereunder. With the exception of the following two items, all other
provisions of the Agreement will continue in full force and effect and apply to
the new corporation to the same extent as the old.

     o    Borrower will clean down the Bank line of credit to $10,000,000 for a
          minimum of 30 consecutive days, annually.

     o    Borrower's minimum Working Capital requirement will increase from
          $40,000,000 to $50,000,000.

Bank of the West consents to the following modifications to the Agreement,
effective with the date of Conversion:

1.   Change the name of borrower from Diamond Walnut  Growers,  Inc. to "Diamond
     Foods, Inc."

2.   Section 5.3  (Preservation of Existence;  Compliance with Applicable Laws):
     Amend to reflect the fact that  Diamond  Foods,  Inc.,  will no longer be a
     "marketing  cooperative" and,  accordingly,  all "rights and privileges" of
     the grower members will not be preserved.

3.   Section 5.4 (Merge or Consolidate): One-time waiver to allow Diamond Walnut
     Growers, Inc. to merge into Diamond Foods, Inc.

4.   Section 5.8 (Payment of Dividends):  Amend to allow Diamond Foods,  Inc. to
     pay annual cash dividends to  shareholders so long as they do not exceed 3%
     of Diamond Foods, Inc. total market capitalization.

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5.   Section 5.13 (Transfer of Assets): One-time waiver to allow the transfer of
     assets from Diamond Walnut Growers, Inc. to Diamond Foods, Inc.

6.   Section  5.15  (Maintenance  of  Jurisdiction):  One-time  waiver  to allow
     Diamond Foods, Inc. to be a Delaware Corporation.

7.   Section 5.17 (Payments to Members):  Permanent  deletion,  as there will no
     longer  be  "grower   members"  after  the  Conversion.   Further,   it  is
     acknowledged by the Bank that there will be no  subordination of any grower
     payments under the Agreement.

8.   Section  6.9  (Change in  Ownership):  One-time  waiver to allow  Change in
     Ownership from Diamond Walnut Growers, Inc. to Diamond Foods, Inc.

The consent of Bank of the West is subject to Diamond Walnut Growers, Inc.
providing such evidence of the Conversion as Bank of the West shall require and
such resolutions, incumbency certificates and other forms and agreements as Bank
of the West may require to evidence the new corporation's continued obligations
under the Agreement.

Sincerely,

/s/ Tracy Holmes

Tracy Holmes
Vice President & Relationship Manager
Sacramento Agribusiness<PAGE>
                                                                   Exhibit 10.26

                   CHANGE OF CONTROL AND RETENTION AGREEMENT

      This Change of Control and Retention Agreement (the "AGREEMENT") is made
and entered into as of [Date], by and between Diamond Walnut Growers, Inc., a
California agricultural cooperative association (the "COMPANY"), and [Executive]
(the "EXECUTIVE").

                                   RECITALS:

      WHEREAS, the Executive is a key employee of the Company who possesses
valuable proprietary knowledge of the Company, its business and operations and
the markets in which the Company competes; and

      WHEREAS, the Company benefits from the knowledge, experience, expertise
and advice of the Executive to manage its business for the benefit of the
Company's stockholders; and

      WHEREAS, the Company recognizes that it is necessary to attract and retain
key employees, and a key element of programs to attract and retain key employees
is to provide assurance about their status in the event of any Change of
Control, to avoid uncertainty regarding the consequences of such an event that
could adversely affect the performance of the Executive; and

      WHEREAS, the Company believes that the existence of this Agreement will
serve as an incentive to Executive to remain in the employ of the Company, and
would enhance the Company's ability to call on and rely upon Executive if a
Change of Control were to occur; and

      WHEREAS, the Company and the Executive desire to enter into this Agreement
to encourage the Executive to continue to devote the Executive's full attention
and dedication to the success of the Company, and to provide specified
compensation and benefits to the Executive in the event of a Termination Upon
Change of Control pursuant to the terms of this Agreement.

      NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:

1.    PURPOSE

      The purpose of this Agreement is to provide specified compensation and
      benefits to the Executive in the event of a Termination Upon Change of
      Control. Either the Executive or the Company may terminate the Executive's
      employment at any time for any reason.

2.    TERMINATION UPON CHANGE OF CONTROL

      2.1   Prior Obligations. In the event of a Termination Upon Change of
            Control, the Executive shall be entitled to the benefits described
            in this Section 2.1.

            2.1.1 Accrued Salary and Vacation. All salary and accrued vacation
                  earned through the date of a Termination Upon Change of
                  Control shall be paid to Executive on such date.
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            2.1.2 Accrued Bonus Payment. The Executive shall receive a lump sum
                  payment of Executive's target bonus for the Company's prior
                  fiscal year to the extent that any such bonus was earned and
                  is unpaid on the date of a Termination Upon Change of Control.

            2.1.3 Expense Reimbursement. Within ten (10) days of submission of
                  proper expense reports by the Executive, the Company shall
                  reimburse the Executive for all expenses incurred by the
                  Executive, consistent with Company policy, in connection with
                  the business of the Company prior to the date of a Termination
                  Upon Change of Control.

      2.2   Additional Cash Severance Benefits. In the event of a Termination
            Upon Change of Control, the Executive shall be entitled to receive
            an amount equal to [______] percent ([___]%) of the Executive's
            Annual Compensation. The amount calculated, as set forth herein,
            shall be paid in cash in a lump sum. Payment hereunder shall be made
            within ten (10) days following the later of: (i) (if required by
            Section 409A of the Code) six (6) months after the date of a
            Termination Upon Change of Control, or (ii) the effective date of
            the release executed by the Executive pursuant to Section 5.3 of
            this Agreement.

      2.3   Stock Option or Restricted Stock Acceleration.

            2.3.1 Acceleration of Vesting and Exercisability. All outstanding
                  stock options and shares of restricted stock (if any) granted
                  to the Executive by the Company (and any successor to the
                  Company) shall have [____]% of their vesting and
                  exercisability accelerated upon the later of (i) the date of a
                  Termination Upon Change of Control, or (ii) the effective date
                  of the release executed by the Executive pursuant to Section
                  5.3 of this Agreement.

            2.3.2 Acceleration Following Non-Assumption of Options. If there is
                  a Change of Control in which, prior to such Change of Control,
                  all unvested outstanding stock options granted to the
                  Executive by the Company are not fully assumed or replaced by
                  fully equivalent substitute stock options of the Successor,
                  then: (1) all such unvested stock options held by Executive
                  shall have their vesting and exercisability fully accelerated
                  such that all unvested stock options are vested immediately
                  prior to the effective date of the Change of Control and (2)
                  the Company shall provide reasonable prior written notice to
                  the Executive of: (a) the date that each such unvested stock
                  options will terminate and (b) the period during which the
                  Executive may exercise any unvested stock options.

      2.4   Additional Service Credit. Executive's total years of service credit
            under each of the defined benefit retirement plans (including excess
            benefits plans) in which Executive participates upon the date of a
            Termination Upon Change of Control shall be increased by an
            additional one year of service credit, but in each case, not

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            above the maximum number of years of service credit permitted under
            each such plan.

      2.5   Additional Insurance Benefits. If, pursuant to the Consolidated
            Omnibus Budget Reconciliation Act of 1985 ("COBRA"), Executive
            elects timely continuation coverage for the Executive and/or any or
            all dependents of the Executive under the Company's medical or
            dental plans as in effect immediately prior to the date of a
            Termination Upon Change of Control, then for a period of up to
            eighteen (18) months following such a Termination Upon Change of
            Control the Executive shall receive a monthly payment from the
            Company equal to the premium(s) for the coverage elected under COBRA
            for the Executive and such dependents. The Company's obligation
            under this Section 2.4 shall terminate upon the insured (e.g., the
            Executive or a dependent) accepting insurance coverage of that type
            under another group health plan. For purposes of this COBRA
            coverage, the date of the "qualifying event" for the Executive and
            any dependents shall be the date of a Termination Upon Change of
            Control.

3.    FEDERAL EXCISE TAX UNDER SECTION 280G

      3.1   Potential Adjustments for Excise Tax. If (1) any amounts payable to
            the Executive under this Agreement or otherwise are characterized as
            excess parachute payments pursuant to Section 4999 of the Internal
            Revenue Code of 1986, as amended (the "CODE"), and (2) the Executive
            thereby would be subject to any United States federal excise tax due
            to that characterization, then it is agreed between the parties to
            reduce (if necessary) the amounts payable under this Agreement, or
            otherwise, or to have any portion of applicable options or
            restricted stock not vest or become exercisable in order to achieve
            the greatest after-tax benefit to the Executive, with such reduction
            to be accomplished in the manner determined by the Executive.

      3.2   Determination by Independent Public Accountants. Unless the Company
            and the Executive otherwise agree in writing, determination of
            whether the Executive would be subject to any United States federal
            excise tax pursuant to Section 4999 of the Code shall be made in
            writing by an independent public accountant agreed to by the Company
            and the Executive (the "ACCOUNTANT"), whose determination shall be
            conclusive and binding upon the Executive and the Company for all
            purposes. For purposes of making the calculations required by this
            Section 3, the Accountant may rely on reasonable, good faith
            interpretations concerning the application of Sections 280G and 4999
            of the Code. The Company and the Executive shall furnish the
            Accountant such information and documents as the Accountant may
            reasonably request in order to make the required determinations. The
            Company shall bear all reasonable fees and expenses of the
            Accountant in connection with the services contemplated by this
            Section 3.

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4.    DEFINITIONS

      4.1   Capitalized Terms Defined. Capitalized terms used in this Agreement
            shall have the meanings set forth in this Section 4, unless the
            context clearly requires a different meaning or they are defined
            elsewhere in this Agreement.

      4.2   "Annual Compensation" means the Executive's total cash compensation
            set by the Company (assuming the maximum potential bonus is earned)
            for the full fiscal year in which occurs the Termination Upon Change
            of Control, or if higher the Executive's total cash compensation
            (assuming the maximum potential bonus is earned) set by the Company
            prior to the Change of Control for the full fiscal year in which
            occurs the Change of Control.

      4.3   "Cause" means:

            (a)   Commission of a felony or an act constituting common law
                  fraud, which has a material adverse effect on the business or
                  affairs of the Company or its affiliates or stockholders; or

            (b)   Intentional or willful misconduct or refusal to follow the
                  lawful instructions of the Board of Directors of the Company
                  (the "Board"); or

            (c)   Intentional breach of Company confidential information
                  obligations, which has an adverse effect on the Company or its
                  affiliates or stockholders.

      For these purposes, no act or failure to act shall be considered
"intentional or willful" unless it is done, or omitted to be done, in bad faith
without a reasonable belief that the action or omission is in the best interests
of the Company.

      4.4   "Change of Control" means:

            (a)   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

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            (b)   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 (i) the
                  continuing or surviving entity and (ii) any direct or indirect
                  parent corporation of such continuing or surviving entity; or

            (c)   following the initial public offering of Company common stock
                  to the general investing public (the "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

            (d)   the sale, transfer or other disposition of all or
                  substantially all of the Company's assets.

      Any other provision of this Section 4.4 notwithstanding, a transaction
shall not constitute a Change of Control 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 Change of
Control shall not be deemed to occur from the occurrence of an initial public
offering of Company common stock to the general investing public.

      4.5   "Company" shall mean Diamond Walnut Growers, Inc., a California
            agricultural cooperative association, and also mean Diamond Foods,
            Inc., a Delaware corporation, and, following a Change of Control,
            any Successor.

      4.6   "Good Reason" means the occurrence of any of the following
            conditions, without the Executive's written consent:

            (a)   a reduction of the Executive's title, position,
                  responsibilities or duties to a level materially less than the
                  title, position, responsibilities or duties the Executive
                  occupied on the date immediately preceding the date of a
                  Termination Upon Change of Control or such other date as
                  agreed to in writing by the Executive and the Company;

            (b)   a reduction in the Executive's base salary or in the
                  Executive's target bonus opportunity from what they were on
                  the date immediately preceding the date of a Termination Upon
                  Change of Control;

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            (c)   the Company's requiring the Executive to be based at any
                  office or location more than [fifty (50)] miles from the
                  office where the Executive was employed on the date
                  immediately preceding the date of a Termination Upon Change of
                  Control; or

            (d)   Failure by the Company to obtain the assumption of this
                  Agreement by any Successor.

      4.7   "Permanent Disability" means that:

            (a)   the Executive has been incapacitated by bodily injury, illness
                  or disease so as to be prevented thereby from engaging in the
                  performance of the Executive's duties;

            (b)   such total incapacity shall have continued for a period of six
                  consecutive months; and

            (c)   such incapacity will, in the opinion of a qualified physician,
                  be permanent and continuous during the remainder of the
                  Executive's life.

      4.8   "Successor" means any successor to or assignee of substantially all
            of the Company's business and/or assets, including without
            limitation, and following a Change of Control, the Company.

      4.9   "Termination Upon Change of Control" means:

            (a)   any termination of the employment of the Executive by the
                  Company without Cause during the twelve (12) months following
                  the date of such Change of Control; or

            (b)   any resignation from employment by Executive for Good Reason
                  where: (i) such Good Reason occurs during the twelve (12)
                  months following the date of such Change of Control, and (ii)
                  such resignation occurs within thirty (30) days following the
                  occurrence of Good Reason.

      Notwithstanding the foregoing, the term "Termination Upon Change of
      Control" shall not include any termination of the employment of the
      Executive: (1) by the Company for Cause; (2) by the Company as a result of
      the Permanent Disability of the Executive; (3) as a result of the death of
      the Executive; or (4) by the Executive resigning from employment without
      Good Reason.

5.    EXCLUSIVE REMEDY

      5.1   No Other Benefits Payable. The Executive shall be entitled to no
            other termination, severance or change of control compensation,
            benefits, or other payments from the Company that are expressly
            conditioned on a Termination Upon a Change of Control with respect
            to which the payments and/or benefits

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            described in Section 2 have been provided to the Executive, except
            as expressly set forth in this Agreement.

      5.2   No Limitation of Regular Benefit Plans. Except as provided in
            Section 5.4 below, this Agreement is not intended to and shall not
            affect, limit or terminate any plans, programs or arrangements of
            the Company that are regularly made available to a significant
            number of employees or officers of the Company, including, without
            limitation, the Company's stock option plans.

      5.3   Release of Claims. The Company may condition payment of benefits
            described in Section 2 of this Agreement upon the delivery by the
            Executive of a signed release of claims in a form reasonably
            satisfactory to the Company; provided, however, that the Executive
            shall not be required to release any rights the Executive may have
            to be indemnified by the Company.

      5.4   Noncumulation of Benefits. The Executive may not cumulate cash
            severance payments, stock option vesting and exercisability and
            restricted stock vesting under this Agreement, any other written
            agreement with the Company and/or another plan or policy of the
            Company. If the Executive has any other binding written agreement
            with the Company which provides that upon a Change of Control or
            Termination Upon a Change of Control the Executive shall receive
            termination, severance or similar benefits, then no benefits shall
            be received by Executive under this Agreement unless prior to
            payment or receipt of benefits under this Agreement the Executive
            waives Executive's rights to all such other benefits, in which case
            this Agreement shall supersede any such written agreement with
            respect to such other benefits.

6.    PROPRIETARY AND CONFIDENTIAL INFORMATION

      During the term of this Agreement and following any Termination Upon
      Change of Control, the Executive agrees to continue to abide by the terms
      and conditions of any confidentiality and/or proprietary rights
      agreement(s) between the Executive and the Company.

7.    NON-SOLICITATION AND NON-COMPETITION

      7.1   For a period of one (1) year after Termination Upon Change of
Control, the Executive will not solicit the services or business of any person
or entity providing services to, or business with, the Company, or solicit any
such person to discontinue provision of such services for, or business with, the
Company without the written consent of the Company.

      7.2   For a period of one (1) year after Termination Upon Change of
Control, the Executive will not directly or indirectly own or participate in a
business that competes with the Company with respect to activities of such
business that are in direct competition with the business activities of the
Company.

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8.    ARBITRATION

      8.1   Disputes Subject to Arbitration. Any claim, dispute or controversy
            arising out of this Agreement, the interpretation, validity or
            enforceability of this Agreement or the alleged breach thereof shall
            be submitted by the parties to binding arbitration by a sole
            arbitrator under the rules of the American Arbitration Association;
            provided, however, that (1) the arbitrator shall have no authority
            to make any ruling or judgment that would confer any rights with
            respect to the trade secrets, confidential and proprietary
            information or other intellectual property of the Company upon the
            Executive or any third party; and (2) this arbitration provision
            shall not preclude the Company from seeking legal and equitable
            relief from any court having jurisdiction with respect to any
            disputes or claims relating to or arising out of the misuse or
            misappropriation of the Company's intellectual property. Judgment
            may be entered on the award of the arbitrator in any court having
            jurisdiction.

      8.2   Site of Arbitration. The site of the arbitration proceeding shall be
            in Stockton, California.

9.    MISCELLANEOUS PROVISIONS

      9.1   Heirs and Representatives of the Executive; Successors and Assigns
of the Company. This Agreement shall be binding upon and shall inure to the
benefit of and be enforceable by the Executive's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devises and legatees. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the successors and assigns of the Company.

      9.2   Amendment and Waiver. No provision of this Agreement shall be
modified, amended, waived or discharged unless the modification, amendment,
waiver or discharge is agreed to in a writing signed by the Executive and by an
authorized officer of the Company (other than the Executive). No waiver by
either party of any breach of, or of compliance with, any condition or provision
of this Agreement by the other party shall be considered a waiver of any other
condition or provision or of the same condition or provision at another time.

      9.3   Right of Setoff. The Company's obligations under this Agreement are
absolute and unconditional and are not diminished under any circumstances other
than as set forth in this Agreement, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company may have
against the Executive. Nothing in this Agreement shall be construed to obligate
the Executive to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the provisions
of this Agreement

      9.4   Withholding Taxes. All payments made under this Agreement shall be
subject to reduction to reflect all federal, state, local and other taxes
required to be withheld by applicable law.

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      9.5   Entire Agreement. This Agreement represents the entire agreement and
understanding between the parties as to the subject matter herein (whether oral
or written and whether express or implied).

      9.6   Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision hereof, which shall remain in full force and effect.

      9.7   Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California, without regard to where the Executive has his residence or principal
office or where he performs his duties hereunder.

      9.8   Successor Corporation. The parties contemplate that Company will
merge with and into its wholly-owned subsidiary, Diamond Foods, Inc., a Delaware
corporation ("DIAMOND FOODS") and that in connection with such merger Diamond
Foods will assume all of the rights and obligations of the Company under this
agreement by operation of law.

      IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.

EXECUTIVE:                             DIAMOND WALNUT GROWERS, INC.:

[Executive]                            _________________________________________
                                       By:
                                       Title:

______________________________
Signature

Date:_________________________

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