Document:

EX-10.2

 

Exhibit 10.2

[YEAR] AWARD

RESTRICTED SHARES GRANT AGREEMENT

FOR [OFFICER or DIRECTOR] WITH 20% ANNUAL VESTING

(No performance goal or other special vesting condition)

The Liberty Corporation (the Company), a South Carolina corporation, hereby grants to

                                        

(the Holder)

                     fully paid and nonassessable shares of the Common Stock of the Company.

1. This award of restricted shares has been granted pursuant to the Company’s Performance Incentive
Compensation Program, (Amended and Restated November 2000) (the Program) and is subject to all the
terms, conditions and provisions of the Program.

	 	(a)  	A copy of the Program is attached hereto as Exhibit A and made a part of this
Agreement as if fully set out herein.
	 
	 	(b)  	This award of restricted shares is not intended to constitute a Qualifying
Award under Section 10 of the Program and is therefore not required to satisfy the
conditions of Section 10 of the Program and Section 162(m) of the Internal Revenue
Code of 1986, as amended.

2. Except as provided below, restricted shares awarded pursuant to this Agreement shall vest in the
Holder in accordance with the following vesting conditions.

	 	(a)  	Subject to the other terms of this Agreement, the vesting as to the following
amounts of restricted shares shall be conditioned upon continuation of the Holder’s
employment by (or service as a non-employee director of) the Company or any of its
subsidiaries until the applicable vesting dates:

	 	 	 
	Percentage or Number of Shares	 	Vesting Date
	20%

	 	___, 200_
	 
	 	 
	40%

	 	___, 200_
	 
	 	 
	60%

	 	___, 200_
	 
	 	 
	80%

	 	___, 200_
	 
	 	 
	100%

	 	___, 200_

19

 

	 	(b)  	To the extent that the shares remain non-vested under paragraph 2(a) above,
such shares shall be deemed to be subject to a Restriction Period. The Restriction
Period shall terminate when and to the extent that such shares vest in the Holder in
accordance with the vesting terms specified in paragraph 2(a) above or in accordance
with the accelerated vesting provided by paragraph 3 below or, to the extent so
provided for a Change in Control Event, any accelerated vesting provided in paragraph 5
below or otherwise provided by the Compensation Committee pursuant to Section 12 of the
Program. Restricted shares that are subject to a Restriction Period (and the right to
vote such shares and receive dividends thereon during the Restriction Period) may not
be assigned, transferred, pledged or otherwise encumbered or disposed of except to the
Company as provided in paragraph 4 below.
	 
	 	(c)  	Except as provided in paragraph 4 below, during the Restriction Period: (i)
the certificates representing the restricted shares (and any certificates representing
any additional restricted shares issued during the Restriction Period pursuant to
paragraph 7 below) may, in the Company’s discretion, bear a restrictive legend
referring to the restrictions imposed by this Agreement, (ii) the Company shall retain
possession of the certificates for restricted shares awarded pursuant to the Program
and this Agreement, (iii) the Holder shall execute and then deliver to the Company a
stock power in blank with respect to such shares, and (iv) the Holder shall be entitled
to full dividend and voting rights in respect of such shares. After the end of the
applicable Restriction Period, the restrictions imposed under the Program and this
Agreement shall cease to apply to the shares previously subject to such Restriction
Period and the certificates for such shares shall be delivered to the Holder.

3. In the event of termination of employment (or service as a non-employee director) by reason of
death, disability or retirement at normal retirement age as provided in the Company’s (or
applicable subsidiary’s) Retirement Plan (or its retirement policy for non-employee directors), the
restrictions imposed under paragraph 2(a) above in respect of any shares then subject to a
Restriction Period shall terminate as of the date of such termination of employment (or service as
a non-employee director).

4. In the event of termination of employment (or service as a non-employee director) other than as
provided in paragraph 3 above or 5 below, the Holder shall forfeit all rights in respect of any
shares subject to a Restriction Period as of the date of such termination of employment (or service
as a non-employee director).

5. In the event of a Change in Control Event described in Section 12 of the Program occurs, then
notwithstanding any contrary terms and conditions to vesting contained, therein, the restrictions
imposed by paragraph 2(a) shall immediately terminate upon such occurrence.

6. Whenever the Holder is entitled to a distribution of restricted shares pursuant to this Award,
the Company may require the Holder to remit to the Company an amount sufficient to satisfy any
federal, state and local withholding tax requirements. The Holder may elect with respect to any
such distribution to surrender or authorize the Company to withhold shares of Common Stock (a Stock
Surrender Withholding Election), valued at current fair market value on the date of surrender or withholding of the shares, in

20

 

satisfaction of any such withholding requirements, subject to the
Program’s conditions for making such a Stock Surrender Withholding Election.

	 	(a)  	The Holder may elect to have withheld any amount which exceeds the amount
required by applicable law and governmental regulations to be withheld but not in
excess of the Holder’s total estimated federal, state and local tax obligations
associated with such distribution, including any applicable FICA taxes. Any shares of
Common Stock used to satisfy that portion of the Holder’s tax obligations associated
with such distribution in excess of the amount required by applicable law and
governmental regulations to be withheld must have been held by the Holder, free of any
vesting restrictions imposed under the Program, for at least six months.
	 
	 	(b)  	Any cash payments of dividends that become payable during the Restriction
Period to an employee (but not to a non-employee director) with respect to the
restricted shares shall be net of an amount sufficient to satisfy any federal, state
and local withholding tax requirements with respect to such dividends.

7. In the event of a merger, reorganization, consolidation, recapitalization, stock dividend,
spin-off, stock split or other change in corporate structure or other distribution of stock or
property (except for regular cash dividends) affecting the Company’s Common Stock during the
Restriction Period, such adjustments shall be made in the number of restricted shares subject to
this Agreement as may be determined appropriate by the Compensation Committee. Any resulting
restricted shares shall be subject to all of the terms and conditions of this Agreement.

8. This Agreement shall bind and inure to the benefit of the Company and any assignees or
successors in interest of the Company and the Holder and his/her heirs, personal representatives
and successors in interest (subject to applicable restrictions on any transfer, etc. by the
Holder).

     Dated at Greenville, South Carolina, as of this [DATE].

	 	 	 	 	 	 	 
	

	 	 	 	The Liberty Corporation	 	 
	 
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	

	 	 	 	

	 	 
	

	 	 	 	Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	

	 	 	 	

	 	 
	

	 	 	 	Holder	 	 

The Restriction Period for the following certificate(s) and shares terminated on the date indicated
and the following certificate(s) and shares are hereby released to the Holder:

	 	 	 	 	 	 	 
	 	 	 	 	Authorized Signature	 	No. of Shares
	Date	 	Certificate No. & No. of Shares	 	& Date Released	 	Still Restricted
	 
	 	 	 	 	 	 

21<PAGE>
                                                                   EXHIBIT 10.21
                                  [DIAMOND FOODS LOGO]

                                             DIAMOND FOODS, INC.
                                            WALNUT PURCHASE AGREEMENT

Grower Name:
                  --------------------------------------------------------------

Grower Address:
                  --------------------------------------------------------------

                  --------------------------------------------------------------

                 Telephone:                          Email:
                           -------------------------       ---------------------

Grower Orchards: [See description on reverse side of this page.]

Date of Agreement:                               , 2005
                   ------------------------------

         This Walnut Purchase Agreement is made between Diamond Foods, Inc., a
Delaware corporation ("Diamond") and the Grower named above ("Grower").

1.   Sale and Purchase. During the Term of this Agreement, Grower will sell and
     Diamond will buy Grower's entire production of walnuts from the Grower
     Orchards described on the reverse side of this page.

2.   Term. The Initial Term of this Agreement will commence on the date set
     forth above and will continue for the remainder of Grower's term under the
     Marketing Agreement contained in the Diamond Walnut Growers, Inc. Bylaws
     PLUS (check one)

     [ ] three additional Crop Years

     [ ] five additional Crop Years

     [ ] ten additional Crop Years

     (Thus, if a grower had one Crop Year remaining under the old Marketing
     Agreement and the grower elected a term of three additional Crop Years, the
     Initial Term would be four Crop Years). A Crop Year will commence on August
     1 of the year in which the harvest is delivered (thus, the 2005 Crop Year
     commences on the August 1 preceding delivery of the harvest in the Fall of
     2005), and will continue until July 31 of the following year).

     After the Initial Term, this Agreement will be automatically renewed for
     successive three-year terms (each, an "Extension Term") unless and until
     either party terminates the Agreement using the procedure described in
     paragraph 6.a. of the General Terms and Condition.

3.       Price. By March 31 following a harvest, Diamond will announce a final
         nominal purchase price for the year's walnut crop (the "Final Price").
         The Final Price will be determined by Diamond in good faith, taking
         into account market conditions, quality, variety, and other relevant
         factors. The actual

<PAGE>

         purchase price (the "Purchase Price") will be determined by applying to
         Grower's deliveries the Final Price, as adjusted for various bonuses
         and price adjustments relating to variety, grade, early delivery,
         suitability for sale as in-shell, shelling quality, insect
         classification, and other factors, all as announced by Diamond from
         time to time in the Growers Guidelines.

Payment Terms. Diamond will pay the Purchase Price as follows

     First Payment                A payment determined by Diamond in its
     (To be paid within 14 days   discretion. Historically, Diamond has made
     averaging after              First Payments averaging approximately 35% to
     delivery)                    45% of the final value of the crop.

     Second Payment               A payment determined by Diamond in its
     (To be paid by February 15   discretion. Historically, Diamond has made
     following delivery)          Second payments averaging approximately 10%
                                  to 15% of the final value of the crop.

     Third Payment                The Third Payment will be an amount equal to
     (To be paid by August 15     65% of the Purchase Price (based upon the
     following delivery)          Final Price announced on March 31), minus the
                                  cumulative amount paid in the First and
                                  Second Payments.

     Fourth and Final Payment
     (To be paid by December 15   35% of the Purchase Price.
     of the year following the
     year of delivery)

     Grower's Walnut Marketing Board and California Walnut Commission fees and
     assessments will be deducted from the First Payment paid to Grower.

5.   General Terms and Conditions and Grower Guidelines. The attached General
     Terms and Conditions and Grower Guidelines are incorporated by this
     reference into this Agreement. Diamond may amend the Grower Guidelines from
     time to time, and the amended Grower Guidelines will be deemed incorporated
     into this Agreement from and after the time such Guidelines are delivered
     to Grower.

6.   Entire Agreement. This Agreement, the Designation of Grower Orchards on the
     reverse side hereof, the attached General Terms and Conditions, and the
     Grower Guidelines (as amended by Diamond from time to time), comprise the
     entire agreement between Grower and Diamond, and all prior or
     contemporaneous agreements and understandings are merged herein and
     superseded hereby.

GROWER:                              DIAMOND FOODS, INC., a Delaware corporation

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

Name:                                Name:
      -------------------------           --------------------------------------

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

                                        2

<PAGE>

                         DESIGNATION OF GROWER ORCHARDS
Orchard     County    Variety     Year     Acres     Trees/Acre     Owned/Leased
Location                         Planted
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

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         "Grower Orchards" includes all walnut orchards as to which Grower or
Grower's Affiliates have the right to sell the production. "Grower Orchards"
include (i) orchards owned now or in the future by Grower or Grower's
Affiliates, and (ii) orchards that Grower or its Affiliates now or in the future
sharecrop or lease from the orchard owner, if Grower or its Affiliates control
the sale of the crop. Grower will notify Diamond in writing if after the date of
this Agreement Grower or any of its Affiliates acquire, sharecrop, or lease
additional Grower Orchards. Grower represents and warrants to Diamond that the
above list of Grower Orchards is complete.

         An "Affiliate" of Grower is any corporation, limited liability company,
partnership, limited partnership, or other entity controlled by Grower, or which
controls Grower, or which is commonly controlled with Grower. A person or entity
"controls" another entity when the person owns more than 50% of the voting or
equity interests in such entity, or otherwise has the power to direct the
management and policies of such entity. A revocable living trust of which Grower
is the grantor will also be considered an Affiliate of Grower.

         If Grower sells a Grower Orchard or terminates the arrangement under
which Grower sharecropped or leased such Grower Orchard, it will cease to be
considered a Grower Orchard after Diamond receives written notice of such event.
Thereafter, the purchaser of the orchard will be free to enter into other
arrangements for the sale of production from such orchard. If Grower leases a
Grower Orchard to a third party or enters into a sharecropping arrangement with
respect thereto, the orchard will continue to be considered a Grower Orchard,
the production of which is committed to Diamond under this Agreement. If Grower
takes a Grower Orchard out of production, Grower will give Diamond prompt
written notice of such event. Thereafter, such orchard will cease to be a Grower
Orchard covered by this Agreement.

                                                 3
<PAGE>

                            WALNUT PURCHASE AGREEMENT
                          GENERAL TERMS AND CONDITIONS

1. Price. Grower acknowledges that Diamond will set the Final Price for walnuts
by March 31 of the year following delivery of each harvest. Diamond's good faith
determination of the Final Price will be conclusive and binding upon the
parties. Title to the walnuts will pass to Diamond upon delivery notwithstanding
that the Purchase Price will be determined at a later date. Grower expressly
waives the provisions of California Food and Agriculture Code Sections 62801,
which provides in part

                  "...unless the parties agree otherwise, every contract for the
                  sale of edible nuts shall be in writing and shall state the
                  full purchase price in a definite sum which is to be paid in
                  accordance with the terms of the contract.

2. Assignment of Payments. Grower may assign to a third party in whole or in
part its right to receive payment by giving Diamond written notice of such
assignment. Diamond will be justified in relying upon such notice until it
receives written notice terminating or changing such assignment.

3. Waiver of Producer's Lien. Grower expressly waives the provisions of
   California Food and Agriculture Code Section 55631, which provides in part

                 "Every producer of any farm product that sells any product
                 which is grown by him to any processor... has a lien upon such
                 product and upon all processed or manufactured forms of such
                 farm product for his labor, care, and expense in growing and
                 harvesting such product."

The producer's lien under Section 55631 is a first priority lien on the farm
product sold. A person waiving the benefits of Section 55631 would be in the
position of a general creditor of Diamond, instead of a secured creditor.

4.   Delivery and Acceptance; Title.
     -------------------------------

             a. Subject to Diamond's right to regulate time of delivery by
reasonable notice, Grower will harvest, hull, and deliver the walnuts in
accordance with Diamond's Grower Guidelines.

             b. Upon the delivery of Grower's walnuts to Diamond's processing
facility, Diamond will inspect, weigh, grade, and sort the walnuts.

             c. If Grower participates in Diamond's Ranch Pick-Up Program,
Grower will deliver the walnuts to Diamond's common carrier for transportation
to Diamond's processing facility. In such event, title to the walnuts will pass
to Diamond when the walnuts are loaded on the common carrier's truck (subject,
however, to Diamond's right to inspect, reject, and return to Grower loads of
walnuts that are not merchantable).

             d. If Grower does not participate in Diamond's Ranch Pick-Up
Program, but rather transports walnuts using Grower's own carrier, title to the
walnuts will pass to Diamond upon delivery of the walnuts to Diamond's facility
and acceptance by Diamond.

             e.  Prior to transfer of title, Grower will bear all risk of loss,
damage, or depreciation of the walnuts.

             f. Diamond will have no obligation to purchase Willson Wonder,
Bijou, Klondyke, Gant, and other walnut varieties that Diamond determines to be
uncommercial.

                                        1

<PAGE>

5.   Grower Warranties.
     -----------------

             a. Grower warrants that upon delivery Diamond will acquire good and
merchantable title to the walnuts. Grower will promptly notify Diamond of the
existence of any security interest granted in the walnuts. Grower will provide
to Diamond upon request proof of release of any liens on delivered walnuts
arising out of crop financing. Grower further warrants that the holders of any
liens, claims, or encumbrances affecting the walnuts have granted to Grower
permission to sell the walnuts to Diamond. Grower will indemnify, defend, and
hold Diamond harmless from any loss or liability relating to the claim of any
person claiming a lien in the walnuts.

             b. Grower warrants that the walnuts will be dry and clean, and of
good marketable quality, with levels of mold, insects, and other damage that do
not render the walnuts unmarketable. The walnuts will be free of pesticide
residues or other substances in a quantity prohibited by local state, or federal
law. If the walnuts fail to meet these standards, Diamond may, at its option and
in its sole discretion, either (i) do whatever is commercially reasonable to
make the walnuts meet these standards, charging all related costs to Grower;
(ii) decline acceptance of such walnuts before or upon delivery or within a
reasonable time after delivery and return the walnuts to Grower at Grower's
expense; or (iii) notify Grower and hold the walnuts subject to Grower's orders
and expense.

             c. Grower warrants that (i) Grower's delivery obligations under
this Agreement will not conflict with any duty Grower may have under agreements
with third parties; and (ii) none of the walnuts delivered by Grower to Diamond
hereunder will originate in orchards other than Grower Orchards.

             d. Grower agrees to conform to (i) the provisions of the pure food
and drug laws and other present or future laws of the State of California, and
(ii) the provisions of the Federal Pure Food and Drugs Act of the United States
of June 30, 1906, and all amendments thereto. Grower warrants that walnuts
delivered under this contract will not on the date of delivery be adulterated or
misbranded within the meaning of any applicable law of the State of California,
or the Federal Food, Drug, and Cosmetic Act. Grower further warrants that the
walnuts have not been subjected to any pesticides or chemicals that may
detrimentally affect the natural state of such walnuts or the saleability
thereof. All products delivered hereunder will be produced in compliance with
the requirements of section 12 of the Fair Labor Standards Act of 1938, as
amended, and all other requirements of the Act so far as they may be applicable.

6.   Term and Termination.
     --------------------

             a. The Initial Term will expire at the end of the last Crop Year of
such period. Thereafter, the term of the Agreement will automatically be renewed
for successive additional three-year terms (each, an "Extension Term"), unless a
party terminates the Agreement through the following procedure. (The Initial
Term and all Extension Terms will be referred to as the "Term.") Either Grower
or Diamond may terminate by giving written notice (a "Termination Notice") to
the other party before February 28 of the final Crop Year of the then-current
Term. If a Termination Notice has been delivered, this Agreement will terminate
at the end of the then-current Term, and will not be automatically renewed.

             b. Grower may terminate this Agreement effective 30 days after
giving written notice to Diamond if Grower sells all of its Grower Orchards or
takes all of the Grower Orchards out of commercial production.

                                        2

<PAGE>

              c. In the event that either party is in material breach of its
obligations hereunder, the other party may give notice to the party in breach,
specifying in detail the nature of the breach. This Agreement will terminate 30
days after the date of such notice, unless the breaching party substantially
cures its breach within the 30-day period (or, if the breach is not capable of
being cured within such period, if the party in breach commences such cure
during such period and thereafter diligently prosecutes such cure to
completion). It shall be considered a material breach of this Agreement if
Grower breaches its obligation to sell to Diamond during the Term of this
Agreement all of its production from Grower Orchards.

             d. Diamond may terminate this Agreement effective upon 30 days
prior written notice to Grower if over 3 consecutive years Grower's deliveries
are not of commercial quality. "Commercial quality" means that at least 80% of
Grower's deliveries are Class I Insect Level and that no more than 12% of the
delivered pounds are classified as "offgrade."

7. Grower Guidelines. Grower and Diamond will be subject to the terms and
conditions set forth in Diamond's Grower Guidelines. Each Crop Year, Diamond
will amend and republish the Grower Guidelines. Diamond will send to Grower or
post on its website in a manner accessible to Grower the Grower Guidelines that
will be applicable to the upcoming harvest.

8. Dispute Resolution.
   ------------------

             a. Any controversy or claim arising out of or relating to this
Agreement will be settled by arbitration conducted in Stockton, California in
accordance with the rules of the American Arbitration Association. The
arbitrator selected to hear the matter must have a minimum of five years of
experience as a judge or arbitrator, or both. At least thirty days before the
arbitration hearing, the parties will allow each other reasonable written
discovery including the inspection and copying of documents and other tangible
items relevant to the issues that are to be presented at the arbitration
hearing. The arbitrator will decide any disputes regarding the scope of
discovery. Fees for the arbitrator or arbitrators will be divided equally
between the parties, and the parties will be individually responsible for the
payment of the fees. The prevailing party in any arbitration, proceeding or
legal action arising out of or relating to this Agreement will be entitled to
recover its reasonable attorneys' fees and costs incurred in connection with
such arbitration, proceeding or legal action. The arbitrator will determine who
is the prevailing party for this purpose.

             b. The award rendered by the arbitrator will be final and binding
upon both parties. The California State Superior Court located in Stockton,
California will have exclusive jurisdiction over disputes between the parties in
connection with such arbitration and the enforcement thereof. The parties
consent to the jurisdiction and venue of the California State Superior Court
located in Stockton, California. Notwithstanding that the parties have agreed to
binding arbitration of disputes, neither party will be prevented from seeking
ancillary or equitable relief from the California State Superior Court,
including us pendens, injunctive relief and specific performance.

             c. The parties will keep confidential the outcome of any mediation,
arbitration, proceeding or legal action. Each dispute will be resolved based
upon its own facts and merits, and no procedure in the nature of class actions
will be permitted. Further, no collateral estoppel effect will be accorded to
any judgment, decision, or award from any prior arbitration, proceeding or legal
action against the other party unless both parties were parties to such prior
proceeding.

9.       Force Majeure: Quarantines and Embargoes; Reservation of Crop.

                                        3

<PAGE>

             a. Either party's obligation to perform under this Agreement will
be excused to the extent it is prevented by fire, storm, flood, earthquake,
explosion, action of the elements, total or partial failure of transportation or
delivery facilities, shortage of labor, materials or supplies, interruption of
power, Act of God, the elements, war, civil disturbance, governmental or
regulatory actions, labor disturbances, or any other event beyond the party's
reasonable control.

             b. If, before delivery hereunder is completed, any quarantine,
embargo, or other laws or regulations or restrictions of federal state, or other
public or governmental authority or officers would prevent or substantially
interfere with shipment of any walnuts deliverable hereunder to the nearest
walnut packing or receiving station of Grower or from such plant, or would
render any such walnuts subject to detention, seizure, or condemnation, Diamond
at its option, by written notice to Grower, may either terminate this Agreement
as to all walnuts not theretofore delivered by Grower, or may postpone the time
for delivery hereunder while such laws, regulations, or restrictions so operate.

             c. Grower acknowledges that pursuant to Federal Marketing Order
(984) covering walnuts grown in California, Diamond may be required to withhold
from the saleable market that portion of Grower's crop which is declared
reserved or surplus by the Walnut Marketing Board and ordered withheld from the
salable market by the United States Secretary of Agriculture. Price and payment
for Grower's reserve walnuts may be on a basis different than for the salable
portion of Grower's crop. Diamond will have no obligation to pay for Grower's
reserve walnuts, until such reserve walnuts are released for sale by the Walnut
Marketing Board.

10. Remedies for Grower's Breach of Obligation to Sell Entire Production. The
parties acknowledge and agree that (i) this contract is a requirements contract
obligating Grower to sell to Diamond its entire production of walnuts from
Grower Orchards; and (ii) Grower is not entitled to sell walnuts to Diamond that
are from orchards other than Grower Orchards. The parties further acknowledge
and agree that these obligations are fundamental to the commercial understanding
between the parties, and that if Grower breaches either of these obligations,
Diamond will suffer damages that would be impracticable or extremely difficult
to determine. Accordingly, the parties agree that in the event that Grower
breaches either of the above obligations, Grower shall become obligated to pay
to Diamond liquidated damages equal to 50% of the market value of production
that Grower sells to buyers other than Diamond, or 50% of the market value of
production sold to Diamond that originated from orchards other than Grower
Orchards. The foregoing right to recover liquidated damages will be in addition
to, and not in substitution of, all other available remedies for breach of this
Agreement, including equitable relief.

11. General
    -------
             a. Effect of Reorganization of Old Diamond. Grower is currently a
member of Diamond Walnut Growers, Inc., a grower-owned California cooperative
("Old Diamond"). As a member, Grower is subject to the "Marketing Agreement"
contained in Diamond's Bylaws, which deals with the same subject matter as this
Agreement. Old Diamond is contemplating a corporate reorganization in which Old
Diamond will be merged into Diamond, a newly-formed Delaware corporation. Old
Diamond has elected to terminate all Marketing Agreements under the Bylaws,
effective upon Diamond's merger into New Diamond. The effectiveness and
operation of this Agreement will be suspended until termination of the Marketing
Agreements under the Bylaws. If the Marketing Agreements under the Bylaws are
not terminated prior to December 31, 2005, Diamond will have the option to
terminate this Agreement effective upon the giving of written notice to Grower.

                                        4
<PAGE>

             b.  Assignment.
                 ----------

                      (i)     Upon giving written notice, Grower may assign its
rights and obligations to a person who acquires by purchase a controlling
interest in all or substantially all of Grower's Grower Orchards, provided that
the assignee agrees in writing to be bound by the terms of this Agreement. In
such a case, no other walnut orchards owned by the assignee will be considered
Grower Orchards unless Diamond agrees in writing to such designation.

                      (ii)    Upon giving written notice, Diamond may assign its
rights and obligations under this Agreement to an acquiror of all or
substantially all Diamond's assets and business operations.

             c. Notices. All notices under this Agreement must be in writing and
will be effective (i) immediately upon delivery in person or by messenger to the
address stated above, or (ii) the next business day after deposit with a
commercial courier or delivery service for next business day delivery, or (iii)
upon receipt by facsimile as established by evidence of successful transmission,
provided a copy of the notice is mailed by first class the same day, or (iv)
three business days after deposit with the United States Postal Service,
certified mail, return receipt requested, postage prepaid. All notices must be
properly addressed to Grower at the address set forth above, or to Diamond at
1050 S. Diamond Street, Stockton, CA 95205-7087, or at such other addresses as
either party may subsequently designate by written notice given in the manner
provided in this Section.

             d. Severability. If any provision of this Agreement or its
application to any person or circumstances is held to be invalid or
unenforceable, the remainder of this Agreement and the application of such term
or provision to other persons or circumstances will not be affected, and each
term of this Agreement will be valid and enforceable to the fullest extent
permitted by law.

             e.  Amendment. This Agreement may only be amended in a writing
signed by both parties; provided, however, that Diamond may amend the Grower
Guidelines from time to time by giving written notice to Grower.

             f.  Binding Agreement. The Agreement will be binding upon, and will
inure to the benefit of, the heirs, executors, administrators, successors,
assigns, and grantees of the parties hereto.

             g.  Governing Law. This Agreement will be governed by the laws of
the State of California, as applied to contracts entered into and performed
completely within California.

                                        5

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