THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Diamond Foods, Inc. (DMND)

11/23/2005 Proxy Information

Any related party transactions, excluding compensation (whether cash, equity or otherwise) which is delegated to the compensation committee, involving one of our directors or executive officers, must be reviewed and approved by the audit committee or another independent body of the board of directors.

Other than the employment and severance agreements described in “Corporate Governance and Board of Directors Matters — Director Compensation,” “Executive Compensation” and the transactions described below, since August 1, 2004 there has not been, and there currently is not proposed, any transaction or series of similar transactions to which we were or will be a party:

• in which the amount involved exceeded or exceeds $60,000; and

• in which any director, executive officer, holder of more than 5% of any class of our common stock or any member of their immediate family had or will have a direct or indirect material interest.

Grower Payments

We have paid each member of our board of directors who is currently a grower from whom we purchase walnuts, or an affiliate of a such a grower, for walnut products we received from them in the ordinary course of our business. Historically, before we converted from an agricultural cooperative to a corporation, each cooperative member provided us with walnuts, and we paid net proceeds of our walnut business to the member in proportion to the members’ patronage. After the conversion, we pay a market price for walnuts delivered. Directors provide walnuts to us on the same terms as other members. Any Walnut Purchase Agreement that Diamond Foods enters into with any member of our board of directors will be on the same terms as our Walnut Purchase Agreements with other walnut growers. The following table shows the payments received by the directors who also sold walnuts to us in fiscal 2005 and fiscal 2006 through November 15, 2005: (See page 24 for table).

Conversion Payments

In connection with our conversion from an agricultural cooperative to a corporation, each director who was also a cooperative member of our predecessor entity was entitled to receive cash and/or shares of our common stock. Each of Mr. Gilbert, Mr. Lea and the Hancock Entities for whom Mr. Silveira provides farming management services elected to receive shares. See “Stock Ownership of Principal Stockholders and Management” above.

Indemnification of Directors and Executive Officers and Limitation of Liability

Our certificate of incorporation includes a provision that eliminates the personal liability of our directors for monetary damages resulting from breach of fiduciary duty as a directors, except for liability:

• for any breach of the director’s duty of loyalty to our company or our stockholders;

• for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;

• under section 174 of the Delaware General Corporation Law regarding unlawful dividends and stock purchases; or

• for any transaction from which the director derived an improper personal benefit.

Our bylaws provide that we:

• must indemnify its directors and executive officers to the fullest extent permitted by Delaware law, subject to limited exceptions;

• may indemnify our other employees and agents to the same extent that we indemnified our directors and executive officers, unless otherwise required by law, our certificate of incorporation, bylaws or agreements; and

• must advance expenses, as incurred, to our directors and executive officers in connection with a legal proceeding to the fullest extent permitted by Delaware law, subject to limited exceptions.

We have entered into indemnification agreements with each of our directors and executive officers to give them additional contractual assurances regarding the scope of the indemnification provided in our certificate of incorporation and bylaws and to provide additional procedural protections. Presently, there is no pending litigation or proceeding involving any of our directors, executive officers or employees for which indemnification is sought, nor are we aware of any threatened litigation that may result in claims for indemnification.

We maintain liability insurance for our directors and officers and have obtained a rider to this coverage for securities matters.