8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 19, 2008

DIEDRICH COFFEE, INC.

(Exact name of registrant as specified in its charter)

Delaware	0-21203	33-0086628
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

28 Executive Park, Suite 200

Irvine, California 92614

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (949) 260-1600

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry Into A Material Definitive Agreement

On June 19, 2008, Diedrich Coffee, Inc. (the “Company”) entered into an Amending Agreement with Sequoia Enterprises, L.P. (“Sequoia”), a limited partnership whose sole general partner also serves as the Chairman of our Board of Directors (the “Amending Agreement”). The Amending Agreement amended that certain $5,000,000 Contingent Convertible Note Purchase Agreement, dated as of May 10, 2004, by and between the Company and Sequoia, as amended (the “Note Purchase Agreement”), the Form of Warrant attached thereto as Exhibit B (the “Form of Note Purchase Warrant”), the outstanding warrant to purchase 4,219 shares of the Company’s common stock (“Common Stock”) issued to Sequoia pursuant to the Note Purchase Agreement (the “Outstanding Note Purchase Warrant”), and the outstanding warrant to purchase 250,000 shares of Common Stock (the “2001 Warrant”) issued to Sequoia pursuant to that certain Common Stock and Warrant Purchase Agreement, dated as of March 14, 2001, to which Sequoia was a party. Pursuant to the Amending Agreement, Sequoia agreed to extend the maturity date of the Note Purchase Agreement (the “Maturity Date”) from June 30, 2008 to September 30, 2008. In consideration for Sequoia’s agreement to extend the Maturity Date, the Company agreed, pursuant to the terms of the Amending Agreement, to (i) extend the expiration date for the 2001 Warrant, the Form of Note Purchase Warrant and the Outstanding Note Purchase Warrant, in each case, to June 30, 2014; (ii) reduce the exercise price of the 2001 Warrant, the Form of Note Purchase Warrant and the Outstanding Note Purchase Warrant, in each case, to $3.00 per share; and (iii) pay a transaction fee of $40,000 to be paid to Sequoia within five business days of the execution of the Amending Agreement.

Prior to the Company’s entry into the Amending Agreement, the exercise price of the 2001 Warrant was $4.80 per share and the expiration date for the 2001 Warrant was May 8, 2011. Prior to entry into the Amending Agreement, the exercise price of the Outstanding Note Purchase Warrant was $3.95 per share. The exercise price of shares of Common Stock to be issued pursuant to the Form of Note Purchase Warrant was to be the greater of (a) the weighted average closing price of the Common Stock on the date of issuance of each of the promissory notes issued under the Note Purchase Agreement to which such warrant relates, or (b) an amount equal to 85% of the average price paid per share of Common Stock in a change of control transaction. The expiration date for both the Form of Note Purchase Warrant and Outstanding Note Purchase Warrant was June 30, 2010.

Consistent with the Company’s procedures for approving related party transactions, the Audit Committee of our Board of Directors, comprised of Timothy J. Ryan and Greg D. Palmer, authorized and approved the Amending Agreement and the transactions contemplated thereby.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

The following exhibit is furnished with this Current Report on Form 8-K:

Exhibit No.	Description
10.1	Amending Agreement, dated as of June 19, 2008, by and between Diedrich Coffee, Inc. and Sequoia Enterprises, L.P.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: June 25, 2008	DIEDRICH COFFEE, INC.
	By:	/s/ Sean M. McCarthy
		Sean M. McCarthy
		Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Description
10.1	Amending Agreement, dated as of June 19, 2008, by and between Diedrich Coffee, Inc. and Sequoia Enterprises, L.P.

EX-10.1

Exhibit 10.1

EXECUTION VERSION

AMENDING AGREEMENT

THIS AMENDING AGREEMENT (this “Agreement”) is entered into as of June 19, 2008, by and among Diedrich Coffee, Inc., a Delaware corporation (the “Company”), and Sequoia Enterprises, L.P., a California limited partnership (“Sequoia”), with reference to the following facts:

WHEREAS, the Company and Sequoia are parties to that certain Contingent Convertible Note Purchase Agreement, dated as of May 10, 2004, as amended (the “Note Purchase Agreement”), whereby Sequoia extended a loan to the Company on the terms and subject to the conditions set forth therein (the “Loan”);

WHEREAS, in the absence of an Event of Default (as such term is defined in the Note Purchase Agreement) or a Change of Control (as such term is defined in the Note Purchase Agreement), the Loan is due and payable on June 30, 2008 (the “Maturity Date”);

WHEREAS, on the terms and subject to the conditions of the Note Purchase Agreement, the Company is obligated under certain circumstances to issue to Sequoia warrants for a number of shares of common stock, par value $0.01 per share, of the Company (“Common Stock”) specified in the Note Purchase Agreement (the “Note Purchase Warrants”);

WHEREAS, as of the date hereof, Note Purchase Warrants for the purchase of 4,219 shares of Common Stock, with an exercise price of $3.95 per share, have been issued to Sequoia and are outstanding (the “Outstanding Note Purchase Warrant”);

WHEREAS, pursuant to that certain Common Stock and Warrant Purchase Agreement, dated as of March 14, 2001, as amended (the “Common Stock and Warrant Agreement”), the Company has issued to Sequoia a warrant to purchase, in the aggregate, 250,000 shares of Common Stock (the “2001 Warrant”) at an exercise price of $4.80 per share (such number of shares and exercise price having taken into account all adjustments required under the 2001 Warrant resulting from any applicable event that occurred prior to the date hereof), subject to adjustment in accordance with the terms of the 2001 Warrant resulting from any applicable event occurring after the date hereof;

WHEREAS, neither the Outstanding Note Purchase Warrant nor the 2001 Warrant has been exercised in part or in whole, and the expiration date for exercise of the Note Purchase Warrants (including the Outstanding Note Purchase Warrant) and the 2001 Warrant are June 30, 2010 and May 8, 2011, respectively;

WHEREAS, pursuant to the terms of this Agreement, Sequoia has agreed to extend the Maturity Date until September 30, 2008 (the “New Maturity Date”); and

WHEREAS, in consideration for Sequoia’s willingness to extend the Maturity Date to the New Maturity Date, the Company desires to (i) extend the expiration date of the Note Purchase Warrants (including the Outstanding Note Purchase Warrant) and the 2001 Warrant to June 30, 2014,

(ii) decrease the exercise price for both the Note Purchase Warrants (including the Outstanding Note Purchase Warrant) and the 2001 Warrant, in each case to $3.00 per share, and (iii) pay to Sequoia a transaction fee in the amount of $40,000.

NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements set forth herein, the parties hereto, intending to be legally bound hereby, agree as follows:

1. Amendment to Note Purchase Agreement.

(a) The definition of “Maturity Date” set forth in Section 1.1 of the Note Purchase Agreement is hereby amended and restated in its entirety as follows:

“Maturity Date” shall mean the earliest of (i) the date of consummation of a Change of Control transaction, (ii) the date the Notes are declared due and payable by Lender upon an Event of Default, or (iii) September 30, 2008.”

(b) Expiration Date in Form of Note Purchase Warrant. The term “Expiration Date” used in the Form of Warrant, attached as Exhibit B to the Note Purchase Agreement, is hereby amended to mean June 30, 2014.

(c) Form of Note Purchase Warrant Conversion Price. Section 1 of the Form of Warrant attached as Exhibit B to the Note Purchase Agreement is hereby amended and restated in its entirety as follows:

“1. Definitions. For purposes of this Warrant, the “Conversion Price” for this Warrant will be $3.00 per share, which takes into account all adjustments pursuant to Section 4 due to any applicable event that occurred prior to June 19, 2008, but as may be adjusted pursuant to Section 4 due to any applicable event occurring after such date (the “Note Price”).”

2. Amendment to Note Purchase Warrants.

(a) Expiration of Outstanding Note Purchase Warrant. The term “Expiration Date” used in the Outstanding Note Purchase Warrant is hereby amended to mean June 30, 2014.

(b) Expiration Date in Form of Note Purchase Warrant. The term “Expiration Date” used in the Form of Warrant, attached as Exhibit B to the Note Purchase Agreement, is hereby amended to mean June 30, 2014.

(c) Outstanding Note Purchase Warrant Conversion Price. Section 1 of the Outstanding Note Purchase Warrant is hereby amended and restated in its entirety as follows:

“1. Definitions. For purposes of this Warrant, the “Conversion Price” for this Warrant will be $3.00 per share, which takes into account all adjustments pursuant to Section 4 due to any applicable event that occurred prior to June 19, 2008, but as may be adjusted pursuant to Section 4 due to any applicable event occurring after such date (the “Note Price”).”

3. Amendment to 2001 Warrant.

(a) Expiration of 2001 Warrant. The term “Expiration Date” used in the 2001 Warrant is hereby amended to mean June 30, 2014.

(b) Warrant Price. The definition of “Warrant Price” set forth in Section 1.11 of the 2001 Warrant is hereby amended and restated in its entirety as follows:

“1.11 “Warrant Price” means $3.00 per share of Warrant Stock, which takes into account all adjustments pursuant to Section 4 hereof and Section 1.7 of the Registration Rights Agreement due to any applicable event that occurred prior to June 19, 2008, but as may be adjusted pursuant to Section 4 hereof and/or Section 1.7 of the Registration Rights Agreement due to any applicable event occurring after such date.”

4. Transaction Fee. Within five (5) business days of the execution of this Agreement, the Company shall pay to Sequoia a transaction fee in the amount of $40,000 by wire transfer of immediately available funds directly to the account specified in writing by Sequoia.

5. No Further Amendments. Except as expressly amended pursuant to Sections 1, 2 and 3 hereof, the remaining terms of the Note Purchase Agreement (including the Form of Warrant attached as Exhibit B thereto), the Note Purchase Warrants (including the Outstanding Note Purchase Warrant) and the 2001 Warrant shall remain in full force and effect in accordance with their terms, notwithstanding the execution and delivery of this Agreement. Nothing in this Agreement shall be construed to amend or otherwise modify the Common Stock and Warrant Agreement or any warrant, other than the 2001 Warrant, issued thereunder.

6. Governing Law. This Agreement shall be governed, construed and interpreted in accordance with the laws of the State of California, regardless of the laws or rules that might otherwise govern under applicable principles of conflicts of laws thereof.

7. Counterparts. This Agreement may be executed by facsimile in one or more counterparts, each of which shall be deemed to be an original but all of which shall constitute one and the same agreement.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first set forth above.

COMPANY:
DIEDRICH COFFEE, INC.
By:	/s/ J. Russell Phillips
Name:	J. Russell Phillips
Title:	Chief Executive Officer

By:	/s/ Sean M. McCarthy
Name:	Sean M. McCarthy
Title:	Chief Financial Officer

SEQUOIA:
SEQUOIA ENTERPRISES, L.P.
By:	/s/ Paul Heeschen
Name:	Paul Heeschen
Title:	General Partner

SIGNATURE PAGE

TO

AMENDING AGREEMENT