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): April 29, 2009

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 April 29, 2009, Diedrich Coffee, Inc. (the “Company”) obtained an amended and restated commitment letter (the “Amended Commitment Letter”) from Sequoia Enterprises, L.P. (“Sequoia”) and Vessel Partners, L.P. (collectively, the “Lenders”), each of which is a limited partnership whose general partner also serves as the chairman of the Board of Directors of the Company. The Amended Commitment Letter amends the commitment letter obtained from the Lenders on March 27, 2009 (the “Prior Commitment Letter”) to extend the date by which the Lenders are required to enter into a $5,000,000 commitment letter or note agreement with the Company, from April 30, 2009 to June 30, 2009.

On April 29, 2009, the Company also entered into an Amendment No. 6 (the “Amendment”) to the Contingent Convertible Note Purchase Agreement (the “Note Purchase Agreement”) with Sequoia. The Amendment extends the maturity date of the Note Purchase Agreement and the notes issued thereunder until March 31, 2010 and was entered into in connection with the Prior Commitment Letter.

In connection with the extension, after the close of the Nasdaq Stock Market on April 29, 2009, the Company issued to Sequoia a warrant to purchase 70,000 shares of common stock of the Company at an exercise price of $7.40 per share (the “Warrant”), which was the closing price of the Company’s common stock on such date. The Warrant is exercisable by Sequoia, in whole or in part, at any time or from time to time, prior to April 29, 2014. The Warrant is not eligible for cashless exercise, but the Company is obligated to cause the common stock issued upon exercise of the Warrant to be registered with the SEC and applicable state governmental authorities and to be listed on the stock exchange on which the Company’s stock is traded at the time of exercise, in each case at the Company’s expense.

Consistent with the Company’s procedures for approving related party transactions, the Audit Committee of the Board of Directors, comprised of James W. Stryker, Timothy J. Ryan and Greg D. Palmer, authorized and approved the Amendment, the Warrant and the transactions contemplated thereby.

The foregoing descriptions of the Amended Commitment Letter, the Amendment and the Warrant are qualified in their entirety by reference to the full text of such documents, which are included herewith as Exhibits 10.1, 10.2 and 4.1, respectively, and incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit No.	Description
4.1	Warrant, dated as of April 29, 2009, issued by Diedrich Coffee, Inc. to Sequoia Enterprises, L.P.

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10.1	Amended and Restated Commitment Letter, dated as of April 29, 2009, by Sequoia Enterprises, L.P. and Vessel Partners, L.P.
10.2	Amendment No. 6 to Contingent Convertible Note Purchase Agreement, dated as of April 29, 2009, by and between Diedrich Coffee, Inc. and Sequoia Enterprises, L.P.

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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: May 4, 2009	DIEDRICH COFFEE, INC.
	By:	/s/ Sean M. McCarthy
		Sean M. McCarthy Chief Financial Officer

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EXHIBIT INDEX

Exhibit No.	Description
4.1	Warrant, dated as of April 29, 2009, issued by Diedrich Coffee, Inc. to Sequoia Enterprises, L.P.
10.1	Amended and Restated Commitment Letter, dated as of April 29, 2009, by Sequoia Enterprises, L.P. and Vessel Partners, L.P.
10.2	Amendment No. 6 to Contingent Convertible Note Purchase Agreement, dated as of April 29, 2009, by and between Diedrich Coffee, Inc. and Sequoia Enterprises, L.P.

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EX-4.1

EXHIBIT 4.1

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NEITHER THIS WARRANT NOR SUCH COMMON STOCK MAY BE SOLD, PLEDGED, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY AND ITS LEGAL COUNSEL STATING THAT SUCH SALE, TRANSFER OR ASSIGNMENT IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

WARRANT TO PURCHASE COMMON STOCK

OF

DIEDRICH COFFEE, INC.

VOID AFTER APRIL 29, 2014

April 29, 2009

No.                    

This certifies that Sequoia Enterprises, Inc., a California limited partnership, or its permitted successors and assigns (the “Holder”) is entitled, subject to the terms and conditions of this Warrant, to purchase from Diedrich Coffee, Inc., a Delaware corporation (the “Company”), all or any part of an aggregate of 70,000 shares of the Company’s authorized and unissued Common Stock, par value $0.01 per share (the “Warrant Stock”), at a price per share of $7.40 (the “Exercise Price”), upon surrender of this Warrant at the principal offices of the Company, together with a duly executed subscription form and simultaneous payment of the aggregate Exercise Price for the Warrant Stock so purchased in lawful, immediately available money of the United States. The number of shares of Warrant Stock issuable upon exercise of this Warrant and the Exercise Price are subject to adjustment and limitation as provided herein.

1. Definitions. All capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in that certain Contingent Convertible Note Purchase Agreement, dated as of May 10, 2004, as amended, between the Company and the Holder (the “Agreement”).

2. Exercise.

2.1 Right to Exercise. This Warrant is exercisable in whole or in part, at any time or from time to time, on or prior to April 29, 2014, after which this Warrant will expire and no longer be exercisable.

2.2 Partial Exercise; No Fractional Shares. Upon a partial exercise of this Warrant, this Warrant shall be surrendered by the Holder and replaced with a new warrant of like tenor for the balance of the shares of Warrant Stock purchasable under this Warrant. No fractional shares may be issued upon any exercise of this Warrant.

2.3 Form of Payment. Payment by the Holder of the aggregate Exercise Price may be made by (a) a check payable to the Company’s order, (b) wire transfer of immediately available funds to the

Company, (c) cancellation of indebtedness of the Company to the Holder, or (d) any combination of the foregoing. This Warrant is not eligible for cashless exercise.

3. Change of Control. To the extent possible, the Company shall provide the Holder with no less than seven (7) days prior written notice of a Change of Control. If the Holder elects to exercise this Warrant in connection with a Change of Control, the shares of Warrant Stock issuable upon exercise of this Warrant shall be deemed to be issued to the Holder as the record owner of such shares immediately prior to consummation of the Change of Control.

4. Adjustment Provisions. The number and character of shares of Warrant Stock issuable upon exercise of this Warrant (or any shares of stock or other securities or property at the time receivable or issuable upon exercise of this Warrant) and the Exercise Price therefor, are subject to adjustment upon the occurrence of the following events between the date this Warrant is issued and the date it is exercised or expires:

4.1 Adjustment for Stock Splits, Stock Dividends, Recapitalizations, etc. The Exercise Price of this Warrant and the number of shares of Warrant Stock issuable upon exercise of this Warrant (or any shares of stock or other securities at the time issuable upon exercise of this Warrant) shall each be appropriately and proportionally adjusted to reflect any stock dividend, stock split, reverse stock split, combination of shares, reclassification, recapitalization or other similar event affecting the number of outstanding shares of Common Stock (or such other stock or securities).

4.2 Adjustment for Other Dividends and Distributions. In case the Company shall make or issue, or shall fix a record date for the determination of eligible holders entitled to receive, a dividend or other distribution payable with respect to the Common Stock that is payable in (a) securities of the Company (other than issuances with respect to which adjustment is made under Section 4.1), or (b) assets, then, and in each such case, the Holder, upon exercise of this Warrant at any time after the consummation, effective date or record date of such event, shall receive, in addition to the shares of Warrant Stock issuable upon such exercise prior to such date, the securities or such other assets of the Company to which the Holder would have been entitled upon such date if the Holder had exercised this Warrant immediately prior thereto (all subject to further adjustment as provided in this Warrant). Notwithstanding the foregoing, no adjustment in respect of any cash dividends paid by the Company will be made during the term of this Warrant or upon the exercise of this Warrant.

4.3 Notice of Adjustments. Whenever the Exercise Price or character or number of shares of Warrant Stock issuable upon exercise hereof shall be adjusted pursuant to this Section 4, the Company shall issue a written notice setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated and the Exercise Price and character and number of shares of Warrant Stock purchasable hereunder after giving effect to such adjustment, and shall cause a copy of such notice to be delivered to the Holder.

4.4 No Change Necessary. The form of this Warrant need not be changed because of any adjustment in the Exercise Price or in the number of shares of Warrant Stock issuable upon its exercise.

5. No Rights or Liabilities as Stockholder. This Warrant does not entitle the Holder to any voting rights or other rights as a stockholder of the Company. No provisions of this Warrant, and no enumeration herein of the rights or privileges of the Holder, shall cause the Holder to be a stockholder of the Company for any purpose unless and until this Warrant is exercised.

6. Transfer. This Warrant may not be assigned by the Holder, except to a Lender Affiliate, without the prior written consent of the Company. Notwithstanding the foregoing, THIS WARRANT SHALL NOT BE EXERCISABLE INTO SECURITIES OF THE COMPANY IF SUCH EXERCISE

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WOULD VIOLATE FEDERAL SECURITIES LAWS OR APPLICABLE STATE SECURITIES LAWS.

7. Loss or Mutilation. Upon receipt by the Company of evidence reasonably satisfactory to it of the ownership and the loss, theft, destruction or mutilation of this Warrant, and of indemnity reasonably satisfactory to it, and (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will execute and deliver in lieu thereof a new Warrant of like tenor.

8. Governing Law. This Warrant shall be governed by and construed and interpreted in accordance with the laws of the State of California, without giving effect to its conflicts of law principles.

9. Agreement. This Warrant incorporates by reference all relevant provisions of the Agreement, including all provisions contained therein with respect to remedies and covenants, and the description of the benefits, rights and obligations of each of the Company and Lender under the Agreement.

10. Terms Binding. By acceptance of this Warrant, the Holder accepts and agrees to be bound by all the terms and conditions of this Warrant.

11. No Impairment. The Company will not, by amendment of its certificate of incorporation or bylaws, or through reorganization, consolidation, merger, dissolution, issue or sale of securities, sale of assets or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder of this Warrant against impairment. Without limiting the generality of the foregoing, the Company (a) will not increase the par value of any shares of stock issuable upon the exercise of this Warrant above the amount payable therefor upon such exercise, and (b) will take all such action as may be necessary or appropriate in order that the Company may validly issue fully paid and non-assessable shares of Warrant Stock upon exercise of this Warrant.

12. Common Stock; Registration Rights. The Company shall have the same obligations, and the Holder shall have the same rights, with respect to this Warrant as are set forth in Article IV of the Loan Agreement, dated as of August 26, 2008, between the Company and the Holder with respect to the warrant issued by the Company in connection with such Loan Agreement.

[Signature page follows.]

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IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the date set forth above.

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

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EX-10.1

EXHIBIT 10.1

SEQUOIA ENTERPRISES, L.P.

VESSEL PARTNERS, L.P.

April 29, 2009

BDO Seidman, LLP

Ladies and gentlemen:

In connection with BDO Seidman, LLP’s audit of the consolidated financial statements of Diedrich Coffee, Inc. (the “Company”) as of and for the year ended June 25, 2008, Sequoia Enterprises, L.P. (“Sequoia”) and Vessel Partners, L.P. (“Vessel” and collectively with Sequoia, the “Lenders”) make the following commitments. This letter amends, restates and supersedes the Lenders’ letters to you dated as of October 8, 2008, November 10, 2008, January 23, 2009 and March 27, 2009.

1. The Lenders commit to provide additional financial support to the Company on commercially acceptable terms not to exceed $5 million (the “Commitment Cap”) until April 8, 2010. Such amount will provide cash flow sufficient to operate the Company on a going concern basis during that period.

2. To evidence the commitment in the paragraph above, the Lenders will enter into a commitment letter or note agreement not to exceed the Commitment Cap with the Company (the “Company Agreement”) as soon as possible and no later than June 30, 2009.

3. The Lenders will not require that the Company agree to any covenants more onerous than those presently existing in the agreements between the Company and Sequoia.

4. The Lenders have the intent and the ability to fully fund the financial commitments that are outlined in this letter.

5. I have the authority as the General Partner of each of Sequoia Enterprises, L.P. and Vessel Partners, L.P. to make investment decisions and financial commitments outlined in this letter.

6. The Commitment Cap hereunder and under the Company Agreement shall automatically be reduced by the amount of gross proceeds from one or more transactions and by the amount of availability under one or more credit or loan agreements with parties other than the Lenders. When the Commitment Cap is reduced to zero, the Lenders’ commitments set forth in this letter shall immediately cease and terminate.

Sincerely,

/s/ Paul Heeschen

Paul Heeschen

General Partner, Sequoia Enterprises, L.P.

General Partner, Vessel Partners, L.P.

EX-10.2

EXHIBIT 10.2

AMENDMENT NO. 6 TO

CONTINGENT CONVERTIBLE NOTE PURCHASE AGREEMENT

THIS AMENDMENT NO. 6 TO CONTINGENT CONVERTIBLE NOTE PURCHASE AGREEMENT (this “Amendment”) is entered into as of April 29, 2009, by and between 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”); and

WHEREAS, the parties wish to extend the maturity date of the Note Purchase Agreement until March 31, 2010 on the terms set forth herein.

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. Extension of Maturity Date. 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 (for the avoidance of doubt, the term “Maturity Date” used in the outstanding notes under the Note Purchase Agreement (the “Notes”) is hereby amended and restated to reflect the following amended and restated definition):

““Maturity Date” shall mean the earliest of (i) the date of consummation of a Change of Control transaction, (ii) the date Notes are declared due and payable by Lender upon an Event of Default, or (iii) March 31, 2010.”

2. Issuance of Warrant. In consideration of the extension of the maturity date of the Note Purchase Agreement, the Company is issuing to Sequoia a warrant, of even date herewith, to purchase 70,000 shares of common stock of the Company, exercisable on the terms and subject to the conditions set forth therein.

3. No Further Amendments. Except as expressly amended pursuant to Section 1, the remaining terms of the Note Purchase Agreement and the Notes shall remain in full force and effect in accordance with their terms, notwithstanding the execution and delivery of this Amendment.

4. Governing Law. This Amendment 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.

5. Counterparts. This Amendment may be executed by facsimile or electronic transmission 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 instrument.

[Signature page follows.]

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IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment 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

AMENDMENT NO. 6