SC TO-T

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Schedule TO

(Rule 14d-100)

Tender Offer Statement under Section 14(d)(1) or 13(e)(1)

of the Securities Exchange Act of 1934

Diedrich Coffee, Inc.

(Name of Subject Company (Issuer))

Marty Acquisition Sub, Inc. (Offeror)

Peet’s Coffee & Tea, Inc. (Parent of Offeror)

(Names of Filing Persons (Identifying Status as Offeror, Issuer or Other Person)

COMMON STOCK, PAR VALUE $0.01 PER SHARE

(Title of Class of Securities)

253675201

(CUSIP Number of Class of Securities)

Thomas P. Cawley

Chief Financial Officer

Peet’s Coffee & Tea, Inc.

1400 Park Avenue

Emeryville, California 94608-3520

Tel: (510) 594-2100

(Name, address, and telephone number of person authorized to

receive notices and communications on behalf of filing persons)

with copies to:

Kenneth L. Guernsey

David A. Lipkin

Gian-Michele a Marca

Cooley Godward Kronish LLP

101 California Street, 5^th Floor

San Francisco, California 94111-5800

Tel: (415) 693-2000

Fax: (415) 693-2222

CALCULATION OF FILING FEE

Transaction valuation(1)	Amount of filing fee(2)
$164,502,698.25	$9,179.25

(1) Estimated solely for the purpose of calculating the registration fee in accordance with the Securities Exchange Act of 1934, as amended, based on the product of (i) $26.125, the average of the high and low per share prices of Diedrich Coffee, Inc. common stock, par value of $0.01 per share, as reported on the Nasdaq Capital Market on November 16, 2009, and (ii) 6,296,754, the estimated maximum number of shares of Diedrich Coffee, Inc. common stock to be received by Peet’s Coffee & Tea, Inc. pursuant to the exchange offer and subsequent Merger.

(2) The amount of the filing fee calculated in accordance with the Securities Exchange Act of 1934, as amended, equals $55.80 for each $1,000,000 of value. The filing fee was calculated in accordance with Rule 0-11 under the Securities Exchange Act of 1934 and Fee Rate Advisory #3 for fiscal year 2010, issued October 30, 2009.

x Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number or the form or schedule and the date of its filing.

Amount Previously Paid: $4,174.08	Filing Party: Peet’s Coffee & Tea, Inc.
Form or Registration No.: Form S-4	Date Filed: November 17, 2009

¨ Check the box if the filing relates to preliminary communications made before the commencement of a tender offer.

Check the appropriate boxes below to designate any transactions to which the statement relates:

x third-party tender offer subject to Rule 14d-1.

¨ issuer tender offer subject to Rule 13e-4.

¨ going-private transaction subject to Rule 13e-3.

¨ amendment to Schedule 13D under Rule 13d-2.

Check the following box if the filing is a final amendment reporting the results of the tender offer:  ¨

This Tender Offer Statement on Schedule TO (this “Schedule TO”) relates to the offer by Marty Acquisition Sub, Inc., a Delaware corporation (the “Purchaser”) and a wholly-owned subsidiary of Peet’s Coffee & Tea, Inc., a Washington corporation (“Peet’s”), to purchase each outstanding share of common stock, par value $0.01 per share, of Diedrich Coffee, Inc., a Delaware corporation (“Diedrich”), for consideration consisting of $17.33 in cash, without interest, and a fraction of a share of Peet’s common stock, no par value, having a value equal to $8.67 based on a formula as provided in the Merger Agreement (as defined below), provided that in no event will such fraction exceed 0.315 of a share of Peet’s common stock, upon the terms and subject to the conditions set forth in the Prospectus/Offer to Purchase, dated November 17, 2009 (the “Prospectus/Offer to Purchase”), and in the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the “Offer”).

The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of November 2, 2009, as amended from time to time, by and among Peet’s, the Purchaser and Diedrich (the “Merger Agreement”), which contemplates the Offer and the subsequent Merger of the Purchaser with and into Diedrich (the “Merger”) with Diedrich surviving as a wholly-owned subsidiary of Peet’s. Peet’s has filed a registration statement with the Securities and Exchange Commission (the “SEC”) on Form S-4 relating to the shares of Peet’s common stock to be issued to stockholders, and holders of options and warrants to purchase shares of common stock, of Diedrich in the Offer and the Merger (the “Registration Statement”). The terms and conditions of the Offer and the Merger are described in the Prospectus/Offer to Purchase which is a part of the Registration Statement, and the related Letter of Transmittal, which are Exhibits (a)(1) and (a)(2) hereto, respectively.

Notwithstanding anything to the contrary in the Prospectus/Offer to Purchase, in the event that pursuant to Nasdaq Listing Rule 5635(a) (or its successor), the issuance of shares of Peet’s common stock (or rights with respect thereto) pursuant to the Offer and the Merger would otherwise require the approval of the stockholder of Peet’s, then the fraction of a share of Peet’s common stock issuable to Diedrich stockholders pursuant to the Offer and the Merger will be reduced to be the greatest fraction of a share of Peet’s common stock that would, if distributable to Diedrich stockholders pursuant to the offer and the merger, not require the approval of the shareholders of Peet’s with respect to such issuance.

All of the information in the Prospectus/Offer to Purchase and the related Letter of Transmittal, and any prospectus supplement or other amendment thereto is hereby incorporated by reference in answer to Items 1 through 11 of this Schedule TO, and is supplemented by the information specifically provided herein.

ITEM 1. SUMMARY TERM SHEET.

The information set forth under “Introduction” and “Questions and Answers Regarding the Transaction” in the Prospectus/Offer to Purchase is incorporated herein by reference.

ITEM 2. SUBJECT COMPANY INFORMATION.

(a) The name of the subject company and the issuer of the securities to which this Schedule TO relates is Diedrich Coffee, Inc., a Delaware corporation. Diedrich’s principal executive offices are located at 28 Executive Park, Suite 200, Irvine, CA 92614. Diedrich’s telephone number at that address is (949) 260-1600.

(b) The information set forth under “Introduction” in the Prospectus/Offer to Purchase is incorporated herein by reference.

(c) The information set forth under “Comparative and Historical Per Share Market Price Data” in the Prospectus/Offer to Purchase is incorporated herein by reference.

ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON.

This Schedule TO is filed by the Purchaser and Peet’s. The information set forth under “Information Relating to Peet’s and the Purchaser” and Schedule I in the Prospectus/Offer to Purchase is incorporated herein by reference.

ITEM 4. TERMS OF THE TRANSACTION.

The information set forth in the Prospectus/Offer to Purchase is incorporated herein by reference.

ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.

The information set forth under “Introduction,” “Background of the Transaction,” “The Offer,” “Interests of Certain Persons in the Transaction,” “The Merger Agreement,” “Other Agreements Related to the Transaction,” “Information Relating to Diedrich” and “Information Relating to Peet’s and the Purchaser” in the Prospectus/Offer to Purchase is incorporated herein by reference. Except as set forth therein, there have been no material contacts, negotiations or transactions during the past two (2) years which would be

required to be disclosed under this Item 5 between any of the Purchaser or Peet’s or any of their respective subsidiaries or, to the best knowledge of the Purchaser and Peet’s, any of those persons listed on Schedule I to the Prospectus/Offer to Purchase, on the one hand, and Diedrich or its affiliates, on the other, concerning a merger, a consolidation or acquisition, a tender offer or other acquisition of securities, an election of directors or a sale or transfer of a material amount of assets.

ITEM 6. PURPOSES OF THIS TRANSACTION AND PLANS OR PROPOSALS.

The information set forth under “Introduction,” “Background of the Transaction,” “The Offer,” “Comparative and Historical Per Share Market Price Data,” “The Merger Agreement” and “Other Agreements Related to the Transaction” in the Prospectus/Offer to Purchase is incorporated herein by reference.

ITEM 7. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.

The information set forth under “Questions and Answers Regarding the Transaction,” “Risk Factors,” “Source and Amount of Funds,” “The Merger Agreement,” “Other Agreements Related to the Transaction,” “Unaudited Pro Forma Condensed Combined Financial Information” in the Prospectus/Offer to Purchase is incorporated herein by reference.

ITEM 8. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.

The information set forth under “Introduction,” “Background of the Transaction,” “The Offer,” “Interests of Certain Persons in the Transaction,” “The Merger Agreement,” “Other Agreements Related to the Transaction,” “Information Relating to Diedrich” and “Information Relating to Peet’s and the Purchaser” and Schedule I in the Prospectus/Offer to Purchase is incorporated herein by reference. Except as set forth therein, none of Peet’s, its subsidiaries (including the Purchaser) or any of their officers and directors owns or has any interest in any shares of Diedrich common stock, nor have they engaged in any transactions with respect to shares of Diedrich common stock in the past 60 days.

ITEM 9. PERSONS/ASSETS RETAINED, EMPLOYED, COMPENSATED OR USED.

The information set forth under “Introduction” and “The Offer” in the Prospectus/Offer to Purchase is incorporated herein by reference.

ITEM 10. FINANCIAL STATEMENTS.

(a) The information set forth under “Summary Selected Consolidated Financial Data,” “Summary Selected Unaudited Pro Forma Condensed Combined Financial Data” and “Unaudited Pro Forma Condensed Combined Financial Information” in the Prospectus/Offer to Purchase and the financial statements in Peet’s Quarterly Report on Form 10-Q for the quarter ended September 27, 2009 and Peet’s Annual Report on Form 10-K for the year ended December 28, 2008 are incorporated herein by reference. Copies of such reports should be available for inspection at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549, and at the regional offices of the SEC located at 3 World Financial Center, Suite 400, New York, NY 10281 and 175 W. Jackson Boulevard, Suite 900, Chicago, IL 60604. Copies of such information should be obtainable by mail, upon payment of the SEC’s customary charges, by writing to the SEC’s principal office at 100 F Street, N.E., Washington, D.C. 20549. The SEC also maintains a website at www.sec.gov that contains reports, proxy statements and other information relating to Peet’s that have been filed via the EDGAR System.

(b) The information set forth under “Unaudited Pro Forma Condensed Combined Financial Information” in the Prospectus/Offer to Purchase is incorporated herein by reference.

ITEM 11. ADDITIONAL INFORMATION.

(a) The information set forth under “Introduction,” “Background of the Transaction,” “Risk Factors,” “The Offer,” “The Merger Agreement” and “Other Agreements Related to the Transaction,” in the Prospectus/Offer to Purchase is incorporated herein by reference.

(b) The information set forth in the Prospectus/Offer to Purchase is incorporated herein by reference.

ITEM 12. EXHIBITS.

(a	)(1)	Prospectus/Offer to Purchase relating to shares of Peet’s Common Stock to be issued in the Offer and the Merger (incorporated by reference from the Registration Statement on Form S-4, filed by Peet’s Coffee & Tea, Inc. with the Securities and Exchange Commission on November 17, 2009)
(a	)(2)	Form of Letter of Transmittal (incorporated by reference to Exhibit 99.1 from the Registration Statement on Form S-4, filed by Peet’s Coffee & Tea, Inc. with the Securities and Exchange Commission on November 17, 2009)

(a)(3)	Form of Notice of Guaranteed Delivery (incorporated by reference to Exhibit 99.2 from Peet’s Registration Statement on Form S-4, filed by Peet’s Coffee & Tea, Inc. with the Securities and Exchange Commission on November 17, 2009)
(a)(4)	Form of Letter from the Information Agent to Brokers, Dealers, Banks, Trust Companies and Other Nominees (incorporated by reference to Exhibit 99.3 from the Registration Statement on Form S-4, filed by Peet’s Coffee & Tea, Inc. with the Securities and Exchange Commission on November 17, 2009)
(a)(5)	Form of Letter to Clients with respect to the Prospectus/Offer to Purchase for use by Brokers, Dealers, Banks, Trust Companies and Other Nominees (incorporated by reference to Exhibit 99.4 from the Registration Statement on Form S-4, filed by Peet’s Coffee & Tea, Inc. with the Securities and Exchange Commission on November 17, 2009)
(a)(6)	Instructions for Certification of Taxpayer Identification Number on Substitute Form W-9 (incorporated by reference to Exhibit 99.5 from the Registration Statement on Form S-4, filed by Peet’s Coffee & Tea, Inc. with the Securities and Exchange Commission on November 17, 2009)
(a)(7)	Press Release issued by Peet’s Coffee & Tea, Inc. on November 2, 2009 (incorporated by reference from the Form 425 filed by Peet’s Coffee & Tea, Inc. with the Securities and Exchange Commission on November 3, 2009)
(a)(8)	Summary Newspaper Advertisement published in The Wall Street Journal on November 17, 2009
(b)(1)	Commitment Letter dated as of November 2, 2009, among Peet’s Coffee & Tea, Inc., Wells Fargo Bank, National Association and Wells Fargo Securities, LLC (incorporated by reference to Exhibit 10.1 from the Form 8-K filed by Peet’s Coffee & Tea, Inc. with the Securities and Exchange Commission on November 4, 2009)
(d)(1)	Agreement and Plan of Merger, dated as of November 2, 2009, by and among Peet’s Coffee & Tea, Inc., Marty Acquisition Sub, Inc. and Diedrich Coffee, Inc. (incorporated by reference to Exhibit 2.1 from the Form 8-K filed by Peet’s Coffee & Tea, Inc. with the Securities and Exchange Commission on November 4, 2009)
(d)(2)	Amendment No. 1 to Agreement and Plan of Merger, dated as of November 17, 2009, by and among Peet’s Coffee & Tea, Inc., Marty Acquisition Sub, Inc. and Diedrich Coffee, Inc. (incorporated by reference to Exhibit 2.2 from the Registration Statement on Form S-4, filed by Peet’s Coffee & Tea, Inc. with the Securities and Exchange Commission on November 17, 2009)
(d)(3)	Stockholder Agreement, dated as of November 2, 2009, by and between Peet’s Coffee & Tea, Inc. and Paul C. Heeschen (incorporated by reference to Exhibit 2.2 from the Form 8-K filed by Peet’s Coffee & Tea, Inc. with the Securities and Exchange Commission on November 4, 2009)
(d)(4)	Form of Stockholder Agreement dated as of November 2, 2009, between Peet’s Coffee & Tea, Inc. and certain directors and executive officers of Diedrich Coffee, Inc. (incorporated by reference to Exhibit 2.3 from the Form 8-K filed by Peet’s Coffee & Tea, Inc. with the Securities and Exchange Commission on November 4, 2009)
(d)(5)	Confidentiality Agreement, dated as of September 27, 2008, by and between Diedrich Coffee, Inc., Heeschen & Associates and Paul C. Heeschen, on the one hand, and Peet’s Coffee & Tea, Inc. on the other
(g)	Not applicable
(h)	Not applicable

SIGNATURES

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

MARTY ACQUISITION SUB, INC.
By:	/S/    PATRICK J. O’DEA
Name:	Patrick J. O’Dea
Title:	President and Chief Executive Officer
PEET’S COFFEE & TEA, INC.
By:	/S/    PATRICK J. O’DEA
Name:	Patrick J. O’Dea
Title:	President and Chief Executive Officer

Dated: November 17, 2009

INDEX TO EXHIBITS

Exhibit No.	Document
(a)(1)	Prospectus/Offer to Purchase relating to shares of Peet’s Common Stock to be issued in the Offer and the Merger (incorporated by reference from the Registration Statement on Form S-4, filed by Peet’s Coffee & Tea, Inc. with the Securities and Exchange Commission on November 17, 2009)
(a)(2)	Form of Letter of Transmittal (incorporated by reference to Exhibit 99.1 from the Registration Statement on Form S-4, filed by Peet’s Coffee & Tea, Inc. with the Securities and Exchange Commission on November 17, 2009)
(a)(3)	Form of Notice of Guaranteed Delivery (incorporated by reference to Exhibit 99.2 from the Registration Statement on Form S-4, filed by Peet’s Coffee & Tea, Inc. with the Securities and Exchange Commission on November 17, 2009)
(a)(4)	Form of Letter from the Information Agent to Brokers, Dealers, Banks, Trust Companies and Other Nominees (incorporated by reference to Exhibit 99.3 from the Registration Statement on Form S-4, filed by Peet’s Coffee & Tea, Inc. with the Securities and Exchange Commission on November 17, 2009)
(a)(5)	Form of Letter to Clients with respect to the Prospectus/Offer to Purchase for use by Brokers, Dealers, Banks, Trust Companies and Other Nominees (incorporated by reference to Exhibit 99.4 from the Registration Statement on Form S-4, filed by Peet’s Coffee & Tea, Inc. with the Securities and Exchange Commission on November 17, 2009)
(a)(6)	Instructions for Certification of Taxpayer Identification Number on Substitute Form W-9 (incorporated by reference to Exhibit 99.5 from the Registration Statement on Form S-4, filed by Peet’s Coffee & Tea, Inc. with the Securities and Exchange Commission on November 17, 2009)
(a)(7)	Press Release issued by Peet’s Coffee & Tea, Inc. on November 2, 2009 (incorporated by reference from the Form 425 filed by Peet’s Coffee & Tea, Inc. with the Securities and Exchange Commission on November 3, 2009)
(a)(8)	Summary Newspaper Advertisement published in The Wall Street Journal on November 17, 2009
(b)(1)	Commitment Letter dated as of November 2, 2009, among Peet’s Coffee & Tea, Inc., Wells Fargo Bank, National Association and Wells Fargo Securities, LLC (incorporated by reference to Exhibit 10.1 from the Form 8-K filed by Peet’s Coffee & Tea, Inc. with the Securities and Exchange Commission on November 4, 2009)
(d)(1)	Agreement and Plan of Merger, dated as of November 2, 2009, by and among Peet’s Coffee & Tea, Inc., Marty Acquisition Sub, Inc. and Diedrich Coffee, Inc. (incorporated by reference to Exhibit 2.1 from the Form 8-K filed by Peet’s Coffee & Tea, Inc. with the Securities and Exchange Commission on November 4, 2009)
(d)(2)	Amendment No. 1 to Agreement and Plan of Merger, dated as of November 17, 2009, by and among Peet’s Coffee & Tea, Inc., Marty Acquisition Sub, Inc. and Diedrich Coffee, Inc. (incorporated by reference to Exhibit 2.2 from the Registration Statement on Form S-4, filed by Peet’s Coffee & Tea, Inc. with the Securities and Exchange Commission on November 17, 2009)
(d)(3)	Stockholder Agreement, dated as of November 2, 2009, by and between Peet’s Coffee & Tea, Inc. and Paul C. Heeschen (incorporated by reference to Exhibit 2.2 from the Form 8-K filed by Peet’s Coffee & Tea, Inc. with the Securities and Exchange Commission on November 4, 2009)
(d)(4)	Form of Stockholder Agreement dated as of November 2, 2009, between Peet’s Coffee & Tea, Inc. and certain directors and executive officers of Diedrich Coffee, Inc. (incorporated by reference to Exhibit 2.3 from the Form 8-K filed by Peet’s Coffee & Tea, Inc. with the Securities and Exchange Commission on November 4, 2009)
(d)(5)	Confidentiality Agreement, dated as of September 27, 2008, by and between Diedrich Coffee, Inc., Heeschen & Associates and Paul C. Heeschen, on the one hand, and Peet’s Coffee & Tea, Inc. on the other
(g)	Not applicable
(h)	Not applicable

EX-99.(A)(8)

Exhibit (a)(8)

This announcement is neither an offer to purchase nor a solicitation of an offer to sell shares of Diedrich Coffee, Inc. common stock. The Offer (as defined below) described herein is made solely by the Prospectus/Offer to Purchase (as defined below) and the related Letter of Transmittal, each of which is being delivered to holders of Diedrich common stock. The Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of shares of Diedrich common stock in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction or any administrative or judicial action pursuant thereto. The Purchaser (as defined below) may, in its discretion, take such action as it may deem necessary to make the Offer in any jurisdiction and extend the Offer to holders of shares of Diedrich common stock in such jurisdiction. In those jurisdictions where securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on behalf of the Purchaser by one or more registered brokers or dealers licensed under the laws of such jurisdiction to be designated by the Purchaser.

Notice of Offer to Purchase

Each Outstanding Share of Common Stock

of

Diedrich Coffee, Inc.

by

Marty Acquisition Sub, Inc.,

a wholly-owned subsidiary of

Peet’s Coffee & Tea, Inc.

for a combination of $17.33 in cash and

a fraction of a share of common stock of

Peet’s Coffee & Tea, Inc.

having a value equal to $8.67 based on a formula provided in the Prospectus/Offer to Purchase

(such fraction not to exceed 0.315 of a share)

Marty Acquisition Sub, Inc., a Delaware corporation (the “Purchaser”) and a wholly-owned subsidiary of Peet’s Coffee & Tea, Inc., a Washington corporation (“Peet’s”), is offering to purchase all of the outstanding shares of common stock, par value $0.01 per share, of Diedrich Coffee, Inc., a Delaware corporation (“Diedrich”), for consideration per share consisting of a combination of $17.33, net to the seller in cash, without interest, and a fraction of a share of common stock, no par value, of Peet’s having a value equal to $8.67 based on a formula as described in the Prospectus/Offer to Purchase (provided that in no event will such fraction exceed 0.315 of a share of Peet’s common stock), all upon the terms and subject to the conditions set forth in the Prospectus/Offer to Purchase, dated November 17, 2009 (the “Prospectus/Offer to Purchase”), and the related Letter of Transmittal, which, together with any amendments or supplements thereto, collectively constitute the “Offer” described herein. Tendering Diedrich stockholders whose shares of Diedrich common stock are registered in their own names and who tender their shares directly to Continental Stock Transfer & Trust Company (the “Depositary”) will not be obligated to pay brokerage fees or commissions in connection with the Offer or, except as set forth in Instruction 6 to the Letter of Transmittal, transfer taxes on the sale of shares in the Offer. Stockholders of Diedrich who hold their shares of Diedrich common stock through brokers, dealers, banks, trust companies or other nominees should consult with such institutions to determine whether they will charge any fees for tendering such stockholders’ shares to the Purchaser in the Offer.

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT (ONE MINUTE AFTER 11:59 P.M.), EASTERN TIME, ON DECEMBER 15, 2009, UNLESS THE OFFER IS EXTENDED. SHARES TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION TIME OF THE OFFER.

The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of November 2, 2009, as amended from time to time, by and among Peet’s, the Purchaser and Diedrich (the “Merger Agreement”). The Purchaser is offering to acquire all of the shares of Diedrich common stock as a first step in acquiring the entire equity interest in, and thus control of, Diedrich. Pursuant to the Merger Agreement, following the satisfaction or waiver of certain conditions and the purchase of shares of Diedrich common stock in the Offer, the Purchaser will be merged with and into Diedrich (the “Merger”), with Diedrich surviving the Merger as a wholly-owned subsidiary of Peet’s. Upon the completion of the Merger, each outstanding share of Diedrich common stock (other than shares owned by Peet’s, the Purchaser or Diedrich or any wholly-owned subsidiary of Peet’s or Diedrich, or held in Diedrich’s treasury, or owned by any stockholder of Diedrich who properly exercises appraisal rights under Delaware law) will be converted into the right to receive the same combination of cash and a fraction of a share of Peet’s common stock paid for each Diedrich share accepted for exchange pursuant to the Offer (subject to the effect of stock splits and other similar adjustments).

The Diedrich board of directors has unanimously (1) determined that the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, are fair to and in the best interests of the stockholders of Diedrich, (2) adopted and approved the merger agreement and approved the Offer, the Merger and the other transactions contemplated by the Merger Agreement, in accordance with the requirements of the Delaware General Corporation Law, (3) declared that the Merger Agreement is advisable, and (4) resolved to recommend that the stockholders of Diedrich accept the Offer and tender their shares of Diedrich common stock pursuant to the Offer and (to the extent necessary) adopt the Merger Agreement.

The Offer is conditioned upon, among other things, there being validly tendered and not withdrawn in accordance with the terms of the Offer prior to the Expiration Time (as defined below), shares of Diedrich common stock that, together with any shares of Diedrich common stock then owned by Peet’s or the Purchaser or any other subsidiaries of Peet’s, represent more than 50% of the sum of the aggregate number of shares of Diedrich common stock issued and outstanding immediately prior to the acceptance for exchange of shares pursuant to the Offer (the “Acceptance Time”), plus, at the election of Peet’s, an additional number of shares up to (but not exceeding) the aggregate number of shares of Diedrich common stock issuable upon the exercise of all Diedrich stock options, Diedrich warrants and other rights to acquire Diedrich common stock that are outstanding immediately prior to the Acceptance Time and that are vested and exercisable or will be vested and exercisable prior to the completion of the Merger (which condition is referred to as the “Minimum Condition” in this Notice of Offer).

On the terms of and subject to the conditions to the Offer, promptly after the Expiration Time, the Purchaser will accept for exchange, and deliver consideration for, all shares of Diedrich common stock validly tendered to the Purchaser in the Offer and not withdrawn prior to the Expiration Time. The Purchaser will be deemed to have accepted for exchange, and thereby purchased, shares of Diedrich common stock that are validly tendered in the Offer and not withdrawn prior to the Expiration Time as, if and when the Purchaser gives oral or written notice to the Depositary of the Purchaser’s acceptance for exchange of such shares. The delivery of consideration for shares of Diedrich common stock that are accepted for exchange in the Offer will be made promptly by delivery of the consideration therefor to the Depositary, which will act as agent for stockholders tendering shares in the Offer for the purpose of receiving consideration from the Purchaser and transmitting consideration to such stockholders whose shares of Diedrich common stock have been accepted for exchange in the Offer. For a stockholder to validly tender shares of Diedrich common stock in the Offer (i) the certificate(s) representing the tendered shares, together with the Letter of Transmittal, properly completed and duly executed, together with any required signature guarantees and any other required documents, must be received by the Depositary prior to the Expiration Time, (ii) in the case of a tender effected pursuant to the book-entry transfer procedures (a) either a Letter of Transmittal, properly completed and duly executed, together with any required signature guarantees, or an agent’s message (as defined in the section of the Prospectus/Offer to Purchase entitled “The Offer – Procedures for Tendering Shares of Diedrich Common Stock in the Offer”), and any other required documents, must be received by the Depositary prior to the Expiration Time and (b) the shares to be tendered must be delivered pursuant to the book-entry transfer

procedures described in the Prospectus/Offer to Purchase and a book-entry confirmation (as defined in the section of the Prospectus/Offer to Purchase entitled “The Offer – Procedures for Tendering Shares of Diedrich Common Stock in the Offer”) must be received by the Depositary prior to the Expiration Time, or (iii) the tendering stockholder must comply with the guaranteed delivery procedures described in the section of the Prospectus/Offer to Purchase entitled “The Offer – Procedures for Tendering Shares of Diedrich Common Stock in the Offer” prior to the Expiration Time.

Under no circumstances will interest be paid on the cash portion of the Offer consideration, regardless of any extension of, or amendment to, the Offer or any delay in paying for such shares.

As used herein, the term “Expiration Time” means 12:00 midnight (one minute after 11:59 p.m.), Eastern time, on December 15, 2009, unless and until the Purchaser extends the period of time during which the Offer is open in accordance with the terms of the Merger Agreement, in which event the term “Expiration Time” will mean the latest time at which the Offer, as so extended by the Purchaser, will expire. Pursuant to the Merger Agreement, subject to Peet’s and Diedrich’s termination rights thereunder: (1) if, at any time as of which the Offer is scheduled to expire, any condition to the Offer has not been satisfied or waived, the Purchaser is required to extend the Offer on one or more occasions for additional successive periods of up to 20 business days per extension (but not beyond March 31, 2010); and (2) the Purchaser is required to extend the Offer at any time or from time to time for any period required by any rule, regulation, interpretation or position of the Securities and Exchange Commission (the “SEC”) or the staff of the SEC applicable to the Offer.

If the Purchaser extends the Offer, the Purchaser will inform the Depositary of that fact and will make a public announcement of the extension not later than 9:00 a.m., Eastern time, on the next business day after the previously scheduled Expiration Time of the Offer. During any such extension, all shares of Diedrich common stock previously tendered and not withdrawn will remain deposited with the Depositary, subject to the right of a tendering stockholder to withdraw such shares. Shares of Diedrich common stock that are tendered in the Offer may be withdrawn pursuant to the procedures described in the Prospectus/Offer to Purchase at any time prior to the Expiration Time, and shares that are tendered may also be withdrawn at any time after January 16, 2010, unless accepted for exchange on or before that date. In the event that the Purchaser provides for a subsequent offering period following the successful completion of the Offer, no withdrawal rights will apply to shares that were previously tendered in the Offer and accepted for exchange.

For a withdrawal of shares of Diedrich common stock previously tendered in the Offer to be effective, a written or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses listed on the back cover of the Prospectus/Offer to Purchase, specifying the name of the person having tendered the shares to be withdrawn, the number of shares to be withdrawn and the name of the registered holder of the shares to be withdrawn, if different from the name of the person who tendered the shares. If certificates for shares have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such certificates, the serial numbers shown on such certificates must be submitted to the Depositary and, unless such shares have been tendered by a financial institution (including most banks, savings and loan associations and brokerage houses) that is a participant in the Security Transfer Agent’s Medallion Program or the Stock Exchange Medallion Program, any and all signatures on the notice of withdrawal must be guaranteed by such an institution. If shares have been tendered pursuant to the book-entry transfer procedures described in the section of the Prospectus/Offer to Purchase entitled “The Offer – Procedures for Tendering Shares of Diedrich Common Stock in the Offer”, any notice of withdrawal must also specify the name and number of the account at the book-entry transfer facility (as defined in the section of the Prospectus/Offer to Purchase entitled “The Offer – Procedures for Tendering Shares of Diedrich Common Stock in the Offer”) to be credited with the withdrawn shares and otherwise comply with the Book-Entry Transfer Facility’s procedures. Withdrawals of tenders of shares may not be rescinded, and any shares withdrawn will thereafter be deemed not validly tendered for purposes of the Offer. Withdrawn shares may be re-tendered in the Offer, however, by following one of the procedures described in the section of the Prospectus/Offer to Purchase entitled “The Offer – Procedures for Tendering Shares of Diedrich Common Stock in the Offer” at any time prior to the Expiration Time. All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by the Purchaser in its sole discretion, which determination will be final and binding. None of the Purchaser, Peet’s, Diedrich, the Depositary, Laurel Hill Advisory Group (the information agent for the Offer (the “Information Agent”)) or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification.

Under Rule 14d-11 of the Securities Exchange Act of 1934, as amended, and subject to conditions described in the Prospectus/Offer to Purchase, the Purchaser may elect to provide for one or more subsequent offering periods, immediately following the Expiration Time, of up to 20 business days in the aggregate. The Purchaser will accept for exchange, and deliver the same consideration paid in the Offer for, any shares of Diedrich common stock validly tendered to the Purchaser during any subsequent offering period, promptly after any such shares are validly tendered. Holders of shares of Diedrich common stock that are validly tendered to the Purchaser during a subsequent offering period, if provided, will not have the right to withdraw such tendered shares.

Diedrich has provided the Purchaser with a list, and security position listings, of Diedrich’s stockholders for the purpose of disseminating the Offer to holders of shares of Diedrich common stock. The Prospectus/Offer to Purchase and the Letter of Transmittal and other materials related to the Offer will be mailed to record holders of shares of Diedrich common stock and will be furnished to brokers, dealers, banks, trust companies and other nominees whose names, or the names of whose nominees, appear on the list of Diedrich’s stockholders, or, if applicable, who are listed as participants in a clearing agency’s security position listing, for subsequent transmittal to beneficial owners of shares of Diedrich common stock.

The receipt of consideration in exchange for shares of Diedrich common stock pursuant to the Offer or the Merger will be a taxable transaction for United States federal income tax purposes under the Internal Revenue Code of 1986, as amended, and may also be a taxable transaction under applicable state, local or foreign income or other tax laws. Generally, this means that a Diedrich stockholder will recognize gain or loss for United States federal income tax purposes on a block-by-block basis equal to the difference between (1) the sum of the fair market value of any Peet’s common stock and cash received in the Offer or the Merger and (2) the tax basis of the shares of Diedrich common stock surrendered in exchange therefor. If such gain or loss is a capital gain or capital loss, the gain or loss will be long-term capital gain or long-term capital loss if the holder has held the applicable block of Diedrich common stock for more than one year as of the date of the sale of such common stock by such holder in the Offer or the Merger. Diedrich stockholders should consult their own tax advisors with respect to the particular tax consequences to them of the Offer and the Merger to them, including the applicable federal, state, local and foreign tax consequences. The foregoing summary of the United States federal tax consequences is qualified in its entirety by the Prospectus/Offer to Purchase. For a more complete description of certain material United States federal income tax consequences of the Offer and the Merger, see the section of the Prospectus/Offer to Purchase entitled “Material United States Federal Income Tax Consequences”. In order to avoid backup withholding of United States federal income tax on payments in connection with the Offer or the Merger, Diedrich stockholders must follow the procedures outlined in the section of the Prospectus/Offer to Purchase entitled “Backup Withholding”.

The Purchaser expressly reserves the right (but shall not be obligated), at any time and from time to time, to increase the Offer consideration or to make any other changes in the terms of and conditions to the Offer, subject, in each case, to applicable law and to the terms of the Merger Agreement, which provides that the Minimum Condition may not be waived and certain other modifications to the Offer may not be made without the consent of Diedrich.

The information required to be disclosed by paragraph (d)(1) of Rule 14d-6 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, is contained in the Prospectus/Offer to Purchase and is incorporated herein by reference.

The Prospectus/Offer to Purchase and Letter of Transmittal contain important information. Diedrich stockholders are urged to read these documents carefully and in their entirety before making any decision with respect to the Offer.

Questions regarding the Offer, and requests for assistance in connection with the Offer, may be directed to the Information Agent at the address and telephone number set forth below. Copies of the Prospectus/Offer to Purchase, the Letter of Transmittal and all other materials related to the Offer are available free of charge from the Information Agent by calling the telephone number set forth below. No fees or commissions will be payable to brokers, dealers or other persons for soliciting tenders of shares of Diedrich common stock in the Offer.

The Information Agent for the Offer is:

Laurel Hill Advisory Group, LLC

100 Wall Street, 22nd Floor

New York, NY 10005

Banks and Brokers Call Collect: (917) 338-3181

All Others Call Toll Free: (888) 742-1305

November 17, 2009

EX-99.(D)(5)

Exhibit (d)(5)

CONFIDENTIALITY AGREEMENT

THIS CONFIDENTIALITY AGREEMENT (“Agreement”) is being entered into as of September 27, 2008, between Diedrich Coffee, Inc. (“Diedrich”), Heeschen & Associates and Paul C. Heeschen (collectively, the “Diedrich Parties”), on the one hand, and Peet’s Coffee & Tea, Inc. (“Peet’s”), on the other. The Diedrich Parties and Peet’s are referred to collectively as the “Parties” and each is individually referred to as a “Party”).

In order to facilitate the consideration and negotiation of a possible transaction involving the Diedrich and Peet’s, each Party has requested access to certain non-public information regarding the other Party and the other Party’s subsidiaries. (Each Party, in its capacity as a provider of information, is referred to in this Agreement as the “Provider”; and each Party, in its capacity as a recipient of information, is referred to in this Agreement as the “Recipient.”) This Agreement sets forth the Parties’ obligations regarding the use and disclosure of such information and regarding various related matters.

The Parties, intending to be legally bound, acknowledge and agree as follows:

1. Limitations on Disclosure and Use of Confidential Information.

(a) The Recipient will take reasonable precautions (consistent with the precautions it ordinarily takes to safeguard its own confidential documents) to safeguard the confidentiality of the Provider’s Confidential Information (as defined in section 7 below); provided, however, that: (i) the Recipient will be permitted to furnish and otherwise disclose the Provider’s Confidential Information to those of its Representatives who need to know such Confidential Information for the purpose of helping the Recipient evaluate or negotiate a possible transaction between the Parties and who are advised or otherwise made aware that such Confidential Information is confidential; and (ii) the Recipient and its Representatives will be permitted to furnish and otherwise disclose the Provider’s Confidential Information to the extent that the Recipient or any of its Representatives determines in good faith that disclosure thereof is required by any law, rule, regulation, judicial order, administrative order, subpoena, interrogatory, discovery request, investigative demand or other legal requirement or legal process. If the Recipient or any of its Representatives determines in good faith that disclosure of any of Provider’s Confidential Information is required by any law, rule, regulation, judicial order, administrative order, subpoena, interrogatory, discovery request, investigative demand or other legal requirement or legal process, then the Recipient or such Representative will provide prompt notice of such disclosure requirement and provide reasonable cooperation to the Provider in any attempt by the Provider to obtain a protective order or other appropriate remedy.

(b) The Recipient will not, and the Recipient will take reasonable precautions to cause its Representatives not to, make use of any of the Provider’s Confidential Information, except for the specific purpose of considering, evaluating and negotiating a possible transaction between the Parties.

(c) Except to the extent required by any law, rule, regulation, judicial order, administrative order, subpoena, interrogatory, discovery request, investigative demand or other legal requirement or legal process, neither Party will make or permit any disclosure to any Person (other than to such Party’s Representatives who agree not to permit or make any disclosure to any Person) regarding (i)

the existence or terms of this Agreement, or the fact that Confidential Information has been made available to the Recipient or any of its Representatives, or (ii) the fact that discussions or negotiations are or may be taking place with respect to a possible transaction involving the Parties (whether the Parties are identified by name or by any description enabling a reasonable Person to discern a Party’s name), or the proposed terms of any such transaction.

(d) Access to the Provider’s Confidential Information shall not preclude an individual employee or other Representative of the Recipient who has seen or otherwise had access to such Confidential Information for the purposes of this Agreement from working on future projects that relate to similar subject matters, provided that such individual does not use or make reference to the Confidential Information in doing so.

2. No Representations by Provider. Neither the Provider nor any of its Representatives has made or is making any representation or warranty, express or implied, as to the accuracy or completeness of any of the Provider’s Confidential Information, and neither the Provider nor any of its Representatives will have any liability to the Recipient or to any of the Recipient’s Representatives relating to or resulting from the use of any of the Provider’s Confidential Information or any inaccuracies or errors therein or omissions therefrom. Only those representations and warranties (if any) that are included in any final definitive written agreement that provides for the consummation of a negotiated transaction between the Parties and is validly executed on behalf of the Parties (a “Definitive Agreement”) will have legal effect.

3. Return of Confidential Information. Upon the Provider’s request, the Recipient and the Recipient’s Representatives will deliver to the Provider any of the Provider’s Confidential Information (and all copies thereof) obtained or possessed by the Recipient or any of the Recipient’s Representatives; provided, however, that, in lieu of delivering to the Provider any written materials of the type described in clause “(b)” of the first sentence of section 7 below, the Recipient may destroy such written materials and deliver to the Provider a certificate confirming their destruction. Notwithstanding the delivery to the Provider (or the destruction by the Recipient) of Confidential Information of the Provider pursuant to this section 3, the Recipient and its Representatives will continue to be bound by their confidentiality obligations and other obligations under this Agreement.

4. No Obligation to Pursue Transaction. Unless the Parties enter into a Definitive Agreement, no agreement providing for a transaction involving either of the Parties will be deemed to exist between the Parties, and neither Party will be under any obligation to negotiate or enter into any such agreement or transaction with the other Party. Each Party recognizes that, except as expressly provided in any binding written agreement between the Parties that is executed on or after the date of this Agreement: (i) the other Party and its Representatives will be free to negotiate with, and to enter into any agreement or transaction with, any other interested party; and (ii) except pursuant to this Agreement, such Party will not have any rights or claims against the other Party or any of the other Party’s Representatives arising out of or relating to any transaction or proposed transaction involving the other Party.

5. No Waiver. No failure or delay by either Party or any of its Representatives in exercising any right, power or privilege under this Agreement will operate as a waiver thereof, and no single or partial exercise of any such right, power or privilege will preclude any other or future exercise thereof or the exercise of any other right, power or privilege under this Agreement. No provision of this Agreement can be waived or amended except by means of a written instrument that is validly executed on behalf of both of the Parties and that refers specifically to the particular provision or provisions being waived or amended.

6. Successors and Assigns; Applicable Law; Jurisdiction and Venue. This Agreement will be binding upon and inure to the benefit of each Party and its Representatives and their respective heirs, successors and assigns. This Agreement will be governed by and construed in accordance with the laws of the State of California (without giving effect to principles of conflicts of laws). Each Party: (a) irrevocably and unconditionally consents and submits to the jurisdiction of the state and federal courts located in the State of California for purposes of any action, suit or proceeding arising out of or relating to this Agreement; (b) agrees that service of any process, summons, notice or document by U.S. registered mail to the address set forth opposite the name of such Party at the end of this Agreement shall be effective service of process for any such action, suit or proceeding brought against such Party; (c) irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of or relating to this Agreement in any state or federal court located in the State of California; and (d) irrevocably and unconditionally waives the right to plead or claim, and irrevocably and unconditionally agrees not to plead or claim, that any action, suit or proceeding arising out of or relating to this Agreement that is brought in any state or federal court located in the State of California has been brought in an inconvenient forum.

7. Confidential Information. For purposes of this Agreement, the Provider’s “Confidential Information” will be deemed to include only the following:

(a) any confidential or proprietary information (including any confidential or proprietary technology, know-how, patent application, test result, research study, business plan, budget, forecast or projection) relating to the business of the Provider, any predecessor entity or any subsidiary or other affiliate of the Provider (whether prepared by the Provider or by any other Person and whether or not in written form) that is made available to the Recipient or any Representative of the Recipient by or on behalf of the Provider or any Representative of the Provider; and

(b) any memorandum, analysis, compilation, summary, interpretation, study, report or other document, record or material that is or has been prepared by or for the Recipient or any Representative of the Recipient and that contains, reflects, interprets or is based directly or indirectly upon any information of the type referred to in clause “(a)” of this sentence;

Notwithstanding the foregoing, the Provider’s “Confidential Information” will not be deemed to include:

(i) any information that is or becomes generally available to the public other than as a direct or indirect result of the disclosure of any of such information by the Recipient or by any of the Recipient’s Representatives;

(ii) any information that was in the Recipient’s possession prior to the time it was first made available to the Recipient or any of the Recipient’s Representatives by or on behalf of the Provider or any of the Provider’s Representatives, provided that the source of such information was not and is not known to the Recipient to be bound by any contractual or other obligation of confidentiality to the Provider or to any other Person with respect to any of such information;

(iii) any information that becomes available to the Recipient on a non-confidential basis from a source other than the Provider or any of the Provider’s Representatives, provided that such source is not known to the Recipient to be bound by any contractual or other obligation of confidentiality to the Provider or to any other Person with respect to any of such information; or

(iv) any information that is independently developed by the Recipient or any of the Recipient’s Representatives without the use of or reference to any of the Provider’s Confidential Information.

8. Miscellaneous.

(a) For purposes of this Agreement, a Party’s “Representatives” will be deemed to include each Person that is or becomes (i) a subsidiary or other affiliate of such Party or (ii) an officer, director, employee, partner, attorney, advisor, accountant, agent or representative of such Party or of any of such Party’s subsidiaries or other affiliates.

(b) The term “Person,” as used in this Agreement, will be broadly interpreted to include any individual and any corporation, partnership, entity, group, tribunal or governmental authority.

(c) In any action at law or suit in equity to enforce this Agreement or the rights of any of the Parties, the prevailing party in such action or suit shall be entitled to receive its actual and reasonable attorneys’ fees and all other reasonable costs and expenses incurred in such action or suit, including any related appeals.

(d) In addition to all other remedies available (at law or otherwise) to a Party, each Party shall be entitled to equitable relief (including injunction and specific performance) as a remedy for any breach or threatened breach of any provision of this Agreement, it being understood and agreed that monetary damages may not be a sufficient remedy. Neither Party shall be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to obtaining any remedy referred to in this paragraph “(d),” and each Party waives any right it may have to require that the other Party obtain, furnish or post any such bond or similar instrument.

(e) The obligations of the Recipient and the Recipient’s Representatives under Section 1 of this Agreement will terminate on the second anniversary of the date hereof.

(f) The bold-faced captions appearing in this Agreement have been included only for convenience and shall not affect or be taken into account in the interpretation of this Agreement.

(g) Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.

(h) By making Confidential Information or other information available to the Recipient or the Recipient’s Representatives, the Provider is not, and shall not be deemed to be, granting (expressly or by implication) any license or other right under or with respect to any patent, trade secret, copyright, trademark or other proprietary or intellectual property right.

(i) To the extent that any Confidential Information includes materials or other information that may be subject to the attorney-client privilege, work product doctrine or any other applicable privilege or doctrine concerning any Confidentiality Information or any pending, threatened or prospective action, suit, proceeding, investigation, arbitration or dispute, it is acknowledged and agreed that the Parties have a commonality of interest with respect to such Confidential Information or action, suit, proceeding, investigation, arbitration or dispute and that it is the Parties’ mutual desire, intention and understanding that the sharing of such materials and other information is not intended to, and shall not,

affect the confidentiality of any of such materials or other information or waive or diminish the continued protection of any of such materials or other information under the attorney-client privilege, work product doctrine or other applicable privilege or doctrine. Accordingly, all Confidential Information that is entitled to protection under the attorney-client privilege, work product doctrine or other applicable privilege or doctrine shall remain entitled to protection thereunder and shall be entitled to protection under the joint defense doctrine, and the Parties agree to take all measures necessary to preserve, to the fullest extent possible, the applicability of all such privileges or doctrines.

(j) This Agreement constitutes the entire agreement between the Parties regarding the subject matter hereof and supersedes any prior agreement between the Parties regarding the subject matter hereof.

The parties have caused this Agreement to be executed as of the date first written above.

DIEDRICH COFFEE INC.		HEESCHEN & ASSOCIATES
By:	/s/ Paul C. Heeschen	By:	/s/ Paul C. Heeschen
Title:	Board Chairman	Title:	President
Address:	28 Executive Park, Suite 200	Address:
	Irvine, California 92614
		PEET’S COFFEE & TEA, INC.
	/s/ Paul C. Heeschen	By:	/s/ Patrick J. O’Dea
	PAUL C. HEESCHEN	Title:	President and Chief Executive Officer
Address:		Address:	1400 Park Avenue
			Emeryville, California 94608-3520