EXHIBIT 10.2

EXECUTION COPY

AMENDMENT NO. 1 TO

2001 WARRANT,

AMENDMENT NO. 4 TO

CONTINGENT CONVERTIBLE NOTE PURCHASE AGREEMENT

AND

CANCELLATION OF

NOTE PURCHASE WARRANT

THIS AMENDMENT NO. 1 TO 2001 WARRANT, AMENDMENT NO. 4 TO CONTINGENT CONVERTIBLE
NOTE PURCHASE AGREEMENT AND CANCELLATION OF NOTE PURCHASE WARRANT (this
“Amendment”) is entered into as of August 26, 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, on May 8, 2001, the Company issued to Sequoia a warrant (the “2001
Warrant”) to purchase 250,000 shares of common stock, par value $0.01 per share,
of the Company (“Common Stock”);

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”), pursuant to which certain promissory notes in favor
of Sequoia are outstanding (the “Notes”) and pursuant to which the Company
issued to Sequoia a warrant to purchase 4,219 shares of Common Stock (the “Note
Purchase Warrant”);

WHEREAS, concurrently herewith, the Company and Sequoia are entering into a new
Loan Agreement (the “Loan Agreement”), and in connection therewith the Company
is issuing to Sequoia a warrant to purchase 1,667,000 shares of Common Stock
(the “2008 Warrant”);

WHEREAS, in connection with the Loan Agreement and the 2008 Warrant, the Company
and Sequoia have agreed to (i) amend the exercise price of the 2001 Warrant,
(ii) extend the maturity date of the Note Purchase Agreement and Notes and amend
the timing for payment of principal, (iii) remove the conversion feature of the
Notes and provide that no further warrants will be issued under the Note
Purchase Agreement and (iv) cancel the outstanding Note Purchase Warrant, in
each case as further described 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:

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1. Amendment of Exercise Price of 2001 Warrant. 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 $2.00 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
August 26, 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.”

 

2. Extension of Maturity Date; Timing of Payment of Principal.

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

““Change of Control” shall mean (a) a transaction (or series of transactions) in
which a Third Party (other than Heeschen or any entity controlled by Heeschen)
becomes the Beneficial Owner, directly or indirectly, of equity representing 25%
or more of the voting equity of the Company; (b) a merger, consolidation or
other business combination transaction (or series of transactions) involving the
Company, the result of which is that a Third Party who, immediately prior to
such transaction or transactions is not the Beneficial Owner, directly or
indirectly, of more than 25% of the voting equity of the Company, becomes the
Beneficial Owner, directly or indirectly, of more than 25% of the voting equity
of the Company or the successor entity in such transaction or transactions; or
(c) a sale of all or substantially all of the assets of the Company.”

(b) 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 outstanding 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, 2009.”

(c) Section 3.3(a) of the Note Purchase Agreement is hereby amended and restated
in its entirety as follows:

“(a) Until the Maturity Date, the Company will be required to make payments to
Lender monthly (each, a “Monthly Payment”) on the first Business Day of each
month no later than 1:00 p.m. on such day (each, a “Payment Date”), equal to the
sum of:

(i) all accrued interest on the Outstanding Balance of each of the outstanding
Notes for the prior month, plus

 

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(ii) a fee equal to 0.0833% of the Availability (the “Commitment Fee”).”

(d) Section 2(c) of the Form of Note attached as Exhibit A to the Note Purchase
Agreement and Section 2(c) of all outstanding Notes is hereby amended and
restated in its entirety as follows:

“(c) Monthly Payments. No later than 1:00 p.m. on the first business day of each
month, the Company will make payments to Lender equal to the sum of: (i) all
accrued interest on the Outstanding Balance of this Note for the prior month,
plus (ii) any other amount due at such time pursuant to the Agreement.”

 

3. Removal of Conversion Feature of Notes; No Further Warrant Issuances.

(a) The word “convertible” is hereby deleted from the first recital of the Note
Purchase Agreement. The second and third recitals of the Note Purchase Agreement
are hereby deleted in their entirety.

(b) The definition of “Restricted Stock” set forth in Section 1.1 of the Note
Purchase Agreement is hereby deleted in its entirety. The definition of
“Securities” set forth in Section 1.1 of the Note Purchase Agreement is hereby
amended and restated as follows: ““Securities” shall mean the Notes.”

(c) Section 2.2 of the Note Purchase Agreement (Issuance of Warrants) is hereby
deleted in its entirety.

(d) Article 4 of the Note Purchase Agreement (Contingent Conversion; Issuance of
Shares) is hereby deleted in its entirety and replaced with the following
placeholder: “4. [Intentionally Omitted.]”

(e) The Table of Contents of the Note Purchase Agreement is hereby updated
mutatis mutandis to reflect the foregoing amendments.

(f) The restrictive legend on the Form of Note attached as Exhibit A to the Note
Purchase Agreement and the restrictive legend on all outstanding Notes is hereby
amended and restated in its entirety as follows:

“THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR UNDER ANY STATE SECURITIES LAWS. THIS NOTE MAY NOT 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.”

 

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(g) The word “CONVERTIBLE” is hereby deleted from the title of the Form of Note
attached as Exhibit A to the Note Purchase Agreement and from the title of all
outstanding Notes.

(h) Section 7 of the Form of Note attached as Exhibit A to the Note Purchase
Agreement and Section 7 of all outstanding Notes (Conversion of Note for Common
Stock) is hereby deleted in its entirety and replaced with the following
placeholder: “7. [Intentionally Omitted.]”

(i) Section 8 of the Form of Note attached as Exhibit A to the Note Purchase
Agreement and Section 8 of all outstanding Notes (Issuance of Warrants) is
hereby deleted in its entirety and replaced with the following placeholder: “8.
[Intentionally Omitted.]”

(j) The word “CONVERTIBLE” is hereby deleted from the schedule to the Form of
Note attached as Exhibit A to the Note Purchase Agreement and from the schedules
to all outstanding Notes.

(k) The Form of Warrant attached as Exhibit B to the Note Purchase Agreement is
hereby deleted in its entirety.

 

4. Cancellation of Note Purchase Warrant. The Note Purchase Warrant is hereby
canceled in its entirety, as if the same shall never have been issued.

 

5. No Further Amendments. Except as expressly amended pursuant to Sections 1
through 4 hereof, the remaining terms of the 2001 Warrant, 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.

 

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.]

 

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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