TO: ALL SHAREHOLDERS OF DIEDRICH COFFEE, INC. (“DIEDRICH” OR THE “COMPANY”) COMMON STOCK AS OF MAY 11, 2010.

PLEASE TAKE NOTICE that on June 11, 2010, the Hon. Thierry Patrick Colaw of the Superior Court of California for the County of Orange preliminarily approved settlement (“Settlement”) in the class action (the “Action”) Mendenhall v. Phillips. This notice should be read in conjunction with, and is qualified in its entirety by reference to, the text of the May 10, 2010 Stipulation between the parties, which has been filed with the Court and which is posted simultaneously with this notice to the Diedrich (www.diedrich.com) website, under "Investor Relations," and to the Green Mountain (www.greenmountaincoffee.com) website, under "Investor Services."

The Final Settlement Hearing will be held on August 27, 2010 at 1:30 p.m. in the Superior Court of the State of California for the County of Orange, Civil Complex Center, located at 751 W. Santa Ana Boulevard, Santa Ana, California 92701 to: (i) determine whether final approval of the Settlement should be entered as fair, reasonable, adequate and in the best interests of the Class; (ii) determine whether judgment should be entered pursuant to the Stipulation, inter alia, extinguishing and releasing all Settled Claims (as defined in the Stipulation); (iii) determine whether the Class should be certified and whether the Class representative and his counsel have adequately represented the Class; (iv) rule on an application of Plaintiff’s counsel for an award of attorneys’ fees and expenses; and (v) rule on such other matters as the Court may deem appropriate.

The Court has reserved the right to approve the Settlement with or without modification, to enter a Final Judgment, and to order the payment of attorneys’ fees and expenses without further notice of any kind.

Any member of the Class who: (a) objects to the (i) Settlement, (ii) class action determination, (iii) adequacy of representation of Plaintiff and his counsel, (iv) judgment to be entered with respect to the Action, and/or (v) the request for fees, incentive award and/or reimbursement of costs and expenses by counsel for the Plaintiff; or (b) otherwise wishes to be heard, may appear in person or through counsel at the Final Settlement Hearing and show cause why the Settlement should not be approved. If you want to do so, however, you must, not later than ten (10) calendar days prior to the Final Settlement Hearing (unless the Court in its discretion shall otherwise direct for good cause shown), file in the Superior Court of the State of California for the County of Orange, Civil Complex Center, located at 751 W. Santa Ana Boulevard, Santa Ana, California 92701: (i) a written notice of intention to appear; (ii) proof of membership in the Class; (iii) a statement of your objections to any matters before the Court; and (iv) the grounds for your objection or the reasons for your desiring to appear and be heard, as well as documents or writings you desire the Court to consider. Also, on or before the date you file such papers, copies of such papers must be served on and received by each of the following attorneys of record:

If you do not object to the Settlement, the class action determination, or the request by counsel for the Plaintiff for an award of attorneys’ fees, expenses and/or incentive award, you do not need to do anything at this time.

You cannot be heard at the Final Settlement Hearing unless you serve and file written objections in the manner described above.

Any person who fails to object in the manner described above shall be deemed to have waived the right to object (including the right to appeal) and will be forever barred from raising such objection in this or any other action or proceeding.

Inquiries may be made to Plaintiff’s Counsel: Juan E. Monteverde, Levi & Korsinsky, LLP, 30 Broad Street, 15th Floor, New York, New York 10004.

For more information see:
STIPULATION AND AGREEMENT OF COMPROMISE, SETTLEMENT AND RELEASE