-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F67+Qm52gFubVsG24cMcSYC/oqAT1HAUI5EXW4rGepWtdubIB7esJWyBXnvbvTww 3++TsHzzY0QxPr8iPtvVdQ== 0000892569-98-002240.txt : 19980813 0000892569-98-002240.hdr.sgml : 19980813 ACCESSION NUMBER: 0000892569-98-002240 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19980812 EFFECTIVENESS DATE: 19980812 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DIEDRICH COFFEE INC CENTRAL INDEX KEY: 0000947661 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-FOOD STORES [5400] IRS NUMBER: 330086628 STATE OF INCORPORATION: CA FISCAL YEAR END: 0129 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-61271 FILM NUMBER: 98683857 BUSINESS ADDRESS: STREET 1: 2144 MICHELSON DRIVE STREET 2: STE A CITY: IRVINE STATE: CA ZIP: 9262682612 BUSINESS PHONE: 7142601600 MAIL ADDRESS: STREET 1: 2144 MICHELSON DRIVE CITY: IRVINE STATE: CA ZIP: 92612 S-8 1 FORM S-8 1997 NON-EMPLOYEE DIRECTORS STOCK OPTION 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 12, 1998 REGISTRATION NO. 333-______ ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ DIEDRICH COFFEE, INC. (Exact name of registrant as specified in its charter) 2144 MICHELSON DRIVE IRVINE, CALIFORNIA 92612 (714) 260-1600 (Address of Principal Executive Offices) DELAWARE 33-0086628 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1997 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN (Full title of the plan) ------------------------ ANN WRIDE CHIEF FINANCIAL OFFICER DIEDRICH COFFEE, INC. 2144 MICHELSON DRIVE IRVINE, CALIFORNIA 92612 (949) 260-1600 (Name, address, zip code, and telephone number, including area code, of agent for service) ------------------------ CALCULATION OF REGISTRATION FEE
================================================================================================ PROPOSED PROPOSED MAXIMUM MAXIMUM AGGREGATE AMOUNT OF TITLE OF SECURITIES TO AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE - ------------------------------------------------------------------------------------------------ Common Stock, par value $0.01 per share 20,000 $6.125 $122,500 $36 ================================================================================================
- ------------------- (1) There is also being registered hereunder such additional shares as may he issued pursuant to the anti-dilution provisions of the 1997 Non-Employee Directors Stock Option Plan dated April 25, 1997. (2) Estimated solely for purposes of determining the registration fee pursuant to Rule 457(h) and Rule 457(c) and based on the average of the high and low prices of the Common Stock of Diedrich Coffee, Inc. as reported on August 10, 1998 on the Nasdaq National Market. 2 INTRODUCTION This Registration Statement on Form S-8 is filed by Diedrich Coffee, Inc. (the "Registrant") relating to 20,000 shares of the Registrant's Common Stock, par value $0.01 per share (the "Common Stock"), issuable to Peter Churm and Paul Heeschen, Non-Employee Directors of the Registrant pursuant to the 1997 Non-Employee Director's Stock Option Plan and Agreement dated as of April 25, 1997 (the "Plan"). PART I INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS ITEM 1. PLAN INFORMATION. Information required by Part I of Form S-8 to be contained in the Section 10(a) prospectus is omitted from this Registration Statement in accordance with Rule 428 under the Securities Act of 1933, as amended (the "Securities Act"), and the Note to Part I of Form S-8. ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION. The Registrant's documents and public reports listed in Item 3 below, and all subsequent public reports, are and will be available to Messrs. Churm and Heeschen without charge, upon request to the Company, attention Ann Wride, Chief Financial Officer, at 2144 Michelson Drive, Irvine, CA 92614 (949) 260-1600. PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE. The following documents, which previously have been filed by the Registrant with the Securities and Exchange Commission (the "Commission"), are incorporated herein by reference and made a part hereof: (a) The Registrant's annual report on Form 10-K for the year ended January 28, 1998 filed with the Commission on April 23, 1998. (b) All other reports filed pursuant to Section 13(a) or 15(d) of the Exchange Act since the end of the fiscal year ended January 28, 1998. (c) The description of the Registrant's Common Stock contained in the Registrant's Registration Statement on Form 8-A (Registration No. 000-21203) filed with the Commission on August 14, 1996, which incorporates by reference the description of the Registrant's Common Stock contained in the Registrant's Registration Statement on Form S-1 (Registration No. 333-08633), as amended, including any amendment or report filed for the purpose of updating such description. All documents filed by the Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended, subsequent to the date of this Registration Statement and prior to the filing of a post-effective amendment hereto which indicates that all securities offered hereunder have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents. For purposes of this Registration Statement, any statement contained herein or in a document incorporated or deemed to be incorporated herein by reference shall be deemed to be modified or superseded to the extent that a statement contained herein or in any other subsequently filed document that also is or is deemed to be incorporated herein by reference modifies or supersedes such statement in such document. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement. 2 3 ITEM 4. DESCRIPTION OF SECURITIES. Not applicable ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. Not applicable. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Registrant is a Delaware corporation. Section 145 of the General Corporation Law of the State of Delaware (the "GCL") provides that a Delaware corporation has the power to indemnify its officers and directors in certain circumstances. Subsection (a) of Section 145 of the GCL empowers a corporation to indemnify any director or officer, or former director or officer, who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation), against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding provided that such director or officer acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, provided that such director or officer had no cause to believe his or her conduct was unlawful. Subsection (b) of Section 145 of the GCL empowers a corporation to indemnify any director or officer, or former director or officer, who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person acted in any of the capacities set forth above, against expenses actually and reasonably incurred in connection with the defense or settlement of such action or suit provided that such director or officer acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification may be made in respect of any claim, issue or matter as to which such director or officer shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action was brought shall determine that despite the adjudication of liability such director or officer is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper. Section 145 of the GCL further provides that to the extent a director or officer of a corporation has been successful in the defense of any action, suit or proceeding referred to in subsections (a) and (b) or in the defense of any claim, issue or matter therein, he or she shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him or her in connection therewith; that indemnification provided for in Section 145 shall not be deemed exclusive of any other rights to which the indemnified party may be entitled; and that the corporation shall have power to purchase and maintain insurance on behalf of a director or officer of the corporation against any liability asserted against him or her or incurred by him or her in any such capacity or arising out of his or her status as such whether or not the corporation would have the power to indemnify him or her against such liabilities under Section 145. Article VIII of the Registrant's Certificate of Incorporation currently provides that each director shall not be personally liable to the Registrant or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the directors' duty of loyalty to the Registrant or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the GCL, or (iv) for any transaction from which the director derived an improper benefit. The Certificate of Incorporation further provides that the Registrant shall indemnify, to the fullest extent permitted by the GCL, any person made a party to an action or proceeding by reason of the fact that such person was a director, officer, employee or agent of the Registrant. 3 4 Article VII of the Registrant's Bylaws provides that the Registrant may indemnify its officers and directors to the fullest extent permitted by law. Subject to the Registrant's Certificate of Incorporation, the Bylaws provide that the Registrant shall indemnify directors and officers for all costs reasonably incurred in connection with any action, suit or proceeding in which such director or officer is made a party by virtue of his being an officer or director of the Registrant except where such director or officer is finally adjudged to have been derelict in the performance of his duties as such director or officer. The Registrant has entered into separate indemnification agreements with its directors and officers containing provisions that provide for the maximum indemnity allowed to directors and officers by the GCL and the Registrant's Bylaws, subject to certain exceptions. The indemnification agreements may require the Registrant, among other obligations, to indemnify such directors and officers against certain liabilities that may arise by reason of their status as directors or officers, other than liabilities arising from willful misconduct of a culpable nature, provided that such person acted in good faith and in a manner that he or she reasonably believed to be in or not opposed to the best interests of the Registrant and, in the case of a criminal proceeding, had no reasonable cause to believe that his conduct was unlawful. In addition, the indemnification agreements provide generally that the Registrant will, subject to certain exceptions, advance the expenses incurred by directors and officers as a result of any proceeding against them as to which they may be entitled to indemnification. The Registrant also maintains directors' and officers' liability insurance. ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED. Not applicable. ITEM 8. EXHIBITS. 4.1 Certificate of Incorporation of the Registrant(1) 4.2 Bylaws of the Registrant(1) 4.3 1997 Non-Employee directors Stock Option Plan dated as of April 25, 1997 5 Opinion of Gibson, Dunn & Crutcher LLP as to the legality of the securities being registered 23.1 Consent of KPMG Peat Marwick LLP 23.2 Consent of BDO Seidman, LLP 23.3 Consent of Gibson, Dunn & Crutcher LLP (contained in Exhibit 5 hereto) 24.1 Power of Attorney (contained on signature page hereto) - ------------------- (1) Incorporated by reference to the Registrant's Registration Statement on Form S-1 (Reg. No. 333-08633), as amended. ITEM 9. UNDERTAKINGS. (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; 4 5 (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by a final adjudication of such issue. 5 6 SIGNATURES THE REGISTRANT Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Irvine, State of California, on this 11th day of August, 1998. DIEDRICH COFFEE, INC. By: /s/ ANN WRIDE ------------------------------- Ann Wride Chief Financial Officer POWER OF ATTORNEY Each person whose signature appears below constitutes and appoints Ann Wride and John B. Bayley his true and lawful attorneys-in-fact and agents, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, each acting alone, with full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming that all said attorneys-in-fact and agents, each acting alone, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
NAME AND SIGNATURE TITLE DATE ------------------ ----- ---- /s/ JOHN E. MARTIN Chairman of the Board August 6, 1998 - ------------------------------------ John E. Martin /s/ TIMOTHY J. RYAN Director and President and Chief - ------------------------------------ Executive Officer (Principal Executive August 5, 1998 Timothy J. Ryan Officer) /s/ ANN WRIDE Vice President, Chief Financial Officer August 5, 1998 - ------------------------------------ (Principal Financial and Accounting Ann Wride Officer) /s/ MARTIN R. DIEDRICH Chief Coffee Officer, Vice Chairman of August 5, 1998 - ------------------------------------ Board of Directors and Secretary Martin R. Diedrich Director August _, 1998 - ------------------------------------ Lawrence Goelman /s/ PAUL C. HEESCHEN Director August 6, 1998 - ------------------------------------ Paul C. Heeschen Director August _, 1998 - ------------------------------------ Peter Churm
6 7 INDEX TO EXHIBITS Exhibit No. Description - ----------- ----------- 4.1 Certificate of Incorporation of the Registrant(1) 4.2 Bylaws of the Registrant(1) 4.3 1997 Non-Employee Directors Stock Option Plan and Agreement dated as of April 25, 1997 5 Opinion of Gibson, Dunn & Crutcher LLP as to the legality of the securities being registered 23.1 Consent of KPMG Peat Marwick LLP 23.2 Consent of BDO Seidman, LLP 23.3 Consent of Gibson, Dunn & Crutcher LLP (contained in Exhibit 5 hereto) 24.1 Power of Attorney (contained on signature page hereto) - --------------------- (1) Incorporated by reference to the Registrant's Registration Statement on Form S-1 (Reg. No. 333-08633), as amended. EX-4.3 2 STOCK OPTION PLAN & AGREEMENT 1 EXHIBIT 4.3 1997 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN AND AGREEMENT This 1997 Non-Employee Director Stock Option Plan and Agreement, dated as of April 25, 1997 (the "AGREEMENT") is entered into by and among Diedrich Coffee, Inc., a Delaware corporation (the "COMPANY"), on the one hand, and Peter Churm and Paul C. Heeschen (individually, the "GRANTEE" and collectively, the "GRANTEES") on the other hand. RECITALS A. Messrs. Churm and Heeschen have served as independent directors of the Company since the Company's initial public offering in September 1996. In light of the operational challenges and management transition that the Company has experienced this year, the independent directors have been called upon to work closely with the Company's officers providing invaluable advice and direction beyond that which would ordinarily be expected from members of the Board of Directors. B. In appreciation of the service rendered by the independent directors and for the purpose of encouraging and rewarding their continuing contributions to the performance of the Company and further aligning their interests with the interests of the Company's stockholders, the Company believes that it is in the best interests of the Company and its stockholders to grant to each of the Grantees options to purchase 10,000 shares of common stock, $0.01 par value per share (the "COMMON STOCK"), of the Company. AGREEMENT NOW, THEREFORE, to evidence the grant of options by the Company and to set forth the terms and conditions of the grant of options, the Company and Grantees hereby agree as follows: 1. DEFINITIONS. The following terms, as used in this Agreement, have the meanings ascribed to them in this Section 1. (a) "BOARD" means the Board of Directors of the Company. (b) "CLOSING PRICE" means the closing price on any given trading day of the Common Stock on the Nasdaq National Market (or any subsequent exchange or market system upon which the Company's Common Stock is principally traded) as reported in the Transaction Index of the Wall Street Journal. (c) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. (d) "EXERCISE DATE" means any date on which Grantee exercises Options. 2 (e) "EXERCISE DATE VALUE" means the product of: (i) the number of shares of Common Stock delivered to the Company and (ii) the Closing Price of the Common Stock on the Exercise Date. (f) "EXERCISE SHARES" means those shares of Common Stock with respect to which Options are being exercised. (g) "NON-EMPLOYEE DIRECTOR" means a duly elected or appointed member of the Company's Board of Directors who is not and has not since the beginning of the Company's most recently completed fiscal year been an employee of or a compensated consultant to the Company or any of its affiliates. (h) "OPTIONS" means options to purchase shares of Common Stock granted under this Agreement. (i) "SECURITIES ACT" means the Securities Act of 1933, as amended. 2. GRANT OF OPTIONS. The Company hereby grants options to Grantees as follows: (a) The Company grants to Mr. Churm, effective as of the date hereof, Options to purchase up to 10,000 shares of Common Stock on the terms and subject to the conditions set forth herein; and (b) The Company grants to Mr. Heeschen, effective as of the date hereof, Options to purchase up to 10,000 shares of Common Stock on the terms and subject to the conditions set forth herein. 3. EXERCISABILITY AND EXERCISE PRICES. The Options will become exercisable at an option exercise price of $2.75 per share of Common Stock on April 25, 1998, if the Grantee has remained a Non-Employee Director for the entire period from the date hereof to April 25, 1998. Any Options that have not become exercisable at the time the Grantee ceases to be a Non-Employee Director shall terminate. 4. TERMINATION OF OPTIONS. (a) Unless an earlier termination date occurs as specified in Section 4(b), the Options will expire and become unexercisable (whether or not then exercisable) on the tenth (10th) anniversary of the date hereof ("EXPIRATION DATE"). (b) If a Grantee ceases to be a Non-Employee Director for any reason prior to the Expiration Date: (i) all Options that have not otherwise become exercisable, as of the date Grantee ceases to be a Non-Employee Director, will immediately terminate and become unexercisable; and (ii) all Options that have become exercisable will terminate and become unexercisable on and after the date one hundred eighty (180) days following the date of Grantee's termination of employment. 2 3 5. REGISTRATION OF OPTIONS. After execution of this Agreement, the Company, at its expense, shall file a registration statement on Form S-8 to register the issuance and exercise of the Options. 6. RESTRICTIONS ON EXERCISE. All options granted under the Plan shall be subject to the requirement that, if at any time the Company shall determine, in its discretion, that the listing, registration or qualification of the shares subject to options granted under the Plan upon any securities exchange or under any state or federal law, or the consent or approval of any government or regulatory body or authority, is necessary or desirable as a condition of, or in connection with, the granting of such an option or the issuance, if any, or purchase of shares in connection therewith, such option may not be exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Company. Unless the shares of stock to be issued upon exercise of an option granted under the Plan have been effectively registered under the Securities Act of 1933, as amended (the "Securities Act") as now in force or hereafter amended, the Company shall be under no obligation to issue any shares of stock covered by any option unless the person who exercises such option, in whole or in part, shall give a written representation and undertaking to the Company satisfactory in form and scope to counsel to the Company and upon which, in the opinion of such counsel, the Company may reasonably rely, that he or she is acquiring the shares of stock issued to him or her pursuant to such exercise of the option for his or her own account as an investment and not with a view to, or for sale in connection with, the distribution of any such shares of stock, and that he or she will make no transfer of the same except in compliance with any rules and regulations in force at the time of such transfer under the Securities Act, or any other applicable law or regulation, and that if shares of stock are issued without such registration, a legend to this effect may be endorsed upon the securities so issued and the Company may order its transfer agent to stop transfer of such shares. 7. NON-TRANSFERABILITY OF OPTIONS. None of the Options are assignable or transferable, in whole or in part, and may not, directly or indirectly, be offered, transferred, sold, pledged, assigned, alienated, hypothecated or otherwise disposed of or encumbered (including without limitation by gift, operation of law or otherwise) other than by will or by the laws of descent and distribution to the estate of Grantee upon his death, provided that the deceased Grantee's beneficiary or the representative of his estate acknowledge and agree in writing, in a form reasonably acceptable to the Board of Directors to be bound by this Agreement as if such beneficiary or the estate were Grantee. 8. WITHHOLDING. Whenever shares of Common Stock are to be issued pursuant to the exercise of Options, the Board of Directors may require the recipient of the shares of Common Stock to remit to the Company an amount sufficient to satisfy any applicable federal, state and local tax withholding requirements. Upon request by Grantee, the Company may also withhold shares of Common Stock to satisfy applicable withholding requirements, subject to any rules adopted by the Board of Directors regarding compliance with applicable law, including, but not limited to, Section 16(b) of the Exchange Act. 3 4 9. MANNER OF EXERCISE: (a) To the extent that the Options have become and remain exercisable as provided in Sections 3 and 4, and subject to such reasonable administrative regulations as the Board of Directors may adopt, the Options may be exercised, by written notice to the Board of Directors, specifying the number of Exercise Shares and the Exercise Date. On or before the Exercise Date, Grantee shall deliver to the Company full payment for the Options being exercised in cash, or cash equivalent satisfactory to the Board of Directors, and in an amount equal to the aggregate purchase price for the Exercise Shares. (b) Subject to the discretion of the Board of Directors, Grantee may, in lieu of cash, either: (i) deliver shares of Common Stock having an Exercise Date Value equal to the purchase price of the Exercise Shares; or (ii) deliver a combination of cash and shares of Common Stock with an aggregate value and Exercise Date Value equal to the purchase price of the Exercise Shares, subject to such rules and regulations as may be adopted by the Board of Directors to provide for the compliance of such payment procedure with applicable law, including Section 16(b) of the Exchange Act. (c) The Board of Directors may require Grantee to furnish or execute such other documents as the Board of Directors reasonably deems necessary: (i) to evidence such exercise and (ii) to comply with or satisfy the requirements of the Securities Act, applicable state securities laws or any other law. 10. NO RIGHTS AS STOCKHOLDER. Grantee will have no voting or other rights as a stockholder of the Company with respect to any shares of Common Stock covered by the Options until the exercise of such Options and the issuance of a certificate or certificates to him for such shares of Common Stock. No adjustment will be made for dividends or other rights for which the record date is prior to the issuance of such certificate or certificates. 11. CAPITAL ADJUSTMENTS. The number and any applicable option price of the shares of Common Stock covered by the Options will be proportionately and appropriately adjusted by the Board of Directors to reflect any stock dividend, stock split or share combination of the Common Stock or any recapitalization of the Company. Subject to any required action by the stockholders of the Company, in any merger, consolidation, reorganization, exchange of shares, liquidation or dissolution, the Options will pertain to the securities and other property, if any, that a holder of the number of shares of Common Stock covered by the Options would have been entitled to receive in connection with such event. 12. REORGANIZATIONS; MERGERS; CHANGES IN CONTROL. Subject to the other provisions of this Section 12, if the Company shall consummate any reorganization or merger or consolidation in which holders of shares of the Company's Common Stock are entitled to receive in respect of such shares any other consideration (including, without limitation, a different number of such shares), each option outstanding under this Agreement shall thereafter be exercisable, in accordance with the Agreement, only for the kind and amount of securities, cash and/or other property receivable upon such reorganization or merger or consolidation by a holder of the same number of shares of Common Stock as are subject to that option immediately prior to 4 5 such reorganization or merger or consolidation, and any appropriate adjustments will be made to the exercise price thereof. In addition, if a Change in Control occurs and in connection with such Change in Control any recipient of an option granted under the Plan ceases to be a director of the Company, then such recipient shall have the right to exercise his or her options granted under the Plan in whole or in part during the applicable time period provided in Section 4 without regard to any vesting requirements. For purposes hereof, but without limitation, a director will be deemed to have ceased to be a director of the Company in connection with a Change in Control if such director (i) is removed by or resigns upon request of a Person (as defined in paragraph (a) below) exercising practical voting control over the Company following the Change in Control, or a person acting upon authority or at the instruction of such Person, or (ii) is willing and able to continue as a director of the Company but is not re-elected to or retained on the Company's Board of Directors by the Company's stockholders through the stockholder vote or consent action for election of directors that precedes and is taken in connection with, or next follows, the Change of Control. For purposes hereof, a "Change in Control" means the following and shall be deemed to occur if any of the following events occur: (a) Any person, entity or group, within the meaning of Section 13(d) or 14(d) of the Exchange Act, but excluding the Company and its subsidiaries and any employee benefit or stock ownership plan of the Company or its subsidiaries and also excluding an underwriter or underwriting syndicate that has acquired the Company's securities solely in connection with a public offering thereof (such person, entity or group being referred to herein as a "Person"), becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of either the then outstanding shares of Common Stock or the combined voting power of the Company's then outstanding securities entitled to vote generally in the election of directors; or (b) Individuals who, as of the effective date hereof, constitute the Board of Directors of the Company (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board of Directors of the Company, provided that any individual who becomes a director after the effective date hereof whose election, or nomination for election by the Company's stockholders, is approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered to be a member of the Incumbent Board unless that individual was nominated or elected by any Person having the power to exercise, through beneficial ownership, voting agreement and/or proxy, 20% or more of either the then outstanding shares of Common Stock or the combined voting power of the Company's then outstanding voting securities entitled to vote generally in the election of directors, in which case that individual shall not be considered to be a member of the Incumbent Board unless such individual's election or nomination for election by the Company's stockholders is approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board; or (c) Consummation by the Company of the sale or other disposition by the Company of all or substantially all of the Company's assets or a reorganization or merger or consolidation of the Company with any other person, entity or corporation, other than 5 6 (i) a reorganization or merger or consolidation that would result in the voting securities of the Company outstanding immediately prior thereto (or, in the case of a reorganization or merger or consolidation that is preceded or accomplished by an acquisition or series of related acquisitions by any Person, by tender or exchange offer or otherwise, of voting securities representing 5% or more of the combined voting power of all securities of the Company, immediately prior to such acquisition or the first acquisition in such series of acquisitions) continuing to represent, either by remaining outstanding or by being converted into voting securities of another entity, more than 50% of the combined voting power of the voting securities of the Company or such other entity outstanding immediately after such reorganization or merger or consolidation (or series of related transactions involving such a reorganization or merger or consolidation), or (ii) a reorganization or merger or consolidation effected to implement a recapitalization or reincorporation of the Company (or similar transaction) that does not result in a material change in beneficial ownership of the voting securities of the Company or its successor; or (d) Approval by the stockholders of the Company or an order by a court of competent jurisdiction of a plan of liquidation of the Company. 13. NOTICES. All notices and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been given if delivered personally or sent by certified or express mail, return receipt requested, postage prepaid, or by any recognized international equivalent of such delivery, to the Company, or Grantee, as the case may be, at the address of the Company's principal executive office. All such notices and communications shall be deemed to have been received on the date of delivery or on the third business day after the mailing thereof. 14. BINDING EFFECT; BENEFITS. This Agreement shall be binding upon and inure to the benefit of the parties to this Agreement and their respective successors and assigns. Nothing in this Agreement, express or implied, is intended or shall be construed to give any person other than the parties to this Agreement or their respective successors or assigns any legal or equitable right, remedy or claim under or in respect of any agreement or any provision contained herein. 15. AMENDMENT. This Agreement may be amended, modified or supplemented only by a written instrument executed by Grantees and the Company. 16. APPLICABLE LAW. This Agreement shall be governed by and construed in accordance with the law of the State of Delaware, regardless of the law that might be applied under principles of conflict of laws. 17. SECTION AND OTHER HEADINGS. The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. 6 7 18. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the Company and Grantees have executed this Agreement as of the date first above written. DIEDRICH COFFEE, INC., a Delaware corporation BY: /s/ MARTIN DIEDRICH ----------------------------------- NAME: MARTIN DIEDRICH TITLE: VICE CHAIRMAN THE GRANTEES /s/ PETER CHURM ---------------------------------------- PETER CHURM /s/ PAUL C. HEESCHEN ---------------------------------------- PAUL C. HEESCHEN 7 EX-5 3 OPINION OF GIBSON, DUNN & CRUTCHER LLP 1 EXHIBIT 5 August 11, 1998 (949) 451-3800 C 22453-00008 Diedrich Coffee, Inc. 2144 Michelson Drive Irvine, California 92612 Re: Registration Statement on Form S-8 for 1997 Non-Employee Directors Stock Option Plan and Agreement Ladies and Gentlemen: We have acted as your counsel in connection with the preparation of a Registration Statement on Form S-8 (the "Registration Statement") to be filed with the Securities and Exchange Commission on the date hereof, to register under the Securities Act of 1933, as amended (the "Act"), 20,000 shares of the Company's Common Stock, par value $0.01 per share (the "Common Stock"), available to be issued pursuant to awards granted under the Company's 1997 Non-Employee Directors Stock Option Plan and Agreement (the "Plan"). For purposes of rendering this opinion, we have made such legal and factual examinations as we have deemed necessary under the circumstances and, as part of such examination, we have examined originals and copies, certified or otherwise, identified to our satisfaction, of the Plan, the Company's Certificate of Incorporation and Bylaws, and the records of corporate proceedings and other actions taken by the Company in connection with the Plan and the Common Stock issuable thereunder, and such other documents, corporate records and other instruments as we have deemed necessary or appropriate. Based upon the foregoing and in reliance thereon, and subject to (i) compliance with applicable state securities laws and (ii) the effectiveness of the Registration Statement pursuant to the Act, it is our opinion that the 2 Diedrich Coffee, Inc. August 11, 1998 Page 2 Common Stock, when issued and paid for in accordance with the Registration Statement and the Plan, will be validly issued, fully paid and non-assessable. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement, and we further consent to the use of our name under the caption "Legal Matters" in the Prospectus forming a part of said Registration Statement. In giving this consent, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Act or the Rules and Regulations thereunder. Very truly yours, /s/ GIBSON, DUNN & CRUTCHER LLP GIBSON, DUNN & CRUTCHER LLP JBE/REA OA981880.030 EX-23.1 4 CONSENT OF KPMG PEAT MARWICK LLP 1 EXHIBIT 23.1 ACCOUNTANTS' CONSENT The Board of Directors Diedrich Coffee, Inc.: We consent to the incorporation by reference in the registration statements (Form S-8 with John E. Martin, Form S-8 with Timothy J. Ryan, Form S-8 Stock Option Plan, Form S-3) of Diedrich Coffee, Inc. of our report dated March 28, 1998, relating to the balance sheets of Diedrich Coffee as of January 28, 1998 and January 27, 1997 and cash flows for each of the years in the two-year period ended January 28, 1998 and all related schedules, which report appears in the January 28, 1998 annual report on Form 10-K of Diedrich Coffee, Inc. We consent to the reference to our firm under the heading "Experts" in the prospectus. /s/ KPMG Peat Marwick LLP Orange County, California August 11, 1998 EX-23.2 5 CONSENT OF BDO SEIDMAN, LLP 1 EXHIBIT 23.2 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Diedrich Coffee, Inc. Irvine, California We hereby consent to the incorporation by reference in the Prospectus constituting a part of this Registration Statement of our report dated March 11, 1996, relating to the financial statements of Diedrich Coffee, Inc. appearing in the Company's Annual Report on Form 10-K for the year ended January 31, 1996. /s/ BDO SEIDMAN, LLP ---------------------------------------- BDO SEIDMAN, LLP Costa Mesa, California August 11, 1998 -----END PRIVACY-ENHANCED MESSAGE-----