UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to § 240.14a-12
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DIEDRICH COFFEE, INC.
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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DIEDRICH COFFEE, INC.
28 EXECUTIVE PARK, SUITE 200
IRVINE, CALIFORNIA
92614
SUPPLEMENT TO DEFINITIVE PROXY STATEMENT DATED JANUARY 15, 2010
On January 15, 2010, Diedrich Coffee, Inc. filed a definitive proxy statement (the “Proxy Statement”) with the Securities and
Exchange Commission in connection with matters to be voted upon at our 2009 Annual Meeting, which will be held at the Diedrich Coffee, Inc. Roasting Facility, 11480 Commercial Parkway, Castroville, CA 95012, at 9:00 a.m. local time, for the
following purposes:
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1.
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To elect a board of directors to serve until the next annual meeting of stockholders.
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2.
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To ratify the selection of BDO Seidman, LLP as our independent registered public accounting firm for our fiscal year ending June 30, 2010.
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We will also attend to business properly presented at the meeting and any adjournments or postponements of the
meeting.
Following the filing of the Proxy Statement, we announced that, effective February 1, 2010, Paul C. Heeschen
will assume the role of Executive Chairman and Sean M. McCarthy will be promoted to President of Diedrich Coffee in connection with the departure of J. Russell Phillips, Diedrich Coffee’s former President and Chief Executive Officer. In
addition, as a result of Mr. Heeschen’s appointment as Executive Chairman, our board of directors appointed Gregory D. Palmer and James W. Stryker to our compensation committee, thus reconstituting our compensation committee to be comprised of
Timothy J. Ryan and Messrs. Palmer and Stryker. As such, the purpose of this supplement (the “Supplement”) is to update the following sections on the specified pages of the Proxy Statement to reflect these subsequent developments:
“Proposal 1 – Election of Directors” on Page 3, the “Director Independence” section on Page 6, the second sentence in the “Director Nominations” section on Page 7, the “Executive Officers” section on Page
11, the Summary Compensation Table in the “Executive Compensation Tables” section on Page 12, the “Compensatory Agreements with Current Named Executive Officers” section on Page 14, the “Change in Control and Termination
Provisions Applicable to Mr. McCarthy” on Page 15, the final table in the “Diedrich Coffee Stock Options” section on Page 16 and the “Security Ownership of Certain Beneficial Owners and Management” on Pages 20 –
22.
PROPOSAL 1
ELECTION OF DIRECTORS
Our directors are elected once
a year at our annual meeting of stockholders. Our bylaws provide that our board of directors shall consist of between three and seven directors with the precise number to be determined by resolution of our board of directors. The authorized number
of members of our board of directors, as of the date of our annual meeting, will be five. If a quorum is present at our annual meeting, the five nominees receiving the greatest number of votes will be elected and will serve until their respective
successors are duly elected and qualified, they resign or they are removed in the manner provided for in our bylaws.
Shares
represented by executed proxies will be voted, if authority to do so is not withheld, for the election of the five nominees named below. Each of the nominees has consented to serve as a director if elected, and management has no reason to believe
that any nominee will be unable or unwilling to serve if elected as director. In the event that any nominee is unavailable for re-election as a result of an unexpected occurrence, shares will be voted for the election of such substitute nominee as
the independent directors on our board of directors may propose. The following table lists our directors and provides their respective ages and titles as of January 8, 2010.
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Name
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Age
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Title
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Director Since
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Paul C. Heeschen
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52
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Executive Chairman of the Board of Directors (4)
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1996
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Gregory D. Palmer (1)(2)(3)
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53
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Director
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2006
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J. Russell Phillips
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60
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Director (5)
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2007
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Timothy J. Ryan (1)(2)(3)
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69
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Vice Chairman of the Board of Directors
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2005
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James W. Stryker (1)(2)(3)
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63
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Director
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2008
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(1)
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Member of the compensation committee of our board of directors.
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(2)
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Member of the audit committee of our board of directors.
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(3)
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Member of the special committee of our board of directors which was established primarily for the purpose of, among other matters, reviewing, evaluating and negotiating
the terms and conditions of any potential sale of Diedrich Coffee.
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(4)
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On January 20, 2010, Mr. Heeschen was appointed to the position of Executive Chairman, effective as of February 1, 2010.
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(5)
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On January 22, 2010, Diedrich Coffee and Mr. Phillips entered into a Separation Agreement and General Release whereby Mr. Phillips and the Company agreed
that Mr. Phillips’ employment as President and Chief Executive Officer of Diedrich Coffee would terminate on January 31, 2010.
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There are no family relationships among any of the directors or executive officers of Diedrich Coffee. The principal occupation for at least the last five years of each nominee for director, as well as
other information, is set forth below.
Paul C. Heeschen
joined our board of directors in January 1996. In February
2001, the board of directors elected him as Chairman. On January 20, 2010, Mr. Heeschen was appointed to the position of Executive Chairman, effective as of February 1, 2010. Since 1995, Mr. Heeschen has been a Principal of
Heeschen & Associates, a private investment firm. He is also the sole general partner of Sequoia Enterprises, L.P. (“Sequoia”), WF Trust, D.C.H., L.P. and a trustee of the Paul C. Heeschen Revocable Living Trust, each of which are
stockholders of Diedrich Coffee. Mr. Heeschen serves on the board of directors of PC Mall, Inc., a publicly traded supplier of technology solutions for business, government and educational institutions, as well as consumers.
2
Gregory D. Palmer
joined our board of directors in September 2006. From January 1998
to June 2006, Mr. Palmer was the President and Chief Executive Officer of RemedyTemp, Inc., a staffing services company. Mr. Palmer also served as a director of RemedyTemp, Inc. from January 2001 to June 2006.
J. Russell Phillips
joined our board of directors in April 2007 through appointment by our board of directors. From February 2008 to
January 2010, Mr. Phillips was our President and Chief Executive Officer. From 2004 to 2008, Mr. Phillips served as Managing Principal of Transom Partners, an executive consultancy group that facilitates and develops new strategies with
CEOs and executive teams. From 1994 to 2004, Mr. Phillips served as Chief Executive Officer and President of SHURflo, the leading manufacturer of high quality precision pumps, controls, motors and systems serving the food service, industrial
and RV/marine markets. From 1972 to 1994, Mr. Phillips worked for several pump companies in various managerial capacities.
Timothy J. Ryan
joined our board of directors in October 2005. Effective April 8, 2009, Mr. Ryan was appointed Vice Chairman of the board. Mr. Ryan previously served as our Chief Executive Officer from November 1997 to
October 2000. Since April 1999, he has been a director of Rubio’s Restaurants, Inc., a publicly traded fast-casual fresh Mexican grill restaurant chain. From December 1995 to December 1996, Mr. Ryan served as President and Chief Operating
Officer of Sizzler U.S.A., a division of Sizzler International, Inc., and as a director of Sizzler International, Inc., of which he also served as a Senior Vice President. From November 1988 to December 1993, Mr. Ryan served as Senior Vice
President of Marketing at Taco Bell Worldwide and, from December 1993 to December 1995, he served as Senior Vice President of Taco Bell’s Casual Dining Division.
James W. Stryker
joined our board of directors in December 2008 through appointment by our board of directors and currently serves as Chairman of the audit committee. From May 2006 to April
2008, Mr. Stryker was the Executive Vice President and Chief Financial Officer (“CFO”) of Perkins & Marie Callender’s Inc., a chain of two restaurant concepts. From October 2001 to April 2006, Mr. Stryker
served as Executive Vice President and CFO of Wilshire Restaurant Group, Inc. (dba Marie Callender’s). From March 1999 to October 2001, Mr. Stryker was Senior Vice President and CFO of The Johnny Rockets Group, Inc. From January
1996 to March 1999 Mr. Stryker was Vice President, Finance and CFO of Rubio’s Restaurants, Inc. From 1994 to December 1995, Mr. Stryker was Vice President, Finance and Administration of American Restaurant Group, Inc. Prior to
that, Mr. Stryker spent sixteen years with El Torito Restaurants, Inc. including eight years as Executive Vice President and CFO.
Vote Required and Recommendation of the Board of Directors
The nominees for election as directors will be
elected by a plurality of the votes of the shares present in person or represented by proxy and entitled to vote at the annual meeting.
The board of directors recommends that you vote FOR each nominee named in Proposal 1.
Director Independence
Our board of directors has affirmatively determined
that three of our five directors are independent within the meaning of Nasdaq Marketplace Rule 5605. Our independent directors are Gregory D. Palmer, Timothy J. Ryan and James W. Stryker. During its review, the board of directors considered
transactions and relationships between each director or any member of his or her immediate family and Diedrich Coffee and its subsidiaries and affiliates.
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Director Nominations
Consistent with the corporate governance guidelines adopted by our board of directors, the members of the board, all of whom (other than Mr. Heeschen and Mr. Phillips) are currently independent,
work together to: (i) identify qualified individuals to become directors; (ii) determine the composition of the board of directors and its committees; and (iii) monitor and assess the effectiveness of the board of directors and its committees.
EXECUTIVE OFFICERS
Diedrich Coffee’s executive officers are currently as follows:
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Name
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Age
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Position(s) Held
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Paul C. Heeschen
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52
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Executive Chairman of the Board of Directors (1)
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Sean M. McCarthy
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48
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President, Chief Financial Officer and Secretary (2)
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James L. Harris
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46
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Vice President—Sales
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Dana A. King
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46
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Vice President—Information Services & Customer Fulfillment
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(1)
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On January 20, 2010, Mr. Heeschen was appointed to the position of Executive Chairman, effective as of February 1, 2010.
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(2)
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On January 22, 2010, Mr. McCarthy was appointed to the positions of President and Chief Financial Officer of Diedrich Coffee, effective as of February 1,
2010.
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The following is information regarding those persons currently serving as executive officers of Diedrich
Coffee:
Paul C. Heeschen
joined our board of directors in January 1996. In February 2001, the board of directors
elected him as Chairman. On January 20, 2010, Mr. Heeschen was appointed to the position of Executive Chairman, effective as of February 1, 2010. Since 1995, Mr. Heeschen has been a Principal of Heeschen & Associates, a
private investment firm. He is also the sole general partner of Sequoia Enterprises, L.P. (“Sequoia”), WF Trust, D.C.H., L.P. and a trustee of the Paul C. Heeschen Revocable Living Trust, each of which are stockholders of Diedrich Coffee.
Mr. Heeschen serves on the board of directors of PC Mall, Inc., a publicly traded supplier of technology solutions for business, government and educational institutions, as well as consumers.
Sean M. McCarthy
became our President and Chief Financial Officer on February 1, 2010. He became our Chief Financial Officer and
Secretary in January 2006, after serving as Vice President, Controller of Diedrich Coffee since April 2004. From February 2003 to April 2004, Mr. McCarthy was Vice President of ASM Hospitality Group, a privately owned consulting company. From
June 1998 to February 2003, Mr. McCarthy served in various financial capacities for FRD Acquisition Company, Inc. (d/b/a Coco’s & Carrows Restaurants), a subsidiary of Advantica Restaurants Group, Inc., a publicly traded food
service company, first as Manager, Field Finance, then Manager, Financial Planning & Analysis, and finally as Director, Finance. From May 1997 to June 1998, Mr. McCarthy was a Business Analyst for Taco Bell, Inc. From August 1986
through May 1997, Mr. McCarthy served in various accounting and financial capacities for El Torito Restaurants, a subsidiary of Family Restaurants, Inc. Mr. McCarthy earned a B.S. degree in business management from Pepperdine University
and a master’s degree in business administration from the University of Southern California.
James L. Harris
joined Diedrich Coffee in June 2008 as Vice President—Sales. From late 2007 to 2008, Mr. Harris was with Hansen’s Beverage Company, a publicly owned company and manufacturer and seller of premium beverages and Monster Energy Drink, as
the Vice President of International Sales. From 1997 to 2007, Mr. Harris was with FIJI Water, LLC, a privately owned manufacturer and seller of premium-bottled water in a variety of capacities ultimately serving as the Senior Vice President of
Sales, Western Region. From 1991 to 1997, Mr. Harris was with Haagen-Dazs Ice Cream first as an Account Executive and ultimately as a Division
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Manager. From 1985 to 1991, Mr. Harris worked for Pepsi-Cola Bottling Group working his way up to Account Executive and relocating to Southern California.
Dana A. King
became our Vice President-Information Services & Customer Fulfillment effective January 2009 after serving as
Vice President-Information and Customer Services. Ms. King joined Diedrich Coffee in November 2005 as the Director of Information Services. From 2001 until joining Diedrich Coffee, Ms. King led the Application Development group at Del
Taco, a Mexican quick-service restaurant chain. From 1996 until 2000, Ms. King worked for Professional Computing, Inc. (“PCI”), as a programmer/analyst before being promoted to IS Assistant Manager. After PCI was acquired by IKON
in 1997, she was promoted to the Director of IS, and, in 1999 was promoted to VP of IS and Managing Consultant and led a team consisting of developers, engineers and project managers in three locations across two states. After leaving IKON,
Ms. King ran her own consulting business. Ms. King holds a B.S. degree in Business with an emphasis in Computer Information Services from California State Polytechnic University, Pomona.
Executive Compensation Tables
Summary Compensation Table
The following table sets forth compensation earned during the fiscal year ended June 24, 2009 by our Chief Executive Officer and two other most highly compensated executive officers who were serving
as our executive officers at the end of the last completed fiscal year (collectively, the “named executive officers”).
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Name and Principal Position
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Year
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Salary
($)
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Bonus
($) (1)
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Option
Awards
($) (2)
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Non-equity
Incentive
Plan
Compensation
($) (3)
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All Other
Compensation
($)
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Total
($)
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J. Russell Phillips,
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2009
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$
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275,000
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$
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62,700
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$
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203,890
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$
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165,000
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$
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720
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(5)
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$
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707,310
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President and Chief Executive Officer (4)
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2008
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105,769
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—
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99,908
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—
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26,917
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(6)
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232,594
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Sean M. McCarthy,
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2009
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225,000
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90,000
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—
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90,000
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3,016
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(8)
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408,016
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Chief Financial Officer and Secretary (7)
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2008
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214,425
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—
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—
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—
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4,014
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(9)
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218,439
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James L. Harris,
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2009
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180,000
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—
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11,499
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54,000
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15,190
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(10)
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260,689
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Vice President—Sales
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2008
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2,077
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—
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—
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—
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462
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(11)
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2,539
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(1)
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The Company paid discretionary bonuses in the amounts identified in this column for fiscal year 2009 to the Chief Executive Officer and Chief Financial Officer for the
completion of the Transaction with Praise.
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(2)
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This column represents the dollar amount recognized for financial statement reporting purposes with respect to the 2009 and 2008 fiscal years for the fair value of
stock options for each of the named executive officers in accordance with ASC Topic 718. Pursuant to rules of the Securities and Exchange Commission, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting
conditions. For additional information on the valuation assumptions with respect to the 2009 and 2008 grants, refer to Note 1 to our consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended June 24, 2009, as
filed with the Securities and Exchange Commission. These amounts reflect our accounting expense for these awards, and do not correspond to the actual value that may be received by the named executive officers.
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(3)
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Amounts identified in this column for fiscal year 2009 were earned by the Chief Executive Officer and Chief Financial Officer based on achievement of certain targets of
the Company’s financial performance. The amount identified for fiscal year 2009 earned by the Vice President of Sales was primarily based on specific sales and profitability targets.
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(4)
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Mr. Phillips became our President and Chief Executive Officer in February 2008. Mr. Phillips’ annual base salary was $275,000. On January 22, 2010,
Diedrich Coffee and Mr. Phillips entered into a Separation Agreement and General Release whereby Mr. Phillips and the Company agreed that Mr. Phillips’ employment as President and Chief Executive Officer of Diedrich Coffee would
terminate on January 31, 2010.
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(5)
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Consists of health fitness membership reimbursement in the amount of $720.
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(6)
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Consists of a signing bonus payment in the amount of $25,000 and health fitness membership reimbursement in the amount of $1,917.
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(7)
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On January 22, 2010, Mr. McCarthy was appointed to the positions of President and Chief Financial Officer of Diedrich Coffee, effective as of February 1,
2010.
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(8)
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Consists of 401(k) matching contributions by Diedrich Coffee in the amount of $2,271 and health fitness membership reimbursement in the amount of $745.
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(9)
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Consists of 401(k) matching contributions by Diedrich Coffee in the amount of $2,077 and health fitness membership reimbursement in the amount of $1,937.
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(10)
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Consists of auto allowance in the amount of $12,000, 401(k) matching contributions by Diedrich Coffee in the amount of $138 and health fitness membership reimbursement
in the amount of $3,052.
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(11)
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Consists of auto allowance in the amount of $462.
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Compensatory Agreements with Current Named Executive Officers
J. Russell Phillips
. Effective February 7, 2008, Mr. Phillips entered into an employment agreement with us appointing him President and Chief Executive Officer.
Mr. Phillips’s employment agreement provided for compensation consisting of, among other things, (i) an annual base salary of $275,000 and (ii) a grant of options to purchase 275,000 shares of our common stock, (the
“Options”) pursuant to a stock option agreement described below. In addition, Mr. Phillips was eligible to receive (i) a bonus equal to up to 75% of his annual base salary, 80% of which would have been paid upon achievement of
certain defined objectives and 20% of which would have been paid based upon the discretion of our compensation committee and (ii) benefits under all other benefit plans generally provided to our other executive officers.
The Options consist of non-qualified stock options to purchase up to 275,000 shares of our common stock, which vest over three
(3) years, with one-third (1/3) of the options vesting on each anniversary of the effective date until all options have vested. The Options will fully vest and become immediately exercisable upon a change of control (as such term is
defined in Mr. Phillip’s employment agreement). Unless an earlier termination occurs, the Options will expire ten years after the effective date of the stock option agreement.
On January 22, 2010, Diedrich Coffee and Mr. Phillips entered into a Separation Agreement and General Release (the
“Separation Agreement”) whereby Mr. Phillips and the Company agreed that Mr. Phillips’ employment as President and Chief Executive Officer of Diedrich Coffee would terminate on January 31, 2010 (the “Separation
Date”). Pursuant to the terms of the Separation Agreement, Mr. Phillips has a period of 180 days from the Separation Date to exercise any vested Options, and upon expiration of such period, all vested but unexercised Options will terminate
and become unexercisable. Further, all unvested Options shall terminate and become unexercisable as of the date of the Separation Agreement. Pursuant to the Separation Agreement, the vesting of 45,834 Options was accelerated so that the total number
of vested Options is 137,500. Additionally, on the eighth day following the Separation Date, Diedrich Coffee shall make a lump sum payment of $250,000 to Mr. Phillips provided that Mr. Phillips has executed a release and waiver and
complied with the other terms and conditions of the Separation Agreement.
Sean M. McCarthy
. On January 22,
2010, Mr. McCarthy was appointed to the positions of President and Chief Financial Officer of Diedrich Coffee, effective as of February 1, 2010. In connection with this appointment, Diedrich Coffee and Mr. McCarthy entered into a
Letter Agreement dated January 22, 2010 (the “Letter Agreement”), which provides for an increase in Mr. McCarthy’s (i) annual base salary to $275,000, and (ii) participation in Diedrich Coffee’s
bonus/incentive plan to 60% of his annual base salary, which will be paid based upon the achievement of specific criteria identified by our board of directors. In the event that Mr. McCarthy is terminated by Diedrich Coffee for any reason other
than a “Just Cause Dismissal” (as defined in Article IX of Diedrich Coffee’s 2000 Equity Incentive Plan), Mr. McCarthy will be eligible to receive a lump sum severance payment that has been increased to an amount equal to his
annual base salary, provided that Mr. McCarthy executes a complete release of Diedrich Coffee in connection with or related to his employment with Diedrich Coffee. The terms of Mr. McCarthy’s employment letter agreements dated
December 30, 2005 and May 1, 2008 that are not inconsistent with the terms of the Letter Agreement will continue to remain in effect,
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and the terms of the Letter Agreement control in the event that there is any conflict between the Letter Agreement and such prior employment letter agreements.
Change in Control and Termination Provisions Applicable to Mr. McCarthy
As discussed in more detail above, Mr. McCarthy was appointed President and Chief Financial Officer of Diedrich Coffee, effective as of
February 1, 2010, and entered into the Letter Agreement related to such appointment. Under the Letter Agreement, Mr. McCarthy will receive a lump sum severance payment equal to his annual base salary if he is terminated for any reason
other than a “Just Cause Dismissal” (as defined in Article IX of Diedrich Coffee’s 2000 Equity Incentive Plan), provided that Mr. McCarthy executes a complete release of Diedrich Coffee in connection with or related to his
employment with Diedrich Coffee. Mr. McCarthy is also entitled to a stock appreciation payment upon the consummation of a change in control transaction, provided that he executes a general release of Diedrich Coffee. For this purpose, a change
in control transaction is defined as a transaction that results in a non-affiliate of Diedrich Coffee acquiring 90% of the outstanding shares of common stock. The stock appreciation payment payable to Mr. McCarthy upon the consummation of a
change in control transaction is equal to the product of (i) the difference determined by subtracting $5.00 from the per share price at which at least 90% of the outstanding shares of common stock is acquired, multiplied by (ii) 100,000.
In connection with the Offer and the Merger, Mr. McCarthy will receive an aggregate amount of $3,626,200, which is
comprised of (i) a payment of $3,000,000 (constituting the stock appreciation payment) and (ii) a payment of $626,200 in connection with Diedrich Coffee options owned by him (as outlined in the table below). Pursuant to the Letter
Agreement entered into in connection with his appointment as President and Chief Financial Officer, effective as of February 1, 2010, if Mr. McCarthy is terminated for any reason other than a “Just Cause Dismissal” (as defined in
Article IX of Diedrich Coffee’s 2000 Equity Incentive Plan) following the Merger, Mr. McCarthy will receive a lump sum payment of $275,000, provided that Mr. McCarthy executes a complete release of Diedrich Coffee in connection with
or related to his employment with Diedrich Coffee.
Diedrich Coffee Stock Options
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Name
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Number of Shares of
Common Stock Underlying
Unexercised Options
(#)
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Net Consideration to be
Received for Unexercised
Options
($)
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James L. Harris
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20,000
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653,600
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Paul C. Heeschen
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96,250
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3,027,893
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Dana A. King
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20,000
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630,200
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Sean M. McCarthy
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20,000
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626,200
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Gregory D. Palmer
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60,000
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1,924,350
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J. Russell Phillips (1)
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145,000
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4,602,150
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Timothy J. Ryan
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185,000
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5,783,050
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James W. Stryker
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30,000
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1,036,950
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(1)
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The number of shares of common stock underlying unexercised options and the net consideration to be received for unexercised options is provided as of January 22,
2010 for Mr. Phillips, as a result of the Separation Agreement and General Release entered into by Diedrich Coffee and Mr. Phillips on January 22, 2010, whereby Mr. Phillips and Diedrich Coffee agreed that Mr. Phillips’
employment as President and Chief Executive Officer of Diedrich Coffee would terminate on January 31, 2010.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial ownership of our common stock as of January 25, 2010 by:
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each person or group of affiliated persons who we know beneficially owns more than 5% of our common stock;
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•
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each of our directors and nominees;
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•
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each of our named executive officers; and
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•
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all of our directors and executive officers as a group.
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Except as indicated in the footnotes to this table, the persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them,
subject to community property laws. The table below includes the number of shares underlying options and warrants that are exercisable within 60 days from January 25, 2010.
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Name And Address Of Beneficial Owner (1)
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Amount And Nature
Of Beneficial
Ownership (2)
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Percent Of
Class (%)(2)
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Sequoia Enterprises, LP
450 Newport Center Drive, Suite 450
Newport Beach, CA 92660
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3,260,604
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(3)
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44.0
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WF Trust
450 Newport Center Drive, Suite 450
Newport Beach, CA 92660
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750,000
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(4)
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12.4
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Financial & Investment Management Group, LTD
111 Cass Street
Traverse City, MI 49684
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533,342
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(5)
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9.3
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D.C.H., L.P.
450 Newport Center Drive, Suite 450
Newport Beach, CA 92660
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419,268
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(6)
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7.3
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Gamco Investors, Inc. et al
One Corporate Center,
Rye, NY 10580-1435
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356,088
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(7)
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6.2
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Clarus Capital Group Management L.P.
237 Park Avenue, Suite 900
New York, NY 10017
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287,733
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(8)
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5.0
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Hudson Bay Overseas Fund, Ltd.
Walkers SPV Limited, Walker House
P.O. Box 908GT, Mary Street
Georgetown, Grand Cayman
Cayman Islands
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218,790
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(9)
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3.8
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Hudson Bay Fund, L.P.
120 Broadway, 40
th
Floor
New York, NY 10271
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123,070
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(9)
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2.1
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Paul C. Heeschen
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4,527,293
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(10)
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58.0
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Timothy J. Ryan
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75,000
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(11)
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1.3
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Gregory D. Palmer
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60,000
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(12)
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1.0
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James W. Stryker
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30,500
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(13)
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*
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J. Russell Phillips
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148,000
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(14)
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2.5
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Sean M. McCarthy
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25,000
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(15)
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*
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James L. Harris
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6,666
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(16)
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*
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Dana A. King
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12,666
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(17)
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*
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All directors and executive officers as a group (10 persons)
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4,904,377
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(18)
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60.0
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8
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(1)
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Unless otherwise indicated, the address of each person in this table is c/o Diedrich Coffee, Inc., 28 Executive Park, Suite 200, Irvine, California 92614, Attn:
Corporate Secretary.
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(2)
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Calculated pursuant to Rule 13d-3(d) under the Securities Exchange Act of 1934. Shares not outstanding that are subject to options or warrants exercisable by the holder
thereof within 60 days of January 8, 2010 are deemed outstanding for the purposes of calculating the number and percentage owned by such stockholder, but not deemed outstanding for the purpose of calculating the percentage of any other person.
Unless otherwise noted, all shares listed as beneficially owned by a stockholder are actually outstanding.
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(3)
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Paul C. Heeschen, the Executive Chairman of the Board of Directors, is the sole general partner of this limited partnership with voting and investment power as to all
shares beneficially owned by the limited partnership. Includes 250,000 shares subject to warrants that are immediately exercisable and will expire on June 30, 2014, 1,367,000 shares subject to warrants that are immediately exercisable and will
expire on August 26, 2013 and 70,000 shares subject to warrants that are immediately exercisable and will expire on April 29, 2014.
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(4)
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Paul C. Heeschen, the Executive Chairman of the Board of Directors, is the sole trustee with sole voting and investment power as to all shares beneficially owned by the
trust. Includes 300,000 shares subject to warrants that are immediately exercisable and will expire on August 26, 2013.
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(5)
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According to the Schedule 13G, filed on March 23, 2009, Financial & Investment Management Group, LTD (“FIMG”) is a registered investment advisor
that manages individual client accounts. All 533,342 shares represented in that filing have shared voting power and are held in accounts owned by the clients of FIMG. FIMG disclaims beneficial ownership of all such shares.
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(6)
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Paul C. Heeschen, the Executive Chairman of the Board of Directors, is the sole general partner of this limited partnership with voting and investment power as to all
shares beneficially owned by the limited partnership.
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(7)
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According to the Schedule 13D/A filed on January 11, 2010, such Schedule 13D/A has been filed by Mario J. Gabelli (“Mario Gabelli”) and various entities
that he directly or indirectly controls or for which he acts as chief investment officer. The Schedule 13D/A indicates that Mario Gabelli is deemed to have beneficial ownership of the shares owned beneficially by each of the filing persons. Each of
the Reporting Persons and Covered Persons (both as defined in the Schedule 13D/A) has the sole power to vote or direct the vote and sole power to dispose or to direct the disposition of the shares reported for it, either for its own benefit or for
the benefit of its investment clients or its partners, as the case may be, except as noted in the Schedule 13D/A.
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(8)
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According to the Schedule 13G filed on February 13, 2007, includes sole voting power relating to 235,713 shares and shared voting power relating to 52,020 shares
beneficially owned by Clarus Capital Group Management L.P. The general partner to Clarus Capital Group Management L.P. is Clarus Capital Management, LLC. Ephraim Fields is the managing member of Clarus Capital Group Management, LLC and as such
controls Clarus Capital Group Management L.P.
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(9)
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According to the Schedule 13G filed on December 2, 2009, Hudson Bay Capital Management, L.P. serves as investment manager with respect to the Hudson Bay Overseas
Fund, Ltd. and the Hudson Bay Fund, L.P. and shares voting and dispositive power in connection with the 218,790 shares beneficially owned by Hudson Bay Overseas Fund, Ltd. and the 123,070 shares beneficially owned by Hudson Bay Fund, L.P. Sander
Gerber serves as an executive officer of Hudson Bay Capital Management, L.P. Each of Hudson Bay Capital Management, L.P. and Mr. Gerber disclaims any beneficial ownership of any such shares, except for their pecuniary interest therein.
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(10)
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Includes (i) 3,260,604 shares beneficially owned by Sequoia (250,000 shares subject to warrants that are immediately exercisable and will expire on June 30,
2014, 1,367,000 shares subject to warrants that are immediately exercisable and will expire on August 26, 2013 and 70,000 shares subject to warrants that are immediately exercisable and will expire on April 29, 2014), and (ii) 419,268
shares beneficially owned by D.C.H., L.P. Mr. Heeschen is the sole general partner of each of these partnerships with voting and investment power as to all of such shares. Includes 750,000 shares beneficially owned by WF Trust (300,000 shares
subject to warrants that are immediately exercisable and will expire on August 26, 2013). Mr. Heeschen is the sole trustee with sole voting and investment power as to all shares beneficially owned by the trust. Includes 97,421 shares owned
personally by Mr. Heeschen (96,250 shares subject to options that are exercisable within 60 days), and 250 shares held by Paul C. Heeschen Revocable Living Trust.
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9
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(11)
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Includes 75,000 shares subject to options that are exercisable within 60 days.
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(12)
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Includes 60,000 shares subject to options that are exercisable within 60 days.
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(13)
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Includes 30,000 shares subject to options that are exercisable within 60 days.
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(14)
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Pursuant to the terms of the Separation Agreement, all unvested Options terminated and became unexercisabled as of January 22, 2010. Includes 145,000 shares
subject to options that are exercisable within 60 days.
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(15)
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Includes 20,000 shares subject to options that are exercisable within 60 days.
|
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(16)
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Includes 6,666 shares subject to options that are exercisable within 60 days.
|
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(17)
|
Includes 11,666 shares subject to options that are exercisable within 60 days.
|
|
(18)
|
Includes 2,449,914 shares subject to options and warrants that are exercisable within 60 days.
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This Supplement should be read together with the Proxy Statement. Except as described in this Supplement, no other provisions of the Proxy
Statement have been amended or revised. The updates described in this Supplement are the only changes made to the Proxy Statement given or sent or otherwise made available to stockholders. If you have not yet voted your shares, please sign and
return the proxy card previously sent to you. Questions related to the voting of your shares may be directed to Investor Relations at (949) 260-6734.
You do not have to take any action if you have previously voted your shares and do not wish to change your vote.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on February 18, 2010.
The Notice of Annual Meeting of Stockholders, the Proxy Statement for the 2009 Annual Meeting of Stockholders, this Supplement to the Proxy
Statement and the Annual Report on Form 10-K for the fiscal year ended June 24, 2009 are available at
http://www.edocumentview.com/DDRX
.
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