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EXHIBIT 10.23
DIEDRICH COFFEE, INC.
COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is made as of
the 17th day of November, 1997, by and between Diedrich Coffee, Inc., a Delaware
corporation (the "Company") and John E. Martin (the "Purchaser"). Pursuant to
the terms and subject to the conditions hereinafter set forth, the parties agree
as follows:
1. PURCHASE AND SALE OF STOCK
1.1 SALE AND ISSUANCE OF COMMON STOCK.
Subject to the terms and conditions of this Agreement, the
Purchaser agrees to purchase at the Closing, and the Company agrees to issue and
sell to the Purchaser at the Closing, 333,333 shares of the Company's Common
Stock (the "Shares") at an aggregate purchase price of Nine Hundred Ninety-Nine
Thousand Nine Hundred Ninety-Nine Dollars ($999,999.00) or Three Dollars ($3.00)
per share.
1.2 CLOSING.
(a) The purchase and sale of the Shares shall take place at the
offices of the Company in Irvine, California, at 2:00 p.m., on the fifth (5th)
business day following the satisfaction of the conditions set forth in Sections
4 and 5 hereof, or at such other time and place as the Company and Purchaser
shall mutually agree, either orally or in writing (which time and place are
designated as the "Closing").
(b) At the Closing, the Company shall deliver to the Purchaser a
certificate representing the Shares that such Purchaser is purchasing against
payment of the purchase price therefor by check, wire transfer or such other
form of payment as shall be mutually agreed upon by the Purchaser and the
Company.
2. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company that:
2.1 RELIANCE UPON PURCHASERS' REPRESENTATIONS.
The Purchaser understands that the Shares are not registered
under the Securities Act on the ground that the sale provided for in this
Agreement and the issuance of securities hereunder is exempt from registration
under the Securities Act pursuant to Section 4(2) thereof, and that the
Company's reliance on such exemption is predicated on the Purchasers'
representations set forth herein. The Purchaser realizes that the basis for the
exemption may not be present if, notwithstanding such representations, the
Purchaser has in mind merely acquiring the Shares for a fixed or determinable
period in the future, or for a market rise, or for sale if the market does not
rise. The Purchaser has no such intention. The Shares to be acquired by the
Purchaser hereunder will be acquired for Purchaser's own account and not with a
view to or for sale in connection with any distribution of the Shares.
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2.2 RECEIPT OF INFORMATION.
The Purchaser believes such Purchaser has received all the
information such Purchaser considers necessary or appropriate for deciding
whether to purchase the Shares. The Purchaser further represents that such
Purchaser has had an opportunity to ask questions and receive answers from the
Company regarding the terms and conditions of the offering of the Shares and the
business, properties, prospects, and financial condition of the Company and to
obtain additional information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify the accuracy of any information furnished to such Purchaser
or to which such Purchaser had access.
2.3 INVESTMENT EXPERIENCE.
The Purchaser represents that such Purchaser is experienced in
evaluating and investing in private placement transactions of securities of
companies and acknowledges that such Purchaser is able to fend for himself, can
bear the economic risk of such Purchaser's investment, and has such knowledge
and experience in financial and business matters that such Purchaser is capable
of evaluating the merits and risks of the investment in the Shares.
2.4 ACCREDITED PURCHASER.
(a) The term "Accredited Purchaser" as used herein refers to:
(i) A person or entity who is a director or executive
officer of the Company;
(ii) Any natural person who had an individual net worth,
or joint net worth with that person's spouse, at the time of the
purchase exceeds $1,000,000;
(iii) Any natural person who had an individual income in
excess of $200,000 in each of the two most recent years or joint income
with that person's spouse in excess of $300,000 in each of those years
and has a reasonable expectation of reaching the same income level in
the current year; or
(iv) Any entity in which all of the equity owners are
accredited Purchasers.
As used in this Paragraph 2.5(a), the term "net worth" means the
excess of total assets over total liabilities. For the purpose of determining a
person's net worth, the principal residence owned by an individual should be
valued at fair market value, including the cost of improvements, net of current
encumbrances. As used in this Paragraph 2.5(a), "income" means actual economic
income, which may differ from adjusted gross income for income tax purposes.
Accordingly, the Purchaser should consider whether such Purchaser should add any
or all of the following items to such Purchaser's adjusted gross income for
income tax purposes in order to reflect more accurately such Purchaser's actual
economic income: any amounts attributable to tax-exempt income received, losses
claimed as a limited partner in any partnership, deductions claimed for
depletion, contributions to an IRA or Keogh retirement plan, and alimony
payments.
(b) The Purchaser represents to the Company that such
Purchaser is an Accredited Purchaser.
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2.5 RESTRICTED SECURITIES.
The Purchaser understands that the Shares may not be sold,
transferred, or otherwise disposed of without registration under the Securities
Act or an exemption therefrom, and that in the absence of an effective
registration statement covering the Shares or an available exemption from
registration under the Securities Act, the Shares must be held indefinitely. In
particular, the Purchaser is aware that the Shares may not be sold pursuant to
Rule 144 promulgated under the Securities Act unless all of the conditions of
that Rule are met.
2.6 LEGEND.
Each certificate or other document evidencing any of the Shares
shall be endorsed with the legend substantially in the form set forth below:
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED AN OPINION
OF COUNSEL OR OTHER EVIDENCE, SATISFACTORY TO THE COMPANY AND ITS
COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED."
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser that:
3.1 VALID ISSUANCE OF SHARES.
The Shares being purchased by the Purchaser hereunder, when
issued, sold, and delivered in accordance with the terms of this Agreement for
the consideration expressed herein, will be duly and validly issued, fully paid,
and nonassessable, and will be free of restrictions on transfer other than
restrictions on transfer under this Agreement and under applicable state and
federal securities laws.
3.2 AUTHORIZATION; NO CONFLICT.
All corporate action on the part of the Company necessary for the
authorization, execution and delivery of this Agreement and the performance of
all obligations of the Company hereunder has been taken or will be taken prior
to the Closing. The execution, delivery, and performance by the Company of this
Agreement and the consummation of the transactions contemplated hereby will not
result in any violation or default in any material respect of any provision of
its organizational documents or in any material respect of any provision of any
material mortgage, indenture, agreement, instrument, or contract to which it is
a party.
3.3 GOVERNMENTAL CONSENTS.
No consent, approval, qualification, order or authorization of,
or filing with, any (a) state or federal governmental authority or (b) stock
exchange or market system is required on the part of the Company in connection
with the Company's valid execution, delivery, or performance of
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this Agreement, the offer, sale or issuance of the Shares by the Company, except
certain post-Closing filings which the Company agrees to make on a timely basis.
3.4 CAPITALIZATION.
As of September 10, 1997, there were 5,391,650 shares of the
Company's common stock outstanding. From such date to the date hereof, there has
not been any issuance by the Company of a material number of shares of the
Company's common stock.
4. CONDITIONS OF PURCHASER'S OBLIGATIONS AT CLOSING
The obligations of Purchaser under Section 1.1 of this Agreement are
subject to the fulfillment on or before the Closing of each of the following
conditions, the waiver of which shall not be effective unless the Purchaser
consents in writing thereto.
4.1 REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company contained in
Section 3 shall be true on and as of the Closing with the same effect as though
such representations and warranties had been made on and as of the date of the
Closing.
4.2 STOCKHOLDER APPROVAL.
Prior to February 28, 1997, the stockholders of the Company shall
have approved (a) the terms of the Stock Option Plan and Agreement dated
November 17, 1997 between the Company and Purchaser and (b) the grant of options
thereunder.
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING
The obligations of the Company under this Agreement are subject
to the fulfillment on or before the Closing of each of the following conditions,
the waiver of which shall not be effective unless the Company consents in
writing thereto.
5.1 REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Purchaser contained in
Section 2 shall be true on and as of the Closing with the same effect as though
such representations and warranties had been made on and as of the date of the
Closing.
6. MISCELLANEOUS
6.1 ENTIRE AGREEMENT.
This Agreement and the documents referred to herein constitute
the entire agreement among the parties with respect to the subject matter hereof
and no party shall be liable or bound to any other party in any manner by any
warranties, representations, or covenants except as specifically set forth
herein or therein.
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6.2 SURVIVAL OF WARRANTIES.
The representations and warranties of the Purchaser contained in
or made pursuant to this Agreement shall survive the execution and delivery of
this Agreement and the Closing.
6.3 GOVERNING LAW.
This Agreement shall be governed by and construed under the laws
of the State of California as applied to agreements among California residents
entered into and to be performed entirely within California.
6.4 COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
6.5 TITLES AND SUBTITLES.
The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
6.6 SEVERABILITY.
If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from this
Agreement and the balance of this Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
IN WITNESS WHEREOF, this Agreement has been executed by
each of the parties on the date first set forth above.
DIEDRICH COFFEE, INC.
By:___________________________________
Lawrence Goelman
Chairman of the Board and
Interim Chief Executive Officer
PURCHASER
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John E. Martin
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