UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
COFFEE PEOPLE, INC.
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(Name of Issuer)
COMMON STOCK
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(Title of Class of Securities)
92189108
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(CUSIP Number)
Kathy Welsh, 175 Bloor Street East, South Tower Suite 801,
Toronto, Ontario, Canada M4W 3R8 (416) 975-9877
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
May 19, 1998
---------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
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CUSIP No. 92189108 Page 2 of 10 Pages
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1 NAME OF REPORTING PERSON
SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Second Cup USA Holdings Ltd., an Ontario, Canada corporation ("SCU")
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[X]
(b)[ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Ontario, Canada
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY -------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 7,460,679
REPORTING -------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH
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10 SHARED DISPOSITIVE POWER
7,460,679
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,460,679
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
69.5%
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14 TYPE OF REPORTING PERSON*
CO
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<PAGE>
SCHEDULE 13D
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CUSIP No. 92189108 Page 3 of 10 Pages
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1 NAME OF REPORTING PERSON
SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
The Second Cup Ltd., an Ontario, Canada corporation ("SCL")
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[X]
(b)[ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Ontario, Canada
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY -------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 7,460,679
REPORTING -------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH
-------------------------------------------------------
10 SHARED DISPOSITIVE POWER
7,460,679
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,460,679
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
69.5%
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
This report on Schedule 13D relates to the common stock, no par value
(the "Common Shares") of Coffee People, Inc., an Oregon corporation (the
"Issuer" or the "Company"). The Second Cup Ltd., an Ontario, Canada corporation
("SCL"), and its wholly owned subsidiary, Second Cup USA Holdings Ltd., an
Ontario, Canada corporation ("SCU"), may be deemed a "group" for purpose of Rule
13d-5 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). SCU, as successor in interest to The Second Cup Inc., is a party to an
Agreement and Plan of Merger, dated as of February 19, 1998 (the "Merger
Agreement"), with the Company. The Merger Agreement provides that: (i) the
Company will acquire Gloria Jean's Inc., a Delaware corporation ("Gloria
Jean's") and the wholly owned subsidiary of SCU, from SCU for a purchase price
consisting of 69.5% of the issued and outstanding Common Shares of the Company,
after giving effect to the issuance of additional shares of Common Shares
pursuant to a Registration Statement of the Company on Form S-4 filed April 24,
1998; and (ii) Gloria Jean's Merger Corp., a wholly-owned subsidiary of the
Company formed solely for the purposes of the merger transaction, will merge
with and into Gloria Jean's. The transaction contemplated by the Merger
Agreement was completed on May 19, 1998. As a result Gloria Jean's has become a
wholly-owned subsidiary of the Company and 69.5% of the Common Shares of the
Company has been issued to SCU.
The summary descriptions contained in this Report of certain agreements
and documents are qualified in their entirety by reference to the complete texts
of such agreements and documents filed as Exhibits hereto and incorporated
herein by reference.
Item 1. Security and Issuer.
This Report relates to the Issuer's Common Shares. The principal
executive offices of the Issuer are 15100 S.W. Koll Parkway, Suite J, Portland,
Oregon 97006, (503) 672-9603.
Item 2. Identity and Background.
This report is being filed by The Second Cup Ltd. ("SCL") and its
wholly owned subsidiary, Second Cup USA Holdings Ltd. ("SCU"). SCL is
incorporated as a corporation under the laws of Ontario, Canada. SCL's principal
business consists of retailing specialty coffee products throughout North
America. The address of both SCL's principal business and its principal office
is 175 Bloor Street East, South Tower, Suite 801, Toronto, Ontario, Canada, M4W
3R8 and its telephone number is (416) 975-5541. SCU is also incorporated under
the laws of Ontario, Canada. SCU's principal business consists of holding the
United States specialty coffee retailing operations of its parent SCU. The
address of both SCU's principal business and its principal office is 175 Bloor
Street East, South Tower, Suite 801, Toronto, Ontario, Canada, M4W 3R8 and its
telephone number is (416) 975-5541.
Information concerning the executive officers and directors of SCL and
SCU, and the persons controlling SCL, if any, are set forth in Exhibit 99.2 to
this Report. Unless otherwise
Page 4 of 10
<PAGE>
set forth in Exhibit 99.2, each of such executive officers and directors is a
citizen of the United States. Neither SCL, SCU nor, to the best of their
knowledge, any person named in Exhibit 99.2 to this statement, during the last
five years (i) has been convicted in a criminal proceeding (excluding traffic
violations and similar misdemeanors); or (ii) has been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
Item 3. Source and Amount of Funds of Other Consideration.
The consideration for SCU's acquisition of the Common Shares of the
Company is the acquisition by the Company of Gloria Jean's through the merger of
Gloria Jean's Merger Corp., a wholly-owned subsidiary of the Company, with and
into Gloria Jean's, as a result of which Gloria Jean's became a wholly-owned
subsidiary of the Company. Prior to the merger Gloria Jean's was a wholly owned
subsidiary of SCU. Additional consideration provided by SCU in connection with
the transaction include: (i) SCU's agreement to ensure that Gloria Jean's and
its subsidiaries have at least $2,500,000 aggregate in cash in their bank
accounts as of the closing of the merger transactions after payment of expenses
in connection with the Merger Agreement; (ii) SCU's assurance that neither
Gloria Jean's nor any of its subsidiaries will have any interest-bearing
indebtedness for borrowed money or any indebtedness to an affiliate as of the
closing of the merger; and (iii) SCU's agreement to make available to the
Company on the closing date of the merger a revolving loan facility of up to
$4,000,000 with a maximum term of five years. Additional consideration provided
by the Company in connection with the transaction include: (i) the Company's
agreement that the current President of Gloria Jean's, Alton McEwen, or another
person designated by SCU in its discretion, will be appointed Chief Executive
Officer of the Company following the merger; and (ii) the Company's agreement to
take all actions necessary to cause to be elected to the Company's board,
following the merger, up to six nominees of SCU (with respect to a contemplated
future nine member board) or four nominees of SCU (with respect to an interim
six member board immediately following the merger).
Item 4. Purpose of Transaction.
Upon consummation of the transactions contemplated in the Merger
Agreement, the businesses of Coffee People and Gloria Jean's will be combined.
After the transaction, SCU's ownership of more than a majority of the Company's
Common Shares will give SCU the ability to control and direct the Company's
board of directors and management. SCU currently intends to cause the combined
company to pursue a strategy of continued growth through expansion in existing
markets and selective acquisition of successful regional specialty coffee
retailers in new markets. SCU believes that the combination of Coffee People
with Gloria Jean's will benefit from operational synergies and economies of
scale.
Item 5. Interest in Securities of the Issuer
Page 5 of 10
<PAGE>
On May 19, 1998, the Company issued to SCU a total of 7,460,679 shares
of the Company's Common Shares pursuant to the Merger Agreement described under
Items 1, 3 and 4 above. Such shares constituted 69.5% of the Company's
10,734,790 Shares of Common Shares outstanding immediately following such
issuance. SCL, as the shareholder of 100% of the voting securities of SCU, may
also be deemed to exercise control over the shares of Common Shares issued to
SCU. No other transactions in the Company's Common Stock were effected by SCL or
SCU in the 60 days prior to May 19, 1998.
Item 6. Contracts, Arrangement, Understandings or Relationships With Respect to
Securities of the Issuer
SCU, as the successor to The Second Cup Inc., has a contractual
relationship with the Issuer relating to the Common Shares of the Issuer,
pursuant to the Merger Agreement described in Items 1, 3 and 4. The terms of the
Merger Agreement provide for SCU, upon completion of the merger, to exercise
control over the Company through ownership of 69.5% of the Company's outstanding
Common Shares and representation on the Company's Board of Directors. In
connection with the closing the current President of Gloria Jean's, Alton
McEwen, has been appointed Chief Executive Officer of the Company following the
merger and four nominees of SCU have been appointed to the Company's six-member
Board of Directors. To facilitate the merger, holders of approximately 39% of
the outstanding Common Shares of the Issuer agreed to vote in favor of the
merger transaction pursuant to voting agreements entered into with SCU. Pursuant
to the Merger Agreement, the Company has agreed to use its best efforts to
maintain the listing of the Company's Common Shares on the Nasdaq National
Market system, and SCU has agreed for a period of 18 months to use its "best
efforts" not to, and to use its best efforts to cause the Company not to, take
any action to delist the shares of the Company's Common Shares from the Nasdaq
Stock Market (i.e. the National Market system and/or the SmallCap Market). The
Merger Agreement does not preclude SCU from causing the Company to enter into a
transaction pursuant to which the holders of the Company's Common Shares receive
cash and/or securities listed on the New York Stock Exchange, the Nasdaq Stock
Market or The Toronto Stock Exchange.
Item 7. Material to Be Filed as Exhibits
Exhibit 1: Prospectus and Proxy Statement of the Issuer filed April 29,
1998 (incorporated by reference as filed by the Issuer (Registration No.
333-50905) (the "Proxy Statement")).
Exhibit 2: Agreement and Plan of Merger, dated as of February 19, 1998,
among the Issuer and The Second Cup, Inc. (incorporated by reference to Exhibit
10.23 to the Issuer's Form 10-K filed March 27, 1998, and to Annex 1 to the
Proxy Statement)).
Exhibit 3: Registration Statement on Form S-4, as amended, filed by the
Issuer and as declared effective on April 27, 1998 (incorporated by reference as
filed by the Issuer (Registration No. 333-50905) (the "Form S-4")).
Page 6 of 10
<PAGE>
Exhibit 4: Form of Voting Agreement (incorporated by reference to Annex
2 to the Proxy Statement).
Exhibit 99.1: Joint Filing Agreement
Exhibit 99.2: Executive Officers and Directors of SCL and SCU
Signature
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After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: May 19, 1998
/s/ Alton McEwen
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Alton McEwen, as President of Second Cup
USA Holdings Ltd.
Signature
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After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: May 19, 1998
/s/ Alton McEwen
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Alton McEwen, as President and Chief
Operating Officer for U.S. Operations
of The Second Cup Ltd.
INDEX TO EXHIBITS
Exhibit 1: Prospectus and Proxy Statement of the Issuer filed April 29, 1998
(incorporated by reference as filed by the Issuer (Registration
No. 333-50905) (the "Proxy Statement")).
Exhibit 2: Agreement and Plan of Merger, dated as of February 19, 1998,
among the Issuer and The Second Cup, Inc. (incorporated by
reference to Exhibit 10.23 to the Issuer's Form 10-K filed March
27, 1998, and to Annex 1 to the Proxy Statement)).
Exhibit 3: Registration Statement on Form S-4, as amended, filed by the
Issuer and as declared effective on April 27, 1998 (incorporated
by reference as filed by the Issuer (Registration No. 333-50905)
(the "Form S-4")).
Exhibit 4: Form of Voting Agreement (incorporated by reference to Annex 2 to
the Proxy Statement).
Exhibit 99.1: Joint Filing Agreement
Exhibit 99.2: Executive Officers and Directors of SCL and SCU
Page 7 of 10
EXHIBIT 99.1
JOINT FILING AGREEMENT
May 19, 1998
The undersigned hereby agree, with respect to the Schedule 13D to which
this joint filing agreement is an exhibit, to file a joint statement pursuant to
Rule 13d-1(f)(1).
/s/ Alton McEwen
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Alton McEwen, as President
of Second Cup USA Holdings Ltd.
/s/ Alton McEwen
----------------------------------------
Alton McEwen, as Chief Operating Officer
of The Second Cup Ltd.
Page 8 of 10
EXHIBIT 99.2
Executive Officers and Directors of SCL
<TABLE>
<CAPTION>
Principal Occupation Principal Business in Which
Name/Citizenship Position And Business Address Employment is Conducted
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- ------------------ ------------------------ -------------------------------------------- ----------------------------
<S> <C> <C> <C>
Michael Bregman/ Director, Chairman of Chief Executive Officer of SCL, 175 Bloor Specialty coffee retail
Canadian the Board, and C.E.O. Street East, South Tower, Suite 801, operations in United States
of SCL Toronto, Ontario, Canada, M4W 3R8 and Canada.
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Louis Bregman/ Director, Executive Executive Vice President of SCL, 175 Bloor Specialty coffee retail
Canadian Vice President Street East, South Tower, Suite 801, operations in United States
Toronto, Ontario, Canada, M4W 3R8 and Canada.
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Alton McEwen/ Director, President President and C.O.O. of SCL for U.S. Specialty coffee retail
Canadian and C.O.O. of SCL Operations, 11480 Commercial Parkway, operations in United
for U.S. Operations Castroville, California 95012 States.
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Randy A. Powell/ Director, President President and C.O.O. of SCL for Canadian Specialty coffee retail
Canadian and C.O.O. of SCL Operations, 175 Bloor Street East, South operations in Canada.
for Canadian Tower, Suite 801, Toronto, Ontario,
Operations Canada, M4W 3R8
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Kathy Welsh/ Exec. Vice President Chief Financial Officer of SCL, 175 Bloor Specialty coffee retail
Canadian and Chief Financial Street East, South Tower, Suite 801, operations in United States
Officer of SCL Toronto, Ontario, Canada, M4W 3R8 and Canada.
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Robert M Haft Director Managing Partner of Hamilton Morgan and Retail sale of vitamins and
President and C.E.O. of Vitamin Superstore, similar products.
3000 K St., Ste 105, Wash., D.C. N.W. 20008
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Dian Cohen Director President, Dian Cohen Productions Ltd., Economic and business
Canadian Ayer's Cliff, Quebec, Canada communications
consulting.
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Dale Lastman/ Director Partner in Goodman Phillips & Vineberg, 250 Practice of law.
Canadian Yonge Street, Suite 2400, Toronto, Ontario
Canada M5B 2M6
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Hugh Segal/ Director Fellow in the School of Policy Studies, Financial investment and
Canadian Queen's University; Associate, Gluskin Sheff investment fund
& Associates, Inc., Toronto, Ontario,
Canada management.
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Roy Sugden/ Director Retired executive c/o SCL, 175 Bloor Street Director of SCL
Canadian East, South Tower, Suite 801, Toronto,
Ontario, Canada, M4W 3R8
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M. Bernard Syron/ Director Chairman of the Board and C.E.O., Cara Commercial restaurant,
Canadian Operations Limited, 230 Bloor Street West, food, and other hospitality
Toronto, Ontario, Canada M5S 1T8 services.
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Gabriel Director President and C.O.O., Cara Operations Commercial restaurant,
Tsampalieros/ Limited, 230 Bloor Street West, Toronto, food, and other hospitality
Canadian Ontario, Canada M5S 1T8 services.
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</TABLE>
Page 9 of 10
<PAGE>
Executive Officers and Directors of SCU
<TABLE>
<CAPTION>
Principal Occupation Principal Business in Which
Name/Citizenship Position And Business Address Employment is Conducted
- ---------------- -------- -------------------- -----------------------
- ------------------ ------------------------ -------------------------------------------- ----------------------------
<S> <C> <C> <C>
Michael Bregman/ Director Chief Executive Officer of SCL, Specialty coffee retail operations in
Canadian 175 Bloor Street East, South Tower, United States and Canada.
Suite 801, Toronto, Ontario,
Canada, M4W 3R8
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Louis Bregman/ Director Executive Vice Presidentof SCL, Specialty coffee retail operations in
Canadian 175 Bloor Street East, South Tower, United States and Canada.
Suite 801, Toronto, Ontario,
Canada, M4W 3R8
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Alton McEwen/ Director, President President and Chief Operating Specialty coffee retail operations in
Canadian Officer of SCL for U.S. United States.
Operations, 11480 Commercial
Parkway, Castroville, California
95012
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Kathy Welsh/ Secretary Chief Financial Officer of SCL, 175 Specialty coffee retail operations in
Canadian Bloor Street East, South Tower, United States and Canada.
Suite 801, Toronto, Ontario,
Canada, M4W 3R8
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</TABLE>
Page 10 of 10
