REVISED DEFINITIVE
PROXY MATERIAL
NOTICE OF ANNUAL MEETING
The Annual Meeting of Shareholders of Elephant & Castle Group
Inc. (the "Company") will be held at the Holiday Inn Hotel, 1355
No. Harbour Drive, San Diego, California, 92101-3385 on Thursday,
June 27, 1996 at 12:00 P.M. noon for the following purposes:
(i) To elect eight (8) Directors, each to serve until
the next annual meeting of shareholders of the
Company;
(ii) To ratify the appointment of Pannell Kerr Forster
Worldwide as the Company's auditors for the fiscal year
ending December 31, 1996; and
(iii) To consider such other business as may properly come
before the meeting. In accordance with local practice in
Canada, the Shareholders will be receiving, considering
and approving a report to the Shareholders from the Board
of Directors; and receiving, considering and approving
the Audited Financial Statements of the Company for the
year ended December 31, 1995 and the Auditor's Report
thereon.
Shareholders of record at the close of business on May 9, 1996
will be entitled to notice of and to vote at the meeting and any
adjournment thereof.
By order of the Board of
Directors
Peter Barnett
Secretary of the Company
Vancouver, B.C.
May 16, 1996
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ELEPHANT & CASTLE GROUP INC.
1996 PROXY STATEMENT
This proxy statement is being furnished to holders of Common
Shares of Elephant & Castle Group Inc. (the "Company") in connec-
tion with the solicitation of proxies on behalf of the Board of
Directors. If executed and returned, the proxies will be voted at
the 1996 Annual Meeting of Shareholders to be held on Thursday,
June 27, 1996 and at any adjournment thereof. This statement and
form of proxy were first mailed to shareholders on or about May 16,
1996. Any shareholder submitting a proxy may revoke it at any time
before it is voted by notifying the Corporate Secretary in writing
or in person.
Only holders of the Company's Common Shares outstanding as of
the close of business on May 9, 1996, the record date, will be
entitled to vote at the meeting. The Company's only class of
voting securities is its Common Shares, without par value. There
are currently 2,604,611 Common Shares outstanding. Each Common
Share is entitled to one vote. The representation in person or by
proxy of a majority of the outstanding Common Shares is necessary
to provide a quorum at the Annual Meeting. Votes withheld from a
nominee for election as a director or votes on other matters that
reflect abstentions or broker non-votes are counted as present in
determining whether the quorum requirement is satisfied, but they
have no other effect on voting for election of directors.
The expenses of this proxy solicitation, including the cost of
preparing and mailing the Proxy Statement and proxy, will be paid
by the Company. Such expenses may also include the charges and
expenses of banks, brokerage firms, and other custodians, nominees
or fiduciaries for forwarding proxies and proxy material to
beneficial owners of the Company's Common Stock. The Company
expects to solicit proxies primarily by mail, but directors,
officers, employees and agents of the Company may also solicit
proxies in person or by telephone or by other electronic means.
<PAGE>
Preliminary Information
The Corporation is a corporation organized under the laws of
the Province of British Columbia, Canada. The Company operates a
chain of restaurants principally at malls located throughout
Canada. The Company is in the process of refocusing its restaurant
operations by opening and expanding food and beverage operations at
major hotel chains and similar facilities in the United States and
Canada.
Voting Securities and Principal Holders Thereof
All holders of the Company's Common Shares (herein the "Common
Shares") of record as of the close of business on May 9, 1996 are
entitled to vote at the Annual Meeting. Each holder is entitled to
one vote per Common Share. There is no cumulative voting.
Security Ownership of Directors, Management and Certain Beneficial
Owners
As of the close of business on March 31, 1996, 2,604,611
Common Shares were issued and outstanding. The following table
sets forth, as of such date, information relating to the beneficial
ownership of the Company's Common Shares by each person known to
the Company to be beneficial owner of more than 5% of the Common
Shares, by each director, by each of the named executive officers
and by all directors and executive officers as a group:
Approximate
Percentage of
Name and Address Number of Shares Outstanding Shares(3)
- ------------------------ ---------------- ---------------------
Jeffrey M. Barnett(1)(2) 550,375 21.13
Peter J. Barnett(1)(2) 550,375 21.13
George W. Pitman(1)(2) 137,250 5.27
William C. McEwen(1)(3) 6,000 .23
D. David Cohen(1) 79,500 3.05
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Approximate
Percentage of
Name and Address Number of Shares Outstanding Shares(3)
- ----------------------- ---------------- ---------------------
Martin O'Dowd(1)(3)
David Wiederecht(1)(4) --- .
Anthony Mariani(1)(4) --- .
Daniel DeBou(2)(3) 8,200 .31
Paul Tilbury(2)(3) 17,000 .65
All Directors and Executive 1,348,700 51.77%
Officers as a Group
_______________
(1) Each person is a director.
(2) Excludes an aggregate of 100,000 shares subject to conditional
options issued to the founders of the Company prior to the
public offering pursuant to a Founders Retention Plan.
(3) Includes options granted to directors and executive officers
pursuant to the 1993 Employee Stock Option Plan and the 1993
Director Stock Option Plan.
(4) Excludes 111,111 shares owned by an investment fund
("Fund"), of which the nominee is a representative, and
up to 675,000 additional shares subject to Warrants and
Subordinated Convertible Debentures held by the Fund.
ELECTION OF DIRECTORS
The Company's Memorandum and Articles of Association provide
for the election of the Board of Directors at each annual meeting
of the Company's Shareholders. Each person so elected shall serve
until their respective successors shall have been elected and
qualified.
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It is intended that votes will be cast, pursuant to authority
granted by the enclosed proxy, for the election of the nominees
named below as directors of the Company, except as otherwise
specified in the proxy. Directors shall be elected by a plurality
of the votes present in person or represented by proxy at the
Annual Meeting and entitled to vote on the election of directors.
In the event any one or more of such nominees shall be unable to
serve, votes will be cast, pursuant to authority granted by the
enclosed proxy, for such person or persons as may be designated by
the present Board of Directors to fill the vacancy. The Company is
not aware of any nominee who will be unable, or who intends to
decline, to serve as a director.
The names and ages of the nominees as of April 30, 1996, and
certain information about them are set forth below:
Name Age Principal Occupation
------------------ --- -------------------------------------
Jeffrey M. Barnett 57 Chairman of the Board, Chief Execu-
tive Officer, Director and President
Peter J. Barnett 57 Executive Vice President, Director
and Secretary
George W. Pitman 54 Vice President - Design and Develop-
ment, and Director
William L. McEwen 71 Independent Entrepreneur, Real Es-
tate and Telecommunications
D. David Cohen 56 Attorney, Private Practice
Martin O'Dowd 48 Director, President, Chief Operating Officer,
Rainforest Cafe, Inc.
David Wiederecht 40 Vice President, Alternative Investments,
GE Investment Corporation
Anthony Mariani 31 Senior Analyst, Private Equities,
GE Investment Corporation
<PAGE>
Executive Officers and Directors
Jeffrey M. Barnett co-founded the predecessor of the Company
in 1977 with twin brother Peter J. Barnett and their long-time
business colleague, Mr. George W. Pitman. Jeffrey M. Barnett
became Chairman of the Board and Chief Executive Officer of the
Company upon the reorganization. Mr. Barnett is involved in all
material aspects of the Company. He has served on the Board of
Directors and in various executive positions with each of the
predecessor subsidiaries.
Peter J. Barnett, Executive Vice President and Secretary, is
one of the founders of the Company and also is involved in all
material aspects of the Company. He has served on the Board of
Directors and has held various executive positions with the
predecessor subsidiaries.
George W. Pitman, Vice President - Design and Development, is
one of the founders of the Company and serves as a director of the
Company since the reorganization. He has served on the Board of
Directors of the predecessor subsidiaries since their inception in
1977.
William L. McEwen is an independent entrepreneur who is the
owner/manager of residential and commercial properties in Ottawa,
Ontario, and Vancouver, B.C. Mr. McEwen is also the co-founder of
Ottawa Cablevision, Ltd., Keeble Cable in Toronto and Signal West
Distributors, Ltd., a wholesale/retail distributor of television
converters, electronic products and telephones. Mr. McEwen is
Chairman of the Board and Chief Executive Officer of Tasco Communi-
cations, Inc., a paging and telephone answering company. He is
Vice President of the Liberal Party of Canada and a Knight of the
Order of Saint Jean of Jerusalem. He was formerly employed for 16
years by Atomic Energy of Canada Ltd. as North American Sales
Manager, Medical Products. Director since 1993.
D. David Cohen is engaged in the private practice of law in
New York, and is also currently Of Counsel to the New York law firm
of Parker Duryee Rosoff & Haft. Mr. Cohen served as U. S. securi-
ties counsel to the Registrant in connection with its 1993 public
Offering. From December 1988 to December 1990, while also engaged
in the practice of law as a member of Parker Duryee Rosoff & Haft,
Mr. Cohen also served as Vice President and General Counsel of Data
Switch Corporation, a publicly-owned company in the electronics
industry. In 1995, Data Switch was merged with and into a
subsidiary of General Signal Corporation. Mr. Cohen is also a
director of ERD Waste Corp. Director since 1993.
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Martin O'Dowd has been President and Chief Operating Officer
of Rainforest Cafe, Inc., Minneapolis, MN, since May 1995 and has
served as a director and Secretary since June 1995. From July 1987
to May 1995, Mr. O'Dowd was Corporate Director of Food and Beverage
Services for Holiday Inn Worldwide, where Mr. O'Dowd was
responsible for approximately $250 million in annual food and
beverage revenue and was responsible for concept development,
strategic planning, and operations for 120 company-owned units.
From August 1985 to July 1987, Mr. O'Dowd was Vice President and
General Operations Manager for the New York based hard Rock Cafe
Organization overseeing operations in New York, London and
Stockholm. Mr. O'Dowd began his restaurant career with 8 years at
Steak & Ale Restaurants. Mr. O'Dowd was first elected to the Board
of Directors of the Company in June of 1995.
David Wiederecht is Vice President of Alternative Investments
for GE Investment Corporation since January 1994. Prior to his
current assignment, he served GE Investments in various senior
financial management assignments in GEIC's real estate and finance
organization since 1988. Prior to joining GEIC, Mr. Wiederecht
worked at various assignments within General Electric Company,
including corporate headquarters and GE's audit staff. Mr.
Wiederecht was first elected to the Board of Directors of the
Company in January, 1996.
Anthony Mariani is Senior Analyst of Private Equities for GE
Investment Corporation since February 1994. Prior to his current
assignment, he worked at various assignments in GE Investments'
private equities and finance organizations since 1988. Mr. Mariani
was first elected to the Board of Directors of the Company in
January, 1996.
Meetings, Attendance, Committees
The Board of Directors of the Company held three (3) regular
meetings in 1995. Following its public offering, the Board created
two standing committees: the Compensation Committee and the Audit
<PAGE>
Committee. Each incumbent director attended at least 75% of the
aggregate of: (1) the total number of Board meetings held during
the period he was a director; and (2) the total number of meetings
held by all Committees of the Board on which he served during such
period.
It is the function of the Compensation Committee to review the
Company's remuneration policies and practices, administer certain
of the Company's incentive compensation and stock option plans, and
establish the salaries of the executive officers of the Company.
It is the function of the Audit Committee to review the external
audit programs of the Company and to make recommendations to the
Board of Directors of the Company concerning its appointment of
independent auditors, the conduct of the audit and related matters.
Messrs. Jeffrey M. Barnett, William McEwen and D. David Cohen have
heretofore served as the Audit Committee. The Committees meet
separately from, but on the same days as, regularly scheduled Board
meetings. During 1995, there were three (3) such meetings. The
Company does not maintain a nominating committee or one performing
a similar function.
Compensation of Directors
Directors who are not employees or officers of the Company
(herein the "Outside Directors") are currently separately
compensated for their services as follows: CDN $500.00 cash for
each three months as a director, plus 2,000 shares of Company Stock
for each two years of service as an outside director, issued at in
eight equal quarterly amounts. Certain outside Directors have
elected not to accept cash compensation and have redirected their
shares compensation to their employer. In addition, each of
Messrs. McEwen and Cohen were granted, upon election to the Board,
non-qualified options to purchase 5,000 Common Shares each at a
price equal to 100% of the fair market value of the Common Shares
as at the date of the grant of such stock options. At the time of
the option grant, the fair market value of the Shares subject to
the grant was, therefore, the exercise price of the options, $6.00
per Share. The options vest in two equal installments, on each of
the first two successive anniversaries of the date of grant,
subject to continued service, and are exercisable for a period of
five years.
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Executive Compensation
Report of the Compensation Committee
The Compensation Committee (the "Committee") is composed of
three directors, Jeffrey Barnett, Chairman and Founder of the Com-
pany, and Messrs. McEwen and Cohen, Outside Directors. The
Committee has not altered or otherwise modified the compensation
practices and general rates which prevailed for executives of the
Company at the time of the 1993 public offering. It is the
intention that the Committee will be reviewing compensation rates
and incentives offered by the Company against practices at similar-sized
companies in the same industry and same geographic areas in
future periods. No such reviews have been made or completed to
date.
The Compensation Committee
By: Jeffrey M. Barnett, Chairman
William McEwen
D. David Cohen
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Jeffrey M. Barnett, Chairman of the Compensation Committee, is
the Chairman and Chief Executive Officer of the Company. Messrs.
William McEwen and D. David Cohen are Outside Directors. The Com-
pany intends to continue a policy of having directors unaffiliated
with management to constitute a majority of the members of the
Compensation Committee. Mr. Cohen served as counsel to the
Company. He earned fees for legal services of CDN $61,000 during
1995. Mr. Cohen is indebted to the Company in the amount of
$300,000 for the purchase of securities of the Company, which loan
is fully collateralized by securities other than securities of the
Company. There are no interlocks among the members of the
Compensation Committee.
SUMMARY COMPENSATION TABLE
The following table sets forth a summary of the compensation
of the Chief Executive Officer of the Company and the two other
founders of the Company for their services rendered during fiscal
years 1995, 1994 and 1993. No executive officer received a salary
and bonus which exceeded U.S. $100,000 in 1995. All figures are in
Canadian dollars. The relative value of the Canadian dollar
compared to the U.S. dollar fluctuates from time to time. During
1995, the average value was each CDN $1.00 equals U.S. $.73.
Base All Other
Salary Bonuses Compensation(1)
-------- ------- ----------------
Jeffrey M. Barnett,
Chief Executive Officer
12/31/1995 CDN $135,000 ------ 25,026
12/31/1994 125,539 ------ 25,026
12/31/1993 102,698 ------ 25,026
Peter J. Barnett,
Executive Vice President
12/31/1995 $125,000 ------ 18,997
12/31/1994 115,385 ------ 18,997
12/31/1993 98,082 ------ 18,997
<PAGE>
Base All Other
Salary Bonuses Compensation(1)
-------- ------- ---------------
George W. Pitman
Vice President,
Design and Development
12/31/1995 $ 95,000 ------ ------
12/31/1994 95,000 ------ ------
12/31/1993 76,865 ------ ------
(1) The other compensation consists of life insurance
premiums paid on policies on which the families of the insured are
the sole beneficiaries.
The Company currently does not maintain and none of its
executive officers are eligible for deferred compensation,
long-term incentive plan payouts, restricted stock awards, or other
similar compensatory arrangements. The principal executives who
are the principal shareholders of the Company are intended to be
incentivized by their ownership of a substantial fraction of the
Company's Shares, and by certain pre-existing long-term rights to
acquire up to an aggregate of an additional 100,000 Shares pursuant
to a Founders Retention Plan, described below. Such executives are
not eligible for grants of options pursuant to the Company's 1993
Employee Stock Option Plan.
Employment Agreements
During 1993, the Company entered into five-year employment
agreements with the personal service corporations of Messrs.
Jeffrey M. Barnett, Peter J. Barnett and George W. Pitman. The
agreements provide Messrs. Jeffrey M. Barnett, Peter J. Barnett and
Mr. George P. Pitman with base salaries of CDN $135,000, CDN
$125,000 and CDN $95,000, respectively. Messrs. Barnett and Pitman
are entitled to other specified benefits such as an automobile
allowance, reimbursement of business expenses, and health, life and
disability insurance. Messrs. Barnett and Pitman are entitled to
receive their compensation through the date of termination if their
employment is terminated (i) by the Company otherwise than for good
cause, (ii) by reason of death or disability of the employee, or
(iii) by the employee for any reason, other than a voluntary
<PAGE>
termination. The executives intend to utilize non-assignable
personal service corporations to receive the income from their
employments with the Company. The Company is the beneficiary of
life insurance policies in the amount of at least CDN $1,000,000 on
the lives of each of such executives. A portion of the proceeds,
if any, from such policies in the event of the death of any execu-
tive will be applied to the payment of any sums due to the execu-
tive pursuant to such personal service agreements.
Founders Retention Plan
Prior to the public offering, the Board of Directors and the
shareholders of the Company have adopted a plan pursuant to which
Jeffrey M. Barnett, Peter J. Barnett and George W. Pitman have been
granted options to purchase an aggregate of 100,000 Common Shares
of the Company (43,750 to each Mr. Barnett and 12,500 to Mr. Pit-
man). The options are exercisable at U.S. $6.60 per share as to
20% of the shares pursuant to each Option Grant as of the 5th, 6th,
7th, 8th and 9th annual anniversaries of the grant date, subject to
the Optionee's continued employment by the Company on such dates.
None of the founders retention plan options are currently
exercisable.
1993 Employee Stock Option Plan
The Board of Directors and the shareholders of the Company
have adopted The Elephant & Castle 1993 Employee Stock Option Plan
(the "Stock Option Plan"). Under the Stock Option Plan, options
may be granted to key salaried management and administration
employees. Messrs. Jeffrey M. Barnett, Peter J. Barnett and
George W. Pitman are not eligible for grants under this Plan.
100,000 shares were initially set aside for grants pursuant to the
Stock Option Plan. Options granted pursuant to the Stock Option
Plan vest 1/3 after 18 months; 2/3 after 30 months; and as to the
balance, after 42 months. All options expire on the fifth annual
anniversary of the date of grant. No options were granted to
employees during 1995.
The Stock Option Plan is intended to permit the Company to
retain and attract qualified individuals who contribute to the
overall success of the Company and the achievement of performance
<PAGE>
measures. The Option Plan will be administered by the Compensation
Committee of the Board of Directors, whose members determine to
whom options will be granted and the terms of the options. The
Committee is entitled to accelerate the vesting options upon such
circumstances as it deems appropriate. Actual vesting can be
accelerated or delayed based on performance measures established by
the Compensation Committee.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Reorganization
The Company was incorporated on December 14, 1992 to acquire
all of the equity interests of the predecessor restaurant subsidi-
aries. Under the terms of the Reorganization Agreement, Jeffrey M.
Barnett, Peter J. Barnett and George W. Pitman exchanged their
interests in the predecessor subsidiaries for 568,750, 568,750 and
162,500 Common Shares, respectively.
Indebtedness Previously Owed to Management
Prior to the 1993 public offering, Jeffrey M. Barnett and
Peter J. Barnett made demand loans to the Company to finance
capital expenditures (leasehold improvements, equipment, furniture
and fixtures) for new and renovated restaurants. No interest was
charged by the principals to the Company on those loans. No
principal payments were made on these loans until March 12, 1993,
when the amounts (CDN $2,848,503) then due were paid in full. The
Company replaced the shareholder loans with bank loans, guaranteed
by the shareholders, which were repaid with a portion of the
proceeds of the public offering.
RATIFICATION OF SELECTION OF ACCOUNTANTS
The Board of Directors of the Company has selected Pannell
Kerr Forster Worldwide to serve as the independent accountants of
the Company for the fiscal year 1996, subject to ratification by
the shareholders.
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Pannell Kerr Forster Worldwide has advised the Company that it
has no direct or indirect financial interest in the Company or its
subsidiaries nor any other connection therewith except in the
capacity of independent public accountants.
A representative of Pannell Kerr Forster Worldwide is expected
to be present at the Annual Meeting of the Shareholders. Such
representative will have the right to make a statement if he or she
desires to do so and will be available to respond to appropriate
questions.
The proposal for ratification of the selection of Pannell Kerr
Forster Worldwide requires the approval of a majority of the Common
Shares present and voting at the meeting. If the proposal should
not be approved, the Board of Directors would have to select an
alternative firm of auditors. The Board recommends that share-
holders vote FOR the proposal.
COMPLIANCE WITH SECTION 16(a) REPORTING
Each director, officer and beneficial owner of ten percent
(10%) or more of a registered class of the Company's equity
securities is required to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in
ownership of the Common Shares and other equity securities of the
Company by specific due dates. During the year ended December 31,
1995, all such filing requirements were complied with.
OTHER MATTERS
The Company knows of no other matters to be submitted to the
meeting. If any other matters properly come before the meeting, it
is the intention of the persons named in the enclosed form of proxy
to vote the shares they represent as the Board of Directors may
recommend.
<PAGE>
AVAILABILITY OF REPORT ON FORM 10-KSB
The Company's Annual Report on Form 10-KSB is being provided
to shareholders together with this Proxy Statement. The Annual
Report is not incorporated in this Proxy Statement by reference.
Any shareholder of record and each beneficial owner of the
Company's securities not in receipt of Form 10-KSB may obtain a
copy thereof without charge upon written request addressed to Peter
J. Barnett, Elephant & Castle Group Inc., 303 IBM Tower, 701 West
Georgia Street, P. O. Box 10240, Vancouver, British Columbia,
Canada V7Y 1E7.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
FOR 1997 ANNUAL MEETING
Proposals of shareholders which are intended to be presented
by such shareholder at the Company's 1997 Annual Meeting must be
received by the Company no later than January 31, 1997 in order to
be included in the Proxy Statement and form of proxy relating to
that meeting.
ELEPHANT & CASTLE GROUP INC.
By Order of the Board of Directors
May 16, 1996
