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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 4)*
Elephant & Castle Group Inc.
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
266199-10-4
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(CUSIP Number)
Michael M. Pastore, GE Investment Management Incorporated,
3003 Summer Street, Stamford, CT 06904
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
December 8, 1998
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(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 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).
Potential persons who are to respond to the collection of information contained
in this form are not required to respond unless the form displays a currently
valid OMR control number.
<PAGE>
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1. Names of Reporting Persons GE Investment Private Placement
Partners II, a Limited Partnership I.R.S. Identification Nos.
of above persons (entities only) 06-1429671
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2. Check the Appropriate Box if a Member of a Group
(See Instructions)
Not applicable
(a)
-------------------------------------------------------------
(b)
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3. SEC Use Only
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4. Source of Funds (See Instructions)
00
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5. Check if Disclosure of Legal Proceedings Is Required Pursuant
to Items 2(d) or 2(e)
Not applicable
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6. Citizenship or Place of Organization
State of Delaware
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Number of 7. Sole Voting Power
Shares Bene- None
ficially by
Owned by 8. Shared Voting Power
Each 2,399,721
Reporting
Persons With 9. Sole Dispositive Power
None
10. Shared Dispositive Power
2,399,721
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11. Aggregate Amount Benefically Owned by Each Reporting Person
2,399,721
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12. Check if the Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions)
Not applicable
- --------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11)
44%
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14. Type of Reporting Person (See Instructions)
PN
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1. Names of Reporting Persons GE Investment Management
Incorporated, as General Partner of GE Investment Private
Placement Partners II, a Limited Partnership I.R.S.
Identification Nos. of above persons (entities only)
06-1238874
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2. Check the Appropriate Box if a Member of a Group
(See Instructions)
Not applicable
(a)
-------------------------------------------------------------
(b)
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Source of Funds (See Instructions)
Not applicable
- --------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings Is Required Pursuant
to Items 2(d) or 2(e)
Not applicable
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
State of Delaware
- --------------------------------------------------------------------------------
Number of 7. Sole Voting Power
Shares Bene- None
ficially by
Owned by 8. Shared Voting Power
Each 2,399,721
Reporting
Persons With 9. Sole Dispositive Power
None
10. Shared Dispositive Power
2,399,721
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11. Aggregate Amount Benefically Owned by Each Reporting Person
2,399,721
- --------------------------------------------------------------------------------
12. Check if the Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions)
Not applicable
- --------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11)
44%
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14. Type of Reporting Person (See Instructions)
CO
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1. Names of Reporting Persons General Electric Company
I.R.S. Identification Nos. of
above persons (entities only) 14-0689340
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2. Check the Appropriate Box if a Member of a Group
(See Instructions)
Not applicable
(a)
-------------------------------------------------------------
(b)
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Source of Funds (See Instructions)
Not applicable
- --------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings Is Required Pursuant
to Items 2(d) or 2(e) /X/
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6. Citizenship or Place of Organization
State of New York
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Number of 7. Sole Voting Power
Shares Bene- Disclaimed (See 11 below)
ficially by
Owned by 8. Shared Voting Power
Each None
Reporting
Persons With 9. Sole Dispositive Power
Disclaimed (See 11 below)
10. Shared Dispositive Power
None
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11. Aggregate Amount Benefically Owned by Each Reporting Person
Beneficial ownership of all shares disclaimed by
General Electric Company
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12. Check if the Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions)
Not applicable
- --------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11)
Not applicable
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14. Type of Reporting Person (See Instructions)
CO
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Item 1. Security and Issuer. Item I of the Schedule 13D (as defined
below) is hereby deleted in its entirety and the following is inserted in lieu
thereof:
"This Amendment No. 4 amends and supplements the Statement on
Schedule 13D filed by GE Investment Private Placement Partners II, a Limited
Partnership, a Delaware limited partnership (the "Partnership"), GE
Investment Management Incorporated, a Delaware corporation and a wholly-owned
subsidiary of General Electric Company ("GEIM") and General Electric Company,
a New York corporation ("GE") (collectively, the "Reporting Persons") with
the Securities and Exchange Commission on November 30, 1995, as amended
pursuant to Amendment No. 1 thereto filed on March 14, 1997, Amendment No. 2
thereto filed on November 6, 1997, and Amendment No. 3 thereto filed on June
24, 1998 (as amended, the "Schedule 13D"), relating to common stock, no par
value per share (the "Common Stock") of Elephant & Castle Group Inc. (the
"Issuer"), having its principal offices at 856 Homer Street, Vancouver,
British Columbia V6B 2W5 Canada. Capitalized terms used herein shall have the
meanings given to them in the Schedule 13D and the Note, Stock Purchase and
Warrant Agreement dated November 30, 1995, as amended on May 31, 1996, March
14, 1997, October 17, 1997 and December 8, 1998 (the "Agreement").
The Reporting Persons have entered into a Joint Filing Agreement, dated
December 21, 1998 attached hereto as Schedule I."
Item 3. Source and Amount of Funds and Other Consideration.
Paragraph 4 of Item 3 of the Schedule 13D is hereby amended and
restated to read as follows:
" On December 8, 1998, the Partnership and the Issuer agreed to
enter into the Amendment No. 4 to the Agreement (the "Amendment No. 4").
Prior to entering into the Amendment No. 4, the Partnership was entitled to
receive 6,500 shares of Common Stock as Additional Consideration Shares for
each three month period ending September 30, December 31, March 31 and June
30 beginning September 30, 1997, during which there shall have occurred and
been continuing for any portion of such period a Default (as defined in the
Agreement). Pursuant to the Amendment No. 4, the Partnership will be entitled
to receive the Additional Consideration Shares for each three month period
ending September 30, December 31, March 31 and June 30 beginning September
30, 1997 and ending March 31, 1998. Also pursuant to the Amendment No. 4, up
to $2,000,000 principal amount of Notes issued on the Fourth Closing Date and
up to $1,000,000 principal amount of Notes issued on the Third Closing Date,
become subject to repurchase by the Issuer, at the option of the holders of
such Notes, at any time and from time to time after the six month anniversary
of the date of the Exchange (as defined below) upon any Public Offering by
the Issuer. A copy of the Amendment No. 4 is attached hereto as Exhibit I."
Item 3 of the Schedule 13D is hereby further amended by inserting at
the end of paragraph 4 thereof a new paragraph 5 which shall read in full as
follows:
"On December 8, 1998, the Partnership has entered into a Note
Agreement with the Issuer (the "Note Agreement"), pursuant to which the
Partnership has acquired the exchangeable debentures of the Issuer due March
31, 2000 (the "1998 Notes") in the aggregate principal amount of $2,000,000.
The 1998 Notes may be exchanged (the "Exchange") at any time prior to the
Maturity Date, at the option of the Partnership, into convertible
subordinated notes of the Issuer (the "Convertible Subordinated Notes") on
such terms and other conditions as may be mutually acceptable to the
Partnership and the Issuer. The funds used by the Partnership to pay for the
1998 Notes were obtained from Capital Contributions made by its
Page 5 of 16
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partners pursuant to a pre-existing capital commitment. A copy of the Note
Agreement is attached hereto as Exhibit II."
Item 4. Purpose of Transaction.
Item 4 of the Schedule 13D is hereby amended by inserting a new
paragraph 6 immediately after paragraph 5 thereof which shall read in full as
follows:
"On December 8, 1998, the Partnership purchased from the Issuer 1998
Notes in the aggregate principal amount of $2,000,000, exchangeable at any
time prior to the Maturity Date, at the option of the Partnership, into
convertible subordinated notes of the Issuer (the "Convertible Subordinated
Notes") on such terms and other conditions as may be mutually acceptable to
the Partnership and the Issuer."
Item 5. Interest In Securities of the Issuer.
Item 5(a) of the Schedule 13D is hereby deleted in its entirety and the
following is inserted in lieu thereof:
"The Partnership and GEIM beneficially own 2,399,721 shares of
Common Stock, representing 44% of the shares of such class that would be
outstanding upon (i) the exercise of all the outstanding Warrants exercisable
for 300,000 shares of Common Stock, (ii) the conversion of all the
outstanding Notes, which are convertible into 1,800,000 shares of Common
Stock (calculated using the Fourth Closing Date as the relevant date for
purposes of determining the conversion ratios), (iii) the issuance of 13,000
Additional Shares of Common Stock which have not yet been issued, but which
the Partnership previously became entitled to receive, as set forth in
paragraph 3 of Item 3, because Notes were outstanding on certain dates set
forth therein, and (iv) the receipt of 19,500 shares of Common Stock that the
Partnership became entitled to receive, due to the occurrence and continuance
of Defaults in each of the three month periods ending on September 30, 1997,
December 31, 1997 and March 31, 1998. Due to the fact that the Fourth Closing
has occurred prior to June 30, 1998, the conversion rates for each of the
convertible subordinated Notes issued and delivered to the Partnership on the
First Closing Date, the Second Closing Date and the Third Closing Date have
been adjusted, pursuant to Section 9A of the Agreement, to equal the
conversion rate of the subordinated Notes delivered to the Partnership at the
Fourth Closing. As a result, all of the Notes are now convertible into the
shares of Common Stock at a conversion price of the lesser of (x) $6.00 per
share and (y) the greater of (A) $5.00 per share and (B) 85% of the Market
Price on the Fourth Closing Date."
Item 7. Material to Be Filed as Exhibits.
Item 7 of the Schedule 13D is hereby deleted in its entirety and the
following is inserted in lieu thereof:
"Exhibit I Amendment No. 4 dated December 8, 1998, to the Note, Stock Purchase &
Warrant Agreement, dated November 30, 1995 (as amended).
Exhibit II Note Agreement dated December 8, 1998, between the Issuer and the
Partnership.
The Note, Stock Purchase & Warrant Agreement, dated November 30, 1995, and
Amendments thereof, dated May 31, 1996, and March 14, 1997, respectively,
between the Issuer and the Partnership was attached as Exhibit I to the
Amendment No. 1 dated March 14, 1997, to Schedule 13D filed by the Reporting
Persons on March 14, 1997, and is incorporated herein by reference.
Page 6 of 16
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Amendment No. 3 dated October 17, 1997, to the Note, Stock Purchase & Warrant
Agreement, dated November 30, 1995 (as amended) was attached as Exhibit I to the
Amendment No. 2 dated November 4, 1997, to Schedule 13D filed by the Reporting
Persons on November 6, 1997 and is incorporated herein by reference.
Side Letter Agreement, dated as of March 12, 1997, between the Partnership and
the Issuer was attached as Exhibit II to the Amendment No. 1 dated March 14,
1997, to Schedule 13D filed by the Reporting Persons on March 14, 1997, and is
incorporated herein by reference.
Schedule I.
Schedule I to the Schedule 13D is hereby amended and restated in its
entirety as set forth in the revised version thereof attached hereto.
Page 7 of 16
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Signature
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.
GE INVESTMENT PRIVATE PLACEMENT PARTNERS II,
a LIMITED PARTNERSHIP
By: GE Investment Management Incorporated,
Its General Partner
By: /s/ Michael M. Pastore
-----------------------------------------
Name: Michael M. Pastore
Title: Vice President
Dated: December 21, 1998
Page 8 of 16
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Signature
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.
GE INVESTMENT MANAGEMENT INCORPORATED
By: /s/ Michael M. Pastore
-----------------------------------
Name: Michael M. Pastore
Title: Vice President
Dated: December 21, 1998
Page 9 of 16
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Signature
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.
GENERAL ELECTRIC COMPANY
By: /s/ John H. Myers
-----------------------------------
Name: John H. Myers
Title: Vice President
Dated: December 21, 1998
Page 10 of 16
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Schedule I
JOINT FILING AGREEMENT
The undersigned parties hereby agree that the Schedule 13D filed
herewith (and any amendments thereto) relating to the Stock of Elephant & Castle
Group Inc. is being filed jointly with the Securities and Exchange Commission
pursuant to Rule 13d-1(k) on behalf of each such person.
Dated: December 21, 1998
GE INVESTMENT PRIVATE PLACEMENT
PARTNERS II, LIMITED PARTNERSHIP
By: GE Investment Management
Incorporated, Its General
Partner
By: /s/ Michael M. Pastore
----------------------------------
Name: Michael M. Pastore
Title: Vice President
GE INVESTMENT MANAGEMENT INCORPORATED
By: /s/ Michael M. Pastore
-----------------------------------
Name: Michael M. Pastore
Title: Vice President
GENERAL ELECTRIC COMPANY
By: /s/ John H. Myers
-----------------------------------
Name: John H. Myers
Title: Vice President
Page 11 of 16
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List of Exhibits:
Exhibit I Amendment No. 4 dated December 8, 1998, to the Note, Stock
Purchase & Warrant Agreement, dated November 30, 1995 (as amended).
Exhibit II Note Agreement dated December 8, 1998, between the Issuer and the
Partnership.
Page 12 of 16
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Exhibit I
AMENDMENT NO. 4
TO
NOTE, STOCK PURCHASE AND WARRANT AGREEMENT
dated as of December 8, 1998
THIS AMENDMENT NO. 4 dated as of December 8, 1998, (this "Amendment")
to the Agreement (as defined below) is entered into between Elephant & Castle
Group Inc. (the "Company") and GE Investment Private Placement Partners II, a
Limited Partnership ("GEIPPPII").
W I T N E S S E T H:
WHEREAS, the Company and GEIPPPII have entered into that certain Note,
Stock Purchase and Warrant Agreement dated as of November 30, 1995, as amended
by Amendment No.1 dated as of May 31, 1996, Amendment No. 2 dated as of March
14, 1997 and Amendment No. 3 dated as of October 17, 1997 (the "Agreement");
WHEREAS, capitalized terms unless otherwise defined herein shall have
the meaning attributed thereto in the Agreement;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and GEIPPPII hereby agree as follows:
1. Amendment. (a) Paragraph 2B(b)(iii)(C) is hereby amended by
inserting immediately after the words "respectively, beginning September 30,
1997" the words "and ending March 31, 1998".
(b) Paragraph 4 is hereby amended (i) by renumbering paragraphs 4D, 4E
and 4F, as paragraphs 4E, 4F and 4G, respectively, and (ii) by inserting at the
end of Paragraph 4C a new paragraph 4D which shall read in full as follows:
"4D. Mandatory Repurchase at Holders' Option upon Equity Financing. Up
to $2,000,000 (Two Million Dollars) principal amount of Notes issued on the
Fourth Closing Date and up to $1,000,000 (One Million Dollars) principal amount
of Notes issued on the Third Closing Date shall be subject to repurchase, at the
option of the holder of such Notes, at any time and from time to time after the
six month anniversary of the date of the Exchange (as defined below) that the
Company issues to the public, common stock, preferred stock or securities
convertible into, exercisable for or exchangeable into common stock or preferred
stock (collectively, a "Public Offering"), provided, however, that the
provisions of this Paragraph 4D shall not apply to the exchangeable notes issued
by the Company pursuant to that certain Note Agreement
<PAGE>
dated as of December 8, 1998 between the Company and GEIPPPII (the "Bridge Loan
Agreement") or the convertible subordinated notes to be exchanged therefore (the
"Exchange") pursuant to the terms of such Bridge Loan Agreement or to be issued
to other investors. This option may be exercised by the holders of such Notes
for a period ending ninety (90) days subsequent to receipt by the holders of
such Notes of written notice from the Company to the effect that such equity
financing has occurred upon at least 10 days written notice from the holders to
the Company electing repurchase of the Notes specifying (i) the principal amount
of Notes issued on the Fourth Closing Date and/or the principal amount of Notes
issued on the Third Closing Date to be repurchased, (ii) the repurchase date and
(iii) the repurchase price for such Notes which shall be (A) the principal
amount of such Notes, and (B) a premium equal to that amount which is sufficient
to provide a return equal to 20% (twenty percent) per annum on such principal
amount of Notes, taking into account any cash interest or dividends paid on such
Notes, provided, however, that if the Company effects a Public Offering at any
time after the date hereof and prior to the six month anniversary of the date of
the Exchange and subsequently effects a Public Offering after the six month
anniversary of the date of the Exchange, such premium shall be equal to that
amount which is sufficient to provide a return equal to 25% (twenty-five
percent) per annum on such principal amount of Notes, in each case, from the
date of issuance of such Notes to and including the date of such repurchase,
compounded annually."
(c) Paragraph 4G is hereby amended by inserting in such paragraph 4G
immediately after the words "as required by paragraph 4C" the words "or
paragraph 4D".
(d) Paragraph 9D is hereby amended by inserting at the end of paragraph
9D(9) a new paragraph 9D(10) which shall read in full as follows:
"9D(10) Nonapplicability of Paragraph 9D to certain shares of Common
Stock. Notwithstanding anything to the contrary contained in this Agreement, the
provisions of paragraph 9D (other than this paragraph 9D(10)) shall not apply
to, and shall not adjust the Conversion Price with respect to, any shares of
Common Stock issuable upon conversion of $2,000,000 (Two Million Dollars)
principal amount of Notes issued on the Fourth Closing Date and $1,000,000 (One
Million Dollars) principal amount of Notes issued on the Third Closing Date, in
each case as such amount may be reduced by the principal amount of such Notes
repurchased pursuant to Paragraph 4D."
(e) Paragraph 12 is hereby amended by deleting the words "Peter J.
Barnett or George W. Pitman" from the definition of "Change in Control Event"
and by inserting in lieu thereof the words "Martin O'Dowd or Richard Bryant".
2. Reconfirmation. The Company and GEIPPPII hereby reconfirm their
rights and obligations under the Agreement as amended and restated hereby.
3. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute one and the same instrument.
2
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4. Governing Law. THIS AMENDMENT SHALL IN ALL RESPECTS BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
3
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IN WITNESS WHEREOF, the Company and GEIPPPII have each caused this
Amendment to be duly executed and delivered as of the day and year first above
written.
GE INVESTMENT PRIVATE PLACEMENT
PARTNERS II, A LIMITED PARTNERSHIP
By: General Electric Investment Management, its general
partner
By: /s/ Anthony J. Mariani
---------------------------------------------------
Name: Anthony J. Mariani
Title: Vice President
ELEPHANT & CASTLE GROUP INC.
By: /s/ J. Barnett
---------------------------------------------------
Name: J. Barnett
Title: Chairman of the Board
<PAGE>
Exhibit II
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ELEPHANT & CASTLE GROUP INC.
Exchangeable Debentures Due March 31, 2000
-----------------------
NOTE AGREEMENT
-----------------------
Dated December 8, 1998
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<PAGE>
TABLE OF CONTENTS
(Not Part of Agreement)
<TABLE>
<CAPTION>
Page
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<S> <C>
1. Authorization of Issue of Notes...........................................................1
2. The Notes.................................................................................1
3. Conditions of Closing.....................................................................2
3A. Opinion of Company's Counsel..................................................2
3B. Representations and Warranties; No Default....................................2
3C. Purchase Permitted by Applicable Laws.........................................2
3D. Compliance With Outstanding Debt Issues.......................................2
3E. Proceedings...................................................................3
3F. Delivery of Notes, Further Conditions of Closing..............................3
4. Prepayments...............................................................................3
4A. Optional Prepayment in Whole or in Part.......................................3
4B. Mandatory Payment.............................................................3
4C. Mandatory Purchase at Holders' Option upon Certain Events.....................3
4D. Conditional Mandatory Purchase at Holders' Option.............................3
5. Events of Default and Remedies............................................................4
6. Representations, Covenants and Warranties.................................................6
6A. Organization, Standing and Qualification of Company and Subsidiaries..........6
6B. Corporate Authority...........................................................6
6C. Financial Statements..........................................................6
6D. Actions Pending...............................................................7
6E. Outstanding Debt; No Default..................................................7
6F. Burdensome and Conflicting Agreements and Charter Provisions..................7
6G. Offering of Notes.............................................................8
6H. Governmental Consent..........................................................8
6I. Disclosure....................................................................8
6J. No Deductions or Withholdings.................................................9
7. Representations and Covenants of the Purchaser............................................9
8. Exchange..................................................................................9
8A. Exchange Privilege............................................................9
8B. No Adjustments for Dividends.................................................10
8C. Delivery of Convertible Subordinated Notes...................................10
9. Restrictions on Transfer.................................................................10
9A. Applicability of Restrictions................................................10
9B. Restrictive Legends..........................................................10
9C. Notice of Proposed Transfer; Opinions of Counsel; Certain Restrictions.......10
</TABLE>
i
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<TABLE>
<CAPTION>
Page
----
<S> <C>
10. Definitions..............................................................................12
11. Miscellaneous............................................................................14
11A. Note Payments................................................................14
11B. Expenses.....................................................................14
11C. Consent to Amendments........................................................15
11D. Notices to Subsequent Holder.................................................15
11E. Form, Registration, Transfer and Exchange of Notes; Lost Notes...............15
11F. Persons Deemed Owners........................................................16
11G. Survival of Representations, Warranties and Indemnities......................16
11H. Successors and Assigns.......................................................16
11I. Notices......................................................................16
11J. Satisfaction Requirement.....................................................16
11K. Governing Law................................................................17
11L. Headings; Table of Contents..................................................17
11M. Counterparts.................................................................17
11N. Non Exclusivity of Remedies and Specific Performance.........................17
11O. Non Business Days............................................................17
</TABLE>
Exhibit A -- Form of Note
Exhibit 3A -- Form of Opinions of Harper Grey Easton as to Canadian
law matters and D. David Cohen, Esq. as to United States
law matters
Exhibit 6E -- Indebtedness
ii
<PAGE>
ELEPHANT & CASTLE GROUP INC.
Suite 500
856 Homer Street
Vancouver, B.C. V6B 2W5
Canada
December 8, 1998
GE Investment Private Placement
Partners II, a Limited Partnership
c/o GE Investment Management Incorporated
General Electric Investment Corporation
3003 Summer Street
Stamford, Connecticut 06904
Gentlemen:
The undersigned, ELEPHANT & CASTLE GROUP INC., a corporation
incorporated in the Province of British Columbia, Canada (herein called the
"Company"), hereby agrees with you as follows:
1. Authorization of Issue of Notes. The Company will authorize the
issue of its exchangeable debentures (the "Notes") in the aggregate principal
amount of $2,000,000, to be dated the date of issue, to mature on the Maturity
Date, to bear interest on the unpaid balance thereof from the date thereof until
the entire principal thereof shall have become due and payable at the rate of 8%
per annum, payable in arrears on the Maturity Date; provided, however, that to
the extent permitted by applicable law interest shall be due and payable on any
overdue installment of principal or interest at a rate equal to the Defined Rate
per annum from the date such payment was due until paid, payable on demand. All
interest on the Notes shall be computed on the basis of the actual number of
days elapsed and a year of 365 or 366 days, as applicable. The term "Note" or
"Notes" as used herein shall include each Note delivered pursuant to any
provision of this Agreement and each Note delivered in substitution or exchange
for any such Note, in any case which is at the time outstanding.
2. The Notes. The Company hereby agrees to sell to you and, subject to
the terms and conditions herein set forth, you agree to purchase from the
Company, $2,000,000 principal amount of Notes at 100% of such principal amount
as follows:
<PAGE>
At 11:00 a.m. New York time on December 8, 1998, or at such other time
and on such other date as you and the Company may agree (the "Closing Date"),
the Company will deliver to you at the offices of Dewey Ballantine, 1301 Avenue
of the Americas, New York, New York 10019, or at such other location as you and
the Company may agree (the "Closing), one or more Notes, as you may request,
registered in your name, evidencing $2,000,000 principal amount to be purchased
by you, against payment of the purchase price thereof by wire transfer of
immediately available funds to or upon the order of the Company.
3. Conditions of Closing. Your obligation to purchase and pay for such
Notes on the Closing Date is subject to the satisfaction, on or before the
Closing Date, of the following conditions:
3A. Opinion of Company's Counsel. On the Closing Date you shall have
received (x) from Harper Grey Easton, who are acting as Canadian counsel to the
Company in connection with this transaction, a favorable opinion as to Canadian
law matters and (y) from D. David Cohen, Esq., who is acting as United States
counsel to the Company in connection with this transaction, a favorable opinion
as to United States law matters; each such opinion dated the Closing,
satisfactory to you and substantially in the form set forth in Exhibit 3A
hereto.
3B. Representations and Warranties; No Default. The representations and
warranties contained in paragraph 6 hereof shall be true on and as of the
Closing Date with the same effect as though made on and as of the Closing Date,
except to the extent of changes caused by the transactions herein contemplated
and as to certain dates; there shall exist on the Closing Date after giving
effect to the transactions described herein no Event of Default or Default; and
the Company shall have delivered to you an Officer's Certificate, dated the
Closing Date, to both such effects.
3C. Purchase Permitted by Applicable Laws. The purchase of and payment
for the Notes to be purchased by you and the issuance by the Company of the
Notes on the Closing Date on the terms and conditions herein provided (including
the use of the proceeds of the Notes by the Company) shall not violate any
applicable law or governmental regulation (including without limitation
Regulations G, T and X of the Board of Governors of the Federal Reserve System,
the Securities Act (British Columbia) and the Company Act (British Columbia))
and shall not subject you to any tax, penalty, liability or other onerous
condition under or pursuant to any applicable law or governmental regulation
relating to the extension of credit, and you shall have received such
certificates or other evidence as you may request to establish compliance with
this condition.
3D. Compliance With Outstanding Debt Issues. On or prior to the Closing
Date, the Company shall have delivered to you such evidence as you or your
special counsel may reasonably request showing that the execution, delivery and
performance by the Company of this Agreement and the Notes will not conflict
with, or result in a breach of the terms, conditions or provisions of, or
constitute a default under, or result in the creation of any Lien upon any of
the properties or assets of the Company or any Subsidiary pursuant to, or
otherwise violate, any instrument evidencing any indebtedness of the Company or
any of its Subsidiaries or any agreement relating thereto.
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3E. Proceedings. On or prior to the Closing Date, all corporate and
other proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incident thereto shall be satisfactory in
form and substance to you and your special counsel, and you and your special
counsel shall have received all such counterpart originals or certified or other
copies of such documents as you or they may reasonably request.
3F. Delivery of Notes, Further Conditions of Closing. On the Closing
Date, the Company shall have delivered the Notes pursuant to paragraph 2 hereof.
4. Prepayments. The Notes shall be subject to optional prepayments and
mandatory repayments or repurchase as specified in paragraphs 4A, 4B and 4C
hereof.
4A. Optional Prepayment in Whole or in Part. Any Note to be issued
hereunder shall be subject to prepayment at any time, in whole, or from time to
time in part, in increments of $500,000 principal amount of such Notes then
outstanding plus accrued and unpaid interest thereon, at the option of the
Company and no notice shall be required.
4B. Mandatory Payment. On the Maturity Date, the Company will repay in
whole all outstanding principal amount of the Notes together with interest
accrued thereon to the date of repayment except to the extent that any Note (or
portion thereof) shall have been surrendered to the Company for exchange prior
to such payment date in accordance with paragraph 8 hereof.
4C. Mandatory Purchase at Holders' Option upon Certain Events. The
Notes shall be subject to prepayment, at any time in whole or in part, by the
Company and the Company shall immediately prepay such Notes, in whole or in
part, at the option of the holder, upon the occurrence of a Change in Control
Event and thereafter for a period ending 30 days subsequent to receipt by the
holders of Notes of notice from the Company to the effect that a Change in
Control Event has occurred upon at least ten days written notice to the Company
by such holder specifying (i) the principal amount of Notes to be prepaid, (ii)
the prepayment date and (iii) the prepayment price for such Notes, which shall
be (A) the principal amount of any such Notes and (B) interest accrued thereon
to the date of payment.
4D. Conditional Mandatory Purchase at Holders' Option. In the event
that prior to March 31, 1999, the Company has not sold Convertible Subordinated
Notes to one or more purchasers, in such amounts and on such terms and
conditions which are subject to your satisfaction in your sole and absolute
discretion, then the Notes shall be subject to prepayment in whole or in part at
any time on or after March 31, 1999 by the Company, and the Company shall
immediately prepay such Notes, in whole or in part, at the option of the holder
or holders of at least 66-2/3% of the aggregate principal amount of the Notes at
the time outstanding, within 30 days subsequent to receipt by the Company of
written notice to the Company by such holder or holders, specifying (i) the
principal amount of Notes to be prepaid, (ii) the prepayment date (which shall
not be earlier than 30 days subsequent to receipt by the Company of such notice)
and (iii) the prepayment price for such Notes, which shall be (A) the principal
amount of any such Notes and (B) interest accrued thereon to the date of
payment.
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5. Events of Default and Remedies. If any of the following events shall
occur and be continuing for any reason whatsoever (and whether such occurrence
shall be voluntary or involuntary or come about or be affected by operation of
law or otherwise):
(i) the Company shall default in the payment of any principal of
any Note when the same shall become due, either by the terms thereof or
otherwise as herein provided; or
(ii) the Company shall default in the payment of any interest or
premium on any Note and such default shall have continued for five
consecutive days; or
(iii) the Company shall default in the making of any required
purchase of any Note as provided in paragraph 4C hereof;
(iv) the Company or any Subsidiary shall default in any payment of
principal of or interest on any other obligation for borrowed money (or any
obligation or obligations under a conditional sale or other title retention
agreement or any obligation or obligations issued or assumed as full or
partial payment for property whether or not secured by a purchase money
mortgage or any obligation under notes payable or drafts accepted
representing extensions of credit) beyond any period of grace provided with
respect thereto or shall default in the performance of any other agreement,
term or condition contained in any agreement under which any such obligation
is created (or if any other default under any such agreement shall occur and
be continuing) if the effect of such default is to cause, or permit the
holder or holders of such obligation or obligations (or a trustee on behalf
of such holder or holders) to cause, such obligation or obligations to
become due prior to its or their stated maturity and such default continues
for more than ten (10) business days; or
(v) a final judgment, decree or order for the payment of money in
excess of $50,000 shall be rendered against the Company or any Subsidiary,
and the same shall not be discharged or execution thereon stayed pending
appeal within 60 days after entry thereof, or, in the event of such a stay,
such judgment shall not be discharged, or again stayed pending further
appeal, within 60 days after such stay shall expire; or
(vi) any representation or warranty made by the Company herein or
in any writing furnished in connection with the issuance and sale of the
Notes and the purchase thereof by you shall be false in any material respect
on the date as of which made; or
(vii) the Company shall default in the performance or observance
of any other agreement, covenant, term or condition contained herein (other
than as provided in clause (i), (ii), (iii) of this paragraph 5, for which
the respective grace period, if any, described in such clause shall apply),
including without limitation the furnishing in writing of any representation
or warranty required to be furnished after each Closing Date pursuant to
this Agreement, and such default shall not have been remedied within 30 days
after written notice thereof shall have been received by the Company from
any holder of Notes; or
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(viii) if the Company or any Subsidiary shall (a) apply for or
consent to the appointment of a receiver, trustee, liquidator or custodian
or the like of itself or of its property, (b) admit in writing its inability
to pay its debts generally as they become due, (c) make a general assignment
for the benefit of creditors, (d) commence a voluntary case under the
Federal bankruptcy laws of the United States of America or file a voluntary
petition or answer seeking reorganization, an arrangement with creditors or
an order for relief or seeking to take advantage of any insolvency law or
file an answer admitting the material allegations of a petition filed
against it in any bankruptcy, reorganization or insolvency proceeding, or
corporate action shall be taken by it for the purpose of effecting any of
the foregoing; or
(ix) if without the application, approval or consent of the
Company or any Subsidiary, a proceeding shall be instituted in any court of
competent jurisdiction, under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking in respect of the Company or
any Subsidiary an order for relief or an adjudication in bankruptcy,
reorganization, dissolution, winding up, liquidation, a composition or
arrangement with creditors, a readjustment of debts, the appointment of a
trustee, receiver, liquidator or custodian or the like of the Company or
such Subsidiary or of all or any substantial part of its assets, or other
like relief in respect thereof under any bankruptcy or insolvency law, and,
if such proceeding is being contested by the Company or such Subsidiary in
good faith, the same shall (a) result in the entry of an order for relief or
any such adjudication or appointment or (b) continue undismissed, or pending
and unstayed, for any period of thirty (30) consecutive days;
then, upon the happening of any event described in clauses (viii) and (ix) in
this paragraph 5 (with respect to the Company), the Notes shall be and become
immediately due and payable without any notice of any kind at the principal
amount thereof together with accrued interest thereon, or, during the
continuance of any event referred to in this paragraph 5 other than such clauses
(viii) and (ix) (with respect to the Company), any holder or holders of 66-2/3%
in aggregate principal amount of the Notes then outstanding may, at their option
and in addition to any right, power or remedy permitted by law or equity or
herein granted, by notice in writing to the Company, declare all of the Notes to
be, and such Notes shall thereupon be and become, forthwith due and payable at
the principal amount thereof, together with interest accrued thereon and a
premium equal to that amount which is sufficient to provide a return equal to
the Defined Rate, per annum on the principal amount thereof, taking into account
any interest on such Notes paid to and including the date of final payment
thereof, compounded quarterly, from the date of issuance to the date of such
payment.
The above provision with respect to any acceleration of the Notes is
subject to the condition that if for any reason after the principal of the Notes
shall have so become due and payable, the Company shall demonstrate to the
satisfaction of the holders in their sole judgment that it is able to pay all
matured installments of interest upon the Notes and to make any required
payments which shall have become due other than by reason of such acceleration
(with interest upon such payments and, to the extent that payment of such
interest is enforceable under applicable law, on overdue installments of
interest) and all defaults under this Agreement, other than nonpayment of the
principal of or interest on the Notes which have become due by such
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acceleration, shall have been remedied or waived by holders representing at
least the percentage in aggregate principal amount of Notes requesting such
acceleration, then and in such instance such default may be waived and its
consequences rescinded and annulled by the holders representing at least the
percentage in aggregate principal amount of Notes requesting such acceleration
by written notice to the Company, which waiver shall be binding upon all
holders. It is expressly understood and agreed that the decision so to waive any
default and so to rescind and annul any consequences is within the sole judgment
and control of the holders of the Notes, and such holders shall be under no
obligation so to do.
6. Representations, Covenants and Warranties. The Company represents,
covenants and warrants as follows:
6A. Organization, Standing and Qualification of Company and
Subsidiaries. The Company is a corporation duly organized and existing in good
standing under the laws of the Province of British Columbia, Canada, each
Subsidiary, if any, is duly organized and existing in good standing under the
laws of the jurisdiction in which it is incorporated, and the Company has and
each Subsidiary has the corporate power to own its respective property and to
carry on its respective business as now being conducted. The Company is and each
Subsidiary is duly qualified and in good standing as a foreign or extra
provincial corporation to do business in every jurisdiction where the character
of the properties owned or leased by it or the nature of any business transacted
by it makes such qualification necessary and where such nonqualification or lack
of good standing would have a material adverse effect on the business of the
Company and its consolidated Subsidiaries taken as a whole.
6B. Corporate Authority.
(a) The execution and delivery by the Company of all transactions
and obligations contemplated hereby are within its corporate authority. This
Agreement constitutes the legal, valid and binding obligations of the
Company enforceable in accordance with its terms, except to the extent that
enforcement may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting creditor's rights generally
and the application of general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law), and
with respect to the indemnification provisions contained herein, by
applicable securities laws or principles of public policy.
(b) The execution, delivery and performance of this Agreement and
the issuance of the Notes have been duly authorized by all necessary
corporate proceedings on the part of the Company. This Agreement and the
Notes have been duly executed and delivered.
6C. Financial Statements. The Company has furnished you with (i) the
Company's Annual Report on Form 10-KSB filed with the Securities and Exchange
Commission for the fiscal year ended December 31, 1997, and (ii) the Company's
Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission
for the three months ended March 31,
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1998, June 30, 1998 and September 31, 1998, respectively (All such financial
statements contained in such reports are collectively referred to herein as the
"Financial Statements").
The financials statement contained in the Company's Annual Report on
Form 10-KSB filed with the Securities and Exchange Commission for the fiscal
year ended December 31, 1997 have been certified by Pannell Kerr Forster,
including the related schedules and notes. All Financial Statements (including
any related schedules and/or notes) have been prepared in accordance with
generally accepted accounting principles as in effect in Canada consistently
applied, except to the extent set forth in the notes to such financial
statements, throughout the periods involved and to the extent required by such
principles show all liabilities, direct and contingent, of the Company and its
consolidated Subsidiaries. The balance sheets and the related schedules and
notes fairly present on a consolidated basis the financial condition of the
Company and its consolidated Subsidiaries as at the respective dates thereof;
and the net income and shareholders' equity statements and the related schedules
and notes fairly present on a consolidated basis the results of the operations
of the Company and its consolidated Subsidiaries for the respective periods
indicated.
There have been no material adverse changes in the condition, financial
or other, of the Company and its Subsidiaries, on a consolidated basis, since
December 31, 1997.
6D. Actions Pending. Except as disclosed in the Company's Annual Report
on Form 10-KSB for the fiscal year ended December 31, 1997 filed with the
Securities and Exchange Commission, there is no action, suit, investigation or
proceeding pending or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries before any court, arbitrator or
administrative or governmental body that materially and adversely affects, or as
to which there is a reasonable possibility of an adverse decision that would
materially and adversely affect, either individually or collectively, the
business or condition of the Company and its consolidated Subsidiaries taken as
a whole. Neither the Company nor any Subsidiary is in violation of any judgment,
order, writ, injunction, decree, rule or regulation of any court or governmental
department, commission, board, bureau, agency or instrumentality, the violation
of which might, either individually or collectively, materially and adversely
affect the business, property, assets or financial position of the Company and
its consolidated Subsidiaries taken as a whole.
6E. Outstanding Debt; No Default. Neither the Company nor any of its
Subsidiaries has outstanding any Current Indebtedness or Funded Indebtedness
except as set forth in Exhibit 6E. There exists no event of default by the
Company or any Subsidiary under the provisions of any instrument evidencing such
Current Indebtedness or Funded Indebtedness and there exists no event of default
by the Company or any Subsidiary except as set forth on Exhibit 6E.
6F. Burdensome and Conflicting Agreements and Charter Provisions.
Neither the Company nor any Subsidiary is a party to any contract or agreement
or subject to any charter or other corporate restriction which materially and
adversely affects its business as currently conducted, properties or assets or
financial condition. Neither the execution nor delivery of this Agreement or the
Notes by the Company, nor the offering, issuance and sale of the Notes by the
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Company, nor fulfillment of nor compliance with the terms and provisions of this
Agreement or the Notes by the Company, will conflict with, or result in a breach
of the terms, conditions or provisions of, or constitute a default under, or
result in any violation of, or result in the creation of any Lien upon any of
the properties or assets of the Company or any Subsidiary pursuant to, or
require any consent, approval or other action by any court or administrative or
governmental body or any other Person pursuant to, the charter or by-laws of the
Company or any Subsidiary, any award of any arbitrator or any agreement
(including any agreement with shareholders), instrument, order, judgment,
decree, statute, law, rule or regulation to which the Company or any Subsidiary
is subject, except for such approval as may be required in connection with
fulfillment of, or compliance with, the provisions of paragraph 9 hereof.
Neither the Company nor any Subsidiary is a party to, or otherwise subject to
any provision contained in, any instrument evidencing Indebtedness of the
Company or such Subsidiary, any agreement relating thereto or any other contract
or agreement (including its charter) which, except to the extent complied with
by the Company or consented to in connection with the execution of this
Agreement and the issuance of the Notes, restricts or otherwise limits the
incurring of the Indebtedness evidenced by the Notes.
6G. Offering of Notes. Neither the Company nor any other agent acting
on the Company's behalf has, directly or indirectly, offered the Notes or any
similar security of the Company for sale to, or solicited any offers to buy the
Notes or any similar security of the Company from, or otherwise approached or
negotiated with respect thereto with more than 10 Persons including yourself
(all of which Persons are institutional investors), and neither the Company nor
any agent acting on its behalf has taken or will take any action which would
subject the issuance or sale of the Notes to the provisions of Section 5 of the
Securities Act, or to the registration or qualification requirements of any
securities or Blue Sky law of any applicable jurisdiction. The Company has not
authorized or employed any agent, broker or dealer in connection with the
offering or sale of the Notes or any similar security of the Company.
The issuance of the Notes is exempt from the registration and
prospectus requirements of the Securities Act of the Province of British
Columbia and no prospectus will be required and no other document must be filed,
proceeding taken or approval obtained in British Columbia to permit the
offering, sale and delivery of the Notes to you.
6H. Governmental Consent. Neither the nature of the Company or of any
Subsidiary, nor any of their respective businesses or properties, nor any
relationship between the Company or any Subsidiary and any other Person, nor any
circumstance in connection with the offer, issue, sale or delivery of the Notes
is such as to require any consent, approval or authorization of, or any notice
to, or filing, registration or qualification with, any court or administrative
or governmental body in connection with the execution and delivery of this
Agreement or the offer, issue, sale or delivery of the Notes, or (except as may
be required in connection with fulfillment of, or compliance with, the
provisions of paragraph 9 hereof and except as provided in paragraph 6G)
fulfillment of, or compliance with, the terms and provisions of this Agreement
or of the Notes.
6I. Disclosure. Neither this Agreement nor any other document,
certificate or statement furnished to you by or on behalf of the Company in
connection herewith contains any
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untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained herein and therein, in the light of
the circumstances under which made, not misleading. There is no fact peculiar to
the Company or its Subsidiaries and known to the Company which materially
adversely affects or in the future may (so far as the Company can now foresee)
materially adversely affect the business, property or assets, or financial
condition of the Company and its Subsidiaries, taken as a whole, which has not
been set forth in this Agreement or in the other documents described herein and
furnished to you by or on behalf of the Company prior to the date hereof in
connection with the transactions contemplated hereby.
6J. No Deductions or Withholdings. All sums payable by the Company to
you hereunder whether of principal or interest or otherwise shall be paid in
full without any deduction on account of any present or future income or other
taxes, levies, imposts, duties, charges or withholdings of any nature. In the
event of the Company being compelled by law to make any such deduction or
withholding from any payment to you, the Company will pay to you by way of
additional interest such additional amounts as may be necessary to ensure that
the aggregate of the net amounts received by you after such deduction shall
equal the amount which would have been receivable in the absence of any such
deduction.
7. Representations and Covenants of the Purchaser. You represent, and
in making the sale of Notes contemplated hereby to you it is specifically
understood and agreed, that you are acquiring such Notes for your own account
for the purpose of investment and not with a view to or for sale in connection
with any distribution thereof, provided that the disposition of your property
shall at all times be and remain within your control. You further represent that
you are familiar with Release No. 5226 issued by the Commission under the
Securities Act, that you have consulted with your counsel in regard thereto, and
that you are fully familiar with the position of the Commission with respect to
the resale of any Note to the public.
8. Exchange.
8A. Exchange Privilege
(a) Subject to the conditions set forth in paragraph 8 hereof, the
holder of any Note may, at such holder's option, at any time and from time
to time prior to and including the Maturity Date, exchange all or any part
of the unpaid principal thereof into convertible subordinated notes of the
Company (the "Convertible Subordinated Notes") on such terms and other
conditions as may be mutually acceptable to such holder and the Company.
(b) Subject to the provisions of paragraph 8 hereof, any Note may
be exchanged in full or in part by the holder thereof by surrender of the
Note, with a written statement specifying the principal amount thereof to be
exchanged, to the Company at its principal office. Upon any partial exchange
of any Note, the Company at its expense shall forthwith issue and deliver to
the holder thereof a new Note or Notes in principal amount equal to the
unpaid and unexchanged principal amount of such surrendered Note. Each
exchange shall be deemed to have been effected immediately prior to the
close of business on the date on which such Note was received by the
Company.
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8C. No Adjustments for Dividends.
(a) No payment or adjustment shall be made upon exchange of any
Note for cash dividends with respect to Convertible Subordinated Notes
issued thereupon.
(b) The Company shall forthwith upon exchange of all or any
portion of any Note pay all interest accrued on the principal amount
exchanged to the date of such exchange. 8D. Delivery of Convertible
Subordinated Notes
8D. Delivery of Convertible Subordinated Notes. As promptly as
practicable after the exchange of any Note in full or in part, the Company, at
its expense, shall issue and deliver to the holder of such Note, or as such
holder (upon payment of any applicable transfer taxes by such holder) may,
subject to the provisions of paragraph 9, direct, the Convertible Subordinated
Notes deliverable upon such exchange.
9. Restrictions on Transfer.
9A. Applicability of Restrictions. Notwithstanding any provisions to
the contrary contained in this Agreement, any Note or the Company's Memorandum
or Articles, the provisions of this paragraph 9 shall apply to any proposed,
purported or effected transfer of any Note, except as expressly permitted
pursuant to paragraph 9C hereof (each such action being herein called a
"Restricted Action"). The holder of any Note, by its acceptance thereof, agrees
that, unless otherwise permitted hereunder, it will not take any Restricted
Action prior to the delivery to the Company of the opinion or opinions of
counsel referred to in, and to the effect described in, clause (a) of paragraph
9C (or the penultimate sentence of the last paragraph of paragraph 9C), or until
registration under the Securities Act of the Notes involved in, such Restricted
Action has become effective.
9B. Restrictive Legends. Each Note and certificate issued upon the
transfer or exchange of any such Note (except as otherwise permitted by this
paragraph 9), shall bear a legend in substantially the following form:
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and neither the
securities nor any interest therein may be sold, transferred, pledged
or otherwise disposed of in the absence of such registration or an
exemption under such Act and the rules and regulations thereunder. The
transfer of such securities is subject to the restrictions set forth in
paragraph 9 of that certain Note Agreement, dated December 8, 1998
between Elephant & Castle Group Inc. and GE Investment Private
Placement Partners II, a Limited Partnership, copies of which are
available for inspection at the offices of Elephant & Castle Group
Inc., and such securities may be transferred only in compliance with
the terms and conditions of said paragraph 9 of said Note Agreement.
9C. Notice of Proposed Transfer; Opinions of Counsel; Certain
Restrictions. Each holder of any Notes, by its acceptance thereof, agrees that,
except as otherwise expressly provided below in this paragraph 9C, prior to the
taking of any Restricted Action, such holder
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will give written notice to the Company of such holder's intention to take such
Restricted Action and to comply in all other respects with this paragraph 9C.
Each such notice (i) shall describe the manner and circumstances of the proposed
Restricted Action in sufficient detail to enable counsel to render the opinions
referred to below and (ii) shall designate counsel for the holder giving such
notice (who may be house counsel for such holder). The holder giving such notice
will submit a copy thereof to the counsel designated in such notice, and the
Company will promptly submit a copy thereof to its counsel (who may be house
counsel for the Company), and the following provisions shall apply:
(a) If in the opinion of each such counsel the proposed Restricted
Action may be effected without registration under the Securities Act or any
applicable state securities or Blue Sky laws of any Note involved in such
Restricted Action, then the Company will promptly notify the holder thereof
and such holder shall thereupon be entitled to effect such Restricted Action
in accordance with the terms of the notice delivered by such holder to the
Company, and the Company will promptly effect any transfer of any Notes
involved in such Restricted Action and either deliver new Notes in
accordance with paragraph 11E, bearing (or not bearing, if in the opinion of
each such counsel such legend is no longer required to insure compliance
with the Securities Act) the legend set forth in paragraph 9B, or both, as
the case may be. If for any reason counsel for the Company (after having
been furnished with the information required to be furnished by clause (i)
of this paragraph 9C) shall fail to deliver an opinion to the Company (with
a copy to such holder), or the Company shall fail to notify such holder
thereof as aforesaid, within 15 days after counsel for such holder shall
have delivered its opinion to such holder (with a copy to the Company), then
for all purposes hereof the opinion of counsel for the Company shall be
deemed to be the same as the opinion of counsel for such holder.
(b) If in the opinion of either or both of such counsel (such
opinion or opinions to state the basis of the legal conclusions reached
therein) the proposed Restricted Action may not legally be effected without
registration under the Securities Act or any applicable state securities or
Blue Sky laws of any Note involved in such Restricted Action, the Company
shall promptly so notify the holder thereof and thereafter such holder shall
not be entitled to effect such Restricted Action until receipt of a further
notice from the Company under clause (a) of this paragraph 9C.
Notwithstanding the foregoing, each holder shall be permitted to transfer any
Note or Notes attributable to Notes in one or more transactions to a limited
number of institutional investors similar in nature to yourselves or "accredited
investors" as defined in Rule 501 under the Securities Act; provided, however,
that (x) each such investor shall represent in writing that it is acquiring such
Note for investment and not with a view to the distribution thereof (subject,
however, to any requirement of law that the disposition thereof shall at all
times be within the control of such transferee), (y) each such investor shall
agree in writing to be bound by all the restrictions on transfer of such Note
contained in paragraph 9 hereof and (z) such holder shall deliver to the Company
an opinion of counsel (who shall be satisfactory to the Company) stating that
such transfer may be effected without registration under the Securities Act or
any applicable state securities or Blue Sky laws. The Company will pay the
reasonable fees and disbursements
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of counsel (other than house counsel) for any holder of Notes and of counsel for
the Company in connection with all opinions rendered by them pursuant to this
paragraph 9C, and will reimburse any such holder for all other out-of-pocket
expenses incurred by such holder in complying with this paragraph 9C.
10. Definitions. For the purpose of the Agreements, the following terms
shall have the following respective meanings:
"Affiliate" shall mean, with respect to any Person, any person that,
directly or indirectly, controls, is controlled by or is under common control
with such Person. For the purposes of this definition, "control" (including,
with correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting securities
or by contract or otherwise.
"Change in Control Event" shall be deemed to have occurred upon, (i)
the acquisition by any "person" (as that term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended) of beneficial
ownership, direct or indirect, of securities of the Company representing more
than 50% of the combined voting power of the Company's then outstanding
securities, (ii) the acquisition of the Company, or all or substantially all of
its assets, by, or the combination of the Company or all or substantially all of
its assets, with, another "person" (as defined above), unless the acquiring or
surviving "person" shall be a corporation more than 50% of the combined voting
power of which corporation's then outstanding securities, after such acquisition
or combination, are owned, immediately after such acquisition or combination, by
the owners of the voting securities of the Company outstanding immediately prior
to such acquisition or combination or (iii) for a period commencing on the
Closing Date and ending on the fifth anniversary thereof, any of two out of
Jeffrey M. Barnett, Martin O'Dowd or Richard Bryant shall cease to be actively
employed by the Company or cease to spend substantially all of his business time
to the management and control of the affairs of the Company.
"Commission" shall mean the Securities and Exchange Commission or any
other governmental authority at the time administering the Securities Act or the
Exchange Act.
"Convertible Subordinated Notes" shall have the meaning set forth in
paragraph 8A of this Agreement.
"Current Indebtedness" shall mean, as of any date, with respect to any
Person, all liabilities for borrowed money and all liabilities secured by any
Lien existing on property owned by such Person whether or not such liabilities
have been assumed and all liabilities, contingent or otherwise, as guarantor or
otherwise, with respect to borrowed money or otherwise, which, in any case, are
payable on demand or within one year from the date of determination, except any
such liabilities which are renewable or extendible at the option of the debtor
to a date more than one year from the date of determination.
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"Defined Rate" shall mean the greater of (i) 9% and (ii) the prime or
base rate as determined by the Wall Street Journal, or successor thereto, from
time to time plus 500 basis points; provided, however, that if the foregoing is
in excess of the maximum interest rate permitted by applicable law, then the
term "Defined Rate" shall mean the Maximum interest rate permitted by applicable
law.
"Dollar" or "U.S. $" or "U.S. dollars" or "$" shall mean United States
dollars.
"Event of Default" shall mean any of the events specified in paragraph
5, provided that there has been satisfied any requirement in connection with
such event for the giving of notice, or the lapse of time, or the happening of
any further condition, event or act, and "Default" shall mean any of such
events, whether or not any such requirement has been satisfied.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar or successor Federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect at
the time.
"Funded Indebtedness" shall mean, as of any date, with respect to any
Person, without duplication:
(a) its liabilities for borrowed money, other than Current
Indebtedness;
(b) liabilities secured by any Lien existing on property owned by
such Person (whether or not such liabilities have been assumed), other than
Current Indebtedness;
(c) obligations other than Current Indebtedness of such Person,
contingently or otherwise, as obligor, guarantor or otherwise, under any
lease of real or personal property or comparable arrangement with respect to
use or title which are required by generally accepted accounting principles
to be capitalized;
(d) obligations other than Current Indebtedness of such Person,
contingently or otherwise, as guarantor or otherwise, under any arrangement
with respect to liabilities for borrowed money which, if the Company were
the obligor, would represent Funded Indebtedness or which are required by
generally accepted accounting principles to be capitalized; and
(e) any other obligations (other than deferred taxes) which are
required by generally accepted accounting principles to be shown as
liabilities on its balance sheet and which are payable or remain unpaid more
than one year from the date of determination thereof.
"Indebtedness" shall mean the sum of Current Indebtedness and Funded
Indebtedness.
"Lien" shall mean any interest in property securing an obligation owed
to, or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute or contract, and including but not
limited to the security interest lien arising
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<PAGE>
from a mortgage, encumbrance, pledge, conditional sale or trust receipt or a
lease, consignment or bailment for security purposes. The term "Lien" shall
include reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title exceptions and
encumbrances affecting property, except any such usual or normal reservations,
exceptions, encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases or other title exceptions or encumbrances affecting
property that are not disruptive to the use of such property in the ordinary
course of business. For the purposes of this Agreement, the Company or a
Subsidiary shall be deemed to be the owner of any property which it has acquired
or holds subject to a conditional sale agreement, financing lease or other
arrangement pursuant to which title to the property has been retained by or
vested in some other Person for security purposes.
"Maturity Date" shall mean March 31, 2000.
"Person" shall mean and include an individual, a corporation, an
association, a partnership, a trust or estate, a government or any department or
agency thereof.
"Restricted Action" shall have the meaning set forth in paragraph 9A
hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
any similar or successor Federal statute, and the rules and regulations of the
Commission thereunder, all as the same may be in effect at the time.
"Subsidiary" shall mean a corporation of which the Company owns,
directly or indirectly, more than 50% of the shares of stock entitled to vote in
the election of directors (excluding shares so entitled to vote only upon a
failure to pay dividends or other contingencies).
11. Miscellaneous.
11A. Note Payments. The Company agrees that, so long as you shall hold
any Note, it will make payments of principal thereof and interest and premium,
if any, thereon, which comply with the terms of this Agreement, by wire transfer
of immediately available funds for credit to your account at State Street Bank
and Trust Company, Boston, MA, ABA: 021 000 028, Acct: 2564-7819, Ref: 8X32 -
GEIPPPII, or such other account in the United States of America as you may
designate in writing, notwithstanding any contrary provision herein or in any
Note with respect to the place of payment. The Company agrees to afford the
benefits of this paragraph to any institutional investor of recognized standing
which is the direct or indirect transferee of any Note purchased by you
hereunder.
11B. Expenses. The Company agrees, whether or not the transactions
hereby contemplated shall be consummated, to pay, and save you harmless against
liability for the payment of, all out-of-pocket expenses arising in connection
with such transactions, including all taxes (including any intangible personal
property tax, together in each case with interest and penalties, if any, and
also including any filing fees payable to any governmental authority, and any
income tax payable by you in respect of any reimbursement for any such tax or
fee) which may be payable in respect of the execution and delivery of this
Agreement or the execution, delivery or acquisition of any Note issued under or
pursuant to this Agreement or any Preferred
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Stock issued under or pursuant to this Agreement or issuable upon conversion of
any such Notes, printing costs, if any, and the reasonable fees and expenses of
your special counsel in connection with this Agreement, any subsequent
modification thereof or consent thereunder (including any proposed modification
or consent, whether or not finalized) and any of the foregoing transactions
contemplated by this Agreement, the cost and fees and expenses of any investment
banks and advisers incurred in connection with transactions related to the
execution of this Agreement and the issuance of the Notes, and the cost and
expenses, including reasonable attorney's fees, incurred by you in enforcing any
of your rights hereunder, including without limitation costs and expenses
incurred in any bankruptcy case. The obligations of the Company under this
paragraph shall survive transfer by you and payment or conversion of any Note.
11C. Consent to Amendments. This Agreement may be amended, and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, if the Company shall obtain the written consent
to such amendment, action or omission to act given by the holder or holders of
at least 66-2/3% of the aggregate principal amount of the Notes at the time
outstanding, except that, without the written consent of the holder or holders
of all the Notes at the time outstanding, no amendment to this Agreement shall
change the maturity of any Note, or change the principal of, or the rate or time
of payment of interest or any premium payable with respect to, any Note, or
affect the time or amount of any required prepayments or repurchases, or
adversely affect the conversion rights, or modify the subordination provisions
in a manner adverse to the holders of Notes, or reduce the proportion of the
principal amount of the Notes required with respect to any consent. Any
consideration given to any holder to obtain his consent shall be given pro rata
to all such holders of a Note or Notes whether or not they give consent. Each
holder of any Note at the time or thereafter outstanding shall be bound by any
consent authorized by this paragraph, whether or not such Note shall have been
marked to indicate such consent, but any Note issued thereafter may bear a
notation referring to any such consent. No course of dealing between the Company
and the holder of any Note nor any delay in exercising any rights hereunder or
under any Note shall operate as a waiver of any rights of any holder of such
Note, as applicable. As used herein and in the Notes, the term "this Agreement"
and references thereto shall mean this Agreement as it may from time to time be
amended or supplemented.
11D. Notices to Subsequent Holder. If any Note shall have been
transferred to another holder pursuant to paragraph 11E and such holder shall
have designated in writing the address to which communications with respect to
such Note, as applicable shall be mailed, all notices, certificates, requests,
statements and other documents required or permitted to be delivered to you by
any provision hereof shall also be delivered to each such holder.
11E. Form, Registration, Transfer and Exchange of Notes; Lost Notes.
The Notes are issuable only as registered Notes without coupons in the
denominations of $100,000 and integral multiples of $5,000 in excess of $100,000
for such Note. The Company shall keep at its principal office a register in
which the Company shall provide for the registration of Notes and of transfers
of Notes. Upon surrender of any Note for registration of transfer in compliance
with the terms of this Agreement at the office of the Company, the Company
shall, at its expense (other than for transfer taxes, if any), execute and
deliver one or more new Notes, as applicable of like tenor and of a like
aggregate principal amount registered in the name of the designated
15
<PAGE>
transferee or transferees. At the option of the holder of any Note, such Note
may be exchanged for other Notes of like tenor and of any authorized
denominations, of a like aggregate principal amount, upon surrender of the Note
to be exchanged at the office of the Company. Whenever any Notes are so
surrendered for exchange, the Company or such transfer agent shall, at the
Company's expense (other than for transfer taxes, if any), execute and deliver
the Notes which the holder of Notes making the exchange is entitled to receive.
Every Note presented or surrendered for registration of transfer or exchange
shall be duly endorsed, or be accompanied by a written instrument of transfer
duly executed, by the holder of such Note or his attorney duly authorized in
writing. Any Note or Notes issued in exchange for any Note or upon transfer
thereof shall carry the rights to unpaid interest and interest to accrue which
were carried by the Note so exchanged or transferred, so that neither gain nor
loss of interest to accrue shall result from any such transfer or exchange. Upon
receipt of written notice or other evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of any Note and, in the
case of any such loss, theft, or destruction, upon receipt of your unsecured
indemnity agreement, or, in the case of any other holder of a Note or Notes,
other indemnity reasonably satisfactory to the Company, or in the case of any
such mutilation upon surrender and cancellation of such Note, the Company will
make and deliver a new Note, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Note.
11F. Persons Deemed Owners. Prior to due presentment for registration
of transfer, the Company may treat the Person in whose name any Note is
registered as the owner and holder of such Note for the purpose of receiving
payment of principal of and interest and premium (if any) in the case of on such
Note and for all other purposes whatsoever in the case of such Note, whether or
not such Note shall be overdue, and the Company shall not be affected by notice
to the contrary.
11G. Survival of Representations, Warranties and Indemnities. All
representations, warranties and indemnities contained herein or made in writing
by the Company in connection herewith shall survive the execution and delivery
of this Agreement, regardless of any investigation made by you or on your
behalf.
11H. Successors and Assigns. All covenants and agreements in this
Agreement contained by or on behalf of either of the parties hereto shall bind
and inure to the benefit of the respective successors and assigns of the parties
hereto whether so expressed or not.
11I. Notices. All notices and other communications provided for or
given or made hereunder shall be effective when sent by first class mail (or
registered mail, if required) and, if to you, at GE Investment Management
Incorporated, c/o General Electric Investment Corporation, 3003 Summer Street,
Stamford, Connecticut 06904, directed to GE Investment Private Placement
Partners II, a Limited Partnership, Attention: Michael M. Pastore, and if to the
Company, at its offices at the address set forth on page 1 hereof, or to such
other address with respect to either party as such party shall notify the other
in writing.
11J. Satisfaction Requirement. If any agreement, certificate or other
writing, or any action taken or to be taken, is by the terms of this Agreement
required to be satisfactory to
16
<PAGE>
you, the determination of such satisfaction shall be made by you in your sole
and exclusive judgment exercised in good faith.
11K. Governing Law. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of New York. This Agreement may not be changed orally, but (subject to
the provisions of paragraph 11C) only by an agreement in writing signed by the
party against whom enforcement is sought.
11L. Headings; Table of Contents. The descriptive headings of the
several paragraphs of this Agreement and the table of contents are inserted for
convenience only and do not constitute a part of this Agreement.
11M. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, all of which shall be deemed but one and the same
instrument and each of which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart.
11N. Non Exclusivity of Remedies and Specific Performance. The rights
and remedies of any of the parties hereunder shall not be mutually exclusive,
and the exercise of one or more of the provisions of this Agreement shall not
preclude the exercise of any other provisions of this Agreement. Each of the
parties confirms that damages at law may be an inadequate remedy for breach or
threat of breach of any provisions of this Agreement. The respective rights and
obligations arising out of or under this Agreement shall be enforceable by
specific performance, injunction, or other equitable remedy, but nothing in this
Agreement is intended to limit or affect any rights at law or by statute or
otherwise of any party aggrieved as against the other parties for a breach or
threat of breach of any provision of this Agreement, it being the intention by
this paragraph to make clear that under this Agreement the respective rights and
obligations of the parties shall be enforceable in equity as well as at law or
otherwise.
11O. Non Business Days. If the date for making any payment or the last
date for performance of any act or the exercising of any right, as provided in
this Agreement, shall not be a business day, such payment may be made or act
performed or right exercised on the next succeeding business day, with the same
force and effect as if done on the nominal date provided in this Agreement,
except that interest shall accrue and be payable for the period after such
nominal date.
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<PAGE>
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart of this letter and return the same to the
undersigned, whereupon this letter shall become a binding agreement between you
and the undersigned.
Very truly yours,
ELEPHANT & CASTLE GROUP INC.
By: /s/ J. Barnett
--------------------------
Name: J. Barnett
Title: Chairman of the Board
The foregoing Agreement is hereby accepted as of the date first above written.
GE INVESTMENT PRIVATE PLACEMENT PARTNERS II,
a LIMITED PARTNERSHIP
By: GE Investment Management Incorporated
Its: General Partner
By: /s/ Anthony J. Mariani
---------------------------------------
Name: Anthony J. Mariani
Title: Vice President
<PAGE>
EXHIBIT A
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND NEITHER THE SECURITIES NOR
ANY INTEREST THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION UNDER SUCH ACT AND
THE RULES AND REGULATIONS THEREUNDER. THE TRANSFER OF SUCH SECURITIES IS
SUBJECT TO THE RESTRICTIONS SET FORTH IN PARAGRAPH 9 OF THAT CERTAIN NOTE
AGREEMENT, DATED DECEMBER 8 1998, BETWEEN ELEPHANT & CASTLE GROUP INC. AND
GE INVESTMENT PRIVATE PLACEMENT PARTNERS II, A LIMITED PARTNERSHIP, COPIES
OF WHICH ARE AVAILABLE FOR INSPECTION AT THE OFFICES OF ELEPHANT & CASTLE
GROUP INC., AND SUCH SECURITIES MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH
THE TERMS AND CONDITIONS OF SAID PARAGRAPH 9 OF SAID NOTE AGREEMENT.
Elephant & Castle Group Inc.
Exchangeable Subordinated Note
Due March 31, 2000
No.
--------
$
----------- [date]
FOR VALUE RECEIVED, the undersigned, Elephant & Castle Group Inc.
(herein called the "Company"), a corporation organized and existing under the
laws of the Province of British Columbia, Canada, hereby promises to pay to GE
Investment Private Placement Partners II, a Limited Partnership ("GEIPPPII") or
registered assigns, the principal sum of ______________________ Dollars on March
31, 2000, with interest (computed on the basis of the number of days actually
elapsed and a 365-or 366-day year, as applicable) on the unpaid balance thereof
from the date of issuance hereof until March 31, 2000 or until the entire
principal hereof shall have become due and payable, at the rate of 8% per annum,
payable in arrears on March 31, 2000; provided, however, that to the extent
permitted by law interest shall be due and payable on any overdue installment of
principal or interest at a rate equal to the greater of (i) 9% and (ii) the
prime or base rate as determined by the Wall Street Journal from time to time
plus 500 basis points, but not in excess of the maximum interest rate permitted
by applicable law, per annum from the date such payment was due, payable on
demand. This Note is subject to mandatory and optional prepayment at the times,
in the amounts and subject to the conditions set forth in the Agreement.
Payments of both principal and interest are to be made by wire transfer
for credit to the account of GEIPPPII at State Street Bank and Trust Company,
Boston, MA, ABA: 021
A-1
<PAGE>
000 028, Acct: 2564-7819, Ref: 8X32-GEIPPPII, or in such other manner or to such
other place in the United States of America as the holder hereof shall designate
to the Company in writing, in lawful money of the United States of America.
This Note is one of a duly authorized issue of Exchangeable Notes due
March 31, 2000 of the Company, originally issued pursuant to a Note Agreement
(the "Agreement") dated December 8, 1998, between the Company and GE Investment
Private Placement Partners II, a Limited Partnership, and is entitled to the
benefit of the Agreement, and each holder of this Note, by his acceptance
hereof, agrees to be bound by the provisions of the Agreement. As provided in
the Agreement, (i) this Note is subject to prepayment or repurchase, in whole or
in part, as specified in such Agreement, (ii) subject to and upon compliance
with the provisions of the Agreement, at the option of the holder hereof, this
Note or any portion of the principal amount hereof may at any time after the
date hereof to and including March 31, 2000, be exchanged into Convertible
Subordinated Notes of the Company as specified in the Agreement and (iii) this
Note may be transferred only upon fulfillment by the Company and the holder
hereof of conditions specified in the Agreement.
As provided and subject to the restrictions on transfer set forth in
the Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or his attorney duly authorized in writing, a new
Note for a like principal amount will be issued to, and registered in the name
of, the transferee. Prior to due presentment for registration of transfer, the
Company may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Company shall not be affected by any notice to the contrary.
This Note shall be governed by and enforced in accordance with the laws
of the State of New York.
The Company agrees to make payments, prepayments and repurchases of the
Notes on the dates and in the amounts specified in the Agreement.
Should the indebtedness represented by this Note or any part thereof be
collected in any proceeding provided for in the Agreement or be placed in the
hands of attorneys for collection, the Company agrees to pay, in addition to the
principal, premium, if any, and interest due and payable hereon, all costs of
collecting this Note, including reasonable attorney's fees and expenses.
A-2
<PAGE>
In case an Event of Default, as defined in the Agreement, shall occur
and be continuing, this Note may be declared due and payable in the amount, in
the manner and with the effect provided in the Agreement.
Elephant & Castle Group Inc.
By:
------------------------------
Name:
Title:
A-3
<PAGE>
EXHIBIT 3A
FORM OF OPINIONS OF COUNSEL
TO THE COMPANY
Opinion as to United States law matters to be provided by D. David Cohen, Esq.
covering the following opinions:
3. (1) The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the Province of British Columbia, Canada
and has all requisite corporate power and authority (a) to carry on the business
in which it is engaged and to own the properties that it owns, (b) to enter into
the Agreement, (c) to issue, sell and deliver the Notes and to incur the
Indebtedness evidenced by the Notes and (d) to carry out the provisions of the
Agreement and the Note to be carried out by it.
3. (2) The Company is duly authorized to conduct its business in each
jurisdiction in which it operates and has been duly qualified and is in good
standing as a foreign corporation in each jurisdiction where the character of
its properties or the nature of its activities makes such qualification
necessary or desirable.
3. (3) Each of the Agreement and the Notes being purchased by you under
the Agreement has been duly authorized by all necessary corporate action on the
part of the Company (no action by the stockholders of the Company being required
by law, by the Certificate of Incorporation or otherwise), has been duly
executed and delivered by the Company and constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as may be limited (a) by bankruptcy, insolvency, moratorium or
similar laws affecting creditors' rights generally, (b) by general principles of
equity, regardless of whether enforcement of any obligation therein mentioned is
sought in a proceeding in equity or at law and (c) with respect to the
indemnification provisions contained in the Agreement, by applicable securities
laws or principles of public policy.
3 (4) The execution and delivery of the Agreement, the Note and the
performance by the Company of its agreements, covenants and obligations
thereunder and the issuance and sale of the Note will not (a) result in any
violation of the provisions of any federal or state statute, rule or regulation
binding on the Company or of the Certificate of Incorporation or the By-laws of
the Company or (b) conflict with, result in a breach of any of the terms or
provisions of, constitute a default under, or result in the creation or
imposition of any Lien upon any of the property of the Company pursuant to the
provisions of, the Certificate of Incorporation or By-laws of the Company or any
agreement or other instrument to which the Company is a party or by which it is
bound.
3 (5) The issuance, sale and delivery of the Note by the Company under
the circumstances contemplated by the Agreement constitute transactions exempt
from registration under applicable state securities and Blue Sky laws and from
the registration provisions of
3A-1
<PAGE>
the Securities Act of 1933, as amended, and do not, under existing law, require
the registration of the Note under the Securities Act of 1933, as amended, or
compliance with any requirements of the Trust Indenture Act of 1939.
3 (6) All consents, approvals or authorizations, if any, of any
governmental authority required on the part of the Company in connection with
the execution and delivery or performance of the Agreement or the offer, issue,
sale or delivery of the Note to you have been duly obtained, and the Company has
complied with any applicable provisions of law requiring any declaration,
filing, registration and/or qualification with any governmental authority in
connection with such offer, issue, sale or delivery.
3 (7) There is no action, suit or proceeding at law or in equity by or
before any governmental authority or tribunal or other agency now pending or
threatened against or affecting either the Company or any of its Subsidiaries or
any properties or rights of any thereof (i) wherein an unfavorable decision,
ruling or finding would have a material adverse effect on the validity or
enforceability of the Agreement or the Note or would materially and adversely
affect the condition (financial or otherwise) of the Company and its
consolidated Subsidiaries, taken as a whole, or (ii) that seeks to enjoin or
otherwise prevent the consummation of the transactions contemplated by the
Agreement or the issuance, sale and delivery of the Note.
Opinion as to Canadian law matters to be provided by Harper Grey Easton covering
the following opinions:
(1) Elephant & Castle Group Inc. (the "Company") has been duly
incorporated and is a valid and subsisting company under Company Act (British
Columbia), has all requisite corporate capacity, power and authority to carry on
its business as now conducted by it, to own its assets and to enter into,
deliver and to perform its obligations under the Note Agreement.
(2) The Note Agreement has been duly authorized by all necessary
corporate action on the part of the Company, have been duly executed and
delivered by and on behalf of the Company and is a valid and legally binding
obligation of the Company.
(3) Neither the execution and delivery of the Note Agreement nor the
fulfillment by the Company of the terms thereof, nor the sale of the Notes
conflicts or will conflict with or results or will conflict with or results or
will result in a breach of, and do not create a state of facts which, after
notice or lapse of time or both, will result in a breach of or conflict with any
of the terms, conditions or provisions of the memorandum or articles of the
Company or, to our knowledge, of any resolutions of its shareholders or
directors or any material license or permit issued to the Company or any
agreement or instrument to which the Company is a party or by which it is bound
as of the date hereof.
(4) To our knowledge, there are no actions, suits, proceedings or
investigations, whether on behalf of or against the Company, taken as a whole,
pending or threatened against or affecting the Company, taken as a whole, at law
or in equity, before or by
3A-2
<PAGE>
any federal, provincial, municipal or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, which would
reasonably be expected to materially adversely affect the property, assets or
business of the Company, taken as a whole, or the validity of the sale of the
Notes.
(5) The offering, issuance and delivery of the Notes by the Company to
___________ in accordance with the terms of the Note Agreement are exempt,
either by statute, regulation or order, from the prospectus and registration
requirements of the Securities Act (British Columbia), and except as have been
obtained or completed, no documents are required to be filed, proceedings taken,
and no approval or consent of, or registration or filing with, any regulatory
authority in British Columbia is required, in order to permit the offering,
issuance and delivery of the Securities by the Company to ______________.
3A-3
<PAGE>
EXHIBIT 6E
INDEBTEDNESS
8A-1
