<PAGE>
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): AUGUST 23, 1999
ELEPHANT & CASTLE GROUP INC.
(Exact name of registrant as specified in its charter)
BRITISH COLUMBIA, CANADA 1-12134 N/A
(State or other jurisdiction Commission IRS Employer
Of incorporation) File No. Identification No.
856 HOMER STREET, VANCOUVER, B.C. CANADA V6B 2W5
(Address of principal executive officer)
Registrant's Telephone Number, including area code: (604) 684-6451
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ITEM 5. OTHER EVENTS
Following the commencement of the Registrant's 1999 annual general meeting
("AGM") on August 23, 1999, shareholders voted to adjourn the meeting to
October 22, 1999. The proposal to adjourn resulted from an objection by
counsel for a group of unidentified shareholders (the "Objectants") to the
holding of the AGM and the solicitation of proxies by management on the basis
of a management proxy statement alleged to be in material non-compliance with
the securities laws in British Columbia, Canada and the COMPANY ACT (British
Columbia). The substantive allegations concern (i) the failure to disclose a
significant related party transaction between the Registrant and one of its
insiders, and (ii) a lack of certain background information in the proxy
statement relating to a nominee for election as a director.
The alleged deficient disclosure concerns two issues to which the Objectants
have indicated their opposition:
(i) the previously announced intention by the Registrant to amend a certain
1995 Note and Stock Purchase Agreement (the "1995 Agreement") pursuant
to which General Electric Investment Private Placement Partners II
("GEIPPP II") has invested more than U.S. Ten Million Dollars (U.S.
$10,000,000) in securities of the Registrant to provide a security
interest in favour of GEIPPP II; and
(ii) the continued service of Martin O'Dowd as President of the Company. On
July 30, 1999, Rick Bryant was elected to serve as Chief Executive
Officer of the Registrant and Mr. O'Dowd's responsibilities were reduced
to a position of part-time President of the Registrant. Mr. O'Dowd also
serves as President of a separate unrelated publicly-owned company,
Famous Daves of America, Inc.
While the Objectants currently claim to seek discussions concerning
representation on the Board of Directors of the Registrant, new management
and additional disclosures principally concerning the proposed GEIPPP II
Security Agreement and management service of Mr. O'Dowd, Objectants have also
threatened litigation.
The adjournment of the AGM may result in further changes in management and/or
the composition of the Board of Directors of the Registrant. Mr. William
McEwen, an independent director of the Registrant, has resigned. Colin
Stacey, Chief Operating Officer of the Company, has been appointed to fill
the casual vacancy on the Board.
If the proposed amendments to the 1995 Agreement are not effected, there may
be material and adverse consequences to the Registrant, since GEIPPP II is
presently in a position to enforce its remedies under the 1995 Agreement,
based on the Registrant's failure to meet certain financial covenants and
there can be no assurance that alternative financing will be available on
satisfactory terms. The Objectants have verbally claimed to have methods or
means to provide such alternative financing. The Registrant knows of no
basis to credit such claims and intends, in the absence of substantiated
other information, to move forward with the Security Agreement with GEIPPP II.
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To the knowledge of the Registrant, the Objectants have not made any filings
of proxy solicitation or other materials identifying their group, or the
members thereof, specifying the purposes, beyond the adjournment of the AGM,
for the formation of the group or their financial bankers, if any.
ITEM 7. (c)
Letter from Ladner Downs dated August 23, 1999 seeking adjournment of Annual
General Meeting.
ELEPHANT & CASTLE GROUP INC.
By: RICK BRYANT
-------------------------------
Title: Chief Executive Officer
DATED: September 3, 1999 /s/ RICK BRYANT
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(Signature)
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LADNER Downs
Barristers & Solicitors
1200 Waterfront Centre
200 Burrard Street
PO Box 48600
Vancouver, BC Canada
V7X 1T2
Telephone (604) 687-5744
Fax (604) 687-1415
Fred R. Pletcher Direct Phone (604) 640-4245
E-MAIL [email protected]
--------------------------
FILE NO: 45460/00010
BY HAND
The Board of Directors
Elephant & Castle Group Inc.
Fifth Floor, 856 Homer Street
Vancouver, BC
V6B 2W5
ATTENTION: RICHARD BRYANT,
CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
Dear Sirs:
PROPOSED ADJOURNMENT OF ELEPHANT & CASTLE GROUP INC.'S
AUGUST 23, 1999 ANNUAL GENERAL MEETING
We represent a group of Canadian and United States shareholders of Elephant &
Castle Group Inc. (the "Company") who are extremely dissatisfied with the
Company's financial and share price performance since January of 1998 as well
as the performance of the Company's management and its Board of Directors.
We believe that it is inappropriate for the Company to proceed with its
annual general meeting today. This is because management's proxy materials
are in material non-compliance with several provisions of British Columbia's
securities laws and the Company Act (British Columbia). We also note, in
passing, that the final versions of management's proxy materials appear not
to have been properly filed under Canadian securities laws.
In particular the proxy materials fail to disclose a significant related
party transaction between the Company and an insider, General Electric
Investment Private Placement
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Partners II ("GE"), pursuant to which the Company has agreed in principle to
grant GE a security interest over substantially all of the assets of the
Company. More importantly, the proxy materials have failed to identify the
principal occupation of one of management's nominees for election to the
Board of Directors: Mr. Martin O'Dowd. While the proxy materials state that
Mr. O'Dowd's principal occupation is serving as President and Chief Executive
Officer of the Company, we understand that Mr. O'Dowd is no longer serving as
the Company's Chief Executive Officer and, in fact, now serves as President
and Chief Executive Officer of a competitor of the Company - Famous Dave's of
America Inc.
Both of these matters are extremely material facts that the Company should
have disclosed to shareholders prior to soliciting proxies for today's annual
general meeting. British Columbia law makes it clear that by failing to
disclose such material matters to shareholders in the Company's proxy
materials in the manner required by law, all proxies solicited by management
for this meeting which are based upon such proxies are null and void.
We are therefore proposing that the meeting be adjourned to reconvene at
9:00 a.m. on Friday, October 22, 1999 at the Chevalier Roof of the Rosedale
on Robson Suites Hotel located at 855 Hamilton Street, Vancouver, B.C.
Canada, V6B 6A2 or such other place as management may properly shareholders
of. This period of 60 days will to allow management of the company
sufficient time to remedy the deficiencies of its proxy materials and engage
in meaningful dialogue with its shareholders as to the direction and future
of this Company.
If during this period of adjournment, management and the Board of Directors
of the Company:
1. acknowledge the poor financial and share performance by the Company since
Mr. O'Dowd became President of the Company;
2. propose a clear and workable strategy to remedy the Company's present
earnings shortfall and restore the Company's share price to its previous
level;
3. engage an experienced and full-time management team to implement this
strategy;
4. impose a system of accountability and performance targets for that
management team, which is tied to the Company's share price and financial
performance;
5. propose a slate of nominees for election to the Board of Directors of the
Company who are free of conflicts-of-interest, and a majority of whom are
not associated with either management of the Company or the Company's
DE FACTO controlling shareholder - GE; and
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6. disclose the proposed grant of security to GE in sufficient detail so as
to give shareholders the opportunity to make a fully informed decision
whether or not to elect a slate of nominees who would support such a
transaction,
then the management can assume that they will likely to receive the full and
enthusiastic support of the shareholders that we represent at the adjourned
meeting.
If management chooses to ignore this reasonable request for an adjournment
and the opportunity to resolve the difficult issues facing the Company in a
reasoned and constructive dialogue with its shareholders through the forum of
a shareholder's meeting where the shareholders are properly appraised of all
relevant facts, then the shareholders I represent will be forced to address
their concerns in another forum - the Courts. If this meeting is not
adjourned, my clients will be forced to consider taking legal action to
invalidate the results of this meeting. My clients would also be forced to
consider the necessity of taking legal action against the Company and certain
of its current directors, in their personal capacities, for breach of their
duties and responsibilities under British Columbia company law and under both
Canadian and United States securities laws.
We trust, however, that management of the Company will not want to embroil
the Company in costly litigation over issues that can be easily addressed
through and informed dialogue with shareholders at an adjourned meeting.
We look forward to being advised of management's plans to address the issues
raised in this letter.
Yours truly,
Ladner Downs
By:
Fred R. Pletcher
Enclosure
