SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
[ X ] Filed by the registrant
[ ] Filed by a party other than the registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ X ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
ELEPHANT & CASTLE GROUP INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
<PAGE>
ELEPHANT & CASTLE GROUP INC.
856 Homer Street
Vancouver, British Columbia, Canada
V6B 2W5
(604) 684-6451
September 13, 1999
Dear Shareholder:
As you may be aware, at the commencement of the 1999 Annual Meeting of
Shareholders of Elephant & Castle Group Inc. on August 23, 1999, Shareholders
voted to adjourn to October 22, 1999. The request for adjournment was based in
part on the fact that certain events occurred after the initial proxy material
was printed and the urging of certain objectants that these facts should have
been disclosed prior to soliciting proxies. The Adjourned Annual Meeting of
Shareholders will be held at 9:00 A.M. on Friday, October 22, 1999, in the
Chevalier Room of the Rosedale on Robson Suite Hotel, located at 838 Hamilton
Street, Vancouver, Canada, V6B 6A2.
The formal Notice of Annual Meeting and Proxy Statement dated July 23,
1999, together with the Company's Annual Report for the fiscal year ended
December 27, 1998 were previously mailed to Shareholders of record on July 12,
1999. Accompanying this letter is a Notice of Adjourned Annual Meeting, Proxy
Statement (which describes the business to be acted upon at the Adjourned
Meeting) and a Form of Proxy. Also enclosed for your convenience are the
Company's unaudited interim financial statements for the quarters ended March 28
and June 27, 1999, both of which have already been filed with the appropriate
regulatory authorities in the United States and Canada. These interim financial
statements do not constitute part of the Proxy Statement.
Proxies giving authority to Management's nominees to vote at the August
23, 1999 Annual Meeting will not be used at the Adjourned Meeting and since it
is important that your shares be represented at the Adjourned Meeting, I urge
that you MARK, SIGN, DATE and PROMPTLY return the enclosed PROXY in the envelope
furnished for that purpose. If you are present at the Adjourned Meeting, you may
revoke your proxy and vote in person. We are looking forward seeing our
Shareholders at the Adjourned Meeting.
Sincerely,
(signed) Richard Bryant,
Chief Executive Officer
<PAGE>
ELEPHANT & CASTLE GROUP INC.
856 Homer Street
Vancouver, British Columbia, Canada
V6B 2W5
(604) 684-6451
NOTICE OF ADJOURNED ANNUAL MEETING
October 22, 1999
The Annual Meeting of Shareholders of Elephant & Castle Group Inc. (the
"Company") was adjourned on August 23, 1999 until 9:00 A.M. (Vancouver Time) on
Friday, October 22, 1999 in the Chevalier Room of the Rosedale on Robson Suite
Hotel, located at 838 Hamilton Street, Vancouver B.C., V6B 6A2 (the "Adjourned
Meeting") for the following purposes:
(i) To elect seven (7) Directors, each to serve until the
next annual meeting of shareholders of the Company;
and
(ii) To consider such other business as may properly come
before the Adjourned Meeting. In accordance with
local practice in Canada, the Shareholders will be
receiving and considering a report to the
Shareholders from the Board of Directors and the
Audited Financial Statements of the Company for the
fiscal year ended December 27, 1998 together with the
Auditor's Report thereon; and
(iii) To ratify the appointment of Pannell Kerr Forster
Worldwide, as the Company's auditors for the fiscal
year ending December 26, 1999.
Shareholders of record at the close of business on July 12, 1999 are
entitled to notice of and to vote at the Adjourned Meeting and any adjournments
thereof.
ELEPHANT & CASTLE GROUP INC.
By order of the Board of Directors
(signed) Richard Bryant,
Chief Executive Officer
Vancouver, B.C.
September 13, 1999
<PAGE>
ELEPHANT & CASTLE GROUP INC.
1999 SUPPLEMENTAL PROXY STATEMENT
Purpose of Solicitation
This Supplemental Proxy Statement is being furnished to holders of
Common Shares of Elephant & Castle Group Inc. (the "Company") in connection with
the solicitation of proxies on behalf of management of the Company
("Management") for the 1999 Adjourned Annual Meeting (the "Adjourned Meeting")
of shareholders ("Shareholders") of the Company, scheduled to be held on Friday,
October 22, 1999 and at any adjournment thereof. The solicitation is made by
Management of the Company. The expenses of this proxy solicitation, including
the cost of preparing and mailing this Supplemental Proxy Statement and enclosed
Form of Proxy, will be paid by the Company. Such expenses may also include the
charges and expenses of banks, brokerage firms, and other custodians, nominees
or fiduciaries for forwarding proxies and proxy material to beneficial owners of
the Company's Common shares. The Company expects to solicit proxies primarily by
mail, but directors, officers, employees and agents of the Company may also
solicit proxies in person or by telephone or by other electronic means.
Voting of Proxies
On July 23, 1999, the Company mailed to all Shareholders of record as
at July 12, 1999 (the "Record Date") a Proxy Statement and Form of Proxy for use
in connection with the August 23, 1999 Annual Meeting. Proxies submitted before
August 23, 1999 giving authority to Management's designees to vote at the August
23, 1999 meeting will not be voted at the Adjourned Meeting. Proxies giving
authority to persons other than Management's designees and submitted prior to
August 23, 1999, if not revoked, may be voted at the Adjourned Meeting, if
otherwise valid and proper. Shareholders should also note that one of the
nominees for director named in the July 23, 1999 Proxy Statement, Mr. William
McEwen, will not be standing for election and Management has proposed in his
place Mr. George Pitman. The enclosed Form of Proxy does, but the Form of Proxy
accompanying the July 23, 1999 Proxy Statement did not, contain any instruction
to permit shares to be voted for the election of Mr. Pitman (See "PROPOSAL ONE:
ELECTION OF DIRECTORS").
Except as noted above, in order for your shares to be voted at the
Adjourned Meeting, the enclosed Form of Proxy must be executed and returned as
described below. If executed and returned, the proxies will be voted by the
proxy holders at the Adjourned Meeting in accordance with the instructions
specified in the enclosed Form of Proxy for the election of directors named in
this Supplemental Proxy Statement and for the ratification of the board of
directors' (the "Board") selection of independent auditors. Richard Bryant,
Chief Executive Officer of the Company will act as proxy, or in the event of his
unavailability, Dan DeBou, Chief Accounting Officer, will so act. Shareholders
may substitute a proxy in lieu of either of such persons by inserting in the
blank space provided in the enclosed Form of Proxy the name of the person to be
designated and striking out the names of the Management designees or by
completing another proper Form of Proxy and delivering same to either the
Company at Fifth Floor, 856 Homer Street, Vancouver, British Columbia, Canada,
V6B 2W5 or at the offices of the Company's Registrar and Transfer Agent,
American Stock Transfer Trust Company, located at 6201, 15th Avneue, Brooklyn,
New York, 11219, USA, no later than 9:00 A.M (Vancouver Time) on October 20,
1999.
<PAGE>
The enclosed Form of Proxy, when properly signed, confers discretionary
authority upon the persons named therein with respect to amendments or
variations of matters identified in the Notice of Adjourned Meeting and any
other matters which may properly be brought before the Adjourned Meeting. As of
the date hereof, Management is not aware that any such amendments to, variations
of or other matters are to be presented for action at the Adjourned Meeting.
However, if any other matters which are not now known to Management should
properly come before the Adjourned Meeting, then Management designees intend to
vote in accordance with the judgement of Management of the Company.
The number of votes required for approval of any matter that will be
submitted to a vote of Shareholders at the Adjourned Meeting is a simple
majority of the votes cast, unless otherwise indicated in this Proxy Statement.
Only holders of the Company's Common shares ("Common Shares")
outstanding as of the close of business on July 12, 1999 will be entitled to
vote at the Adjourned Meeting. The Company's only class of voting securities is
its Common Shares, without par value. As of the Record Date, there were
3,544,709 Common Shares issued and outstanding. Each Common Share is entitled to
one vote. The representation in person, or by proxy, of two Shareholders holding
not less than one-tenth of the outstanding Common Shares is necessary to provide
a quorum at the Adjourned Meeting. Votes withheld from a nominee for election as
a director or votes on other matters that reflect abstentions or broker
non-votes are counted as present in determining whether the quorum requirement
is satisfied, but they have no other effect on voting for election of directors.
Revocation of Proxies
This Supplemental Proxy Statement and enclosed Form of Proxy are
intended to be first mailed to Shareholders on or after September 17, 1999. Any
Shareholder who submitted a proxy for the August 23, 1999 meeting or who submits
a proxy for the Adjourned Meeting may revoke it at any time before it is voted
at the Adjourned Meeting by notifying the Corporate Secretary at the offices of
the Company, located at 856 Homer Street, Vancouver, British Columbia, Canada,
V6B 2W5, Phone: (604) 684-6451, in writing or in person at any time up to, and
including, the last business day preceding the Adjourned Meeting or any
adjournment thereof or, as to any matter is respect of which a vote shall not
have already been cast pursuant to such proxy, with the Chairman of the
Adjourned Meeting on the day of the Adjourned Meeting, or at any adjournment
thereof. Submission of a later proxy automatically revokes a previously
submitted proxy.
As noted above, proxies submitted before August 23, 1999 giving authority to
Management's designees need not be revoked; Management elected at its own
volition that it will not vote these proxies at the Adjourned Meeting.
(See "Voting of Proxies")
Preliminary Information
The Company is a corporation organized under the laws of the Province
of British Columbia, Canada. The Company operates a chain of casual dining
restaurants located throughout Canada, and, to a lesser extent, in the United
States. The Company entered into a joint venture with Rainforest Cafe, Inc.
(NASDAQ: RAIN) ("Rainforest") to develop and operate Rainforest restaurants in
Canada.
<PAGE>
Voting Securities
All holders of the Company's Common Shares outstanding as of the close
of business on July 12, 1999 will be entitled to vote at the Adjourned Meeting.
The Company's only class of voting securities is its Common Shares, without par
value. As of the record date, there were 3,544,709 Common Shares issued and
outstanding. Each Shareholder is entitled to one vote per Common Share held by
such Shareholder. There is no cumulative voting.
Security Ownership of Directors, Management and Certain Beneficial Owners
To the knowledge of the directors and senior officers of the Company
the following table sets forth, as of the date hereof, information relating to
the beneficial ownership of the Company's Common Shares by each person known to
the Company to be the beneficial owner of more than 10% of the Common Shares, by
each director and executive officer of the Company and all directors and
executive officers as a group:
<TABLE>
<CAPTION>
====================================================================================================================
Name Number of Common Shares Approximate Percentage of Total
Beneficially Owned or Over Issued and Outstanding Common
Which Control or Direction is Shares (3)
Exercised
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Jeffrey M. Barnett(1)(2)(3) 562,375 15.9%
- --------------------------------------------------------------------------------------------------------------------
Peter J. Barnett(4) 550,375 15.5%
- --------------------------------------------------------------------------------------------------------------------
George W. Pitman(1)(2) 129,250 3.6%
- --------------------------------------------------------------------------------------------------------------------
William C. McEwen(1)(5) 7,100 <1%
- --------------------------------------------------------------------------------------------------------------------
Martin O'Dowd(1)(5) 23,960 <1%
- --------------------------------------------------------------------------------------------------------------------
David Wiederecht(1)(6) --- ---
- --------------------------------------------------------------------------------------------------------------------
Anthony Mariani(1)(6) --- ---
- --------------------------------------------------------------------------------------------------------------------
Colin Stacey(1) --- ---
- --------------------------------------------------------------------------------------------------------------------
Richard H. Bryant(1) --- ---
- --------------------------------------------------------------------------------------------------------------------
Daniel DeBou(5) 33,200 <1%
- --------------------------------------------------------------------------------------------------------------------
Paul Tilbury(5) 42,000 1.2%
- --------------------------------------------------------------------------------------------------------------------
General Electric Investment Private Placement 299,721 8.5%
Partners II(7)(8)
- --------------------------------------------------------------------------------------------------------------------
All Directors and Executive 1,097,606 31.0%
officers as a Group
====================================================================================================================
</TABLE>
(1) With the exception of Mr. McEwen, who resigned as a director on August
24, 1999, each person is a director and will be standing for nomination
as a director of the Company for the ensuing year.
(2) Excludes Common Shares subject to conditional options issued to the
founders of the Company.
(3) These shares are subject to a voting trust agreement under which GE
Investment Management ("GEIM"), the general partner of General Electric
Investment Private Placement Partners II ("GEIPPP II") is entitled to
vote such shares to elect directors subject to certain conditions. (See
"Certain Relationships and Related Transactions")
(4) Includes 50,000 Common Shares transferred by Mr. Peter Barnett to his
children.
(5) Includes all vested options granted to directors and executive
officers.
(6) Messrs. Wiederecht and Mariani are employed by a fund, GEIM, general
partner of GEIPPP II, the holdings of which are separately stated
herein.
(7) Excludes up to 4,508,000 additional Common Shares issuable on
conversion of Warrants and Subordinated Convertible Debentures held by
the Fund.
(8) Excludes 562,375 Common Shares owned by Mr. Jeffrey Barnett, which are
subject to a voting trust agreement with GEIM. (See note 3 above)
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
The Company's Memorandum and Articles of Association provide for the
election of the Board of Directors at each annual meeting of the Company's
Shareholders. Each person so elected shall serve until their respective
successors shall have been elected and qualified. As required by the Company Act
(British Columbia), advance notice of the Annual General Meeting scheduled for
August 23, 1999 was published in the Vancouver Sun newspaper in Vancouver,
British Columbia, Canada, on June 25, 1999.
It is intended that votes will be cast, pursuant to authority granted
by the enclosed Form of Proxy, for the election of the nominees named below as
directors of the Company, except as otherwise specified in the proxy. Directors
shall be elected by a plurality of the votes present in person or represented by
proxy at the Adjourned Meeting and entitled to vote on the election of
directors. In the event any one or more of such nominees shall be unable to
serve, votes will be cast, pursuant to authority granted by the enclosed Form of
Proxy, for such person or persons as may be designated by the present Board of
Directors to fill the vacancy. The Company is not aware of any nominee who will
be unable, or who intends to decline, to serve as a director. The term of office
for each elected director will expire at the Company's next Annual Meeting of
Shareholders to be held in 2000.
<PAGE>
The following table sets forth certain information for each of the
current directors and nominees as directors as of the date hereof:
<TABLE>
<CAPTION>
====================================================================================================================
Name and Municipality of Residence Age Date Became a Principal Occupation(1) Number and
Director Approximate
Percentage of Common
Shares Beneficially
Owned or Over Which
Control or Direction
is Exercised
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Jeffrey M. Barnett(2)(3) 60 December 14, 1992 Founder and Director 562,379
(Vancouver, BC, Canada) (15.9%)
- --------------------------------------------------------------------------------------------------------------------
Martin O'Dowd(2)(3) 51 June 23, Part-time President of 23,960
(Minneapolis, MN, U.S.) 1995 the Company (<1%)
- --------------------------------------------------------------------------------------------------------------------
Colin Stacey 59 August 30, Vice President and Chief Nil
(Vancouver, BC, Canada) 1999 Operating Officer of the
Company
- --------------------------------------------------------------------------------------------------------------------
George Pitman 58 December 14, 1992 Design Consultant 129,250
(Burnaby, BC, Canada) (3.6%)
- --------------------------------------------------------------------------------------------------------------------
David Wiederecht(2) 43 January 12, Vice President, Nil
(Westport, CT, U.S.) 1996 Alternative Investments,
GE Investment Corporation
- --------------------------------------------------------------------------------------------------------------------
Anthony Mariani(3) 35 January 12, Vice President, Private Nil
(Stamford, CT, U.S.) 1996 Equities, GE Investment
Corporation
- --------------------------------------------------------------------------------------------------------------------
Richard H. Bryant 45 April 15, Chief Executive Officer Nil
(West Vancouver, BC, Canada) 1998 of the Company
====================================================================================================================
</TABLE>
(1) The directors of the Company have held their present principal
occupations noted opposite their respective names through the last five
years except as described below under "Executive Officers and
Directors".
(2) Member of the Audit Committee as of 1998-1999.
(3) Member of the Compensation Committee as of 1998-1999.
<PAGE>
Executive Officers and Directors
Jeffrey M. Barnett co-founded the predecessor of the Company in 1977
with his twin brother, Peter J. Barnett, and their long-time business colleague,
Mr. George W. Pitman. Mr. Barnett served as Chief Executive Officer of the
Company until March 19, 1998 and Chairman of the Board of Directors until June
25, 1999. He has entered into a Settlement Agreement with the Company. See
"Certain Relationships and Related Transactions". Mr. Barnett will be standing
for nomination as a director of the Company for 1999.
Martin O'Dowd was first elected to the Board of Directors of the
Company in June of 1995, initially serving as an outside director. In August of
1997, he was elected to serve as President of Elephant & Castle International,
Inc. On March 19, 1998, Mr. O'Dowd was elected President and Chief Executive
Officer of the Company until his responsibilities were reduced to part-time
President of the Company on July 30, 1999. Mr. O'Dowd's responsibilities
encompass the Canadian Rainforest restaurants and the franchising of the Alamo
restaurants through Holiday Inn and in relation to his areas of responsibility,
he now reports to the Chief Executive Officer. Previously, from May of 1995,
until April 28, 1997, he was President and Chief Operating officer of Rainforest
Cafe, Inc., Minneapolis, MN. From July 1987 to May 1995, Mr. O'Dowd was
Corporate Director of Food and Beverage Services for Holiday Inn Worldwide,
where Mr. O'Dowd was responsible for approximately $250 million in annual food
and beverage revenue and was responsible for concept development, strategic
planning, and operations for 120 company-owned units. Previously, Mr. O'Dowd was
Vice President and General Operations Manager for the New York based Hard Rock
Cafe organization, and prior to that was associated with Steak & Ale
Restaurants. Mr. O'Dowd also serves as President of Famous Dave's of America,
Inc., a separate company, unrelated to the Company, which operates 23 casual
dining restaurants in 4 Midwestern states of the United States. Mr. O'Dowd will
be standing for nomination as a director of the Company for 1999.
Colin Stacey has been the Chief Operating Officer of the Company since
June of 1997. From 1992 to June of 1997, Mr. Stacey was President and Chief
Executive Officer of Keg Restaurants, a North American subsidiary of Whitbread
PLC. Prior to that assignment, Mr. Stacey occupied senior management positions
within Whitbread's restaurants and leisure businesses in the United Kingdom and
Australia. Subsequent to the Company's 1997 Annual Meeting, Mr. Stacey was
elected by the Board to serve as a director of the Company, but took an
indeterminate leave from service as a director. On August 30, 1999, Mr. Stacey
was appointed to the Board of Directors of the Company to fill a vacancy upon
the resignation of Mr. William McEwen. Mr. Stacey will be standing for
nomination as a director of the Company for 1999.
David Wiederecht has been Vice President of Alternative Investments for
GE Investment Corporation since January 1994. Prior to his current assignment,
he served GE Investments in various senior financial management assignments in
GEIC's real estate and finance organization since 1988. Prior to joining GEIC,
Mr. Wiederecht worked at various assignments within General Electric Company,
including corporate headquarters and GE's audit staff. Mr. Wiederecht was first
elected to the Board of Directors of the Company in January of 1996 and will be
standing for nomination as a director of the Company for 1999.
<PAGE>
Anthony Mariani has been Vice President of Private Equities for GE
Investment Corporation since 1997. Prior to that, he worked at various
assignments in GE Investments' private equities and finance organizations since
1988. Mr. Mariani was first elected to the Board of Directors of the Company in
January of 1996 and will also be standing for nomination as a director for 1999.
Richard Hugh Bryant was recently appointed as Chief Executive Officer
of the Company on July 30, 1999. Prior to that Mr. Bryant was the Vice President
and Chief Financial Officer of the Company since November of 1997. Prior to
joining the Company, Mr. Bryant was Chief Financial Officer of Keg Restaurants
Limited, a North American subsidiary of Whitbread PLC, from August of 1993 to
June of 1997. From June of 1990 until August of 1993, Mr. Bryant served as
financial controller of the Whitbread Beer Company, a division of Whitbread PLC.
Since April of 1998, Mr. Bryant has been serving as a director of the Company
and will stand for re-election to the Board of Directors for 1999.
George W. Pitman is one of the founders of the Company and served as a
key executive and a director of the Company since prior to the Company's initial
public offering in 1993. Mr. Pitman's employment with the Company was not
renewed upon expiration of his employment agreement in June of 1999. Mr. Pitman
has asserted claims for severance pay, which claims have not been resolved to
date. Mr. Pitman will be standing for election as a director for 1999.
Daniel DeBou, Chartered Accountant, has been the Chief Accounting
Officer of the Company since January 1, 1993. Prior to joining the Company, Mr.
DeBou was employed from 1978 to 1992 in various financial capacities with
Woodward Stores Limited, a publicly-owned company traded on The Toronto Stock
Exchange and engaged in the operation of department and speciality stores.
Paul Tilbury, formerly Vice President of Operations, is currently
serving as Vice President of Canadian Rainforests Restaurants, Inc., a jointly
owned subsidiary of the Company and Rainforest Cafe, Inc. Mr. Tilbury is the
nephew of Mr. Jeffrey M. Barnett.
Meetings, Attendance, Committees
The Board of Directors of the Company held eight (8) regular meetings
in 1998. The Board maintains two standing committees: the Compensation Committee
and the Audit Committee. Each incumbent director attended at least 75% of the
aggregate of: (1) the total number of Board meetings held during the period he
was a director; and (2) the total number of meetings held by all Committees of
the Board on which he served during such period.
It is the function of the Compensation Committee to review the
Company's remuneration policies and practices, administer certain of the
Company's incentive compensation and stock option plans, and establish the
salaries of the executive officers of the Company. Messrs. Jeffrey M. Barnett,
Martin O'Dowd, William McEwen, and Anthony Mariani served as the members of the
Compensation Committee. It is the function of the Audit Committee to review the
external audit programs of the Company and to make recommendations to the Board
of Directors of the Company concerning its appointment of independent auditors,
the conduct of the audit and related matters. Messrs. Jeffrey Barnett, William
McEwen, Martin O'Dowd and David Wiederecht served as the members of the Audit
Committee. The Committees meet separately from, but usually on the same days as,
regularly scheduled Board meetings. The Company does not maintain a nominating
committee or one performing a similar function.
<PAGE>
EXECUTIVE COMPENSATION
Compensation of Directors
Directors who are not employees or officers of the Company (herein the
"Outside Directors") were separately compensated for their services as follows:
CDN $500.00 cash for each three months as a director, plus 1,000 Common Shares
for each two years of service as an Outside Director. Effective July 1, 1999,
Outside Director compensation was increased to CDN $1,250 per quarter plus 3,000
Common Shares for each year of service. Certain Outside Directors have elected
not to accept cash compensation and have redirected their Common Share
compensation to their employer. No director, other than Mr. Jeffrey Barnett, is
indebted to the Company. As to Mr. Barnett's indebtedness to the Company, see
"Certain Relationships and Related Transactions".
Report of the Compensation Committee
The Compensation Committee (the "Committee") is composed of four
directors, Messrs. Anthony Mariani, Chairman, Jeffrey M. Barnett, Martin O'Dowd
and William McEwen. Messrs. Mariani and McEwen are non-employee directors, and
Mr. Barnett ceased to be an executive employee of the Company on June 25, 1998.
See "Certain Relationships and Related Transactions". During 1998, the Committee
has not altered or otherwise modified the compensation practices and general
rates which prevailed for the principal executives of the Company at the time of
its 1993 initial public offering. The Committee negotiated a compensation
package for Mr. O'Dowd, the former chief executive officer of the Company.
The Compensation Committee
By: Anthony Mariani, Chairman
Jeffrey M. Barnett
Martin O'Dowd
William McEwen (member until August 24, 1999)
Compensation Committee Interlocks and Insider Participation
Anthony Mariani, an Outside Director, is currently serving as Chairman
of the Compensation Committee. Each of Messrs. Mariani and Wiederecht is, and
Mr. McEwen was, an Outside Director. The Company intends to pursue a policy of
having directors unaffiliated with management to constitute a majority of the
full Board, and at least one half of the members of the Compensation Committee
and the Audit Committee. Filling vacancies on the Board requires finding
Canadian residents willing to so serve, since the Board of any corporation
organized under the laws of British Columbia must consist of a majority of
Canadian residents. There are no interlocks among the members of the
Compensation Committee.
<PAGE>
Summary Compensation Table
The following table sets forth a summary of the compensation of the
Chief Executive Officer of the Company and the four other most highly paid
executive officers of the Company serving as such ("Named Executive Officers")
as of the end of the last fiscal year for their services rendered during fiscal
years 1998, 1997 and 1996. All figures are in Canadian dollars. The relative
value of the Canadian dollar compared to the U.S. dollar fluctuates from time to
time. During 1998, the average value was each CDN $1.00 equals U.S. $0.69.
<TABLE>
<CAPTION>
==========================================================================================================
Name and Principal Year Annual Compensation Long Term All Other
Position Compensation Compensation(1)
--------------------
Salary Bonus Awards
--------------------
Securities Under
Options
Granted
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Jeffrey M. Barnett, 1998 $167,178 -- -- $45,398
Former Chairman 1997 164,373 -- 125,000 45,398
1996 152,361 -- -- 25,026
- ----------------------------------------------------------------------------------------------------------
Rick Bryant, 1998 $132,125 -- 100,000 --
Chief Executive Officer 1997 20,833(2) -- -- --
1996 -- -- -- --
- ----------------------------------------------------------------------------------------------------------
Martin O'Dowd, 1998 $247,801 $72,000 600,000 --
Former Chief Executive 1997 59,278(3) -- -- --
Officer and President 1996 -- -- -- --
- ----------------------------------------------------------------------------------------------------------
George W. Pitman, 1998 $102,590 -- -- --
Former Vice President, 1997 99,750 -- -- --
Design and Development 1996 99,750 -- -- --
- ----------------------------------------------------------------------------------------------------------
Paul Tilbury, 1998 $86,359 -- -- $4,094
Vice President, 1997 58,052 -- 20,000 --
Canadian Rainforest 1996 58,052 -- -- --
==========================================================================================================
</TABLE>
(1) Other compensation consists of life insurance premiums paid on policies
on which the families of the insured are the sole beneficiaries. Also
includes, in 1998 and 1997, certain travel and entertainment
perquisites deemed to be of a compensatory nature. In addition, Mr.
Jeffrey M. Barnett is the owner of an apartment in Toronto, Canada used
by the Company for various business purposes. Through 1998, the Company
paid CDN $2,500 per month for the use thereof, no part of which has
been accounted for as other compensation. This arrangement terminated
at the end of 1998.
(2) Mr. Bryant began his employment with the Company in November of 1997.
(3) Mr. O'Dowd began his employment with the Company in June of 1997.
<PAGE>
The Company currently does not maintain and none of the Named Executive
Officers are eligible for deferred compensation, long-term incentive plan
payouts, restricted stock awards, or other similar compensatory arrangements.
Other Compensation Information
The aggregate compensation paid or payable directly to the Company's
directors and senior officers as a group (including the Named Executive
Officers) by the Company for the year ended December 31, 1998 was $859,545.
These amounts include salaries, fees, commissions and bonuses, but exclude the
value of options granted in partial compensation for salary or bonus. The
directors and senior officers as a group earned taxable benefits in 1998
aggregating less than $5,000, comprising solely standard medical benefits.
Employment Agreements
During 1993, the Company entered into five-year employment agreements
with the personal service corporations of Messrs. Jeffrey M. Barnett, Peter
Barnett and George W. Pitman. The agreements with Messrs. Jeffrey M. Barnett and
George W. Pitman were extended through 1999. See the discussion of the Barnett
Settlement Agreement in "Certain Relationships and Related Transactions" and
non-renewal of Mr. Pitman's employment agreement in "Executive officers and
Directors".
Employee Stock Option and Stock Compensation Plans
The Board of Directors of the Company has adopted two Stock Plans, and
the Shareholders have ratified such plans. These plans are the 1993 Stock Option
Plan (the "1993 Plan") and the 1997 Stock Compensation Plan (the "1997 Plan").
Under the 1993 Plan, options may be granted to key salaried management and
administration employees. Messrs. Jeffrey M. Barnett, Peter J. Barnett and
George W. Pitman are not eligible for grants pursuant to the 1993 Plan. 100,000
Common Shares of the Company were initially set aside for grants pursuant to the
1993 Plan, while 400,000 Common Shares of the Company were set aside pursuant to
the 1997 Plan. Options granted pursuant to both Plans vest 1/3 after 18 months;
1/3 after 30 months; and the remaining 1/3 after 42 months. All options expire
on the fifth annual anniversary of the date of grant. 105,000 options were
granted to employees during fiscal 1998 pursuant to the 1997 Plan. No employee
stock options were exercised under either Plan during the most recent fiscal
year.
Both the 1993 Plan and the 1997 Plan are intended to permit the Company
to retain and attract qualified individuals who contribute to the overall
success of the Company and the achievement of performance measures. Both Plans
are administered by the Compensation Committee of the Board of Directors, whose
members determine to whom options will be granted and the terms of the options.
The Committee is entitled to accelerate the vesting of options upon such
circumstances as it deems appropriate. Actual vesting can be accelerated or
delayed based on performance measures established by the Compensation Committee.
No persons who are officers or directors either received any grants or
exercised any options under either Plan during fiscal 1998.
<PAGE>
Non-Plan Options
During 1998, options for a total of 945,000 Common Shares were granted
to five key executives, four of whom commenced employment with the Company in
1997. None have been exercised and 20,000 of these options were cancelled
through December 27, 1998. Non plan options granted to Executive Officers
included in the "Summary Compensation Table" during 1998 were as follows:
<TABLE>
<CAPTION>
Option Grants During 1998 Financial Year
====================================================================================================================
Name and Principal Position Securities % of Total Exercise or Market Value Expiration
Under Options Base Price of Securities Date
Options Granted to (US$/ Underlying
Granted Employees in Security) Options
(#) Financial Year on the Date
of Grant
(US$/
Security)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Martin O'Dowd, 600,000 58.25% $5 to $9 $2.25 to $6 2003
Former Chief Executive Officer
and President
- --------------------------------------------------------------------------------------------------------------------
Colin Stacey, 200,000 19.42% $5 to $9 $2.25 to $5 2003
Vice President and Chief
Operating Officer
- --------------------------------------------------------------------------------------------------------------------
Rick Bryant, 100,000 9.7% $5 to $8 $2.25 to $5 2003
Chief Executive Officer
====================================================================================================================
</TABLE>
Total Options/Weighted Average Exercise Price
Including the 925,000 remaining options granted in 1998, there were an
aggregate of 1,312,584 options outstanding at December 27, 1998, exercisable at
various prices at a weighted average exercise price of U.S.
$6.45 per share.
Indemnification of Directors or Officers
There is no indemnification payable this financial year to directors or officers
of the Company.
<PAGE>
Performance Graph
The following graph compares the total cumulative shareholder return for $100
invested in Common shares on June 1, 1993 with the total returns of the S&P
Restaurant Index and the NASDAQ Composite Index:
Comparison of 5 year cumulative total return among
Elephant & Castle Group Inc., the S&P Restaurant Index and the
NASDAQ Composite Index
[GRAPHIC OMMITTED -- GRAPH PLOTTED TO POINTS IN TABLE BELOW]
Jun-93 Dec-93 June-94 Dec-94 Jun-95 Dec-95
------ ------ ------- ------ ------ ------
NASDAQ 100 110.35 100.29 106.82 132.60 149.46
S&P Restaurant 100 116.83 115.71 116.46 152.17 174.67
Elephant & Castle 100 48.33 73.33 105.21 125.00 75.00
Jun-96 Dec-96 Jun-97 Dec-97 Jun-98 Dec-98
------ ------ ------ ------ ------ ------
NASDAQ 168.34 183.39 204.86 223.08 269.15 311.49
S&P Restaurant 179.06 172.57 187.26 185.30 253.68 290.39
Elephant & Castle 98.33 101.67 128.33 93.33 68.33 22.51
Interest of Certain Persons in Matters to be Acted Upon
Other than as set forth in this Proxy Statement, none of the directors
or senior officers of the Company, nor any person who has held such a position
since the beginning of the last completed financial year of the Company, nor any
proposed nominee for election as a director of the Company, nor any of their
respective associates or affiliates, has any substantial or material interest,
direct or indirect, by way of beneficial ownership of securities or otherwise,
in any matter to be acted upon at the Adjourned Meeting.
Certain Relationships and Related Transactions
Other than as disclosed below, the Company is not aware of any material
transaction, involving any director or executive officer or proposed nominee for
election as a director or any Shareholder who holds more than 10% of the voting
rights attached to the Common Shares of the Company or any associate or
affiliate of any of the foregoing, which has been entered into since the
commencement of the Company's last completed financial year or in any proposed
transaction which, in either case, has materially affected or will materially
affect the Company or any of its subsidiaries.
(a) Settlement Agreement
Under an agreement made as of the 25 day of June, 1999, among the
Company, Jeffrey M. Barnett and two personal services corporations of Mr.
Barnett, the Company made provision with respect to the severance of Mr.
Barnett's employment with the Company. As previously disclosed, Mr. Barnett will
continue as a director of the Company. In connection with the severance of his
employment, the Company will pay to Mr. Barnett the sum of $335,000, $100,000 of
which was previously paid.
In addition, Mr. Barnett owes the sum of $350,000 to the Company, which
indebtedness is evidenced by a promissory note. Mr. Barnett's obligation to the
Company arose out of his acceptance of certain claims that the Company asserted
against his brother, Peter Barnett, after Peter Barnett left the employ of the
Company.
Mr. Jeffrey Barnett has entered into a voting trust agreement agreeing
that the trustee will vote all of the Company's Common Shares owned by Mr.
Barnett (a) in favour of all resolutions to elect Mr. Barnett or under certain
circumstances in the event of his death, his executor, as a director of the
Company, and (b) in the discretion of the trustee in favour or against all
resolutions to elect as directors of the Company all persons designated or
nominated by the Company's Board of Directors. GE Investment Management
("GEIM"), the general partner of GEIPPP II, the Company's primary investor, acts
as trustee with respect to such shares.
<PAGE>
(b) Security Interest in Favour of GEIPPP II
The Company has agreed in principle to provide a security interest over
all the assets of the Company and each of its subsidiaries to secure the
repayment of the U.S.$9,000,000 of Convertible Unsecured Debentures (the
"Debentures") issued by the Company to GEIPPP II in November, 1995. The Company
has been unable to meet certain covenants in the Debentures and in consideration
of the grant of a security interest GEIPPP II will waive any existing defaults,
will amend certain financial covenants to make them less onerous and will waive
payments of interest for a period of six months. There is no assurance that the
Company will be able to meet the amended financial covenants in the future and
its ability to do so will depend on the success of its business operations. The
grant of a security interest was approved by the Board of Directors of the
Company on July 16, 1999 and re-affirmed by the Board, following a review of the
Company's financial position on September 13, 1999. Messrs. Wiederecht and
Mariani, both of whom are nominees of GEIPPP II, did not participate in the vote
at the two meetings when this issue was dealt with by the Board.
GEIPPP II is the holder of 299,721 Common Shares (approximately 8.5% of
total outstanding) of the Company and, by virtue of the voting trust agreement
with Mr. Jeffrey Barnett (see above "Settlement Agreement") is entitled to vote
Mr. Jeffrey Barnett's 562,375 Common Shares on any election for directors in
favour of nominees selected by the Board of Directors, subject to an obligation
to vote for Mr. Jeffrey Barnett's election or under certain circumstances, in
the event of his death, his executor.
Indebtedness of Directors and Executive Officers
Other than as set forth above under the heading "Certain Relationships
and Related Transactions", no director, executive officer, proposed nominee for
election as a director, nor any of their respective associates or affiliates is
or has been at any time since the beginning of the last completed financial year
indebted to the Company.
<PAGE>
PROPOSAL TWO
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors of the Company has selected Pannell Kerr Forster
Worldwide, who have served as auditors of the Company since incorporation, to
serve as the independent accountants and auditors of the Company for the fiscal
year 1999, subject to ratification by the Shareholders.
Pannell Kerr Forster Worldwide has advised the Company that it has no
direct or indirect financial interest in the Company or its subsidiaries nor any
other connection therewith except in the capacity of independent public
accountants.
A representative of Pannell Kerr Forster Worldwide is expected to be
present at the Adjourned Meeting of the Shareholders. Such representative will
have the right to make a statement if he or she desires to do so and will be
available to respond to appropriate questions.
The proposal for ratification of the selection of Pannell Kerr Forster
Worldwide requires the approval of a majority of the Common Shares present and
voting at the meeting. If the proposal should not be approved, the Board of
Directors would have to select an alternate firm of auditors.
Compliance With Section 16(a) Reporting
Each director, officer and beneficial owner of ten percent (10%) or
more of a registered class of the Company's equity securities is required to
file with the Securities and Exchange Commission initial reports of ownership
and reports of changes in ownership of the Common Shares and other equity
securities of the Company by specific due dates. During the year ended December
27, 1998, all such filing requirements were complied with.
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting.
If any other matters properly come before the meeting, it is the intention of
the persons named in the enclosed form of proxy to vote the shares they
represent as the Board of Directors may recommend.
AVAILABILITY OF REPORT ON FORM 10-K
The Company's Annual Report was previously provided to Shareholders
with Management's Proxy Statement dated July 23, 1999. The Annual Report is not
incorporated in the July 23, 1999 Proxy Statement or this Supplemental Proxy
Statement by reference. Any Shareholder of record and each beneficial owner of
the Company's securities not in receipt of the Company's Form 10-K may obtain a
copy thereof without charge upon written request addressed to Rick Bryant, Chief
Executive Officer, c/o: Elephant & Castle Group Inc., Fifth Floor 856 Homer
Street, Vancouver, British Columbia, Canada V6B 2W5.
<PAGE>
SHAREHOLDER PROPOSALS
There is no provision in the Company Act (British Columbia) entitling
the shareholders of a company incorporated thereunder to initiate proposals for
an annual general meeting. The Company is incorporated pursuant to the Company
Act (British Columbia).
APPROVAL
The contents and the sending of this Supplemental Proxy Statement have been
approved by the Board of Directors of the Company.
DATED at Vancouver, British Columbia, as of the 17th day of September,
1999.
ELEPHANT & CASTLE GROUP INC.
By Order of the Board of Directors
(signed) Richard Bryant
Chief Executive Officer
September 13, 1999
<PAGE>
NOTES TO PROXY
Shareholders who are unable to attend the Meeting are requested to complete and
deposit this proxy no later than 9:00 a.m. (Vancouver Time), October 20, 1999,
either with the Company at Fifth Floor, 856 Homer Street, Vancouver, British
Columbia, Canada, V6B 2W5 or at the offices of the Company's Registrar and
Transfer Agent, American Stock Transfer and Trust Company, located at 6201, 15th
Avenue, Brooklyn, New York, 11219, USA.
The shares represented by this proxy will be voted for or against, or the voting
of such shares will be withheld or abstained from, as the case may be, on any
poll (ballot) in respect of the items set forth in the Form of Proxy as the
shareholder may have specified by marking an "X" in the place provided for that
purpose. If no choice is specified, the shares will be voted on any poll
(ballot) as if the shareholder had specified voting for (i.e. in favour of) the
items, and the shareholder hereby confers discretionary authority on the
proxyholder or proxyholders hereby appointed to vote the shares accordingly.
Each shareholder has the right to appoint a person (which may be a company) to
attend and act on the shareholder's behalf at the Meeting other than the persons
designated in this Form of Proxy. If the shareholder does not want to appoint
the persons designated in the Form of Proxy, the shareholder should strike out
their names and insert in the blank space provided the name of the person the
shareholder wishes to act as the shareholder's proxyholder and, if desired, an
alternate proxyholder. A proxyholder or alternate proxyholder need not be a
shareholder of the Company.
In the case of any amendments or variations to the proposed resolutions, and in
the case of any other matters which may properly come before the Meeting, the
shareholder hereby confers discretionary authority on the proxyholder hereby
appointed to act and vote on the shareholder's behalf on any poll (ballot), as
the proxyholder to the proxyholder's sole discretion may see fit, all in the
same manner and to the same extent and with the same power as the shareholder
could, if the shareholder were personally present at such meeting. No such
amendments, variations, or other matters were known to management at the time
this proxy was solicited.
A proxy may be revoked by an instrument in writing signed by the shareholder or
by notifying the Company at the office of the Company, located at Fifth Floor,
856 Homer Street, Vancouver, British Columbia Canada, V6B 2W5, or at the offices
of the Company's Registrar and Transfer Agent, American Stock Transfer and Trust
Company, located at 6201, 15th Avenue, Brooklyn, New York, 11219, USA at any
time up to and including the last business day preceding the day of the Meeting
or any adjournment thereof, or as to any matter in respect of which a vote shall
not already have been cast pursuant to such proxy, with the Chairman of the
Meeting on the day of the Meeting, or at any adjournment thereof, and upon
either of such deposits the proxy is revoked.
<PAGE>
For the Adjourned Annual General Meeting of Shareholders of
ELEPHANT & CASTLE GROUP INC.
To be Held on October 22, 1999
THIS PROXY IS SOLICITED BY AND ON BEHALF OF MANAGEMENT
The undersigned, being a holder of Common shares without par value
("Common Shares") in the capital of Elephant & Castle Group Inc. (the "Company")
and hereby revoking any proxy previously given, hereby appoints RICHARD H.
BRYANT, or failing him, DAN DEBOU, or instead of either of them
____________________________ as proxyholder of the undersigned, to attend and
vote for the undersigned and otherwise act for and on behalf of and in the name
of the undersigned at the Adjourned Annual General Meeting (the "Meeting") of
shareholders of the Company, to be held on the 22nd day of October, 1999, and at
any adjournment or postponement thereof. The undersigned hereby instructs the
proxyholder to vote in favour or against, or withhold or abstain from voting, as
the case may be, all of the Common Shares in the capital of the Company or such
number of shares as may be noted hereon registered in the name of the
undersigned on any poll (ballot) in respect of the following matters, details of
which are provided in the Supplemental Proxy Statement, as indicated on the
reverse:
PLEASE MARK, SIGN, DATE AND RETURN THE
PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
<PAGE>
[ X ] Please mark your
vote as in this
example.
1. To vote in respect of the election of the following persons as Directors of
the Company for the term expiring at the close of the next annual meeting
of the Company:
Jeffrey Barnett
Colin Stacey
George Pitman
Martin O'Dowd
David Wiederecht
Anthony Mariani
Rick Bryant
[ ] FOR all nominees listed at right (except as marked to the contrary)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed at right
INSTRUCTION: If you have marked "FOR" above but wish to withhold authority for
any individual nominee, strike a line through the nominee's name in the list at
right.
2. To vote in respect of the appointment of Pannell Kerr Forster Worldwide as
auditors of the Company for the term expiring at the close of the next
annual meeting of the Company.
[ ] FOR [ ] DO NOT MARK THIS BOX [ ] ABSTAIN
THE UNDERSIGNED HEREBY AUTHORIZES THE PROXYHOLDER TO VOTE FOR ALL OF THE
NOMINEES FOR DIRECTOR LISTED IN ITEM 1 AT THE LEFT AND FOR THE MATTER IN ITEM 2
AT THE LEFT, UNLESS AN INSTRUCTION TO THE CONTRARY IS INDICATED.
The Notes to Proxy on the reverse are incorporated in and form part of this form
of proxy.
If this form of proxy is returned undated, the undersigned hereby authorizes the
Chairman of the Meeting or the Chairman's delegate to fill in the date October
20, 1999.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
Name: _____________________________________________
Address: __________________________________________
No. of Common Shares: _____________________________
Signature of Shareholder _______________________________________________________
(Proxy may not be valid unless signed)
DATED this _______________ day of ___________________________, 1999.
(Proxy may not be valid unless dated)
NOTE: Please sign exactly as name appears on your stock certificate. When shares
are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as
such. If a corporation, please sign in full corporate name by President or
other authorized officer. If a partnership, please sign in full
partnership name by authorized person.
