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EXHIBIT 3.6
MEMORANDUM OF AGREEMENT dated as of October 19, 1999 by and among the parties
listed on Schedule A hereto (the "Shareholder Group"), the parties listed on
Schedule B hereto and Elephant & Castle Group Inc. (the "Company").
Background:
A. At the Annual General Meeting (the "Meeting") of Shareholders
of the Company held on August 23, 1999, representatives of the
Shareholder Group expressed dissatisfaction over certain
aspects of the Company's business and affairs, including the
conduct of the board of directors (the "Board"), and sought to
adjourn the meeting pending the mailing of a revised proxy
statement by the Company containing expanded disclosure of
certain matters and in order to provide the Shareholder Group
with an opportunity to discuss their concerns with management
of the Company ("Management");
B. The Meeting was adjourned until 9:00 a.m. on Friday, October
22, 1999 and on September 13, 1999 a supplemental proxy
statement (the "Supplemental Proxy Statement") was mailed to
all Shareholders.
C. Representatives of the Shareholder Group have had discussions
with representatives of Management and have reached certain
agreements, as set out below, as to matters to be proposed to
and considered by Shareholders at the Meeting and as to
certain actions to be taken by the Company following the
Meeting.
1. ELECTION OF DIRECTORS
Each of the members of the Shareholder Group agrees not to nominate or
to vote or cause to be voted any of the shares beneficially owned by
such member, in person or by proxy, at the adjourned Meeting for any
candidates for the Board other than the nominees listed in the
Supplemental Proxy Statement.
2. APPOINTMENT OF ADDITIONAL INDEPENDENT DIRECTORS
At the first meeting of the Board following the conclusion of the
adjourned Meeting,, which will be held as soon as practicable following
the conclusion of the adjourned Meeting and in any event within thirty
(30) days of the date of this Agreement, the Company, through the
Board, will, pursuant to Section 110(3) of the COMPANY ACT, RSBC 1996 c
62, as amended and Article 13.4 of the Company's Articles, cause the
following persons to be appointed as additional directors for a term
(subject to the provisions of Paragraph 5 of this Agreement) to expire
at the conclusion of the annual general meeting of the Company to be
held in the year 2000, such appointments to take effect upon the
receipt of signed forms of consent to act:
Mr. Xxxxx Xxxxxxxx
Apt. 00X, Xxx Xxxxxxxxx Xxxxx Xxxxxxxxxx
Xxxxxxxx, Xxxxxxxxx
Vice-President and Director of Equatorial Energy, Inc.
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Xx. Xxxxxxx X. XxXxxx
0000 Xxxxxxx Xxxxx
Xxxx Xxxxxxxxx, XX X00 0X0
Chairman of Canadian Maple Leaf Financial
3. APPOINTMENT OF PRESIDENT AND CHIEF EXECUTIVE OFFICER
(a) Within a reasonable period following conclusion of the
adjourned Meeting, and in any event within 30 days of the date
of this Agreement, Xx. X'Xxxx will resign as President of the
Company and the Company, through the Board, will appoint Mr.
Xxxxxxx Xxxxxx as President of the Company in replacement of
Xx. Xxxxxx X'Xxxx and will confirm Xx. Xxxxxx in his current
office as Chief Executive Officer.
(b) Within 120 days of the date of this Agreement, all duties and
functions being discharged and exercised by Xx. X'Xxxx will be
assumed by other officers of the Company reporting to Xx.
Xxxxxx and from the date of such assumption of duties the
Company will make no further payments of remuneration to Xx.
X'Xxxx (other than directors' fees approved by the Board to be
paid to Directors who are independent of the Company's
Management or payments made in the 90 day period following the
termination of Xx. X'Xxxx'x existing service and consulting
agreements, pursuant to the terms of such agreements).
(c) Xx. Xxxxxx'x appointment will be made pursuant to a service
contract for a one-year term to be approved by the members of
the Board who are independent of the Company's Management
which will contain provisions as to compensation and severance
arrangements approved by the Compensation Committee of the
Board and to the effect that the renewal or extension of its
term will be subject to a satisfactory assessment of Xx.
Xxxxxx'x performance made by the Board (with any director who
shall have been or shall at such time be part of the Company's
Management abstaining from voting on such assessment).
4. NEXT ANNUAL GENERAL MEETING
The Company will hold its next Annual General Meeting of Shareholders
(the "2000 AGM") on or prior to June 29, 2000. Prior to April 27, 2000,
the Company will seek to reach agreement among the members of the Board
as to the nominees for director to be proposed to Shareholders at the
2000 AGM. Failing agreement among all directors, the Board may act in
accordance with the preference of a majority, but:
(a) Xx. X'Xxxx will not be included among the Company's nominees;
(b) if the Company proposes a nominee for election to the Board in
place of Xx. X'Xxxx, such nominee will be independent of
Management, not affiliated with any major creditor or
shareholder of the Company and preferably with a hospitality
industry or public company background; and
(c) if Mr. Xxxxx Xxxxxxxx is not included among the Company's
nominees for election to the Board, the Company will nominate
in his stead a person independent of Management, not
affiliated with any major creditor or shareholder of the
Company and preferably with a hospitality industry or public
company background.
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5. CHANGES IN BOARD COMPOSITION PRIOR TO THE 2000 AGM
(a) In certain events, the Shareholder Group will have the right
to require changes in the Board prior to the 2000 AGM,
specifically:
- if the Company shall not have achieved a measurable
improvement in financial and operational performance
(as defined in subparagraph 5(d) below) by February
25, 2000, or
- if the stock of the Company shall not be listed on
the Nasdaq system on February 25, 2000.
(b) If either of the above events occur, the Shareholder Group (or
members of the Shareholder Group holding at least two-thirds
of the aggregate number of shares held by all members of the
Shareholder Group) may by notice in writing ("Notice") require
the Company to make changes to the Board in accordance with
the procedure set out in subparagraph 5(c) below.
(c) Forthwith upon receipt of Notice, Mr. Xxxxx Xxxxxxxx and Xx.
Xxxxxx X'Xxxx shall resign from the Board and the boards of
directors of all subsidiaries of the Company (and in the
absence of a letter of resignation will be deemed to have
resigned) and the two vacancies created by their resignations
shall as soon as practicable and in any event within 30 days
of receipt of the Notice be filled by the appointment of two
persons, independent of Management, not affiliated with any
major creditor or shareholder of the Company and preferably
with a hospitality industry or public company background,
selected by:
(i) unanimous agreement of the remaining directors; or
(ii) failing agreement within 20 days of receipt of
Notice, one director shall be selected by Xx. Xxxxxx
Xxxxxx, Attorney of 000 Xxxxxxxx Xxxx, Xxxxx 000, Xxx
Xxxxxxx, Xxxxxxxxxx, 00000 from a list of three
persons submitted by the President of the Company to
Xxxxxx Xxxxx and the Company shall cause one director
to be selected by Xx. Xxxxx X. Xxxxxxxx, Q.C. of
Xxxxxxx & XxXxxxxx, Canadian counsel to the Company,
from a list of three persons submitted on behalf of
the Shareholder Group. Such selections shall be made
and the Company shall be notified of such selections
within seven (7) days of Xxxxxx Downs and Xxxxxxx &
DuMoulin receiving the list of nominees, in each
case. (In case either Xx. Xxxxxx or Xx. Xxxxxxxx are
unwilling or unable to act, their replacements shall
be selected by the Shareholder Group or the Board, as
the case may be.)
(d) For the purpose of this paragraph 5, "a measurable improvement
in financial and operational performance" shall conclusively
be deemed to have occurred in either of the following events:
- the weighted average price of the Company's stock for
the 30 trading days ending on February 25, 2000 shall
be US$1.50 or more; or
- the weighted average price of the Company's stock for
the 30 trading days ending on February 25, 2000 shall
be US$1.00 or more AND the Company shall have
achieved earnings from operations in the nine week
period ended
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February 25, 2000 in excess of those
reported for the same period in 1999 as certified by
the President and Chief Executive Officer on or
before March 10, 2000.
(e) If the Company takes any action to consolidate its shares, the
target prices of US$1.50 and US$1.00 shall be proportionately
adjusted to reflect the consolidation. In the event of
disagreement among the partners as to the adjustment to be
made, the Company's auditors, at the instance of any party,
will determine the adjustment and the auditor's decision will
be binding on the parties.
(f) Except as contemplated by this Agreement, prior to April 27,
1999, the Shareholders Group will not take any other steps
directed at changing the composition of the Board.
6. MISCELLANEOUS
(a) The Company will ensure that all its SEDAR filings are brought
up to date within 30 days of the date of this Agreement.
(b) By way of a contribution to the out-of-pocket costs of the
Shareholder group, the Company will pay to Xxxxxx Downs, as
solicitors for the Shareholder Group, the sum of Cdn. $20,000
by October 25, 1999 and a further Cdn.$20,000 at such time as
the Board considers it appropriate but in no event later than
June 30, 2000.
(c) Following the conclusion of the adjourned Meeting and the
appointment of the additional directors as contemplated in
paragraph 2, the Company will issue a news release which will
include appropriate disclosure of the material aspects of this
Agreement. The Company will consult with Xxxxxx Xxxxx as to
the contents of the proposed news release and will provide to
Xxxxxx Downs a copy of the release prior to publication.
(d) Any notice to be given by the Shareholder Group or any member
of the Shareholder Group to the Company must be in writing and
delivered or sent by facsimile transmission to the Company at
its Vancouver office at Fifth Floor, 000 Xxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx X0X 0X0 Telephone:
000-000-0000, Facsimile: 000-000-0000, marked for the
attention of the President. Any notice to be given by the
Company to the Shareholder Group or to any member of the
Shareholder Group must be in writing and delivered or sent by
facsimile transmission, c/x Xxxxxx Downs, Barristers and
Solicitors, 1200 Waterfront Centre, 000 Xxxxxxx Xxxxxx, X.X.
Xxx 00000, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx X0X 0X0,
Telephone: 000-000-0000, Facsimile: 000-000-0000, marked for
the attention of Xx. Xxxx X. Xxxxxxxx.
(e) Time is of the essence of this Agreement.
(f) This Agreement will enure to the benefit of and be binding
upon the respective legal representatives and successors of
the parties.
(g) This Agreement may not be amended except in writing signed by
the parties.
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(h) None of the parties may assign any right, benefit or interest
in this Agreement without the written consent of the other
parties to this Agreement, and any purported assignment
without such consent will be void.
(i) This Agreement will be governed by and construed in accordance
with the laws of the Province of British Columbia and the
federal laws of Canada applicable therein.
(j) This Agreement constitutes the entire agreement among the
parties pertaining to the subject matter hereof and supersedes
every previous agreement, communication, expectation,
negotiation, representation or understanding, whether oral or
written, express or implied, among the parties with respect to
the subject mater of this Agreement.
(k) This Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original but all of
which together will constitute one and the same instrument.
This Agreement and any counterpart thereof may be delivered by
facsimile and when delivered will be deemed to be an original.
7. EXECUTION
To evidence their agreement, the members of the Shareholder Group have
signed opposite their respective names on Schedule A hereto and the
Company has executed this Agreement by its authorized officers below.
In order to confirm their concurrence that the obligations undertaken
by the Company in this Agreement are in the best interests of the
Company and its shareholders and to evidence their agreement to act
accordingly, the persons to be nominated or appointed as directors,
including the two additional directors, to be appointed under paragraph
2, have signed opposite their respective names in Schedule B.
DATED this 21st day of October, 1999.
ELEPHANT & CASTLE GROUP INC.
By:
---------------------------------
X. Xxxxxx - Director & CEO
By:
---------------------------------
Xxxxxxx Xxxxxxx - Director
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SCHEDULE A
MEMBERS OF THE SHAREHOLDER GROUP
NUMBER OF SHARES
NAME BENEFICIALLY OWNED SIGNATURE
Xxxxx Xxxxxxx 552,375
--------------------------
Xxxxxx Xxxxxxx 80,100
--------------------------
Xxxxxxxx Xxxxxx 38,000
--------------------------
Xxxxxx Xxxxxx 20,000
--------------------------
Renovay Investments Ltd. 4,000
--------------------------
Xxx Xxxxxx 11,000
--------------------------
Xxx XxXxxxx 2,500
--------------------------
Xxxxxx Ram-Ditta 700
--------------------------
Xxxxxxx Xxxxx 18,000
--------------------------
Xxxxxxxx Xxxxx 50,000
--------------------------
Xxxxxxxx Xxxxxxxx 8,000
--------------------------
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SCHEDULE B
MEMBERS OF PROPOSED BOARD OF DIRECTORS
NAME SIGNATURE
Xxxxxxx X. Xxxxxxx
-----------------------------------------
Xxxxxx X'Xxxx
-----------------------------------------
Xxxxx Xxxxxx
-----------------------------------------
Xxxxx Xxxxxxxxxx
-----------------------------------------
Xxxxxxx Xxxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxxx X. XxXxxx
-----------------------------------------
Xxxxx Xxxxxxxx
-----------------------------------------
ELEPHANT & CASTLE INTERNATIONAL, INC. 5 GTM/LEH/JAW 042199
ALAMO GRILL FRANCHISE AGREEMENT 475250.5
