ELDORADO ARTESIAN SPRINGS, INC.
255 Artesian Drive
P.O. Box 445
Eldorado Springs, CO 80025
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held January 25, 1999
To Our Shareholders:
The Annual Meeting of Shareholders of Eldorado Artesian Springs, Inc., a
Colorado corporation, will be held at 11:00 a.m., Mountain Standard Time, on
Friday, January 25, 1999 at Chrisman, Bynum & Johnson, P.C., 1900 Fifteenth
Street, Boulder, CO 80302, and at any and all adjournments thereof, for the
following purposes, all of which are more completely set forth in the
accompanying Proxy Statement.
1. To elect five (5) Directors to serve until the next Annual Meeting of
Shareholders and until their successors are duly elected and qualified;
2. To ratify the appointment of Ehrhardt Keefe Steiner & Hottman, P.C.,
independent certified public accountants for the Company for the fiscal
year ended March 31, 1999.
3. To consider and act upon such other matters as may properly come before
the meeting or any adjournment thereof.
Only shareholders of record on December 31, 1998 as fixed by action of the Board
of Directors, will be entitled to notice of, and to vote at, the meeting or at
any and all adjournments thereof.
All shareholders are cordially invited to attend the Annual Meeting.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, TO INSURE YOUR
REPRESENTATION AT THE MEETING, PLEASE COMPLETE AND PROMPTLY MAIL YOUR PROXY IN
THE RETURN ENVELOPE PROVIDED. This will not prevent you from voting in person,
should you so desire, but will help assure a quorum and avoid added solicitation
costs. Your Proxy may be revoked at any time before it is voted.
BY ORDER OF THE BOARD OF DIRECTORS
Kevin M. Sipple, Secretary
Eldorado Springs, Colorado
January 15, 1999
ELDORADO ARTESIAN SPRINGS, INC.
255 Artesian Drive
P.O. Box 445
Eldorado Springs, CO 80025
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 25, 1999
SOLICITATION OF PROXIES
This Proxy Statement, together with the accompanying Proxy, is furnished in
connection with the Board of Directors' solicitation of Proxies for use at the
Annual Meeting of Shareholders of Eldorado Artesian Springs, Inc. (the
"Company"), to be held at 11:00 a.m., Mountain Standard Time, on Friday, January
25, 1999, at Chrisman, Bynum & Johnson, P.C., 1900 Fifteenth Street, Boulder, CO
80302, and at any and all adjournments thereof. It is anticipated that this
Proxy Statement and the accompanying Proxy will be mailed to the Company's
shareholders on or about January 15, 1999. Any shareholder who executes and
returns a Proxy may revoke it by delivering a written revocation to the offices
of the Company at any time before such Proxy is voted at the meeting; by
submitting a later dated Proxy; or by casting a ballot at the meeting.
The cost of solicitation of Proxies, including the cost of preparing, assembling
and mailing this proxy material to shareholders will be borne by the Company.
The Company may also reimburse banks, brokerage firms and other custodians,
nominees and fiduciaries for expenses incurred by them in sending proxy material
to the beneficial owners of stock. Brokerage houses, custodians, nominees and
fiduciaries are requested to vote directly Proxies held for their beneficial
owners. The Company will send the Proxy Statement and Annual Report directly to
the beneficial owners of the Company's shares if provided a complete list of
these owners, including name, address (including zip code), and number of shares
held as of the record date, December 31, 1998. In addition to solicitation by
mail, certain directors, officers and regular employees of the Company may
solicit Proxies by telegraph, telephone or personal interview. No additional
remuneration will be paid for such solicitation.
SHARES OUTSTANDING AND VOTING RIGHTS
The Company has fixed the close of business on December 31, 1998, as the record
date for determining the holders of its $0.001 par value Common Stock who will
be entitled to notice of and to vote at the meeting. On December 31, 1998, the
Company had issued and outstanding 2,995,495 shares of the Company's $0.001 par
value Common Stock. Holders of the Company's Common Stock are entitled to one
vote for each share owned of record. The presence in person or by proxy of the
holders of a majority of the shares outstanding and entitled to vote at the
meeting shall constitute a quorum. Affirmative votes of the holders of a
majority of the quorum are required for the election of Directors and the
ratification of auditors. In the case of the election of directors, an
abstention from voting has no effect on the item on which the shareholder
abstained from voting. All shares represented by valid Proxies will be voted in
accordance therewith at the meeting.
ELECTION OF DIRECTORS
(Proxy Item #1)
The Company's Bylaws provide that the Board of Directors shall determine by
resolution, and may increase or decrease, to not less than three, the number of
Directors of the Company. The Board of Directors was recently increased to five
members, The Board of Directors recommends the election as Directors of the five
nominees listed below, to hold office until the next Annual Meeting of
Shareholders or until their successors are elected and qualified or until their
earlier death, resignation or removal.
The enclosed Proxy provides that each shareholder may specify that his or her
shares be voted "FOR" the election of the five nominees named herein as
Directors with provision to "withhold authority" as to any individual Director.
At the Annual Meeting, the shares represented by the Proxies will be voted in
accordance with shareholder instructions, and, if no instructions are given, for
the election of the five nominees. In the event any nominee is unable or
declines to serve, which the Board does not anticipate, it is intended that such
Proxies will be voted for the election of the remaining nominees and for
substitute nominees, if any, recommended by the Board of Directors.
The following table sets forth the name and age of each nominee for Director,
indicating all positions and offices with the Company presently held by him, and
the period during which he has served as such:
All Positions and Period Served as
Offices Held Director of
Name Age with the Company the Company
- ----------------- -------- -------------------- --------------------
Douglas A. Larson 43 President, Treasurer 1983 to Present
and Director
Kevin M. Sipple 42 Vice-President, 1983 to Present
Secretary and
Director
Jeremy S. Martin 43 Vice-President and 1983 to Present
Director
George J. Schmitt 67 Director 1998 to Present
Don P. Van Winkle 42 Director 1998 to Present
The principal occupation and business experience of each nominee for Director
are set forth below.
Douglas A. Larson was a co-founder of Eldorado Artesian Springs, Inc. in 1983
and has been President of Eldorado since 1991. Mr. Larson's responsibilities
include corporate strategy and administration of all operating activities at
Eldorado. Prior to his association with Eldorado, Mr. Larson was employed as a
stock broker with Richey-Frankel and Co. from 1981 to 1983 and with B.J.
Leonard, Inc. from 1980 to 1981. Mr. Larson holds a Bachelor of Science Degree
in Business Finance from the University of Colorado.
Kevin M. Sipple was a co-founder of Eldorado Artesian Springs, Inc. in 1983 and
has served as Vice President and Secretary of Eldorado since 1991. Mr. Sipple's
responsibilities include management of the wholesale products division. In
addition, he is also responsible for quality control, testing, source protection
and is a licensed Water Plant operator and manages the utility productions.
Prior to his association with Eldorado, Mr. Sipple was employed by King Soopers,
Inc. from 1972 to 1983, serving in a variety of positions including inventory
ordering and control. Mr. Sipple attended the University of Colorado from 1973
to 1977.
Jeremy S. Martin was a co-founder of Eldorado Artesian Springs, Inc. in 1983 and
has served as Vice President since 1985. Mr. Martin's responsibilities include
management of the five gallon sales and service business. In addition, he is
also responsible for special event promotions and public relations. Prior to his
association with Eldorado, Mr. Martin was an independent distributor for Sunasu
International, a nutritional products manufacturer. Mr. Martin holds a Bachelor
of Science Degree in Business from the University of Colorado.
George J. Schmitt has been a director of the Company since 1998. Mr. Schmitt has
over forty years of experience in the bottled water business. From 1968 to 1996,
Mr. Schmitt was CEO and President of Hinckley & Schmitt Bottled Water Group. He
built an old family business from a small local company in Chicago, Illinois
with revenues of less than one million dollar to a two hundred million dollar
profitable industry leader. Mr. Schmitt was a founding member of the American
Bottled Water Association (now called the International Bottled Water
Association) in 1959 and was inducted into the Industry Hall of Fame in 1991.
Mr. Schmitt is a director of Eureka Bottled Water Co. and National Fuel
Corporation. Mr. Schmitt holds a Bachelor of Arts degree from Dartmouth.
Don P. Van Winkle has been a director of the Company since 1998. From 1996 to
present, Mr. Van Winkle has served as President and CEO of Van Winkle's IGA, a
family owned six store retail supermarket chain in New Mexico. From 1991 to
1996, he resided in Colorado where he provided Contract Chief Financial Officer
and Advisory Services to a wide range of industry which included the Company.
From 1980 to 1991, Mr. Van Winkle was a corporate banker with the two largest
Colorado based bank holding companies (formerly United Banks and First National
Bancorporation). Mr. Van Winkle is a director of The Great Divide Brewing
Company (Denver, CO) and Fresh Produce Sportswear, Inc. (Boulder, CO). He holds
a Bachelor of Science Degree in Finance from New Mexico State University.
Directors are elected at each annual meeting of stockholders and serve until the
next annual meeting. Executive officers are elected at each annual meeting of
the Board of Directors.
During the fiscal year ended March 31, 1998, the Company's Board of Directors
held three (3) formal, in-person meetings. All directors were in attendance.
There is no family relationship between any Director or nominee for Director of
the Company and any other Director, nominee or Executive Officer of the Company.
Committee of the Board of Directors
The Board of Directors will elect an Audit Committee at each annual meeting.
Among other functions, the Audit Committee will make recommendations to the
Board of Directors regarding the selection of independent auditors, review the
results and scope of the audit and other services provided by the Company's
independent auditors, review the Company's financial statements and review and
evaluate the Company's internal control functions.
Compliance with Section 16(a)
Section 16(a) of the Exchange Act requires the Company's directors, executive
officers and holders of more than 10% of the Company's Common Stock to file with
the Securities and Exchange Commission initial reports of ownership and reports
of changes in ownership of Common Stock of the Company. Based solely upon a
review of ownership reports and reports of changes in ownership furnished to the
Company during the fiscal year ended March 31, 1998, to the best of the
Company's knowledge, the Company's directors, officers and holds of more than
10% of its Common Stock complied with all Section 16(a) filing requirements.
Compensation of Outside Directors
Each outside director receives compensation in the amount of one thousand
dollars ($1,000) for each annual or special meeting of the Board he attends in
person or by qualified electronic means. In addition, each outside director will
receive compensation in the amount of five hundred dollars ($500) for each
committee meeting he attends in person or by electronic means. The Company also
grants each outside director, on his term commencement date, a ten year
non-qualified stock option with the right and option to purchase 50,000 shares
of common stock of the Company which is exercisable at $2.75 per share. Assuming
the outside director remains a director of the Company, the options vest at the
rate of 25% each year beginning one year after the date of grant.
In addition, if the Company engages an outside director as an independent
consultant, for such duties and responsibilities as the President determines
("Consulting Services"), the outside director will be compensated at the rate of
one hundred fifty dollars ($150) per hour, plus nominal travel expenses as
agreed upon when necessary. The outside director has the option, at the
beginning of each year, of electing to receive all of the compensation for
Consulting Services in the form of non-qualified options for shares of the
Company's common stock, at the rate of 50 shares per hour, such options vesting
quarterly, or in cash to be paid monthly.
EXECUTIVE COMPENSATION
The following table sets forth the compensation of Eldorado's President, Douglas
A. Larson, for the fiscal years ended March 31, 1996, 1997 and 1998. No other
executive officer receives annual compensation in excess of $100,000 per year.
Annual Compensation
Name and Principal Other Annual
Position Year Salary Bonus Compensation (1)
Douglas A. Larson 1998 $ 66,832 $ - $ 11,440
1997(2) $ 71,524 $ - $ 6,282
1996(2) $ 102,618 $ - $ 6,282
(1) Includes $4,690 annual health care premiums; a 3% Company match for all
contributions to the 401(k) plan, the annual premium cost for key man life
insurance of $1,592, and a car allowance of $5,158 per year.
(2) In 1992, Eldorado went through a restructuring of Company debt. The lender
offering the debt would not assume all corporate debt outstanding. A
portion of Eldorado's debt was replaced by Mr. Larson, who assumed this
obligation personally and his salary was increased to cover the cost of
the note.
Stock Option Plan
On September 10, 1997 Eldorado adopted a Stock Option Plan which reserves
875,000 shares for the grant of non-qualified stock options ("Non-Qualified
Options"), and incentive stock options ("Incentive Options"). The Plan is
administered by the Board of Directors.
All salaried officers and key employees of Eldorado and any subsidiaries are
eligible to receive options under the Plan. The Plan will terminate by its terms
on September 10, 2007, and also may be terminated at any time by the exercise of
all outstanding options.
Options granted may be exercisable for up to ten years. If any options granted
under the Plan expire, terminate or are canceled for any reason without having
been exercised in full, the corresponding number of unpurchased shares reserved
for issuance upon exercise thereof will again be available for the purposes of
the Plan. The purchase price of the Common Stock under each option shall not be
less than the fair market value of the Common Stock on the date on which the
option is granted. The option price is payable either in cash, by the delivery
of shares of Eldorado's common stock, or a combination of cash and shares.
Options will be exercisable immediately, after a period of time or in
installments. Options will terminate not later than the expiration of ten years
from the date of grant, subject to earlier termination due to termination of
service. Except under certain circumstances where termination of service is due
to retirement or death, in which event options may be exercised for an
additional period of time following such termination of service, the option may
be exercised only while the optionee remains in the employ of Eldorado or one of
its subsidiaries.
As of September 30, 1998, there were options to purchase an aggregate of 345,500
shares of common stock outstanding, of which 113,500 immediately vested. None of
these options were granted to executive officers of Eldorado. All of the options
were granted at $2.75 per share, representing 100% of fair market value on the
date of grant.
PRINCIPAL SHAREHOLDERS AND
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of December 31, 1998, the number and
percentage of the Company's shares of $0.001 par value Common Stock owned of
record and beneficially by each person owning more than five percent (5%) of
such Common Stock and by all individual Officers and Directors and by all
Officers and Directors as a group.
Percent Owned
--------------------------------------
Name and Address Number of Before After
of Beneficial Owners Shares Offering Offering
- ------------------------ ---------- -------- ---------
Kevin M. Sipple
43 Fowler Lane
Eldorado Springs, CO 80025 763,674 24.9% 20.3%
Douglas A. Larson
12 Baldwin Circle
Eldorado Springs, CO 80025 770,673(1) 25.1% 20.5%
Jeremy S. Martin
2707 4th Street
Boulder, CO 80302 771,060 25.1% 20.5%
George J. Schmitt
11 Castle Pines J
Castle Rock, CO 80104 - - -
Don P. Van Winkle
1600 Indian Wells
Alamogordo, NM 88310 - - -
All Officers and Directors as
a Group (seven persons) 2,375,407(1) 77.4% 63.0%
- ----------------------
(1) Includes options to purchase 7,000 shares held by Mr. Larson's spouse
which are currently exercisable and options to purchase 70,000 shares held
by executive officers of the Company.
INTEREST OF MANAGEMENT AND
OTHERS IN CERTAIN TRANSACTIONS
During the last fiscal year, there were no transactions in which the amount
involved exceeded $60,000 between the Company and any director or executive
officer or any security holder known to own more than five percent of the
Company's stock, or any immediate family member of any of the foregoing persons,
and no such transactions are currently proposed.
APPROVAL OF AUDITORS
(Proxy Item #2)
The Board of Directors has appointed Ehrhardt Keefe Steiner & Hottman, P.C. to
serve as the Company's independent auditors for the current fiscal year, subject
to the approval of the shareholders. The firm has audited the financial records
of the Company for the fiscal year ending March 31, 1998 and is considered well
qualified.
ANNUAL REPORT AND FINANCIAL STATEMENTS
You are referred to the Company's Annual Report to Shareholders including
financial statements, for the fiscal year ended March 31, 1998. The Annual
Report to Shareholders is not incorporated in the Proxy Statement and is not to
be considered part of the soliciting material. THE COMPANY WILL FURNISH, WITHOUT
CHARGE, A COPY OF THE 10-KSB FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
ON JULY 1, 1998, TO ANY SECURITY HOLDER REQUESTING SUCH COPY IN WRITING.
MISCELLANEOUS
Matters to be Presented:
As of the date of this Proxy Statement, Management does not know of any other
matters to be presented at the Annual Meeting other than those set forth herein.
However, if any other matters properly come before the Meeting, the accompanying
Proxy will be voted in accordance with the best judgment of the Proxy holders.
Shareholder Proposals for 2000 Annual Meeting:
The Board of Directors will make provision for presentation of shareholder
proposals at the 2000 Annual Meeting of Shareholders if such proposals are
submitted by eligible shareholders who have complied as to the substance of the
proposal with the relevant regulations of the Securities and Exchange
Commission. Any such proposals must be included in the Company's Proxy Statement
and provision for voting thereon made in the Proxy card. In order to prepare
such proxy materials on a timely basis, such proposals must be delivered to the
Company's offices not later than June 30, 1999.
BY ORDER OF THE BOARD OF DIRECTORS
Douglas A. Larson, President
January 15, 1998.
PROXY CARD
ELDORADO ARTESIAN SPRINGS, INC.
SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF SHAREHOLDERS TO BE HELD JANUARY 25, 1999
The undersigned hereby constitutes, appoints and authorizes Douglas A. Larson or
Kevin M. Sipple, and each of them, the true and lawful attorneys and Proxies of
the undersigned with full power of substitution and appointment, for and in the
name, place and stead of the undersigned to act for and vote as designated
below, all of the undersigned's shares of the $0.001 par value common stock of
Eldorado Artesian Springs, Inc., a Colorado corporation, at the Annual Meeting
of Shareholders to be held at Chrisman, Bynum & Johnson, P.C., 1900 Fifteenth
Street, Boulder, CO 80302 at 11:00 a.m., Mountain Standard Time, on January 25,
1999 and at any and all adjournments thereof, for the following purposes:
1. To elect five (5) Directors to serve until the next Annual Meeting of
Shareholders or until their successors are duly elected and qualified:
For all nominees listed below (except as marked to the contrary):
Douglas A. Larson
Kevin M. Sipple
Jeremy S. Martin
George J. Schmitt
Don P. Van Winkle
(INSTRUCTION: To withhold authority to vote for any individual nominee, draw a
line through or otherwise strike out his or her name. If authority to vote for
the election of any nominee is not withheld, the execution of this Proxy shall
be deemed to grant such authority.)
2. To ratify the appointment of Ehrhardt Keefe Steiner & Hottman, P.C. as
independent certified public accountants for the Company for the fiscal
year ended March 31, 1999.
FOR AGAINST ABSTAIN
3. To transact such other business as may properly come before the meeting,
or any adjournment thereof.
FOR AGAINST ABSTAIN
The undersigned hereby revokes any Proxies as to said shares heretofore given by
the undersigned, and ratifies and confirms all that said attorneys and Proxies
may lawfully do by virtue hereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1 AND 2. THIS PROXY CONFERS DISCRETIONARY AUTHORITY IN RESPECT TO
MATTERS NOT KNOWN OR DETERMINED AT THE TIME OF THE MAILING OF THE NOTICE OF THE
ANNUAL MEETING OF SHAREHOLDERS TO THE UNDERSIGNED.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement furnished herewith.
Dated: January __, 1999
___________________________
___________________________
Signature(s) of Shareholder(s)
Signature(s) should agree with the name(s) shown hereof. Executors,
administrators, trustees, guardians and attorneys should indicate when signing.
Attorneys should submit powers of attorney.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ELDORADO ARTESIAN
SPRINGS, INC. PLEASE SIGN AND RETURN THIS PROXY TO THE COMPANY. THE GIVING OF A
PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.