PRELIMINARY PROXY
ECHO SPRINGS WATER CO., INC.
HACKENSACK AVENUE, BUILDING 100A
KEARNY, NEW JERSEY 07032
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 23, 1996 AT 10:00 A.M.
To the Shareholders of
Echo Springs Water Co., Inc.
Notice is hereby given that the Annual Meeting of Shareholders (the
"Meeting") of Echo Springs Water Co., Inc., a New York corporation (the
"Company"), will be held at the offices of the Company, Hackensack Avenue,
Building 100A, Kearny, New Jersey 07032 on September 23, 1996, at the hour of
10:00 a.m. local time for the following purposes:
(1) To elect three (3) Directors of the Company for the coming year;
(2) To consider and approve a proposal to effect a 25 for 1 reverse stock
split of the outstanding shares of Common Stock of the Company; and
(3) To transact such other business as may properly come before the
Meeting.
Only shareholders of record at the close of business on September 4, 1996
are entitled to notice of and to vote at the meeting or any adjournment thereof.
By Order of the Board of Directors
Michael S. Rakusin, President
Septmber 4, 1996
IF YOU WISH TO VOTE IN FAVOR OF EACH OF THE PROPOSALS AND FOR THE
NOMINEES PRESENTED, CHECK THE APPROPRIATE BOX AND SIGN, DATE AND
RETURN THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES. IN ANY EVENT YOUR PROMPT
RETURN OF A SIGNED AND DATED PROXY WILL BE APPRECIATED.
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ECHO SPRINGS WATER CO., INC. Hackensack Ave., Bldg. 100A
Kearny, New Jersey 07032
September 23, 1996
PROXY STATEMENT
This Proxy Statement and the accompanying proxy are furnished by the Board
of Directors of the Company in connection with the solicitation of proxies for
use at the 1996 Annual Meeting of Shareholders (the "Meeting") referred to in
the foregoing notice. It is contemplated that this Proxy Statement, together
with the accompanying form of proxy and the Company's Annual Report for the
fiscal year ended October 31, 1995, will be mailed to shareholders on or about
September 6, 1996.
The record date for the determination of shareholders entitled to notice of
and to vote at the Meeting is September 4, 1996. On that date there were issued
and outstanding, 44,449,910 shares of Common Stock, par value $.0001 per share.
The presence, in person or by proxy, of the holders of a majority of the shares
of Common Stock outstanding and entitled to vote at the Meeting is necessary to
constitute a quorum. In deciding all questions, a shareholder shall be entitled
to one vote, in person or by proxy, for each share held in his name on the
record date.
All proxies received pursuant to this solicitation will be voted (unless
revoked) at the Annual meeting of September 23, 1996, or any adjournments
thereof in the manner directed by a shareholder and, if no direction is made, in
favor of the Proposals. Any shareholder giving a proxy has the power to revoke
it any time prior to voting but a revocation will not be effective until the
Company has received a revoking instrument or a proper proxy of later date. Mere
attendance at the meeting, without such revoking instrument, will not revoke the
proxy.
The favorable vote of holders of a majority of the shareholders present at
the Meeting is required to approve all proposals.
As of the date of this Proxy Statement, the Board of Directors knows of no
matters other than the foregoing that will be presented at the Meeting. If any
other business should properly come before the Meeting, the accompanying form of
proxy will be voted in accordance with the judgment of the persons named
therein, and discretionary authority to do so is included in the proxies. All
expenses in connection with the solicitation of this proxy will be paid by the
Company. In addition to solicitation by mail, officers, directors and regular
employees of the Company who will receive no extra compensation for their
services, may solicit proxies by telephone, telegraph, or personal calls.
Management does not intend to use specially engaged employees or paid solicitors
for such solicitation. Management intends to solicit proxies which are held of
record by brokers, dealers, banks, or voting trustees, or their nominees, and
may pay the reasonable expenses of such record holders for completing the
mailing of solicitation materials to persons for whom they hold the shares. All
solicitation expenses will be borne by the Company.
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SECURITY OWNERSHIP AND CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following tabulation shows the security ownership as of August 31, 1996
of (i) each person known to the Company to be the beneficial owner of more than
5% of the Company's outstanding Common Stock, (ii) each Director of the Company,
and (iii) all Directors and Officers as a group.
Amount
and Nature Approximate
Name of of Beneficial Percent
Beneficial Owner Ownership (1) of Class (2)
- - - ---------------- ------------- ------------
Michael S. Rakusin 5,693,980 (1) 13.5%
ESWC, Inc. 5,256,064 (2) 12.7%
All officers and director as a group 5,693,980 13.5%
- - - ----------
(1) Includes 693,980 shares of common stock issuable upon exercise of warrants,
exercisable at $.25 per share and expiring on October 31, 1996.
(2) The shareholders of ESWC, Inc. are Mr. Grey (a former officer and director
of the Company), Richard Schuttenhelm, Lorenzo Ardito, and Kenneth and
Martha Harrington. Pursuant to an oral agreement, the shares owned by the
ESWC, Inc. are voted based upon the decision of the holders of 90% of the
outstanding shares of ESWC, Inc.
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PROPOSAL ONE: ELECTION OF DIRECTORS
Management recommends that you vote in favor of the nominees
named to the Board of Directors
Three (3) directors are to be elected at the meeting for terms of one year
each and until their successors shall be elected and qualified. It is intended
that votes will be cast pursuant to such proxy for the election of the three
persons whose names are first set forth below unless authority to vote for one
or more of the nominees is withheld by the enclosed proxy, in which case it is
intended that votes will be cast for those nominees, if any, with respect to
whom authority has not been withheld. If all of the nominees should become
unable or unwilling to serve as a director, it is intended that the proxy be
voted, unless authority is withheld, for the election of such person, if any, as
shall be designated by the Board of Directors. Directors will be elected by a
majority of the votes cast at the Meeting.
The following information is submitted concerning the three nominees for
election, to serve as directors of the Company until the 1997 Annual Meeting or
until their successors are elected and have qualified.
NOMINEES FOR ELECTION
The following table sets forth information concerning each nominee for
director of the Company, each of which has been nominated to continue as a
director of the Company.
First
Became Principal
Name Age Director Occupation
Michael S. Rakusin 49 1987 President
Edward J. Metzger 39 ___ Vice-President
Frank LaSala 73 ___ ______________
- - - ----------
(1) Directors are elected at the annual meeting of shareholders and shall serve
until their successors are elected and qualified.
Michael S. Rakusin has been the Treasurer and a Director of Echo Springs
since 1987. He was appointed Secretary in June 1987; Executive Vice President in
November 1988; and President in April 1991. From 1984 to March 1987, Mr. Rakusin
was self-employed, rendering financial and
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accounting services. From 1976 to 1984, he was employed as an accountant by J.M.
Stern & Co., Certified Public Accountants. Mr. Rakusin is a Certified Public
Accountant in the State of New York. He earned a Bachelor of Business
Administration Degree from the City University of New York in 1976.
Edward Metzger has been an officer of Echo Springs since 1992. Mr. Metzger
joined Echo Springs after serving as Vice-President of Stony Brook Springs
Water, Inc, a company whose assets were acquired by Echo Springs. Mr. Metzger
earned a Bachelor of Arts Degree from Montclair State College in 1984.
Frank LaSala has been active as an administrator of his own business,
Sal-Ma Instruments Corporation, for the past 45 years.
Executive Compensation
The following tabulation shows the total compensation paid by the Company
for services in all capacities during the fiscal year ended October 31, 1993,
1994 and 1995.
<TABLE>
<CAPTION>
Long Term Compensation
----------------------
Annual Compensation(1) Awards Payouts
---------------------- ------ -------
Other Restricted All
Name and Annual Stock Options LTIP Other
Principal Position Year Salary Bonus Compensation Awards($) /SARs Payouts Compensation
- - - ------------------ ---- ------ ----- ------------ --------- ----- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael S. Rakusin 1995 $ 80,300 0 0 0 0 0 0
President 1994 $ 89,117 0 0 0 0 0 0
1993 $ 60,000 0 0 0 0 0 0
Edward J. Metzger 1995 $ 82,000 0 0 0 0 0 0
Vice President 1994 $104,000 0 0 0 0 0 0
1993 $104,000 0 0 0 0 0 0
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE
ELECTION OF THE THREE DIRECTORS HEREIN NAMED
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PROPOSAL TWO: APPROVAL OF TWENTY-FIVE FOR ONE
REVERSE STOCK SPLIT
Management recommends that you vote in favor of the proposed
reverse stock split
The Board of Directors of the Company has approved, subject to shareholder
approval, an amendment to the Company's Certificate of Incorporation to effect a
twenty-five-for-one reverse stock split pursuant to which each twenty-five
shares of the Company's Common Stock outstanding as of the end of business on
the Record Date will be replaced by one share of Common Stock ("Reverse Stock
Split"). The Reverse Stock Split will reduce the number of outstanding shares of
Common Stock of the Company as of the record date from 44,499,910 to 1,779,996.
The affirmative vote of the holders of a majority of the shares of the
Common Stock outstanding on the Record Date will be required to approve the
Reverse Stock Split. As a result, abstentions will have the same effect as
negative votes.
Reasons for the Reverse Stock Split
The objectives of the Reverse Stock Split are to raise additional capital,
and adjust market capitalization of the Company to make the Common Stock a more
attractive vehicle for a possible primary offering of additional shares of
Common Stock to the public which may be expected to increase the liquidity and
broaden the marketability of the Company's Common Stock. The Company also
desires to become listed on NASDAQ.
Principle Effects
The Reverse Stock Split by itself will not affect the shareholders
proportionate equity interest in the Company or the rights of the shareholders
with respect to each share of Common Stock as to voting, dividends and other
matters. Since there is no consideration received by the Company in connection
with the Reverse Stock Split, the overall capital of the Company will not change
as a result of the Reverse Stock Split.
Effective Date; Delivery of New Certificates
If the Reverse Stock Split is approved by the shareholders, it will become
effective upon the filing of a Certificate of Amendment of the Company's
Certificate of Incorporation with the Secretary of State of the State of New
York which is expected to be effective as of the end of business on the date of
the Shareholders Meeting (the "Reverse Stock Split Record Date"). Subject to
such approval, on or about September 23, 1996 (the "Reverse Stock Split
Notification Date"), the Company will mail to each instructions on how to redeem
their present stock
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certificates for the Reverse Stock Split Common Stock Certificates of the
Company. Shareholders should not retain their stock certificates representing
shares of Common Stock but should send them to the Company's transfer agent upon
receipt of the instructions. Thereafter, on or about October 2, 1996, the
("Reverse Stock Split Payment Date"), the Company will mail a certificate
representing the number of Reverse Stock shares of Common Stock owned by the
Shareholders. If the Shareholders approve the Reverse Stock Split after
September 23, 1996 due to adjournment or postponement of the Shareholder
Meeting, or if the Amended Certificate is not filed on September 23, 1996, for
other reasons, the Reverse Stock Split Payment Date may be changed. Shareholders
contemplating a sale before the Reverse Stock Split Payment Date should consult
their brokers as to their entitlement to the Reverse Stock Shares.
Tax Consequences
The following discussion is included for general information only.
Shareholders should consult their personal tax advisors to determine the
particular consequences of the Reverse Stock Split, including the applicability
and effect of federal income and other taxes. No gain or loss will be recognized
for federal income tax purposes on the receipt of the Reverse Stock Split shares
of Common Stock. A holder's tax basis in the shares of Common stock held
immediately prior to the Reverse Stock Split is allocated proportionately among
the new shares issued as a result of the Reverse Stock Split. The holding period
of the shares of Reverse Stock Split Common Stock will include the period during
which the shares of Common Stock owned immediately prior to the Reverse Stock
Split were held.
THE BOARD OF DIRECTORS RECOMMEND A VOTE IN FAVOR OF PROPOSAL TWO
MISCELLANEOUS
Audit Matters
The principal accountant who has been selected by the Company for the
coming fiscal year is Robbins, Greene, Horowitz, Lester & Co., LLP. It is
expected that a representative of Robbins, Greene, Horowitz, Lester & Co. will
be present at the Annual Meeting of Shareholders and will be available to
respond to appropriate questions.
The Company's 1995 Annual Report on Form 10k is being mailed to
shareholders with this Proxy Statement.
Proposals of Security Holders
Proposals of security holders intended to be presented at the 1996 Annual
Meeting must be received by the Company for inclusion in the Company's Proxy
Statement and form of proxy relating to that meeting no later than January 31,
1997.
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Other Business
The Board of Directors knows of no business that will come before the
meeting for action except as described in the accompanying Notice of Meeting.
However, as to any such business, the persons designated as proxies will have
discretionary authority to act in their best judgment.
By Order of the Board of Directors
Michael S. Rakusin, President
September 4, 1996
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P R O X Y
- - - ---------
ECHO SPRINGS WATER Co., INC.
(Solicited by The Board of Directors)
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a shareholder in Echo
Springs Water Co., Inc., a New York corporation ("Echo"), does hereby constitute
and appoint Michael S. Rakusin and Edward J. Metzger, and each of them acting
jointly, if more than one be present, to be the true and lawful attorneys and
proxies for the undersigned, to vote all shares of Echo which the undersigned is
entitled to vote, with all powers the undersigned would possess if personally
present, at the Annual Meeting of Shareholders of Echo to be held on September
23, 1996, and at any adjournment or adjournments thereof, on the following
matters as designated below and, in other discretion, on such other matters as
may properly come before the meeting. This proxy will be voted in the manner
directed herein by the undersigned shareholder. If no direction is made, this
proxy will be voted FOR the following Proposals.
1. THE ELECTION OF THE NOMINEES FOR DIRECTORS.
[_] FOR [_] AGAINST [_] ABSTAIN
2. THE APPROVAL OF A TWENTY-FIVE FOR ONE REVERSE STOCK SPLIT.
[_] FOR [_] AGAINST [_] ABSTAIN
OTHER MATTERS: Granting the proxies discretionary authority to vote upon any
other unforeseen matters which are properly brought before the meeting as
management may recommend.
The undersigned hereby revokes any and all other proxies heretofore given by the
undersigned and hereby ratifies all that the above named proxies or their
substitutes may do at such meetings, or at any adjournments thereof, by virtue
hereof.
Dated: _________________, 1996
_______________________________
_______________________________
NOTE: This proxy expires eleven (11) months
from this date unless otherwise stated
herein. If you are signing as a trustee,
executor, guardian, fiduciary,
attorney-in-fact, etc., please also give your
full title and also state the name of the
stockholder of record for whom you act.
IMPORTANT: Please SIGN, DATE and RETURN this proxy in the enclosed envelope as
soon as possible.
