NATURADE, INC.
7110 East Jackson Street
Paramount, CA 90723
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
on
April 23, 1997
To the Shareholders of NATURADE, INC.:
The Annual Meeting of Shareholders of Naturade, Inc. (the "Company"), a
Delaware corporation, will be held on April 23, 1997, at 9:00 A.M., Pacific
Daylight Time, at the Company's Headquarters at 7110 East Jackson Street,
Paramount, California 90723, for the following purposes:
1. To elect five directors to the Board of Directors to serve until the
next annual meeting of shareholders or until their successors are
elected and have been qualified.
2. To ratify the appointment of a firm of independent public
accountants to audit the accounts of the Company for the year 1997;
and
3. To transact such other business as may properly come before the
meeting and any adjournment thereof.
The Board of Directors has fixed the close of business on March 5, 1997 as
the record date for the purpose of determining shareholders entitled to receive
notice of, and to vote at said meeting and at any adjournment or postponement
thereof.
All shareholders are cordially invited to attend the meeting in person.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN, DATE AND MAIL THE
ENCLOSED PROXY CARD IN THE ENCLOSED ENVELOPE IMMEDIATELY TO INSURE THAT YOUR
SHARES WILL BE REPRESENTED AT THE MEETING AND ANY ADJOURNMENT OR POSTPONEMENT
THEREOF AND TO HELP ASSURE A QUORUM. If you should decide to attend the
meeting, you may revoke your proxy and vote in person. Shareholders may
revoke any proxies granted hereunder (a) by delivering to the undersigned at
the Company's offices at 7110 East Jackson Street, Paramount, California 90723
a written notice of such revocation, or (b) by presenting at the meeting a
later dated proxy, or (c) by attending the meeting and voting in person.
By Order of the Board of Directors
/s/ Allan Schulman
- ------------------------
ALLAN SCHULMAN
President
Paramount, California
March 20, 1997
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<PAGE>
NATURADE, INC.
7110 EAST JACKSON STREET
PARAMOUNT, CALIFORNIA 90723
ANNUAL MEETING OF SHAREHOLDERS
on
April 23, 1997
PROXY STATEMENT
SOLICITATION OF PROXIES
(This solicitation is made by the Company)
This proxy statement and the accompanying proxy are furnished in
connection with the solicitation of proxies by the Board of Directors of
Naturade, Inc. (the "Company") for use at the Annual Meeting of Shareholders at
9:00 a.m. Pacific Daylight Time on April 23, 1997, and at any and all
adjournments or postponements thereof. The persons named to serve as
proxyholders were selected by the Board of Directors of the Company. A proxy
may be revoked at any time prior to its exercise by written notification to the
Secretary of the Company. Unless so revoked, proxies in the accompanying form
which are properly executed will be noted in accordance with the specification,
if any, of the shareholders and, if no specification is made, in favor of the
directors, as set forth below, unless authority to vote with respect to any or
all nominees is withheld.
This proxy statement and the accompanying proxy are being sent to
shareholders on or about March 24, 1997. The cost of solicitation of proxies
will be borne by the Company. Although there is no formal agreement to do so,
the Company may reimburse banks, brokerage houses and other custodians, nominees
and fiduciaries for their reasonable expenses in forwarding these proxy
materials to shareholders whose Company stock they hold of record. Proxies will
be solicited principally through the use of the mail, but officers, directors
and employees of the Company may solicit for proxies. Execution of a proxy card
will not in any way affect a shareholder's right to attend the meeting and vote
in person, and any person giving a proxy has the right to revoke it at any time
before it is exercised by filing with the Secretary of the Company an instrument
revoking it or a duly executed proxy bearing a later date or by attending the
meeting and voting in person.
VOTING SECURITIES
The record date for the determination of shareholders entitled to vote
at the Annual Meeting or any adjournment or postponements thereof is March 5,
1997. As of that date there were 2,797,223 shares of common stock, no par value,
of the Company ("Common Stock") outstanding and entitled to vote. The Company
has no other class of voting securities outstanding. Each share of Common Stock
is entitled to one vote. The representation, in person or by proxy, of a
majority of the outstanding shares of Common Stock shall constitute a quorum for
the meeting. Votes cast by proxy or in person at the Annual Meeting will be
counted by the persons appointed by the Company to act as election inspectors
for the Annual Meeting. The election inspectors will treat shares represented by
proxies that reflect abstentions as shares that are present and entitled to vote
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for purposes of determining the presence of a quorum and for purposes of
determining the outcome of any matter submitted to the shareholders for a vote.
Abstentions, however, do not constitute votes "for" or "against" any matter and
thus will be disregarded and have no effect in the calculation of "votes cast."
The election inspectors will treat shares referred to as "broker non-votes"
(i.e., shares identified as held by brokers or nominees as to which
instructions have not been received from the beneficial owners or persons
entitled to vote that the broker or nominee does not have discretionary power to
vote on a particular matter) as shares that are present and entitled to vote for
purposes of determining the presence of a quorum. However, for purposes of
determining the outcome of any matter as to which the broker or nominee has
physically indicated on the proxy that it does not have discretionary authority
to vote, those shares will be treated as not present and not entitled to vote
with respect to that matter (even though those shares are considered entitled to
vote for quorum purposes and may be entitled to vote on other matters.)
Shares may be voted cumulatively for the election of directors. If any
shareholder gives notice before the vote is taken, of intention to cumulate
votes, then all shareholders will be entitled to cumulate their votes for
election of directors. Cumulative voting allows a shareholder to cast a number
of votes equal to the number of shares held as of the record date, multiplied by
the number of directors to be elected. These votes may be cast for any one
nominee, or may be distributed among as many nominees as the shareholder sees
fit. If cumulative voting is declared at the meeting, votes represented by
proxies delivered pursuant to this proxy statement may be cumulated in the
discretion of the proxy holders.
NOMINEES FOR ELECTION AS DIRECTORS
Five directors are to be elected to serve until the next annual meeting of
shareholders or until their successors are elected and have been qualified. It
is intended that the proxies solicited hereby will, unless such proxies direct
otherwise, be voted for the election as directors of the persons listed below.
Each of such persons is currently serving as a director. It is not expected that
any of such persons will be unable to serve as a director, but if any director
is unable to accept election, it is intended that shares represented by the
proxies will be voted by the proxy holders for a substitute nominee selected by
the Board of Directors. The following persons are nominated for election of
directors:
Name Age Position Since
---- --- -------- -----
Allan Schulman 66 President, Director, 1959
Chairman of the Board
Robert Bearson 73 Director 1995
William P. Cordeiro 52 Director 1991
Robert L. Zuber 44 Director 1992
Barry M. Zwick 62 Director 1992
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ALLAN SCHULMAN. Mr. Schulman has attended and completed business courses at the
University of California at Los Angeles, Long Beach State College and the
University of California at Irvine. A veteran of the Korean War, Mr. Schulman
joined NPI (Naturade Products, Inc., the Company's predecessor) in 1953, and was
elected President of NPI in 1959. He was elected to the Board of Directors of
NPI in 1959, and to the Board of Directors of the Company in 1991.
ROBERT BEARSON. Mr. Bearson has an MBA in Business Administration from the
Harvard Business School, Harvard University, Cambridge, Mass. He also holds a
Bachelor of Science Degree from Cal Tech, Pasadena, CA. He runs a consulting
business (ABM) and is a Senior Instructor at the University of California at Los
Angeles, Business and Engineering Extension. He is a nationally recognized
authority on specialty store retailing.
WILLIAM P. CORDEIRO. Dr. Cordeiro has a Ph.D. in Executive Management from
Claremont Graduate School and an MBA from the University of Southern California.
Since 1983 he has been a partner of BCA Consulting. Since 1988, Dr. Cordeiro
has been a Management Professor in the School of Business and Economics of the
California State University, Los Angeles. His business experience prior to BCA
Consulting was with The Veta Grande Companies, Inc. as their Vice Chairman
(1979-1983) and the Manager of Planning and Analysis at various divisions of
ARCO (1967-1979).
ROBERT L. ZUBER. Mr. Zuber has a BA in Business from the University of Southern
California, and is a CPA. From June of 1993 to July of 1996 he was the Director
of Finance at Sheppard, Mullin, Richter and Hampton, and is presently Executive
Director of the firm. The previous six years he was Chief Financial Officer and
a member of the Board of American Pacific Mint, Inc. He was a Senior Manager at
Stonefield and Josephson Accountancy Corporation from 1984 to 1987. He has over
20 years experience in financial management, including ten years as Senior Audit
Manager with Ernst & Young.
BARRY M. ZWICK. Mr. Zwick has a BS Degree from the U.S. Military Academy at West
Point and an MBA from the University of Southern California. Mr. Zwick has over
25 years experience in the securities business. He was a registered investment
advisor. Mr. Zwick has been a member of the Midwest Stock Exchange and the
Chicago Board of Trade. Since 1989 he has been a private investor. Prior to this
period, he was a Managing Director of Ladenburg, Thalmann & Co., Inc.
Information concerning the Company's executive officers who are not also
directors is contained in Item 10 "Directors and Executive Officers," on pages
19 through 20 of the Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1996. Such information is hereby incorporated by this
reference.
Provided a majority of the shares are represented in person or by proxy
at the Annual Meeting of Shareholders, thereby constituting a quorum, the 5
individuals receiving the largest number of votes for Director, will be elected
to the 5 seats on the Board of Directors. Shareholders are entitled to cumulate
votes. Abstentions and broker nonvote proxies will be counted toward
establishing the necessary quorum, but will not constitute votes for any
candidate for the Board of Directors.
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<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" THE NOMINEES
BOARD MEETINGS AND COMMITTEES
During fiscal 1996, the Board of Directors of the Company held 5 meetings.
All directors attended at least 80 percent of the aggregate number of meetings
of the Board.
Registrant's Board of Directors has no standing audit, nominating or
compensation committees.
Directors receive directors' fees paid by the Company at the rate of $500
per month, including committee meetings, plus expenses.
SECURITY OWNERSHIP OF DIRECTORS,
MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth information regarding beneficial ownership,
as of February 11, 1997 of the Company's Common Stock by each owner of more than
5% of the outstanding Common Stock, by each director and nominee, by each person
named in the Executive Compensation table herein and by officers and Directors
of the Company as a group.
Name & Address Amount and Nature Percent of
of Beneficial Owner Beneficial Ownership (1) Of Class
------------------- ------------------------- ----------
Allan Schulman 1,291,129 (2) 35.42
Naturade, Inc.
7110 E. Jackson St.
Paramount, CA 90723
Barry M. Zwick 138,017 (3) 3.79
925 De La Vina St.
Suite 102
Santa Barbara, CA 93101
Robert L. Zuber 66,402 (4) 1.82
333 S. Hope St., Suite 4300
Los Angeles, CA 90071
William P. Cordeiro 60,000 (5) 1.65
5755 Kanan-Dume Rd.
Malibu, CA 90265
Michael Fernicola 60,000 (6) 1.65
Naturade, Inc.
7110 E. Jackson St.
Paramount, CA 90723
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<PAGE>
Robert Bearson 10,000 (7) 0.27
10900 Los Alamitos Blvd.
Los Alamitos, CA 90720-5604
Dallas Gold & Silver Exchange, Inc. 399,308 (8) 10.96
519 Interstate 30, Suite 243
Rockwall, TX 75087
All officers and Directors as a 1,725,548 47.34
Group, Consisting of 7 Persons
FOOTNOTES
(1) Reported in accordance with the beneficial ownership rules of the
Securities and Exchange Commission (the "Commission"). Subject to
community property laws, where applicable, unless otherwise
indicated, voting power or investment power with respect to shares
reflected in the table is not shared with others.
(2) Total includes 1,092,018 shares solely owned by Mr. Schulman;
89,111 shares which can be purchased upon exercise of the Company's
Class B Warrants; and 110,000 shares which can be purchased under
presently exercisable options.
(3) Total includes 78,155 shares solely owned by Mr. Zwick; 50,000
shares which can be purchased under presently exercisable options;
and the following amounts owned by Mr. Zwick's minor son: 9,000
shares, and 862 shares which can be purchased upon exercise of the
Company's Class B Warrants.
(4) Total includes 15,000 shares solely owned by Mr. Zuber; 1,402 shares
which can be purchased upon exercise of the Company's Class B
Warrants; and 50,000 shares which can be purchased under presently
exercisable options.
(5) Total includes 10,000 shares solely owned by BCA Associates, of
which Dr. Cordeiro is a 44% shareholder; and 50,000 shares which can
be purchased under presently exercisable options.
(6) Total includes 60,000 shares which can be purchased under presently
exercisable options.
(7) Total includes 10,000 shares which can be purchased under presently
exercisable options.
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(8) Dallas Gold & Silver Exchange, Inc. ("Dallas Gold") is a national
wholesaler and retailer of precious metals and jewelry products
based in Dallas, Texas. The securities of Dallas Gold trade on the
American Stock Exchange under the symbol "DLS.EC". Dr. Len Smith,
a consultant to the Company, is the Chairman of the Board, Chief
Executive Officer and the controlling stockholder of Dallas Gold,
and is the direct beneficial owner of 106,728 of these shares of
the Company's Common Stock and 80,000 shares which can be
purchased under a presently exercisable option. Dallas Gold and
Dr. Smith each disclaim beneficial ownership of the shares held by
each other, and report separately.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Each Director was granted an option on June 9, 1992 to acquire 10,000
shares of the Company's common stock, at an exercise price of $.875, with an
expiration date one year after the departure of each Director from the Board of
Directors. On January 25, 1995 each director was granted an additional option
to acquire 20,000 shares of the Company's common stock at an exercise price of
$1.07, with an expiration date one year after the departure of each Director
from the Board of Directors. These options were granted for service on the Board
of Directors since January 1, 1993. On January 17, 1996, each director, except
Mr. Bearson who had not served a full year, was granted an additional option to
acquire 10,000 shares of the Company's common stock at an exercise price of
$1.72, with an expiration date one year after the departure of each director
from the Board of Directors. Options to acquire 10,000 shares of the Company's
common stock are hereafter to be granted to each director annually for each
additional year of service on the Board of Directors. These options will have
an exercise price equal to the average bid price of the Company's common stock
for the 30 day period ending December 30th each year.
On January 25, 1995, the Company issued to Michael Fernicola, the
Company's Executive Vice President, options on 100,000 shares of the Company's
restricted common stock exercisable at the rate of 20,000 shares per year
beginning September 12, 1995. These options are exercisable at the average of
the bid and ask price on January 25, 1995, which was $1.50 per share. In
September 1996, the Company granted additional stock options to Michael
Fernicola to purchase 20,000 shares of the Company's common stock at an
exercise price of $1.13.
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<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the annual compensation paid and accrued by
the Company during its last three fiscal years to the executive officers to whom
it paid in excess of $100,000, including cash and issuance of securities.
<TABLE>
<CAPTION>
Annual Compensation Awards Payouts
- ----------- --------- -------- ---------- ------- ----------------------- -------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Name Other Restricted All
and Annual Stock LTIP Other
Principal Compensation Award(s) Options/ Payouts Compensation
Position Year Salary($) Bonus($) ($) ($) SARs(#) ($) ($)
- ---------- ---- --------- ------- ------------ --------- ------- ------- -------------
Allan
Schulman
Chief 9/30/94 183,798 17,237 0 0 0 0 11,351
Executive 9/30/95 186,040 39,409 0 0 80,000 0 11,712
Officer 9/30/96 188,754 0 0 0 10,000 0 11,712
- ---------- ------- --------- ------- ------------ --------- ------- ------- -------------
Michael
Fernicola
Executive 9/30/94 3,462 0 0 0 0 0 0
Vice 9/30/95 89,231 5,000 0 0 20,000 0 4,400
President 9/30/96 105,385 4,013 0 0 40,000 0 6,600
- ---------- ------- --------- ------- ------------ --------- -------- ------- -------------
</TABLE>
Mr. Fernicola's employment with Naturade, Inc. commenced September
1994.
In addition, both Mr. Schulman and Mr. Fernicola participate with other
full-time employees in the Company's group health and life insurance program.
Mr. Schulman owns 1/3 of the land and building in which the Company conducts its
activities. As such, Mr. Schulman receives $8,339.00 per month rental paid by
the Company under a facilities lease which extends through July of 1998.
The 10,000 options awarded to Mr. Schulman were for serving on the Board
of Directors and are exercisable at $1.72 per share which was the fair market
value on the date of the grant.
The 40,000 options awarded to Mr. Fernicola included 20,000 excercisable
at $1.50 and 20,000 excercisable at $1.13. The fair market value on the date of
the grant of both of these options was $1.13.
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In June of 1992, the Company entered into a 5 year Employment Agreement
with Mr. Schulman, its Chief Executive Officer providing for a base salary of
$175,000 per year adjusted for cost of living annually, a bonus equal to 10% of
pre-tax net operating profit over $250,000, and $1,000 per month car and travel
allowance, and various other terms and conditions.
All directors receive directors' fees of $500 per month, including
committee meetings, plus expenses.
Option/SAR Grants In Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price
Appreciation
Individual for Option Term
- ------------ ---------- ------------- --------- -------------- ------------ --------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
% of Total
Options/SARs
Options/ Granted to Exercise Market Price
SARs Employees or Base on Date of
Granted in Fiscal Price Grant Expiration
Name (#) Year ($/Sh) ($/Sh) Date 5% (S) 10% (S) 0% (S)
- --------------- --------- ------------- --------- ------------- ---------- ---------- -------- -------
Allan Schulman
Chief Executive
Officer 10,000 14% 1.72 1.72 January 25, $11,100 $29,400 -
2006
- --------------- --------- ------------- --------- ------------- ---------- ---------- -------- -------
Michael Fernicola
Executive
Vice President 20,000 28% 1.50 1.13 September 12, $19,400 $51,200 -
2006
20,000 28% 1.13 1.13 September 12, $14,600 $38,600 -
2006
- --------------- --------- ------------- --------- ------------- ---------- ---------- -------- -------
</TABLE>
No options were exercised by officers or directors during the fiscal year
ended September 30, 1996.
The expiration date was arbitrarily estimated to be ten years from the
grant date because the options do not have a fixed expiration date. The options
expire one year after departure from the Board of Directors. The Company does
not have a mandatory retirement date for Directors.
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<PAGE>
BOARD OF DIRECTORS' REPORT ON EXECUTIVE COMPENSATION
The compensation paid to Mr. Schulman and Mr. Fernicola, including bonus,
was determined by members of the Board of Directors, with Mr. Schulman
abstaining, based upon a comparison of compensation paid to other chief
executive officers and executive vice presidents of other distribution companies
in other industries with comparable sales revenues. The bonus provided in Mr.
Schulman's Employment Contract is fixed at 10% of pre-tax income from operations
in excess of $250,000.
RATIFICATION OF APPOINTMENT OF AUDITORS
The Company's Board of Directors has selected McGladrey & Pullen as the
Company's independent accountants for the fiscal year ended September 30, 1997.
Although the appointment of McGladrey & Pullen is not required to be submitted
to a vote of the shareholders, the Board of Directors believes it appropriate as
a matter of policy to request that the shareholders ratify the appointment for
the current fiscal year. In the event a majority (1,398,612, representing 50% of
the outstanding shares of common stock) of the votes cast at the meeting are not
voted in favor of the appointment, the Board of Directors will reconsider its
selection.
Proxies not limited to the contrary will be voted for the ratification of
the appointment of McGladrey & Pullen to audit the accounts of the Company for
the fiscal year ended September 30,1997. Any proxy indicating a contrary choice
will be voted in accordance with that choice. McGladrey & Pullen has audited the
accounts of the Company since 1994.
A representative of McGladrey & Pullen will be present at the meeting and
will be given an opportunity to make a statement if he desires. He will also be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF
MCGLADREY & PULLEN AS AUDITORS.
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PROPOSALS OF STOCKHOLDERS
Proposals of stockholders must be received in writing by the Secretary of
the Company no later than November 11,1997 in order to be considered for
inclusion in the Company's proxy statement and form of proxy relating to the
Annual Meeting of Stockholders to be held in 1998.
OTHER MATTERS
The Board of Directors does not know of any matters which will be
presented for consideration at the meeting of shareholders other than those
referred to in the notice of meeting. If, however, any such matters should come
before the meeting, the persons named in the enclosed proxy will vote the
shares covered by proxy in accordance with their best judgement.
SHAREHOLDERS ARE URGED TO IMMEDIATELY SPECIFY THEIR CHOICES AND DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED. PROMPT RESPONSE IS HELPFUL
AND YOUR COOPERATION WILL BE APPRECIATED.
By order of the Board of Directors
/s/ Paul D. Shapnick
------------------------------------
Paul D. Shapnick
Secretary
Paramount, California
March 20, 1997
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<PAGE>
Each stockholder, whether or not he or she expects to be present in person at
the Annual Meeting, is requested to SIGN, DATE AND RETURN THE ENCLOSED PROXY in
the accompanying envelope as promptly as possible. A stockholder may revoke his
or her proxy at any time prior to voting.
NATURADE, INC.
PROXY SOLICITED ON BEHALF OF BOARD OF
DIRECTORS FOR ANNUAL MEETING OF
SHAREHOLDERS ON APRIL 23, 1997.
The undersigned hereby constitutes and appoints PAUL D. SHAPNICK and DR. LEN
SMITH, severally, with full power of substitution, attorneys and proxies to the
undersigned to represent the undersigned and vote all shares of the Company's
Common Stock which the undersigned would be entitled to vote if personally
present at the Annual Meeting of Shareholders to be held at the Company's
headquarters at 7110 East Jackson Street, Paramount, California 90723 on
APRIL 23, 1997, at 9:00 A.M. Pacific Daylight Time, and at any postponement or
adjournment thereof, in the following manner:
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below (except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY to vote for the nominees listed below
(INSTRUCTION: To withhold authority to vote for any individual nominee, mark
the box next to the nominee's name below)
[ ] Allan Schulman [ ] Robert L. Zuber
[ ] Robert Bearson [ ] Barry M. Zwick
[ ] William P. Cordeiro
2. RATIFICATION OF APPOINTMENT OF AUDITORS
For [ ] Against [ ] Abstain [ ]
3. IN ACCORDANCE WITH THEIR BEST JUDGEMENT with respect to any matters which
may properly come before the meeting or any postponement or adjournment.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3.
Please sign exactly as name appears below. When shares are held in joint
account, each owner should sign. When signing as attorney, trustee, executor,
etc., so indicate. If corporation, please sign full corporate name by
authorized officer. If partnership, sign in full partnership name by authorized
person.
Date: ________________________, 1997
Signed: ___________________________
Number of Shares Held:______ Signed:____________________________
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
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