UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
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DATE OF REPORT
(Date of Earliest Event Reported): October 17, 1997
NATURADE, INC.
(Exact Name of Registrant as Specified in Charter)
DELAWARE
(State or Other 33-7106-A 23-2442709
Jurisdiction (Commission (IRS Employer
Incorporation) File Number) Identification No.)
7110 EAST JACKSON STREET
PARAMOUNT, CALIFORNIA 90723
(Address of Principal Executive Offices)
Registrant's Telephone Number,
Including Area Code: (562) 531-8120
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Item 5. OTHER EVENTS
On October 17, 1997, Naturade, Inc. (the "Registrant") signed a Term
Sheet with Doyle & Bossiere LLC ("D&B") and four shareholders of the Registrant,
including the Registrant's president, Allan Schulman, which provides for a
transaction in which the Registrant would raise $6,000,000 in cash through the
sale of newly issued shares of its common stock in a private placement and in
which a company controlled by D&B would acquire control of the Registrant
through the ownership of 55% of its outstanding common stock.
The Term Sheet provides that D&B and Taishan Holdings, Inc. ("Taishan")
would form a California corporation named Health Holdings, which would be
controlled by D&B. The Registrant would sell 2,000,000 shares of its common
stock to Health Holdings in a private placement for a purchase price of
$6,000,000, or $3 per share. The shareholders of the Registrant who signed the
Term Sheet would sell to Health Holdings an additional 858,473 shares of the
Registrant's common stock at the same price per share which would provide Health
Holdings with ownership of 55% of the outstanding common stock of the
Registrant. This would result in control of the Registrant by D&B, through its
control of Health Holdings.
In addition, Health Holdings would receive anti-dilution rights which
would permit Health Holdings to maintain its 55% interest in the Registrant
following consummation of the transaction. Health Holdings would receive
registration rights with respect to the common stock it would acquire as well
as reimbursement for its transaction expenses in an amount not to exceed
$150,000. After the closing and as long as Health Holdings and its affiliates
own 25% or more of the common stock of the Registrant, D&B would provide
strategic and financial consulting services to the Registrant for an annual fee
of $300,000.
The Term Sheet provides that Allan Schulman, President of the
Registrant, would continue in his current role with the Registrant following
completion of the transaction pursuant to a four-year employment, consulting
and non-competition agreement. Mr. Schulman's salary would be $180,000 in the
first year and would decrease by 20% per year thereafter, to reflect anticipated
decreases in Mr. Schulman's services to the Registrant as he approaches
retirement.
The closing of the transaction is subject to the satisfaction of
customary closing conditions, including a satisfactory due diligence review by
D&B and Health Holdings, the execution of definitive transaction documents and
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obtaining all necessary consents and approvals. The Term Sheet provides that
D&B is entitled to close the transaction based upon the Term Sheet in the event
that definitive agreements are not executed. The parties currently anticipate
closing the transaction by mid-December.
D&B is a Burlingame, California based manager of a $100 million fund
focused on investing in companies which it believes to be well-positioned and
to have unusually high potential but which are constrained by limited capital.
D&B seeks to assist such companies in realizing their potential by providing
new operating management and additional equity.
Taishan, based in New York City, was formed in 1995 to introduce
pharmaceutical-grade botanical medicines to the global marketplace. Taishan is
a partner in Taishan Pharmaceuticals, Ltd., a joint venture headquartered in
Beijing, China, with the Chinese Ministry of Health's State Administration of
Traditional Chinese Medicine. The Term Sheet provides for Taishan's contribution
of its interest in the joint venture to Health Holdings.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
(a) Financial Statements of Businesses Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
Not Applicable.
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NATURADE, INC.
By: /s/ Allan Schulman
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Allan Schulman,
Chief Executive Officer
Dated: October 31, 1997
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