UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 15, 2003
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HAUSER, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-17174 84-0926801
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(State or other (Commission File (IRS Employer
jurisdiction Number) Identification No.)
of incorporation)
840 Apollo Street, Suite 209
El Segundo, California 90245
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(Address of principal Zip Code
executive offices)
Registrant's telephone number, including area code: (310) 648-7881
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Item 5. Other Events and Regulation FD Disclosure.
On October 15, 2003, Hauser, Inc., a Delaware corporation ("Hauser"),
Botanicals International Extracts, Inc., a Delaware corporation and a wholly
owned subsidiary of Hauser ("BIE" and together with Hauser, collectively the
"Sellers"), and Zuellig Botanicals, Inc., a Delaware corporation ("ZBI"),
entered into an Asset Purchase Agreement (the "Purchase Agreement"). The Sellers
are currently debtors in possession in chapter 11 bankruptcy cases pending in
the United States Bankruptcy Court for the Central District of California (the
"Bankruptcy Court").
Zuellig Group N.A., Inc. ("ZGNA") is the parent corporation of ZBI. ZGNA
and ZBI collectively own approximately 33.8% of the outstanding common stock of
Hauser. In addition, Zatpack, Inc. ("Zatpack" and together with ZGNA and ZBI,
the "Zuellig Entities"), the parent corporation of ZGNA, holds a warrant to
purchase approximately 13.3% of Hauser's common stock (after giving effect to
the issuance of common stock upon exercise of the warrant). If Zatpack exercises
the warrant, the Zuellig Entities would own approximately 42.6% of Hauser's
common stock outstanding after such exercise.
Pursuant to the terms of the Purchase Agreement, the Sellers agreed to sell
to ZBI (the "Transaction") the assets relating to BIE's business of
manufacturing, marketing and distributing certain botanical extracts, dietary
and nutritional supplements, nutraceuticals and vitamins (the "Business") for
approximately $7,567,000 in cash, at closing, subject to certain price
adjustments determined at closing and post-closing (as adjusted, the "Cash
Consideration"), plus the assumption by ZBI of certain related liabilities as
specified in the Purchase Agreement. Following the closing, the Sellers are
entitled to an additional cash payment of up to approximately $676,000 if
certain pre-closing receivables of the Business are collected by ZBI.
Additionally, for the period commencing on the closing date of the Transaction
and ending June 30, 2004, ZBI has agreed to pay, on a monthly basis, an amount
equal to the higher of (a) 8% of the net sales of the Business for the
applicable one month period and (b) $180,000 (such amount, the "Royalty
Payment"), which Royalty Payment will be deposited into an unsecured creditor
fund (the "Unsecured Creditor Fund"). Subject to certain exceptions, to the
extent the Royalty Payment exceeds $220,000 in any month, ZBI has agreed to pay
such excess amount directly to the Sellers. Deposits into the Unsecured Creditor
Fund will be used to pay certain pre-petition claims of unsecured creditors of
the Sellers, Hauser Technical Services, Inc. ("HTS") and ZetaPharm, Inc.
("ZetaPharm") as well as the outstanding pre-closing date fees and costs of
certain professionals and advisors. HTS and ZetaPharm are wholly owned
subsidiaries of Hauser.
As of October 15, 2003, the Sellers had approximately $8,623,500 in
outstanding indebtedness to Wells Fargo Bank, N.A., the Sellers' senior secured
lender ("Wells Fargo"). The Sellers will use the Cash Consideration from the
sale to pay down approximately $6,700,000 of the Sellers' outstanding
indebtedness to Wells Fargo.
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The conditions to closing the Transaction include, among other things,
Bankruptcy Court approval, the absence of any developments or changes that would
have a material adverse effect on the assets being acquired by ZBI or the
Business, ZBI obtaining financing from Wells Fargo, delivery to ZBI of
agreements not to sue from certain of the Sellers' unsecured creditors and
certain other closing conditions typical for transactions of this type. There
can be no assurance that the Transaction will be consummated.
The foregoing description of the Purchase Agreement is qualified in its
entirety by reference to such agreement, a copy of which has been filed as
Exhibit 2.1 to this Form 8-K and is incorporated herein by reference.
On October 23, 2003, Hauser issued a press release relating to the
Transaction, a copy of which is attached hereto as Exhibit 99.1 and is
incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
(a) Not Applicable.
(b) Not Applicable.
(c) Exhibits:
2.1 Asset Purchase Agreement, dated October 15, 2003, among
Hauser, Inc., Botanicals International Extracts, Inc. and
Zuellig Botanicals, Inc.*
99.1 Press Release, dated October 23, 2003.
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* Pursuant to Rule 601(b)(2) of Regulation S-K, certain schedules and
exhibits have been omitted from this filing. Hauser agrees to furnish
supplementally a copy of any omitted schedule or exhibit to the Securities
and Exchange Commission upon request.
SIGNATURES
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.
HAUSER, INC.
Dated: October 27, 2003 By: /s/ Kenneth C. Cleveland
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Name: Kenneth C. Cleveland
Title: President and Chief Executive
Officer
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Exhibit Index
Exhibit No. Description
2.1 Asset Purchase Agreement, dated October 15, 2003, among Hauser,
Inc., Botanicals International Extracts, Inc. and Zuellig
Botanicals, Inc.*
99.1 Press Release, dated October 23, 2003.
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* Pursuant to Rule 601(b)(2) of Regulation S-K, certain schedules and
exhibits have been omitted from this filing. Hauser agrees to furnish
supplementally a copy of any omitted schedule or exhibit to the Securities
and Exchange Commission upon request.