<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 27, 1996
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
STEIN MART, INC.
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C>
FLORIDA 64-046618
(State or Other Jurisdiction of Incorporation) (I.R.S. Employer Identification No.)
</TABLE>
1200 RIVERPLACE BOULEVARD
JACKSONVILLE, FLORIDA 32207
(904) 346-1500
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
JOHN H. WILLIAMS, JR.
PRESIDENT AND CHIEF OPERATING OFFICER
STEIN MART, INC.
1200 RIVERPLACE BOULEVARD
JACKSONVILLE, FLORIDA 32207
(904) 346-1500
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
COPY TO:
<TABLE>
<S> <C>
LINDA Y. KELSO J. PAGE DAVIDSON
G. RAY DRIVER, JR. BASS, BERRY & SIMS PLC
FOLEY & LARDNER 2700 FIRST AMERICAN CENTER
200 LAURA STREET NASHVILLE, TENNESSEE 37238
JACKSONVILLE, FLORIDA 32202 (615) 742-6200
(904) 359-2000
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED(1) PER SHARE OFFERING PRICE FEE(2)
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<S> <C> <C> <C> <C>
Common Stock, $0.01 par value.... 4,025,000 shares $21.875 $88,046,875 $30,360.99
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</TABLE>
(1) Includes up to 525,000 shares of Common Stock which the Underwriters have
the option to purchase to cover over-allotments, if any.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) based on the average of the high and low prices of
the registrant's Common Stock as reported on The Nasdaq Stock Market's
National Market on August 21, 1996.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED AUGUST 27, 1996
PROSPECTUS
3,500,000 SHARES
(LOGO) STEIN MART(R)
COMMON STOCK
The shares of Common Stock of Stein Mart, Inc. ("Stein Mart" or the
"Company") offered hereby (the "Offering") are being sold by the selling
stockholders named herein (the "Selling Stockholders"). See "Principal and
Selling Stockholders and Stock Ownership of Management." The Company will not
receive any of the proceeds from the sale of the shares offered hereby. The
Company's Common Stock is traded on The Nasdaq Stock Market's National Market
(the "Nasdaq National Market") under the symbol "SMRT." On August 26, 1996, the
last reported sale price of the Common Stock on the Nasdaq National Market was
$23.50 per share. See "Price Range of Common Stock and Dividend Policy."
SEE "RISK FACTORS" APPEARING ON PAGES 5 THROUGH 7 OF THIS PROSPECTUS FOR A
DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE
PURCHASERS OF THE COMMON STOCK OFFERED HEREBY.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
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PROCEEDS TO
PRICE TO UNDERWRITING SELLING
PUBLIC DISCOUNT(1) STOCKHOLDERS(2)
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<S> <C> <C> <C>
Per Share......................... $ $ $
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Total(3).......................... $ $ $
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</TABLE>
(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain civil liabilities, including liabilities under
the Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting estimated expenses of $200,000 payable by the Selling
Stockholders.
(3) One of the Selling Stockholders named herein has granted the Underwriters a
30 day over-allotment option to purchase up to 525,000 additional shares of
Common Stock on the same terms and conditions as set forth above. If all
such shares are purchased by the Underwriters, the total Price to Public
will be $ , the total Underwriting Discount will be $ , and
the total Proceeds to Selling Stockholders will be $ . See
"Underwriting."
---------------------
The shares of Common Stock are offered subject to receipt and acceptance by
the several Underwriters, to prior sale and to the Underwriters' right to reject
any order in whole or in part and to withdraw, cancel or modify the offer
without notice. It is expected that certificates for the shares of Common Stock
will be available for delivery on or about , 1996.
---------------------
J.C. Bradford & Co.
NatWest Securities Limited
Wasserstein Perella Securities, Inc.
, 1996
<PAGE> 3
Omitted Graphic and Image Material
The following is a narrative description of graphic and image material
contained in the printed version of the prospectus which has been omitted from
the version filed electronically.
Inside front cover:
1. The heading "Stein Mart - Map of Store Locations."
2. A map of the Continental United States with dots representing the
location of each of the 110 Stein Mart stores as well as dots indicating
stores to be completed during the remaining 1996.
Gatefold layout behind inside front cover:
1. Five pictures (clockwise from the upper left) depicting (i) an interior
view of the "Boutique" section of a store, (ii) an interior view of
ladies' merchandise, (iii) an exterior view of a store front, (iv) an
interior view of ladies' sportswear and (v) an interior view of the
"Exterior" department.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON
STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR OTHERWISE.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
IN CONNECTION WITH THE OFFERING, CERTAIN UNDERWRITERS (AND SELLING GROUP
MEMBERS) MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON
THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 10B-6A UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED. SEE "UNDERWRITING."
FOR UNITED KINGDOM PURCHASERS: THE COMMON STOCK MAY NOT BE OFFERED OR
SOLD IN THE UNITED KINGDOM OTHER THAN TO PERSONS WHOSE ORDINARY ACTIVITIES
INVOLVE THEM IN ACQUIRING, HOLDING, MANAGING OR DISPOSING OF INVESTMENTS,
WHETHER AS PRINCIPAL OR AGENT (EXCEPT IN CIRCUMSTANCES THAT DO NOT CONSTITUTE
AN OFFER TO THE PUBLIC WITHIN THE MEANING OF THE PUBLIC OFFERS OF SECURITIES
REGULATIONS 1995 OR THE FINANCIAL SERVICES ACT 1986), AND THIS PROSPECTUS MAY
ONLY BE ISSUED OR PASSED ON TO ANY PERSON IN THE UNITED KINGDOM IF THAT PERSON
IS OF A KIND DESCRIBED IN ARTICLE 11(3) OF THE FINANCIAL SERVICES ACT 1986
(INVESTMENT ADVERTISEMENTS) (EXEMPTIONS) ORDER 1995 OR IS A PERSON TO WHOM THE
PROSPECTUS MAY OTHERWISE LAWFULLY BE PASSED ON.
2
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the more
detailed information and financial statements, including the notes thereto,
appearing elsewhere or incorporated by reference in this Prospectus. Except as
otherwise indicated, all information in this Prospectus assumes no exercise of
the Underwriters' over-allotment option. All references in this Prospectus to
the "Company" or "Stein Mart" refer to Stein Mart, Inc., a Florida corporation.
THE COMPANY
Stein Mart is a 110-store retailer offering fashionable, current-season,
primarily branded merchandise comparable in quality and presentation to that of
traditional department and fine specialty stores at prices typically 25% to 60%
below those regularly charged by such stores. The Company's focused assortment
of merchandise features moderate to designer brand-name apparel for women, men
and children, as well as accessories, gifts, linens, shoes and fragrances.
During the last five years, the Company has more than doubled the number of
Stein Mart stores from 45 in 15 states at year-end 1991 to 110 in 20 states at
August 26, 1996.
The Company's strategy is to (i) increase the total number of stores by
opening new stores in selected markets across the country, (ii) maintain the
quality of merchandise, store appearance, merchandise presentation and customer
service levels typical of traditional department and fine specialty stores, and
(iii) offer value pricing to its customers through its vendor relationships,
tight control over corporate and store expenses and efficient management of
inventory.
Stein Mart opened 20 new stores in 1995, and plans to open 24 new stores in
1996 (of which 11 were open as of August 26, 1996), 25 to 28 in 1997, and
approximately 25 to 30 in each of the next several years thereafter. The Company
has made substantial investments in information systems, store facilities and
management personnel to support its continued expansion. Stores will be added in
new metropolitan markets, including those markets with the potential for
multiple stores, and in existing markets to capture advertising and management
operating efficiencies. The Company locates its stores, which average
approximately 38,000 gross square feet, primarily in neighborhood shopping
centers, ideally with co-tenants that cater to a similar customer base.
THE OFFERING
Common Stock offered by the
Selling Stockholders.......... 3,500,000 shares
Common Stock outstanding
before the Offering........... 22,593,767 shares(1)
Common Stock outstanding after
the Offering.................. 22,893,767 shares(2)
Use of proceeds............... The Company will not receive any proceeds from
the sale of
Common Stock offered hereby.
Nasdaq symbol................. SMRT
- ---------------
(1) Excludes 2,511,657 shares of Common Stock reserved for issuance upon
exercise of options outstanding under the Company's stock option plans at
August 26, 1996.
(2) Includes the sale in the Offering by one of the Selling Stockholders of
300,000 shares of Common Stock to be issued upon the exercise of options
under the Company's Employee Stock Plan, thereby reducing to 2,211,657 the
number of shares of Common Stock reserved for issuance upon exercise of
options outstanding under the Company's stock option plans.
3
<PAGE> 5
SUMMARY FINANCIAL AND OPERATING DATA
(IN THOUSANDS, EXCEPT PER SHARE AND SELECTED OPERATING DATA)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED(1)
-------------------------------------------- --------------------
DECEMBER 31, DECEMBER 31, DECEMBER 30, JULY 1, JUNE 29,
1993 1994 1995 1995 1996
------------ ------------ ------------ -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales........................... $342,730 $419,220 $496,006 $204,239 $257,917
Income from operations.............. 27,920 31,213 30,408 6,925 12,383
Net income.......................... 16,682 18,419 17,758 3,968 7,148
Net income per share(2)............. $ 0.70 $ 0.78 $ 0.76 $ 0.17 $ 0.31
Weighted average shares
outstanding(2).................... 23,895 23,721 23,454 23,586 23,430
SELECTED OPERATING DATA:
Stores open at end of period........ 66 80 100 89 109
Average sales per store
(000's)(3)(4)..................... $ 6,429 $ 6,335 $ 6,129 $ 2,700 $ 2,708
Average sales per square foot of
selling area(4)(5)................ $ 205 $ 196 $ 189 $ 83 $ 84
Comparable store net sales increase
(decrease)(6)..................... 2.3% 2.4% (0.7)% (2.6)% 6.8%
</TABLE>
<TABLE>
<CAPTION>
JUNE 29,
1996
-----------
(UNAUDITED)
<S> <C>
BALANCE SHEET DATA:
Working capital.................................................................. $ 93,933
Total assets..................................................................... 196,406
Long-term debt, less current portion............................................. 28,527
Total stockholders' equity....................................................... 106,647
</TABLE>
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(1) The business of the Company is seasonal, and results for any period within a
fiscal year are not necessarily indicative of the results that may be
achieved for a full fiscal year. See "Risk Factors -- Seasonality and
Quarterly Fluctuations."
(2) A three-for-two stock split in the form of a 50% stock dividend was effected
on September 10, 1993. Weighted average shares outstanding and net income
per share for all periods presented reflect the effect of this stock split.
(3) Average sales per store (including sales from leased shoe and fragrance
departments) for each period have been calculated by dividing (a) total
sales during such period by (b) the number of stores open at the end of
such period, in each case exclusive of stores open for less than 12 months.
(4) The average sales per store and average sales per square foot of selling
area decreased from 1992 through 1995, primarily as a result of the
Company's store base including a higher proportion of younger stores as a
percentage of total stores. The Company's more mature stores historically
have produced higher average sales and average sales per square foot than
its younger stores. Accordingly, management believes that as stores mature,
their average sales and average sales per square foot should increase.
(5) Includes sales and selling area of the leased shoe and fragrance
departments. Selling area excludes administrative, receiving and storage
areas.
(6) Comparable store information for a period reflects stores open throughout
that period and for the full prior year. Stores remodeled or relocated
continue to be included if no more than 20% additional square footage is
added, the store continues to serve the same market, and a same or similar
market strategy continues.
4
<PAGE> 6
RISK FACTORS
Investors should carefully consider the following matters in connection
with an investment in the Common Stock in addition to the other information
contained or incorporated by reference in this Prospectus. Information contained
or incorporated by reference in this Prospectus may contain "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, which can be identified by the use of forward-looking terminology such
as "may," "will," "expect," "anticipate," "estimate" or "continue" or the
negative thereof or other variations thereon or comparable terminology. The
following matters constitute cautionary statements identifying important factors
with respect to any such forward-looking statements, including certain risks and
uncertainties, that could cause actual results to differ materially from those
reflected in any such forward-looking statements.
COMPETITIVE NATURE OF THE RETAIL INDUSTRY
The Company faces intense competition for customers, access to quality
merchandise and suitable store locations from traditional department stores,
specialty retailers and regional and national off-price retail chains. Many of
these competitors are larger and have significantly greater financial and
marketing resources than the Company. In addition, many department stores have
become more promotional and have reduced their price points, and certain finer
department stores and certain of the Company's vendors have opened outlet stores
which offer off-price merchandise in competition with the Company. Accordingly,
the Company may face periods of intense competition in the future which could
have a material adverse effect on its results of operations. See
"Business -- Competition."
EXPANSION STRATEGY
The Company expects to open a total of 24 new stores in 1996 (of which 11
were open as of August 26, 1996), 25 to 28 in 1997, and approximately 25 to 30
in each of the next several years thereafter. The Company's future operating
results will depend to a substantial extent upon its ability to open and operate
new stores successfully. Expanding into new markets may present competitive
challenges that are different than those currently encountered by the Company in
its existing markets. In addition, the Company's ability to open new stores on a
timely basis will depend upon a number of factors, including the ability to
properly identify and enter new markets, locate suitable store sites, negotiate
acceptable lease terms, construct or refurbish sites, hire, train and retain
skilled managers and personnel, and other factors, some of which may be beyond
the Company's control. There can be no assurance that the Company's new stores
will be profitable or achieve sales and profitability levels comparable to the
Company's existing stores. Assuming the Company's planned expansion occurs as
anticipated, the Company's store base will include an increased proportion of
younger stores, which historically have produced lower average sales per store
than more mature stores. Expansion within existing markets could adversely
affect the financial performance of the Company's existing stores within those
markets, negatively affecting comparable store net sales. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- General" and "Business -- Expansion Strategy."
To manage its expansion, the Company will need to evaluate continually the
adequacy of its existing systems and procedures, including financial controls,
information systems and store management. There can be no assurance that the
Company will anticipate all of the changing demands that its expanding
operations will impose on its existing infrastructure. The failure of the
Company's infrastructure to support its expansion program could adversely affect
its future operating results. In addition, the Company currently intends to
finance its store expansion program primarily through its operating cash flow.
If the Company does not generate sufficient operating cash flow to support its
store expansion program or cannot obtain financing on acceptable terms, the
Company may not achieve its targets for opening new stores. See "Business --
Expansion Strategy."
5
<PAGE> 7
SENSITIVITY TO ECONOMIC CONDITIONS; CHANGING CONSUMER PREFERENCES
The retail apparel business is dependent upon the level of consumer
spending, which may be adversely affected by an economic downturn or a decline
in consumer confidence. An economic downturn, particularly in the Southeast and
other regions in which the Company derives a significant portion of its net
sales, could have a material adverse effect on the Company's results of
operations. In addition, the Company's success depends in part upon its ability
to anticipate and respond to changing consumer preferences and fashion trends in
a timely manner. Although the Company attempts to stay abreast of the fashion
tastes of its customers and provide merchandise that satisfies customer demand,
poor merchandise selection or changes in fashion trends could result in
overstocked inventory and/or higher markdowns which could have a material
adverse effect on the Company's results of operations. See
"Business -- Merchandising" and "Business -- Competition."
ADEQUATE SOURCES OF MERCHANDISE SUPPLY; VENDOR RELATIONSHIPS
The Company's business is dependent to a significant degree upon its
ability to purchase designer and other brand-name merchandise at prices
substantially below normal wholesale. The Company does not have any long-term
supply contracts with its vendors. The loss of certain key vendors or the
failure to establish and maintain relationships with popular vendors could have
an adverse effect on the Company's results of operations. The Company believes
it currently has adequate sources of designer and brand-name merchandise;
however, there can be no assurance, especially given the Company's expansion
plans, that the Company will be able to acquire sufficient quantities and an
appropriate mix of such merchandise at acceptable prices.
SEASONALITY AND QUARTERLY FLUCTUATIONS
The Company's business is affected by the seasonal pattern common to most
retailers. Historically, its highest net sales and profit levels occur during
the fourth quarter, which includes the holiday selling season. During the past
three years, approximately 37% of the Company's annual net sales and
approximately 64% of its income from operations were generated during the fourth
quarter. The Company's operating results depend significantly upon net sales
generated during the fourth quarter, and any factor that negatively impacts this
selling season could adversely affect the Company's results of operations for
the entire year. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- General."
The Company's quarterly results of operations also may fluctuate materially
depending on, among other things, the timing of new store openings, net sales
contributed by new stores, adverse weather conditions, shifts in timing of
certain holidays and changes in the Company's merchandise mix. For instance,
Thanksgiving Day in 1996 is one week later than in 1995 and 1994 which shortens
the 1996 holiday shopping season. Because of these types of factors, the results
of operations for any quarter are not necessarily indicative of the results that
may be achieved for a full fiscal year or any future quarter.
RELIANCE ON KEY PERSONNEL
The Company believes that its continued success will depend to a
significant extent upon the efforts and abilities of its senior executives, and
the loss of the services of any single one of such executives could have a
material adverse effect upon the Company. These executives are Jay Stein,
Chairman of the Board and Chief Executive Officer, John H. Williams, Jr.,
President and Chief Operating Officer, Mason Allen, Senior Executive Vice
President and Chief Merchandising Officer, Michael D. Fisher, Executive Vice
President, Stores, James G. Delfs, Senior Vice President, Finance and Chief
Financial Officer, and D. Hunt Hawkins, Senior Vice President, Human Resources.
The Company's continued success is also dependent upon its ability to attract
and retain qualified employees to meet the Company's needs, especially given the
Company's expansion plan.
CONTROLLING STOCKHOLDER
Following the completion of the Offering, Jay Stein will beneficially own
44.0% of the outstanding Common Stock (41.7% if the Underwriters exercise their
over-allotment option). While not holding a majority of the Common Stock, Mr.
Stein will retain sufficient voting power to have working control with
6
<PAGE> 8
respect to the election of the Board of Directors of the Company or the outcome
of corporate transactions or other matters submitted to the stockholders for
approval. See "Principal and Selling Stockholders and Stock Ownership of
Management."
SHARES ELIGIBLE FOR FUTURE SALE
The market price of the Common Stock could be adversely affected by the
availability for sale of additional Common Stock beneficially owned by the
Company's principal stockholder, Jay Stein. The Selling Stockholders (consisting
of the Stein Ventures Limited Partnership and John H. Williams, Jr.), Jay Stein,
individually, and the Company have agreed not to sell shares of Common Stock for
a period of 180 days following the effective date of the Registration Statement
of which this Prospectus is a part without the prior written consent of the
representatives of the Underwriters. In addition, a charitable foundation (which
owns 314,100 shares of Common Stock) over which Mr. Stein has sole voting and
investment power as trustee has agreed not to sell shares of Common Stock for a
period of 90 days following the effective date of the Registration Statement
without the prior written consent of the representatives of the Underwriters.
After expiration of such 180 and 90-day periods, respectively, such shares may
be sold in accordance with the volume and other limitations of Rule 144
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
or sold upon registration under the Securities Act without regard to the volume
limitations of Rule 144. The sale of a substantial number of such shares could
adversely affect the market price of the Common Stock. See "Principal and
Selling Stockholders and Stock Ownership of Management" and "Underwriting."
VOLATILITY OF MARKET PRICE
From time to time after the Offering, there may be significant volatility
in the market price for the Common Stock. In addition to quarterly operating
results of the Company, changes in earnings estimates by analysts, general
conditions in the economy, the financial markets or the retail industry, or
other developments affecting the Company could cause the market price of the
Common Stock to fluctuate substantially. In addition, the stock market recently
has experienced extreme price and volume fluctuations. This volatility has had a
significant effect on the market prices of securities issued by many companies
for reasons unrelated to their operating performance.
7
<PAGE> 9
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
shares of Common Stock offered hereby.
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Company's Common Stock is listed on the Nasdaq National Market under
the symbol "SMRT." The following table sets forth, for the periods indicated,
the high and low sale prices for the Common Stock as reported by the Nasdaq
National Market:
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
1994:
First Quarter........................................................ $20.25 $15.25
Second Quarter....................................................... 21.50 16.50
Third Quarter........................................................ 18.00 13.25
Fourth Quarter....................................................... 18.25 12.25
1995:
First Quarter........................................................ $15.00 $ 9.25
Second Quarter....................................................... 13.88 9.88
Third Quarter........................................................ 14.75 10.50
Fourth Quarter....................................................... 13.13 10.50
1996:
First Quarter........................................................ $15.25 $ 8.50
Second Quarter....................................................... 20.75 14.38
Third Quarter (through August 26, 1996).............................. 24.75 15.63
</TABLE>
On August 26, 1996, the last reported sale price for the Common Stock on
the Nasdaq National Market was $23.50 per share. On August 23, 1996, there were
approximately 1,050 stockholders of record of the Common Stock.
The Company anticipates that all future earnings will be retained for the
development of its business. The Company does not anticipate paying dividends on
its Common Stock in the foreseeable future. The payment of future dividends will
be at the sole discretion of the Company's Board of Directors and will depend
on, among other things, future earnings, capital requirements, the general
financial condition of the Company and general business conditions.
8
<PAGE> 10
CAPITALIZATION
The following table sets forth the total capitalization of the Company at
June 29, 1996. No "as adjusted" column is provided as the Offering will have no
effect on the Company's capitalization.
<TABLE>
<CAPTION>
JUNE 29, 1996
----------------------
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<S> <C>
Long-term debt:
Notes payable to bank................................................... $ 28,527
Stockholders' equity:
Preferred Stock, $0.01 par value; 1,000,000 shares authorized, no shares
outstanding.......................................................... --
Common Stock, $0.01 par value; 50,000,000 shares authorized, 22,172,171
shares issued and outstanding(1)..................................... 222
Paid-in capital......................................................... 34,220
Retained earnings....................................................... 72,205
--------
Total stockholders' equity...................................... 106,647
--------
Total capitalization.......................................... $135,174
========
</TABLE>
- ---------------
(1) Excludes 2,933,753 shares of Common Stock reserved for issuance upon the
exercise of options outstanding under the Company's stock option plans as
of June 29, 1996.
9
<PAGE> 11
SELECTED FINANCIAL AND OPERATING DATA
(IN THOUSANDS, EXCEPT PER SHARE AND SELECTED OPERATING DATA)
The following selected financial data for the five years ended December 30,
1995, are derived from the audited financial statements of the Company, which
have been audited by Price Waterhouse LLP, independent accountants, and which
are incorporated herein by reference. The selected financial data as of and for
the six months ended July 1, 1995 and June 29, 1996 are derived from unaudited
financial statements as of such dates and for such periods, but, in the opinion
of management, include all adjustments (consisting of only normal recurring
entries) necessary for a fair presentation of the financial position and the
results of operations for these periods. Operating results for the six months
ended June 29, 1996 are not necessarily indicative of the results that may be
expected for the entire year ending December 28, 1996.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED(1)
------------------------------------------------------------------------ --------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 30, JULY 1, JUNE 29,
1991 1992 1993 1994 1995 1995 1996
------------ ------------ ------------ ------------ ------------ -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales................. $225,389 $278,254 $342,730 $419,220 $496,006 $204,239 $257,917
Cost of merchandise
sold.................... 164,879 201,129 247,334 305,672 366,781 152,023 190,234
-------- -------- -------- -------- -------- -------- --------
Gross profit............ 60,510 77,125 95,396 113,548 129,225 52,216 67,683
Selling, general and
administrative
expenses................ 48,392 58,064 71,468 87,397 105,195 48,038 58,919
Other income, net......... 2,881 3,234 3,992 5,062 6,378 2,747 3,619
-------- -------- -------- -------- -------- -------- --------
Income from
operations............ 14,999 22,295 27,920 31,213 30,408 6,925 12,383
Interest expense, net..... 2,238 852 464 744 1,289 420 665
-------- -------- -------- -------- -------- -------- --------
Income before income
taxes................... 12,761 21,443 27,456 30,469 29,119 6,505 11,718
Provision for income
taxes................... 207 7,522 10,774 12,050 11,361 2,537 4,570
-------- -------- -------- -------- -------- -------- --------
Net income................ $ 12,554 $ 13,921 $ 16,682 $ 18,419 $ 17,758 $ 3,968 $ 7,148
======== ======== ======== ======== ======== ======== ========
Net income per share
(2)..................... -- -- $ 0.70 $ 0.78 $ 0.76 $ 0.17 $ 0.31
Pro forma net income
(3)..................... $ 7,942 $ 13,293 -- -- -- -- --
======== ========
Pro forma net income per
share(2)(3)............. $ 0.44 $ 0.61 -- -- -- -- --
Weighted average shares
outstanding (2)......... 18,242 21,785 23,895 23,721 23,454 23,586 23,430
SELECTED OPERATING DATA:
Stores open at end of
period.................. 45 51 66 80 100 89 109
Average sales per store
(000's)(4)(5)........... $ 5,901 $ 6,452 $ 6,429 $ 6,335 $ 6,129 $ 2,700 $ 2,708
Average sales per square
foot of selling
area(5)(6).............. $ 186 $ 206 $ 205 $ 196 $ 189 $ 83 $ 84
Comparable store net sales
increase
(decrease)(7)........... 4.7% 10.9% 2.3% 2.4% (0.7)% (2.6)% 6.8%
BALANCE SHEET DATA (AT
PERIOD END):
Working capital........... $ 27,269 $ 35,751 $ 42,489 $ 53,668 $ 63,685 $ 75,093 $ 93,933
Total assets.............. 69,884 87,198 116,401 154,039 173,517 158,406 196,406
Long-term debt, less
current portion......... 11,953 1 1 1 1 21,830 28,527
Total stockholders' equity(8)...31,534 50,176 66,858 85,277 101,436 88,509 106,647
</TABLE>
10
<PAGE> 12
- ---------------
(1) The business of the Company is seasonal, and results for any period within a
fiscal year are not necessarily indicative of the results that may be
achieved for a full fiscal year. See "Risk Factors -- Seasonality and
Quarterly Fluctuations."
(2) A three-for-two stock split in the form of a 50% stock dividend was effected
on September 10, 1993. Weighted average shares outstanding and net income
per share for all periods presented reflect the effect of this stock split.
(3) From February 1, 1987 until its initial public offering in April 1992, the
Company was treated for federal income tax purposes as an S Corporation and
elected S Corporation status in all but three states in which it operated
during the period. The pro forma information has been computed as if the
Company were subject to corporate federal and state income taxes for all
periods presented, based on the tax laws in effect during the respective
periods.
(4) Average sales per store (including sales from leased shoe and fragrance
departments) for each period have been calculated by dividing (a) total
sales during such period by (b) the number of stores open at the end of
such period, in each case exclusive of stores open for less than 12 months.
(5) The average sales per store and average sales per square foot of selling
area decreased from 1992 through 1995, primarily as a result of the
Company's store base including a higher proportion of younger stores as a
percentage of total stores. The Company's more mature stores historically
have produced higher average sales and average sales per square foot than
its younger stores. Accordingly, management believes that as stores mature,
their average sales and average sales per square foot should increase.
(6) Includes sales and selling area of the leased shoe and fragrance
departments. Selling area excludes administrative, receiving and storage
areas.
(7) Comparable store information for a period reflects stores open throughout
that period and for the full prior year. Stores remodeled or relocated
continue to be included if no more than 20% additional square footage is
added, the store continues to serve the same market, and a same or similar
market strategy continues.
(8) Net of historical stockholder distributions during periods the Company was
an S Corporation.
11
<PAGE> 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion includes certain forward-looking statements.
Investors are cautioned that all forward-looking statements involve risks and
uncertainties, including without limitation, those discussed in "Risk Factors."
Although the Company believes that the assumptions underlying the
forward-looking statements contained herein are reasonable, any of the
assumptions could be inaccurate, and therefore, there can be no assurance that
the forward-looking statements included in this Prospectus will prove to be
accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a representation by the Company or any other person
that the objectives and plans of the Company will be achieved.
GENERAL
The Company experienced significant growth in number of stores and net
sales over the three years ended December 30, 1995. During this period, the
number of stores increased from 51 to 100, and annual net sales increased from
$342.7 million to $496.0 million. However, average sales per square foot of
selling area decreased during this period from $205 in 1993 to $189 in 1995
because of the increasing proportion of younger stores as a percentage of total
stores. The Company's more mature stores historically have produced higher
average sales and average sales per square foot than its younger stores.
Accordingly, management believes that as stores mature, their average sales and
average sales per square foot should increase. As the Company expands its store
base pursuant to its current expansion plan, average sales per store and per
square foot may continue to decrease as the proportion of younger stores
continues to increase.
The Company's business is seasonal in nature with the fourth quarter, which
includes the holiday selling season, historically accounting for the largest
percentage of the Company's net sales and operating income in any given year.
During the past three years, the fourth quarter accounted for an average of
approximately 37% of the Company's annual net sales and approximately 64% of the
Company's income from operations. Accordingly, selling, general and
administrative expenses are typically higher as a percent of net sales during
the first three quarters of each year.
In 1995, the Company changed its fiscal year from a calendar year to a
52-53 week fiscal year ending on the Saturday closest to December 31. The change
did not have a material effect on the Company's 1995 operating results. The
Company's 1996 fiscal year will end on December 28.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the percentage
of the Company's net sales represented by each line item presented:
<TABLE>
<CAPTION>
SIX MONTHS
FISCAL YEAR ENDED ENDED
------------------------------------------ ------------------
DECEMBER 31, DECEMBER 31, DECEMBER 30, JULY 1, JUNE 29,
1993 1994 1995 1995 1996
------------ ------------ ------------ ------- --------
<S> <C> <C> <C> <C> <C>
Net sales.......................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of merchandise sold........... 72.2 72.9 73.9 74.4 73.8
----- ----- ----- ----- -----
Gross profit..................... 27.8 27.1 26.1 25.6 26.2
Selling, general and administrative
expenses......................... 20.9 20.8 21.2 23.5 22.8
Other income, net.................. 1.2 1.2 1.2 1.3 1.4
----- ----- ----- ----- -----
Income from operations........... 8.1 7.5 6.1 3.4 4.8
Interest expense, net.............. 0.1 0.2 0.2 0.2 0.3
----- ----- ----- ----- -----
Income before income taxes......... 8.0 7.3 5.9 3.2 4.5
Net income......................... 4.9% 4.4% 3.6% 1.9% 2.8%
</TABLE>
12
<PAGE> 14
Six Months Ended June 29, 1996 Compared to Six Months Ended July 1, 1995
Ten stores were opened and one store was closed during the first six months
of 1996 and nine stores were opened during the first six months of 1995,
bringing the total number of stores to 109 at June 29, 1996 and 89 at July 1,
1995.
Net sales for the first six months of 1996 were $257.9 million, a 26.3%
increase over net sales of $204.2 million for the first six months of 1995. The
10 stores opened during the first six months of 1996 contributed $13.1 million
to net sales, as compared to the $10.1 million contributed to net sales by the
nine stores opened during the first six months of 1995. Comparable store net
sales for the first six months of 1996 increased by 6.8% compared to the first
six months of 1995.
Gross profit for the first six months of 1996 was $67.7 million, or 26.2%
of net sales, compared to $52.2 million, or 25.6% of net sales, for the first
six months of 1995. The increase in gross profit as a percentage of net sales
resulted primarily from a slight improvement in markup and leveraging of
occupancy costs.
Selling, general and administrative expenses were $58.9 million, or 22.8%
of net sales, for the first six months of 1996, and $48.0 million, or 23.5% of
net sales, for the first six months of 1995. The $10.9 million increase in
selling, general and administrative expenses was primarily due to the additional
stores in operation during the first six months of 1996 as compared to the
number of stores in operation during the first six months of 1995. The decrease
in selling, general and administrative expenses as a percentage of net sales
resulted from leveraging of selling, general and administrative expenses.
Management does not anticipate the recent legislation increasing the minimum
wage will materially affect the Company's payroll expense during the balance of
1996 or in 1997.
Other income, primarily from in-store leased shoe and fragrance
departments, increased to $3.6 million for the first six months of 1996 compared
to $2.7 million for the first six months of 1995. The increase resulted from the
additional stores in operation during the first six months of 1996 and from the
fragrance department, which became a leased operation at the beginning of the
second quarter of 1995.
Interest expense was $665,000 for the first six months of 1996 and $420,000
for the first six months of 1995. The increase in interest expense resulted from
increased borrowings for working capital for the additional stores, partially
offset by lower interest rates.
The effective tax rate of 39.0% remained constant for the first six months
of both years.
Net income for the first six months of 1996 was $7.1 million, or $0.31 per
share, compared to net income of $4.0 million, or $0.17 per share, for the first
six months of 1995.
Fiscal Year 1995 Compared to Fiscal Year 1994
Net sales of $496.0 million were achieved in 1995, an increase of $76.8
million, or 18.3%, compared to net sales of $419.2 in 1994. The 20 new stores
opened in 1995 contributed $50.4 million to net sales. Comparable store net
sales in 1995 decreased by 0.7% from 1994.
Gross profit for 1995 was $129.2 million, an increase of $15.7 million over
the gross profit of $113.5 million for 1994. Gross profit as a percentage of net
sales decreased 1.0% to 26.1% from 27.1% in the prior fiscal year. This decrease
was primarily the result of increased markdowns reflecting a higher level of
promotional activity, notably in the fourth quarter, and a slight increase in
occupancy costs as a percentage of net sales due to lower than expected sales.
Selling, general and administrative expenses were $105.2 million, or 21.2%
of net sales, for 1995, as compared to $87.4 million, or 20.8% of net sales, for
1994. The increase in such expenses was primarily due to the additional stores
in operation during 1995 as compared to the number of stores in operation in
1994. The increase in selling, general and administrative expenses as a
percentage of net sales was due to lower sales productivity. Included in
selling, general and administrative expenses were pre-opening expenses
(primarily advertising, stocking and training) for the 20 stores opened in 1995
in the amount of $2.3 million and for the 14 stores opened in 1994 in the amount
of $1.7 million.
13
<PAGE> 15
Other income, primarily from in-store leased shoe and fragrance
departments, amounted to $6.4 million in 1995, an increase of $1.3 million over
the $5.1 million for 1994. The increase was due to the addition of 20 stores in
1995 and the change during 1995 to operating the fragrance department as a
leased department instead of an owned department.
Interest expense for 1995 was $1,289,000, compared to $744,000 in 1994.
This increase was due to a combination of higher interest rates and increased
average borrowings.
The effective tax rate for 1995 was 39.0% as compared to 39.5% for 1994.
The lower effective tax rate resulted from federal income tax audit adjustments
included in 1994.
The factors discussed above resulted in net income for 1995 of $17.8
million, a decrease of 3.6% from net income of $18.4 million in 1994.
Fiscal Year 1994 Compared to Fiscal Year 1993
Net sales of $419.2 million in 1994 represented an increase of $76.5
million, or 22.3%, over net sales of $342.7 million in 1993. The 14 new stores
opened in 1994 contributed $38.7 million to net sales. Comparable store net
sales increased 2.4% in 1994 over the prior year.
Gross profit for 1994 increased to $113.5 million from $95.4 million in
1993. Gross profit as a percentage of net sales decreased to 27.1% in 1994 from
27.8% in 1993. This decrease was primarily the result of an increase in
occupancy expense as a percentage of net sales caused by lower than expected
sales and certain additional expenses related to the renovation, enlargement
and/or relocation of six stores.
Selling, general and administrative expenses were $87.4 million, or 20.8%
of net sales, in 1994, as compared to $71.5 million, or 20.9% of net sales, in
1993. The increase in expense dollars was primarily due to the additional stores
in operation during 1994 as compared to the number of stores in operation in
1993. Included in selling, general and administrative expenses were pre-opening
expenses for the 14 stores opened in 1994 amounting to $1.7 million and for the
15 stores opened in 1993 amounting to $2.0 million.
During 1994, other income, primarily from in-store leased shoe departments,
amounted to $5.1 million, an increase of $1.1 million over the $4.0 million in
1993.
As a result of higher interest rates and increased average borrowings,
interest expense for 1994 increased to $744,000, as compared to $464,000 in
1993.
The effective tax rate for 1994 was 39.5% as compared to 39.2% for 1993.
The higher effective tax rate reflects an increase in state income taxes due to
higher rates, net of the federal tax benefit.
Net income in 1994 was $18.4 million, an increase of 10.4% over net income
of $16.7 million in 1993.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary capital requirements are to support capital and
inventory investments for the opening of new stores, to meet seasonal working
capital needs and to maintain and improve existing stores. The Company's capital
requirements and working capital needs are funded through a combination of
internally generated funds, a bank line of credit and credit terms from vendors.
During the course of the Company's seasonal business cycle, working capital is
needed to support inventory for existing stores, especially during peak selling
seasons. Historically, the Company's working capital needs are lowest in the
first quarter and peak in either the third or fourth quarter in anticipation of
the fourth quarter selling season.
Net cash used in operating activities was $28.7 million and $31.4 million
during the first six months of 1996 and 1995, respectively. During the first six
months of both years, cash was used to acquire inventory for the additional
stores in operation and to reduce the net amount of current liabilities.
Net cash provided by operating activities for 1995 amounted to $9.2
million, compared to $22.9 million for 1994. During both years, cash was used
primarily to acquire inventory for new stores.
14
<PAGE> 16
During the first six months of 1996 and 1995, cash flow used in investing
activities totaled $6.7 million and $6.1 million, respectively, reflecting the
acquisition of fixtures, equipment, and leasehold improvements for new stores,
information system enhancements and improvements to existing stores. For 1995
and 1994, cash flow used in investing activities amounted to $13.8 million and
$11.5 million, respectively, primarily for the acquisition of fixtures,
equipment and leasehold improvements for the opening of new stores and for
information system enhancements.
Cash flow provided by financing activities was $26.6 million for the first
six months of 1996 and $21.1 million for the first six months of 1995,
reflecting net borrowings under the Company's revolving credit agreement to meet
seasonal working capital requirements in both periods. Also during the first six
months of 1996, cash was used to repurchase 270,000 shares of Common Stock for
$2.6 million. Cash flow used in financing activities in 1995 was for the
repurchase of 166,500 shares of Common Stock partially offset by proceeds
received from the exercise of stock options. There was no effect on cash flow
from the line of credit during 1995 or 1994 as the balance due under the credit
agreement, pursuant to its terms, remained unchanged at $1,000 at year-end 1995,
1994 and 1993.
The cost of opening a prototypical new store generally ranges from $450,000
to $650,000 for fixtures, equipment, leasehold improvements and pre-opening
expenses (primarily advertising, stocking and training). Pre-opening expenses
are expensed in the year of opening. Initial inventory investment for a new
store is approximately $1 million (a portion of which is normally financed
through vendor credit). New stores typically generate operating profit in the
first year of operation. The Company's total capital expenditures for 1996
(including amounts budgeted for new store expansion, improvements to existing
stores and information system enhancements) are anticipated to be approximately
$15.0 million. Through the six months ended June 29, 1996, capital expenditures
were $6.7 million.
The Company may borrow up to $40 million under its current revolving credit
agreement, and an additional $10 million seasonal line of credit is available
each year from March 15 through June 30 and from September 15 through December
31. Due to the seasonal nature of the Company's business, bank borrowings
fluctuate during the year, typically reaching their highest levels during the
third or fourth quarters as the Company builds its inventory for the holiday
selling season. The outstanding loan balance at June 29, 1996 was $28.5 million.
At December 30, 1995, the loan balance was reduced to $1,000, the minimum
balance required to avoid termination of the loan agreement. The Company had
cash and cash equivalents of $15.1 million at December 30, 1995 and $6.3 million
at June 29, 1996.
The Company believes that expected net cash provided by operating
activities, bank borrowings and vendor credit will be sufficient to fund current
and long-term anticipated capital expenditures and working capital requirements.
INFLATION
Inflation affects the costs incurred by the Company in the purchase of
merchandise, the leasing of its stores, and in certain components of its
selling, general and administrative expenses. The Company has offset the effects
of inflation through the control of expenses during the past three years.
However, there can be no assurance that inflation will not have a material
effect on the Company's operations in the future.
15
<PAGE> 17
BUSINESS
Stein Mart is a 110-store retail chain offering fashionable,
current-season, primarily branded merchandise comparable in quality and
presentation to that of traditional department and fine specialty stores at
prices typically 25% to 60% below those regularly charged by such stores. The
Company's focused assortment of merchandise features moderate to designer
brand-name apparel for women, men and children, as well as accessories, gifts,
linens, shoes and fragrances. Stein Mart operated a single store in Greenville,
Mississippi from the early 1900's until 1977, when it began its expansion
program. During the last five years, the Company has more than doubled the
number of Stein Mart stores from 45 in 15 states at year-end 1991 to 110 in 20
states at August 26, 1996. The Company's stores, which average approximately
38,000 gross square feet, are located primarily in neighborhood shopping centers
in metropolitan areas. The Company's principal executive offices are located at
1200 Riverplace Boulevard, Jacksonville, Florida 32207 and its telephone number
is (904) 346-1500.
EXPANSION STRATEGY
The Company's expansion strategy is to add stores in new markets, including
those markets with the potential for multiple stores, and in existing markets to
capture advertising and management efficiencies. The Company has opened 11
stores in 1996 and expects to open 13 new stores during the remainder of 1996,
25 to 28 in 1997 and approximately 25 to 30 in each of the next several years
thereafter. See "Risk Factors -- Expansion Strategy."
The Company targets metropolitan statistical areas with populations of
125,000 or more for new store expansion. In determining where to locate new
stores, the Company evaluates detailed demographic information, including, among
other factors, data relating to income, education levels, age, occupation, the
availability of prime real estate locations, existing and potential competitors,
and the number of Stein Mart stores that a market can support. As a result of
processing only 10% of its merchandise through its distribution center, the
Company is not constrained geographically or by the capacity limits of a central
facility. This allows management to concentrate on the best real estate
opportunities in targeted markets.
The Company refurbishes existing retail locations or occupies newly
constructed stores, which typically are anchor stores in new or existing
shopping centers situated near upscale residential areas, ideally with co-
tenants that cater to a similar customer base. The Company's ability to
negotiate favorable leases and to construct attractive stores with a relatively
low investment provides a significant cost advantage over traditional department
and fine specialty stores.
BUSINESS STRATEGY
The Company's business strategy is to (i) maintain the quality of
merchandise, store appearance, merchandise presentation and customer service
levels typical of traditional department and fine specialty stores and (ii)
offer value pricing to its customers through its vendor relationships, tight
control over corporate and store expenses and efficient management of inventory.
The principal elements of the Company's business strategy are as follows:
Timely, Consistent, Upscale Merchandise. The Company purchases
upscale, branded merchandise primarily through preplanned buying programs
similar to those used by traditional department and fine specialty stores.
These preplanned buying programs enable the Company to offer fashionable,
current-season assortments on a consistent basis.
Appealing Store Appearance and Merchandise Presentation. The Company
creates an ambiance in its stores similar to that of upscale retailers
through attractive in-store layout and signage. Merchandise is displayed in
lifestyle groupings to encourage multiple purchases.
Emphasis on Customer Service. Customer service is fundamental to
Stein Mart's objective of building customer loyalty. Management believes
that the Company offers customer service superior to off-price retailers
and more comparable to traditional department and fine specialty stores.
16
<PAGE> 18
Value Pricing through Vendor Relationships. In negotiating with Stein
Mart, vendors do not build into their pricing structure anticipated returns
or markdown and advertising allowances which are typical in the department
store industry. Stein Mart passes these savings on to its customers through
prices which are typically 25% to 60% below those regularly charged by
traditional department and fine specialty stores.
Efficient Inventory Handling. Stein Mart does not rely on a large
distribution center or warehousing facility. Rather, it primarily utilizes
drop shipments by common carriers from its vendors directly to its stores.
This system enables the Company to receive merchandise at each store on a
more timely basis and to save the time and expense of handling merchandise
twice, which is typical of a traditional distribution center structure.
Operating Efficiencies. Management believes that there will be
opportunities to create additional operating efficiencies as the Company
continues to add stores in new and existing markets.
MERCHANDISING
Stein Mart's focused assortment of merchandise features moderate to
designer brand-name apparel for women, men and children, as well as accessories,
gifts, linens, shoes and fragrances. Branded merchandise is complemented by a
limited private label program that enhances the Company's presentation of
current fashion trends and provides key items in complete size ranges and
assortments.
Management believes that Stein Mart differentiates itself from typical
off-price retailers by offering (i) a higher percentage of current-season
merchandise carried by traditional department and fine specialty stores at
moderate to better price levels, (ii) a stronger merchandising "statement,"
consistently offering more depth of color and size in individual stockkeeping
units, and (iii) a merchandise presentation more comparable to traditional
department and fine specialty stores.
The Company identifies and responds to the latest fashion trends. Within
each major merchandise category, the Company offers a focused assortment of the
best-selling department and fine specialty store items. Stein Mart's merchandise
selection is driven primarily by its own merchandising plans which are based on
management's assessment of fashion trends and market conditions. This strategy
distinguishes Stein Mart from traditional off-price retailers who achieve cost
savings by responding to unplanned buying opportunities. The Company's
merchandise is typically priced at levels 25% to 60% below regular prices at
these stores, therefore offering distinct value to the Stein Mart customer.
17
<PAGE> 19
The following reflects the percentage of the Company's revenues by major
merchandise category for the periods indicated:
<TABLE>
<CAPTION>
SIX MONTHS
FISCAL YEAR ENDED ENDED
------------------------------------------ ------------------
DECEMBER 31, DECEMBER 31, DECEMBER 30, JULY 1, JUNE 29,
1993 1994 1995 1995 1996
------------ ------------ ------------ ------- --------
<S> <C> <C> <C> <C> <C>
Ladies' and Boutique apparel....... 33% 33% 35% 37% 38%
Ladies' accessories................ 11 10 11 10 11
Men's and young men's.............. 22 21 20 19 19
Gifts and linens................... 18 19 18 17 16
Shoes (leased department).......... 9 9 8 10 9
Children's......................... 6 6 6 5 5
Other.............................. 1 2 2 2 2
--- --- --- --- ---
100% 100% 100% 100% 100%
=== === === === ===
</TABLE>
Ladies' apparel, the Company's largest contributor of revenues, consists of
distinctive presentations of dresses, sportswear and other apparel in ladies',
petites, juniors and women's sizes at moderate to upper-moderate prices. Stein
Mart's distinctive Boutique is a key element of the Company's merchandising
strategy to attract more fashion-conscious customers. The Boutique, a
store-within-a-store department, carries better to designer ladies' apparel and
offers the presentation and service levels of a fine specialty boutique. Each
Stein Mart store has its own Boutique, staffed generally by women employed on a
part-time basis who are civically and socially prominent in the community. The
Boutique highlights the Company's strategy of offering upscale merchandise,
presentation and customer service at value prices.
The Company's typical store layout emphasizes ladies' accessories as the
fashion focus at the front of the store. The key merchandise in this department
is fashion-oriented, brand-name, designer and private label jewelry, as well as
scarves, hosiery, leather goods, bath products and fragrances.
Men's and young men's areas together provide the second largest
contribution to revenues. Menswear consists of sportswear, suits, sportcoats,
slacks, dress furnishings and a Big and Tall assortment. The Company believes
that its merchandise presentation is particularly strong in men's dress
furnishings, including branded and private label neckwear and dress shirts.
In 1995, the Company changed the merchandise mix of its traditional junior
girls and young men's departments. This department, named "Exterior," presents a
more contemporary fashion-forward attitude designed to appeal to all ages.
Stein Mart's gifts and linens departments consist primarily of a broad
assortment of fashion-oriented gifts (rather than basic items) for the home and
a wide range of table, bath and bed linens and, in some stores, decorative
fabrics. The presentation in this distinctive department emphasizes fashion,
lifestyle and seasonal themes and includes the full range of merchandise
available in a typical department store. The strength of this category has been
the consistent presentation with a higher percentage mix of better goods.
Stein Mart's children's department offers a range of apparel for infants
and children.
The Company's shoe department is a leased department operated in individual
stores by one of two shoe retailers. The merchandise in this department is
presented in a manner consistent with the Company's overall presentation in
other departments, stressing fashionable, current-season footwear at value
prices. This department offers a variety of men's and women's casual and dress
shoes, which complement the range of apparel available in other departments.
Shoe department leases provide for the Company to be paid the greater of an
annual base rent or a percentage of sales. Almost all of the leases currently
pay on the percentage of sales basis.
In 1995, the Company began leasing its fragrance department to a
third-party operator. The operating agreement requires the third-party operator
to pay the Company the greater of an annual base amount or a percentage of
sales.
18
<PAGE> 20
STORE APPEARANCE
Stein Mart's stores are designed to reflect the upscale ambiance and
appearance of traditional department and fine specialty stores through
attractive layout, displays and in-store signage. The prototypical store is
approximately 36,000 gross square feet with convenient check-out and customer
service areas and attractive, individual dressing rooms. The Company seeks to
create excitement in its stores through the continual flow of brand-name
merchandise, sales promotions, store layout, merchandise presentation, and the
quality, value and depth of its merchandise assortment.
The Company displays merchandise in lifestyle groupings of apparel and
accessories. Management believes that the lifestyle grouping concept strengthens
the fashion image of its merchandise and enables the customer to locate desired
merchandise in a manner that encourages multiple purchases.
CUSTOMER SERVICE
Customer service is fundamental to Stein Mart's objective of building
customer loyalty. The Company's stores offer most of the same services typically
found in traditional department and fine specialty stores such as menswear
alterations and a liberal merchandise return policy. Each store is staffed to
provide a number of sales associates to properly attend to customer needs. Stein
Mart also offers a distinctive customer service through its Agenda program for
career women. This program provides the services of an in-store personal shopper
who maintains a record of customers' sizes and style preferences so that
merchandise can be pre-selected for shopping by appointment.
The Company's training program for sales associates and cashiers emphasizes
attentiveness, courtesy and the effective use of selling techniques. The Company
reinforces its training program by employing an independent shopping service to
monitor the associates' success in implementing the principles taught in sales
training. Associates who are highly rated by the shopping service receive both
formal recognition and cash awards. Management believes this program emphasizes
the importance of customer service necessary to create customer loyalty.
VENDOR RELATIONSHIPS AND BUYING
Stein Mart buys from over 3,500 vendors. Many of these are considered key
vendors, with whom the Company enjoys longstanding working relationships that
create a continuity of preplanned buying opportunities for upscale,
current-season merchandise. Most of the Company's vendors are based in the
United States, which generally reduces the time necessary to purchase and obtain
shipments and allows the Company to react to merchandise trends in a timely
fashion. The Company does not have long-term or exclusive contracts with any
particular vendor. In 1995, less than 2% of Stein Mart's purchases were from any
single vendor.
The Company employs several purchasing strategies to provide its customers
with a consistent selection of quality, fashionable merchandise at value prices:
(i) Stein Mart commits to its purchases from vendors well in advance of the
selling season, in the same manner as department stores, unlike typical
off-price retailers who rely heavily on buys of close-out merchandise or
overruns; (ii) the Company's information systems enable it to acquire
merchandise and track sales information on a store-by-store basis, allowing its
buying staff to respond quickly to customer buying trends; and (iii) an in-house
merchandise development department works with buyers and brand-name vendors to
ensure that the merchandise assortments offered are unique, fashionable,
color-forward and of high quality.
Stein Mart negotiates favorable prices from its vendors by not requiring
advertising and markdown allowances or return privileges that are typical in the
department store industry, resulting in savings that the Company passes along to
its customers in the form of prices that are typically 25% to 60% below those
regularly charged by traditional department and fine specialty stores.
The Company's buying staff is headed by the Chief Merchandising Officer,
who is supported by four Vice Presidents -- General Merchandise Managers, seven
Divisional Merchandising Managers and 29 buyers. In addition to base salary, the
buying staff receives incentive compensation for achieving certain sales goals
within their areas of responsibility. Historically, the Company has had very low
turnover within its buying
19
<PAGE> 21
staff, enabling it to capitalize on an experienced, respected group of buyers
capable of maintaining and enhancing the Company's vendor relationships.
INFORMATION SYSTEMS
The Company's information systems provide daily financial and merchandising
information that is used by management to make timely and effective purchasing
and pricing decisions and for inventory control.
The Company's inventory control system enables it to achieve economies of
scale from bulk purchases while at the same time ordering and tracking separate
drop shipments by store. Store inventory levels are regularly monitored and
adjusted as sales trends dictate. The inventory control system provides
information that enhances management's ability to make informed buying decisions
and accommodate unexpected increases or decreases in demand for a particular
item. The Company uses bar codes and bar code scanners as part of an integrated
inventory management and check-out system in its stores.
The Company is in the process of phasing in an upgraded merchandise
planning and allocation system, which will enable the Company to better utilize
individual store data. The Company expects the system to be operational by the
end of fiscal 1996. When fully operational, merchandise buyers will use the
system to customize their merchandise assortments at the individual store and
department level, based on selected criteria, such as a store's selling
patterns, geography and merchandise color preferences. The ability to customize
individual store assortments presents the Company with new opportunities to
effectively manage inventory, capitalize on sales trends and reduce markdowns.
The Company is also implementing a computerized time management system in
1996 which will assist management in scheduling store associates' hours based on
an individual store's own customer traffic patterns and necessary tasks. This
improvement should maximize customer service levels and enhance efficiency.
STORE OPERATIONS
The Company has six Vice Presidents -- Regional Directors of Stores, each
overseeing between 6 and 14 stores, who report to the Executive Vice President,
Stores. Two of the Vice Presidents have District Directors of Stores reporting
to them, who are each responsible for overseeing 9 to 12 stores. Each Vice
President's and District Director's compensation includes an incentive component
based on overall performance. Each Stein Mart store is managed by a general
manager who reports directly to a Vice President or a District Director. Store
general managers are responsible for individual store operations, including
hiring, motivating and supervising sales associates; receiving and effectively
presenting merchandise; and implementing price change determinations made by the
Company's buying staff. Store general managers receive incentive compensation
based upon operating results in several key areas, including increases in store
sales. In addition to the store general manager and two assistant store
managers, each Stein Mart store employs an average of 60 persons as department
managers, sales associates, cashiers and in other positions.
Stein Mart stores typically are open 11 hours per day, six days a week, and
on Sunday afternoons. The store hours are extended during the holiday selling
season.
ADVERTISING AND SALES PROMOTION
The Company's advertising strategy stresses the offering of upscale,
branded merchandise at significant savings. The Company generally allocates the
majority of its advertising budget to newspaper advertising, employing a
combination of image, price-and-item and sales event approaches. Stein Mart's
per-store advertising expense is reduced by spreading its advertising over
multiple stores in a single market. Management believes the Company also enjoys
substantial word-of-mouth advertising benefits from its customer base.
During 1995, the Company tested a new image campaign in national print
media. The results from a subsequent market survey indicated an increased
recognition of the Stein Mart name. As a result, although newspaper will
continue to be the dominant advertising media, some emphasis will shift to
national and regional magazines and local radio.
20
<PAGE> 22
STORE AND CORPORATE FACILITIES
The Company leases all of its store locations and therefore has been able
to grow without incurring indebtedness to acquire real estate. Management
believes that the Company has earned a reputation as an "anchor tenant," which,
along with its established operating history, has enabled it to negotiate
favorable lease terms. Most of the leases provide for minimum rents, as well as
percentage rents that are based on sales in excess of predetermined levels.
The table below reflects (i) the number of the Company's leases (as of
December 30, 1995) that will expire each year if the Company does not exercise
any of its renewal options, and (ii) the number of the Company's leases that
will expire each year if the Company exercises all of its renewal options
(assuming the lease is not otherwise terminated by either party pursuant to any
other provision).
<TABLE>
<CAPTION>
NUMBER OF LEASES NUMBER OF LEASES
EXPIRING EACH YEAR EXPIRING EACH YEAR
IF NO RENEWALS IF ALL RENEWALS
EXERCISED EXERCISED
------------------ ------------------
<S> <C> <C>
1996........................................................ 1 0
1997........................................................ 2 0
1998........................................................ 6 0
1999........................................................ 8 0
2000........................................................ 7 0
2001-2005................................................... 43 6
2006-2010................................................... 30 17
2011-2029................................................... 1 75
</TABLE>
The Company has made consistent capital commitments to maintain and improve
existing store facilities. During 1995, approximately $3.2 million was spent to
upgrade computer equipment, fixtures, equipment and leasehold improvements in
stores opened prior to 1995.
The Company leases approximately 46,600 gross square feet of office space
for its corporate headquarters in Jacksonville, Florida. The Company also leases
a 56,000 square foot distribution center in Jacksonville for the purpose of
processing a limited amount of merchandise (approximately 10%).
The Company continually evaluates underperforming stores and may choose to
close selected underperforming stores. In accordance with this policy, the
Company closed its Denver, Colorado store in May, 1992, but opened a new store
at a different location in Denver in March, 1996, and closed its Plantation,
Florida store in February, 1996.
COMPETITION
Management believes that the Company occupies a market niche closer to
traditional department stores than typical off-price retail chains. The Company
faces competition for customers and for access to quality merchandise from
traditional department stores, fine specialty stores and, to a lesser degree,
from off-price retail chains. Many of these competitors are units of large
national or regional chains that have substantially greater resources than the
Company. The retail apparel industry is highly fragmented and competitive, and
the off-price retail business may become even more competitive in the future.
The principal competitive factors in the retail apparel industry are the
assortment, presentation and quality of merchandise, price, customer service,
vendor relations and store location. Management believes that the Company is
well-positioned to compete on the basis of each of these factors.
EMPLOYEES
At August 17, 1996, the Company's work force consisted of approximately
6,500 employees (4,300 40-hour equivalent employees). The number of employees
fluctuates based on the particular selling season, peaking during the holiday
selling season.
21
<PAGE> 23
TRADEMARKS
The Company owns the federally registered trademark Stein Mart(R), together
with a number of other marks used in conjunction with its private label
merchandise program. Stein Mart primarily sells branded merchandise. However, in
certain classifications of merchandise, the Company uses several private label
programs to provide additional availability of items. Management believes that
its trademarks are important but, with the exception of Stein Mart(R), not
critical to the Company's merchandising strategy.
LEGAL PROCEEDINGS
The Company is involved in various routine legal proceedings incidental to
the conduct of its business. Management does not believe that any of these legal
proceedings will have a material adverse effect on the financial condition or
results of operations of the Company.
22
<PAGE> 24
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information concerning the executive
officers and directors of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
------------------------------- ---- -----------------------------------------------------------
<S> <C> <C>
Jay Stein...................... 50 Chairman of the Board and Chief Executive Officer
John H. Williams, Jr........... 58 President, Chief Operating Officer and Director
Mason Allen.................... 52 Senior Executive Vice President, Chief Merchandising
Officer and Director
Michael D. Fisher.............. 48 Executive Vice President, Stores
James G. Delfs................. 50 Senior Vice President, Finance and Chief Financial Officer
D. Hunt Hawkins................ 37 Senior Vice President, Human Resources
Robert D. Davis................ 64 Director
Albert Ernest, Jr.............. 66 Director
Mitchell W. Legler............. 53 Director
James H. Winston............... 62 Director
</TABLE>
MR. STEIN has been with Stein Mart since 1967, serving as a director since
1968 and as President from 1979 until 1990. He assumed the position of Chairman
in 1989. Mr. Stein is also a director of American Heritage Life Insurance Co.
and Barnett Bank of Jacksonville, N.A., both based in Jacksonville, Florida, and
Promus Hotel Corporation based in Memphis, Tennessee.
MR. WILLIAMS joined Stein Mart in 1980 and was appointed President in 1990.
Mr. Williams has been a director of the Company since 1984 and is also a
director of SunTrust Bank, North Florida, N.A.
MR. ALLEN joined Stein Mart in 1986 as Executive Vice President and General
Merchandise Manager and was promoted to Senior Executive Vice President and
Chief Merchandising Officer in 1990. Mr. Allen was elected to the Company's
Board of Directors in June 1991.
MR. FISHER joined the Company in August 1993 as Executive Vice President,
Stores. From 1988 to 1993, Mr. Fisher was Senior Vice President of Stores for
Millers Outpost, Inc., a California based chain of apparel stores.
MR. DELFS joined the Company in May 1995 as Senior Vice President, Finance
and Chief Financial Officer. From 1993 to 1994 he was Vice President, Chief
Financial Officer for Helzberg's Diamond Shops, Inc., a chain of jewelry stores,
and from 1988 to 1992 he was Vice President, Chief Financial Officer for
Abercrombie & Fitch, Inc., a division of The Limited, Inc.
MR. HAWKINS joined the Company in February 1994 as Senior Vice President,
Human Resources. From 1984 to 1994 he was employed by Genesco, Inc., a
publicly-held apparel and footwear manufacturer, in various human resources
positions, most recently as Director of Employee Relations.
MR. DAVIS is Chairman of D.D.I., Inc., Jacksonville, Florida, a
family-owned investment firm. He is a director of Winn-Dixie Stores, Inc., a
publicly-held retail supermarket chain. He served as Chairman of Winn-Dixie
Stores, Inc. from 1983 to 1988 and Vice Chairman from 1988 to 1990. Mr. Davis
also is a director of American Heritage Life Investment Corporation, Florida
Rock Industries, Inc., a publicly-held construction materials company, and First
Union Corporation, a bank holding company headquartered in Charlotte, North
Carolina. He was elected to the Company's Board of Directors in August 1992.
MR. ERNEST is Managing Partner of Albert Ernest Enterprises, a consulting
and investment partnership. He served as President and Chief Operating Officer
of Barnett Banks, Inc. from 1988 until 1991, and as Vice
23
<PAGE> 25
Chairman from 1984 to 1988. Mr. Ernest is also a director of Florida Rock
Industries, Inc., Florida Rock Industries' affiliate, FRP Properties, Inc., a
transportation and real estate company, The Emerald Fund, a bank directed mutual
fund group, Wickes Lumber Company and Regency Realty Corporation. He was elected
to the Company's Board of Directors in June 1991.
MR. LEGLER is the sole shareholder of Mitchell W. Legler, P.A., general
counsel to the Company. He was a senior partner in the law firm of Commander
Legler Werber Dawes Sadler & Howell, from 1976 until its merger with Foley &
Lardner in 1991 and a partner in that firm until 1995. Mr. Legler was elected to
the Company's Board of Directors in June 1991.
MR. WINSTON has served as Chairman of LMPC, a real estate investment firm
based in Jacksonville, Florida, since 1979, and as President of Omega Insurance
Company, Citadel Life & Health Insurance Company and Wellington Investments
since 1983. Mr. Winston is a director of Barnett Bank of Jacksonville, N.A., FRP
Properties, Inc. and Winston Hotels. Mr. Winston was elected to the Company's
Board of Directors in June 1991.
24
<PAGE> 26
PRINCIPAL AND SELLING STOCKHOLDERS
AND STOCK OWNERSHIP OF MANAGEMENT
The shares of Common Stock offered hereby are being sold by (a) the Stein
Ventures Limited Partnership (the "Stein Partnership"), a limited partnership
100% controlled by Jay Stein, the Chairman of the Board and Chief Executive
Officer of the Company, and the limited partners of which consist of Mr. Stein
and his wife, and (b) John H. Williams, Jr., President and Chief Operating
Officer (the "Selling Stockholders"). The following table sets forth certain
information regarding the beneficial ownership of shares of Common Stock as of
the date of this Prospectus by (i) the Selling Stockholders, (ii) each person
known by the Company to beneficially own more than 5% thereof, (iii) each
director and executive officer, and (iv) all directors and executive officers of
the Company as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
BEFORE THE OFFERING AFTER THE OFFERING(1)
-------------------------- --------------------------
NUMBER OF SHARES BEING NUMBER OF
NAME SHARES(2) PERCENT OFFERED SHARES(2) PERCENT
- -------------------------------- ---------- ------- ------------ ---------- -------
<S> <C> <C> <C> <C> <C>
Jay Stein(3)(4)(5).............. 13,270,709(6) 58.7% 3,200,000 10,070,709(6) 44.0%
John H. Williams, Jr.(4)(5)..... 446,500(7)(8) 1.9 300,000 146,500(7)(8) *
Mason Allen(4)(5)............... 20,900(9)(10) * -- 20,900(9)(10) *
Michael D. Fisher(4)............ 10,400(11) * -- 10,400(11) *
James G. Delfs(4)............... --(12) -- -- --(12) --
D. Hunt Hawkins(4).............. --(13) -- -- --(13) --
Robert D. Davis(5).............. 78,960(14)(15) * -- 78,960(14)(15) *
Albert Ernest, Jr.(5)........... 12,960(14) * -- 12,960(14) *
Mitchell W. Legler(5)........... 9,960(14)(16) * -- 9,960(14)(16) *
James H. Winston(5)............. 12,960(14)(17) * -- 12,960(14)(17) *
All directors and executive
officers as a group (10
persons)...................... 13,863,349 60.1% 3,500,000 10,363,349 44.9%
</TABLE>
- ---------------
* Where percentage is not indicated, amount is less than 1.0% of the
outstanding Common Stock.
(1) The Stein Partnership, which is 100% controlled by Mr. Stein and which is
one of the Selling Stockholders, has granted the Underwriters an option to
purchase up to 525,000 additional shares of Common Stock. If such option is
exercised in full, upon consummation of the Offering, Jay Stein would be
deemed to beneficially own 9,545,709 shares (41.7%) and all directors and
executive officers as a group would be deemed to beneficially own 9,838,349
shares (42.6%).
(2) Excludes shares subject to options that are not exercisable within 60 days
of the date of this Prospectus held by all individuals listed on the table
other than Mr. Stein, who holds no options. Shares of Common Stock
underlying options that are exercisable within 60 days are deemed to be
outstanding for the purpose of computing the outstanding Common Stock owned
by the particular person and by all executive officers and directors as a
group, but are not deemed outstanding for any other purpose.
(3) The business address of Jay Stein is 1200 Riverplace Boulevard,
Jacksonville, Florida 32207.
(4) Executive officer.
(5) Director.
(6) Consists of 12,956,609 shares held by the Stein Partnership and 314,100
shares held by the Jay and Cynthia Stein Foundation Trust, over which Mr.
Stein has sole voting and dispositive power as trustee, of which 3,200,000
shares will be sold in the Offering.
(7) Includes 443,500 shares subject to presently exercisable options, of which
300,000 will be exercised and sold in the Offering.
(8) Excludes 331,500 shares subject to options that will become exercisable in
1997.
(9) Includes 20,000 shares subject to presently exercisable options. Excludes
150 shares held by Mr. Allen's wife in an Individual Retirement Account
(10) Excludes 102,000 shares subject to options that will become exercisable in
1997.
(11) Includes 9,900 shares subject to presently exercisable options. Excludes
50,100 shares subject to options which will become exercisable between 1997
and 2000.
(12) Excludes 25,000 shares subject to options which will become exercisable
between 1998 and 2000.
(13) Excludes 30,000 shares subject to options which will become exercisable
between 1997 and 2000.
25
<PAGE> 27
(14) Includes 3,960 shares subject to presently exercisable options.
(15) Mr. Davis has shared voting and investment power over 52,500 shares in his
capacity as a member of the investment committee of the corporation that
owns the shares. In addition, he holds sole voting and investment power
over 22,500 shares held by a revocable trust of which he is the trustee and
beneficiary.
(16) Includes 6,000 shares held by Mr. Legler and his wife as tenants by the
entirety.
(17) Includes 6,450 shares owned through corporations of which Mr. Winston is
the sole stockholder.
26
<PAGE> 28
UNDERWRITING
Pursuant to the Underwriting Agreement and subject to the terms and
conditions thereof, the Underwriters named below, acting through J.C. Bradford &
Co., NatWest Securities Limited ("NatWest") and Wasserstein Perella Securities,
Inc., as representatives of the several underwriters (the "Representatives"),
have agreed, severally, to purchase from the Selling Stockholders, the number of
shares of Common Stock set forth below opposite their respective names.
<TABLE>
<CAPTION>
NUMBER OF
NAME OF UNDERWRITER SHARES
- ---------------------------------------------------------------------------------- ---------
<S> <C>
J.C. Bradford & Co. ..............................................................
NatWest Securities Limited........................................................
Wasserstein Perella Securities, Inc. .............................................
---------
Total................................................................... 3,500,000
=========
</TABLE>
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions therein set forth, to purchase all shares of Common Stock
offered hereby if any of such shares are purchased.
The Company has been advised that the Underwriters propose initially to
offer the shares of Common Stock to the public at the public offering price set
forth on the cover page of this Prospectus and to certain dealers at such price
less a concession not in excess of $ per share. The Underwriters may allow
and such dealers may reallow a concession not in excess of $ per share to
certain other dealers. After the initial public offering, the public offering
price and such concessions may be changed by the Underwriters.
The offering of the shares of Common Stock is made for delivery when, as
and if accepted by the Underwriters and subject to prior sale and to withdrawal,
cancellation or modification of the offer without notice. The Underwriters
reserve the right to reject any order for the purchase of the shares.
The Stein Partnership has granted to the Underwriters an option,
exercisable no later than 30 days from the date of this Prospectus, to purchase
up to an aggregate of 525,000 additional shares of Common Stock to cover
over-allotments. To the extent the Underwriters exercise this option, each of
the Underwriters will have a firm commitment to purchase approximately the same
percentage thereof which the number of shares of Common Stock to be purchased by
it shown in the table above bears to the total and the Stein Partnership will be
obligated, pursuant to the option, to sell such shares to the Underwriters. The
Underwriters may exercise such option only to cover over-allotments made in
connection with the sale of shares of Common Stock offered hereby. If purchased,
the Underwriters will sell such additional shares on the same terms as those on
which the shares are being offered.
In connection with the Offering, certain Underwriters may engage in passive
market making transactions in the Common Stock on the Nasdaq National Market
immediately prior to the commencement of sales in the Offering in accordance
with Rule 10b-6A under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Passive market making consists of displaying bids on the Nasdaq
National Market limited by the bid prices of independent market makers and
purchases limited by such prices and effected in response to order flow. Net
purchases by a passive market maker on each day are limited to a specified
percentage of the passive market makers' average daily trading volume in the
Common Stock during a specified period and
27
<PAGE> 29
must be discontinued when such limit is reached. Passive market making may
stabilize the market price of the Common Stock at a level above that which might
otherwise prevail and, if commenced, may be discontinued at any time.
NatWest, a United Kingdom broker-dealer and a member of the Securities and
Futures Authority Limited, has agreed that, as part of the distribution of the
shares of Common Stock offered hereby and subject to certain exceptions, it will
not offer or sell any shares of Common Stock within the United States, its
territories or possessions or to persons who are citizens thereof or residents
therein, provided that NatWest Securities Corporation, an affiliate of NatWest
and a United States broker-dealer, may be a selling broker with respect to the
shares of Common Stock, acting as agent for purchasers within the United States.
The Underwriting Agreement does not limit the sale of the shares of Common Stock
offered hereby outside of the United States.
NatWest has also represented and agreed that (i) it has not offered or sold
and will not offer or sell any Common Stock to persons in the United Kingdom
prior to admission of the Common Stock to listing in accordance with Part IV of
the Financial Services Act of 1986 (the "1986 Act") except to persons whose
ordinary activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purpose of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995 or the 1986 Act, (ii) it has complied and
will comply with all applicable provisions of the 1986 Act with respect to
anything done by it in relation to the Common Stock in, from or otherwise
involving the United Kingdom and (iii) it has only issued or passed on, and will
only issue or pass on, in the United Kingdom any document received by it in
connection with the issue of the Common Stock, other than any document which
consists of or any part of listing particulars, supplementary listing
particulars or any other document required or permitted to be published by
listing rules under Part IV of the 1986 Act, to a person who is of a kind
described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1995 or is a person to whom the document may
otherwise lawfully be issued or passed on.
The Company, the Selling Stockholders, Jay Stein and the Jay and Cynthia
Stein Foundation Trust have agreed that they will not, without the prior written
consent of the Representatives, issue, sell, transfer, assign or otherwise
dispose of any shares of the Common Stock or options, warrants, or rights to
acquire Common Stock owned by them prior to the expiration of 180 days from the
date of this Prospectus (90 days in the case of the Jay and Cynthia Stein
Foundation Trust).
The Underwriting Agreement provides that the Company and the Selling
Stockholders will indemnify the Underwriters and controlling persons, if any,
against certain liabilities, including liabilities under the Securities Act, or
will contribute to payments which the Underwriters or any such controlling
persons may be required to make in respect thereof.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company and the Selling Stockholders by Foley & Lardner,
Jacksonville, Florida. Certain legal matters relating to the sale of the Common
Stock will be passed upon for the Underwriters by Bass, Berry & Sims PLC,
Nashville, Tennessee.
EXPERTS
The financial statements incorporated in this Registration Statement by
reference to the Annual Report on Form 10-K for the year ended December 30,
1995, have been so incorporated in reliance on the report of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
28
<PAGE> 30
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Exchange Act
and, in accordance therewith, files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information may be inspected and copied at
the office of the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549 or at its Regional Offices located in the Citicorp Center, Suite
1400, 500 West Madison Street, Chicago, Illinois 60661 and Seven World Trade
Center, Suite 1300, New York, New York 10007. Copies of such material also may
be obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission
maintains a web site that contains reports, proxy statements and other
information regarding registrants, including the Company, that file such
information electronically with the Commission. The address of the Commission's
web site is http://www.sec.gov. The Company's Common Stock is listed on The
Nasdaq National Market, and such reports, proxy statements and other information
can also be inspected at the offices of Nasdaq Operations, 1735 K Street, N.W.,
Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on Form
S-3, including amendments thereto, relating to the Common Stock offered hereby.
This Prospectus, which is part of such Registration Statement, does not contain
all of the information set forth in the Registration Statement and the exhibits
and schedules thereto. For further information with respect to the Company and
the Common Stock offered hereby, reference is hereby made to the Registration
Statement and such exhibits and schedules, which may be inspected and copied in
the manner and at the locations described above. Statements contained in this
Prospectus as to the contents of any contract or other document referred to are
not necessarily complete and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement or as previously filed with the Commission and incorporated herein by
reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant
to the Exchange Act are hereby incorporated by reference in this Prospectus
except as superseded or modified herein:
1. The Company's Annual Report on Form 10-K for the year ended
December 30, 1995, including portions of the Company's 1995 Annual Report
to Shareholders and the Company's definitive proxy statement for its 1996
annual meeting of stockholders to the extent specifically incorporated by
reference therein.
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 30, 1996 and June 29, 1996.
3. The Company's Registration Statement on Form 8-A filed with the
Commission on March 13, 1992.
Each document filed by the Company with the Commission subsequent to the
date of this Prospectus pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act and prior to the termination of this Offering shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of the filing of such document. Any statement contained in a document
incorporated by reference shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained herein, or
in any subsequently filed incorporated document that also is or is deemed to be
incorporated by reference herein, modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon written
or oral request of any such person, a copy of any document described above that
has been incorporated by reference in this Prospectus and not delivered with
this Prospectus or any preliminary prospectus distributed in connection with the
Offering of the Common Stock, other than exhibits to such document referred to
above unless such exhibits are specifically incorporated by reference herein.
Requests should be directed to Ms. Susan Datz Edelman, the Company's Director of
Stockholder Relations, 1200 Riverplace Boulevard, Jacksonville, Florida 32207
(telephone: (904) 346-1506).
29
<PAGE> 31
Omitted Graphic and Image Material
Inside back cover:
1. Two separate pictures depicting (i) an external view
of one Stein Mart store front, (ii) an interior view
of the gifts department.
<PAGE> 32
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED HEREIN, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDERS OR ANY OF THE UNDERWRITERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY THE SHARES OF COMMON STOCK OFFERED HEREBY BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO
WHOM IT IS UNLAWFUL TO MAKE SUCH SOLICITATION OR OFFER. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 5
Use of Proceeds....................... 8
Price Range of Common Stock and
Dividend Policy..................... 8
Capitalization........................ 9
Selected Financial and Operating
Data................................ 10
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 12
Business.............................. 16
Management............................ 23
Principal and Selling Stockholders and
Stock Ownership of Management....... 25
Underwriting.......................... 27
Legal Matters......................... 28
Experts............................... 28
Available Information................. 29
Incorporation of Certain Documents by
Reference........................... 29
</TABLE>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
3,500,000 SHARES
(LOGO) STEIN MART
COMMON STOCK
--------------------
PROSPECTUS
--------------------
J.C. BRADFORD&CO.
NATWEST SECURITIES LIMITED
WASSERSTEIN PERELLA
SECURITIES, INC.
, 1996
------------------------------------------------------
------------------------------------------------------
<PAGE> 33
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Set forth below is an estimate of the approximate amount of fees and
expenses (other than underwriting discounts and commissions) payable in
connection with the issuance and distribution of the securities registered
hereby. All of such expenses will be borne by the Selling Stockholders although
certain of such expenses may be advanced by the Company, subject to repayment by
the Selling Stockholders.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............................. $ 30,360.99
NASD filing fee................................................................. 9,304.69
Printing and engraving.......................................................... 50,000.00
Accountants' fees and expenses.................................................. 40,000.00
Blue sky fees and expenses...................................................... 10,000.00
Counsel fees and expenses....................................................... 50,000.00
Transfer Agent's fees........................................................... 1,000.00
Miscellaneous................................................................... 9,334.32
----------
Total................................................................. $200,000.00
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Florida Business Corporation Act (the "Florida Act") permits a Florida
corporation to indemnify a present or former director or officer of the
corporation (and certain other persons serving at the request of the corporation
in related capacities) for liabilities, including legal expenses, arising by
reason of service in such capacity if such person shall have acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and in any criminal proceeding if such person had
no reasonable cause to believe his conduct was unlawful. However, in the case of
actions brought by or in the right of the corporation, no indemnification may be
made with respect to any matter as to which such director or officer shall have
been adjudged liable, except in certain limited circumstances.
Article X of the registrant's Bylaws provides that the registrant shall
indemnify directors to the fullest extent now or hereafter permitted by the
Florida Act. In addition, the registrant has entered into Indemnification
Agreements with its directors in which the registrant has agreed to indemnify
such persons to the fullest extent now or hereafter permitted by the Florida
Act. Such Indemnification Agreements entitle directors who also serve as
officers of the registrant to indemnification for liabilities arising out of
their services as officers as well as directors.
The registrant has a standard policy of directors' and officers' liability
insurance covering directors and officers of the corporation with respect to
liabilities incurred as a result of their service in such capacities.
II-1
<PAGE> 34
ITEM 16. EXHIBITS.
<TABLE>
<C> <C> <S>
1. -- Form of Underwriting Agreement
*4A. -- Provisions defining rights of holders of Common Stock of the Registrant are
contained in the Articles of Incorporation and Bylaws of the Registrant filed as
Exhibits 2, 3A and 3B of Registration Statement No. 33-46322
*4B. -- Form of stock certificate for Common Stock
5. -- Opinion of Foley & Lardner as to the legality of the securities to be issued
23A. -- Consent of Foley & Lardner (included in Opinion filed as Exhibit 5)
23B. -- Consent of Price Waterhouse LLP
24. -- Power of Attorney (included on the signature page of this Registration Statement)
</TABLE>
- ---------------
* Filed as exhibit to Registration Statement No. 33-46322 and incorporated
herein by reference.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, the information
omitted from the form of Prospectus filed as part of this Registration Statement
in reliance upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of this Registration Statement as of the time it was
declared effective.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each post-effective
amendment that contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-2
<PAGE> 35
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Jacksonville, State of Florida, on August 27, 1996.
STEIN MART, INC.
By /s/ JAY STEIN
------------------------------------
Jay Stein,
Chairman of the Board and Chief
Executive Officer
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears on
the signature page to this Registration Statement constitutes and appoints Jay
Stein, John H. Williams, James G. Delfs and Clayton E. Roberson, Jr., and each
or any of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement and any and
all Registration Statements filed pursuant to Rule 462(b) under the Securities
Act of 1933, and to file the same, with all exhibits and other documents in
connection therewith, with the Securities and Exchange Commission, and grants
unto said attorneys-in-fact and agents, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or his or her substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------------- ----------------
<C> <S> <C>
/s/ JAY STEIN Chairman of the Board and Chief August 27, 1996
- --------------------------------------------- Executive Officer
Jay Stein
/s/ JOHN H. WILLIAMS JR. President, Chief Operating August 27, 1996
- --------------------------------------------- Officer and Director
John H. Williams, Jr.
/s/ MASON ALLEN Director August 27, 1996
- ---------------------------------------------
Mason Allen
/s/ JAMES G. DELFS Senior Vice President, Finance August 27, 1996
- --------------------------------------------- and Chief Financial Officer
James G. Delfs
/s/ CLAYTON E. ROBERSON, JR. Vice President, Controller August 27, 1996
- ---------------------------------------------
Clayton E. Roberson, Jr.
/s/ ROBERT D. DAVIS Director August 27, 1996
- ---------------------------------------------
Robert D. Davis
</TABLE>
II-3
<PAGE> 36
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------------- ----------------
<C> <S> <C>
/s/ ALBERT ERNEST, JR. Director August 27, 1996
- ---------------------------------------------
Albert Ernest, Jr.
Director
- ---------------------------------------------
Mitchell W. Legler
Director
- ---------------------------------------------
James H. Winston
</TABLE>
II-4
<PAGE> 37
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
PAGE NO.
----------
<C> <S> <C> <C>
1. -- Form of Underwriting Agreement.............................................
*4A. -- Provisions defining rights of holders of Common Stock of the Registrant are
contained in the Articles of Incorporation and Bylaws of the Registrant
filed as Exhibits 2, 3A and 3B of Registration Statement No. 33-46322......
*4B. -- Form of stock certificate for Common Stock.................................
5. -- Opinion of Foley & Lardner as to the legality of the securities to be
issued.....................................................................
23A. -- Consent of Foley & Lardner (included in Opinion filed as Exhibit 5)........
23B. -- Consent of Price Waterhouse LLP............................................
24. -- Power of Attorney (included on the Signature Page of this Registration
Statement).................................................................
</TABLE>
- ---------------
* Filed as exhibit to Registration Statement No. 33-46322 and incorporated
herein by reference.
<PAGE> 1
EXHIBIT 1
STEIN MART, INC.
3,500,000 SHARES
OF
COMMON STOCK
UNDERWRITING AGREEMENT
__________________, 1996
J.C. BRADFORD & CO., L.L.C.
NATWEST SECURITIES LIMITED
WASSERSTEIN PERELLA SECURITIES, INC.
As Representatives of the Several Underwriters
c/o J.C. Bradford & Co., L.L.C.
J.C. Bradford Financial Center
330 Commerce Street
Nashville, Tennessee 37201
Ladies and Gentlemen:
Certain stockholders of Stein Mart, Inc., a Florida corporation (the
"Company"), set forth on Schedule II hereto propose to sell to the underwriters
named in Schedule I hereto (the "Underwriters") for whom you are acting as the
representatives (the "Representatives") 3,500,000 shares, (the "Firm Shares"),
of common stock, $.01 par value (the "Common Stock"), of the Company. Such
shares of Common Stock are to be sold to the Underwriters, acting severally and
not jointly, in such amounts as are set forth in Schedule I hereto opposite the
name of such Underwriter. In addition, The Stein Ventures Limited Partnership
proposes to grant to the Underwriters an option to purchase up to 525,000
additional shares of Common Stock as provided for in Section 3 of this
Agreement for the purpose of covering over-allotments (the "Option Shares").
The Firm Shares and the Option Shares purchased pursuant to this Agreement are
herein called the "Shares." For purposes of this Agreement, including the
provisions of Sections 2 and 9 hereof, the stockholders of the Company set
forth on Schedule II hereto and Jay Stein shall be collectively referred to as
the "Selling Stockholders."
<PAGE> 2
1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each of the Underwriters that:
(a) The Company meets the requirements for use of, and
has filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the
"Securities Act"), a registration statement on Form S-3 (Registration
No. 333-______), including the related preliminary prospectus relating
to the Shares, and has filed one or more amendments thereto. Copies
of such registration statement and any amendments, including any
post-effective amendments, and all forms of the related prospectuses
contained therein and any supplements thereto, have been delivered to
you. Such registration statement, including the prospectus, Part II,
the information incorporated by reference, all financial schedules and
exhibits thereto, and all information deemed to be a part of such
Registration Statement pursuant to Rule 430A under the Securities Act,
as amended at the time when it shall become effective, and any related
registration statement that is to be effective upon filing filed
pursuant to Rule 462(b) under the Securities Act, is herein referred
to as the "Registration Statement," and the prospectus included as
part of the Registration Statement on file with the Commission that
discloses all the information that was omitted from the prospectus on
the effective date pursuant to Rule 430A of the Rules and Regulations
(as defined below) and in the form filed pursuant to Rule 424(b) under
the Securities Act is herein referred to as the "Final Prospectus."
The prospectus included as part of the Registration Statement on the
date when the Registration Statement became effective is referred to
herein as the "Effective Prospectus." Any prospectus included in the
Registration Statement and in any amendment thereto prior to the
effective date of the Registration Statement is referred to herein as
a "Preliminary Prospectus." For purposes of this Agreement, "Rules
and Regulations" mean the rules and regulations promulgated by the
Commission under either the Securities Act or the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), as applicable.
(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus, and each Preliminary
Prospectus, at the time of filing thereof, complied with the
requirements of the Securities Act and the Rules and Regulations, and
did not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; except that the foregoing does
not apply to statements or omissions made in reliance upon and in
conformity with written information furnished to the Company by any
Underwriter specifically for use therein (it being understood that the
only information so provided is the information included in the last
paragraph on the cover page and in the first and third paragraphs
under the caption "Underwriting" in the Preliminary, Effective and
Final Prospectus). When the Registration Statement becomes effective
and at all times subsequent thereto up to and including the First
Closing Date (as hereinafter defined), (i) the Registration Statement,
the Effective Prospectus and Final Prospectus and any amendments or
supplements thereto will contain all statements which are required to
be
2
<PAGE> 3
stated therein in accordance with the Securities Act and the Rules and
Regulations and will comply with the requirements of the Securities
Act and the Rules and Regulations, and (ii) neither the Registration
Statement, the Effective Prospectus nor the Final Prospectus nor any
amendment or supplement thereto will include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading; except that the
foregoing does not apply to statements or omissions made in reliance
upon and in conformity with written information furnished to the
Company by any Underwriter specifically for use therein (it being
understood that the only information so provided is the information
included in the last paragraph on the cover page and in the first and
third paragraphs under the caption "Underwriting" in the Final
Prospectus).
(c) The documents which are incorporated by reference in
any Preliminary, Effective and Final Prospectus or from which
information is so incorporated by reference, when they become
effective or were filed with the Commission, as the case may be,
complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as applicable, and the Rules and
Regulations, and any documents so filed prior to the termination of
this offering and incorporated by reference subsequent to the
effective date of the Registration Statement shall, when they are
filed with the Commission, conform in all material respects with the
requirements of the Securities Act and the Exchange Act, as
applicable, and the Rules and Regulations.
(d) Each of the Company and each subsidiary of the
Company (as used herein, the term "subsidiary" includes any
corporation, joint venture or partnership in which the Company or any
subsidiary of the Company has a direct or indirect ownership interest)
is duly incorporated and validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization with
full power and authority to own its properties and conduct business as
now conducted and is duly qualified or authorized to do business and
is in good standing in all jurisdictions wherein the nature of its
business or the character of property owned or leased may require it
to be qualified or authorized to do business. Each of the Company and
its subsidiaries holds all licenses, consents and approvals, and has
satisfied all eligibility and other similar requirements imposed by
federal and state regulatory bodies, administrative agencies or other
governmental bodies, agencies or officials, in each case as required
for the conduct of the business in which it is engaged and is
contemplated to be engaged in the Effective Prospectus and the Final
Prospectus.
(e) The outstanding capital stock of each of the Company's
corporate subsidiaries has been duly authorized and validly issued and
is fully paid and nonassessable. Except as set forth in the
Prospectus, (i) the Company owns all of the outstanding shares of
capital stock of the Company's corporate subsidiaries, free and clear
of all liens, claims, encumbrances, security interests, restrictions,
stockholder agreements, voting trusts or other claims of third
parties, (ii) the Company has no other subsidiaries and is not a
3
<PAGE> 4
partner or joint venturer in any partnership or joint venture, (iii)
the Company's subsidiaries do not have outstanding any option to
purchase, or any rights or warrants to subscribe for, or any
securities or obligations convertible into, or any contracts or
commitments to issue or sell any shares of capital stock or an
ownership interest of such subsidiary, and (iv) there are no
preemptive rights or other rights to subscribe for or purchase any
shares of the capital stock or an ownership interest of the Company's
subsidiaries.
(f) The capitalization of the Company as of June 29, 1996
is as set forth under the caption "Capitalization" in the Effective
Prospectus and the Final Prospectus, and the Company's capital stock
conforms to the description thereof incorporated by reference in the
Registration Statement. All the issued shares of capital stock of the
Company have been duly authorized and validly issued, are fully paid
and nonassessable. None of the issued shares of capital stock of the
Company have been issued in violation of any preemptive or similar
rights. Except as set forth in the Effective Prospectus and the Final
Prospectus, (i) the Company does not have outstanding any options to
purchase, or any rights or warrants to subscribe for, or any
securities or obligations convertible into, or any contracts or
commitments to issue or sell, any shares of Common Stock and (ii)
there are no preemptive rights or other rights to subscribe for or to
purchase, or any restriction upon the transfer of, any shares of
Common Stock pursuant to the Company's articles of incorporation,
bylaws or any agreement or other instrument to which the Company is a
party or by which it may be bound. Neither the filing of the
Registration Statement nor the offer or sale of the Shares as
contemplated by this Agreement gives rise to any rights, other than
those which have been waived or satisfied, for or relating to the
registration of any shares of Common Stock or any other securities of
the Company. The Underwriters will receive good and marketable title
to the Shares to be issued and delivered hereunder, free and clear of
all liens, encumbrances, claims, security interests, restrictions,
stockholders' agreements and voting trusts whatsoever.
(g) All offers and sales by the Company of the Company's
securities prior to the date hereof were at all relevant times duly
registered or the subject of an available exemption from the
registration requirements of the Securities Act, and were duly
registered or the subject of an available exemption from the
registration requirements of the applicable state securities or Blue
Sky laws.
(h) The Company has full legal right, power and authority
to enter into this Agreement as provided herein, and this Agreement
has been duly authorized, executed and delivered by the Company and
constitutes a valid and binding agreement of the Company enforceable
against the Company in accordance with its terms. No consent,
approval, authorization or order of any court or governmental agency
or body or third party is required for the performance of this
Agreement by the Company or the consummation by the Company of the
transactions contemplated hereby, except such as have been obtained
and such as may be required by the National Association of Securities
Dealers, Inc.
4
<PAGE> 5
("NASD") or under the Securities Act or state securities or Blue Sky
laws in connection with the purchase and distribution of the Shares by
the Underwriters. The Company's performance of this Agreement and the
consummation of the transactions contemplated hereby will not result
in a breach or violation of, or conflict with, any of the terms and
provisions of, or constitute a default by the Company or any of its
subsidiaries under, any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which the Company
or any of its subsidiaries is a party or to which the Company or any
of its subsidiaries or any of their respective properties is subject,
the articles of incorporation, bylaws or other governing instruments
of the Company or any of its subsidiaries or any statute or any
judgment, decree, order, rule or regulation of any court or
governmental agency or body applicable to the Company or any of its
subsidiaries or any of their respective properties. Neither the
Company nor any of its subsidiaries is in violation of its articles of
incorporation, bylaws or other governing instruments or any law,
administrative rule or regulation or arbitrators' or administrative or
court decree, judgment or order or in violation or default (there
being no existing state of facts which with notice or lapse of time or
both would constitute a default) in the performance or observance of
any material obligation, agreement, covenant or condition contained in
any contract, indenture, deed of trust, mortgage, loan agreement,
note, lease, agreement or other instrument or permit to which it is a
party or by which it or any of its properties is or may be bound.
(i) The consolidated financial statements and the related
notes of the Company incorporated by reference in the Registration
Statement, the Effective Prospectus and the Final Prospectus present
fairly the financial position, results of operations and changes in
financial position and cash flow of the Company at the dates and for
the periods to which they relate and have been prepared in accordance
with generally accepted accounting principles applied on a consistent
basis throughout the periods indicated, except as otherwise set forth
in such financial statements or the related notes. The other
financial statements and schedules included or incorporated by
reference in the Registration Statement conform to the requirements of
the Securities Act and the Rules and Regulations and present fairly
the information presented therein for the periods shown. The
financial and statistical data set forth in the Effective Prospectus
and the Final Prospectus under the captions "Prospectus Summary,"
"Selected Financial and Operating Data," Management's Discussion and
Analysis of Financial Condition and Results of Operations,"
"Capitalization," "Business" and "Principal and Selling Stockholders
and Stock Ownership of Management" fairly presents the information set
forth therein on the basis stated in the Effective Prospectus and the
Final Prospectus. Price Waterhouse LLP, whose reports are
incorporated by reference in the Effective Prospectus and the Final
Prospectus, are independent accountants as required by the Securities
Act and the Rules and Regulations.
(j) Subsequent to December 30, 1995, neither the Company
nor any of its subsidiaries has sustained any material loss or
interference with its business or properties from fire, flood,
hurricane, accident or other calamity, whether or not covered by
5
<PAGE> 6
insurance, or from any labor dispute or court or governmental action,
order or decree, which is not disclosed in the Effective Prospectus
and the Final Prospectus; and subsequent to the respective dates as of
which information is given in the Registration Statement, the
Effective Prospectus and the Final Prospectus, (i) neither the Company
nor any of its subsidiaries has incurred any material liabilities or
obligations, direct or contingent, or entered into any transactions
not in the ordinary course of business, and (ii) there has not been
any change in the capital stock, long-term debt, obligations under
capital leases or short-term borrowings of the Company and its
subsidiaries, or any issuance of options, warrants or rights to
purchase interests or the capital stock of the Company or its
subsidiaries, or any adverse change, or any development involving a
prospective adverse change, in the general affairs, management,
business, prospects, financial position, net worth or results of
operations of the Company or any of its subsidiaries, except in each
case as described in the Effective Prospectus and the Final Prospectus.
(k) Except as described in the Effective Prospectus and
the Final Prospectus, there is not pending, or to the knowledge of the
Company threatened, any legal or governmental action, suit,
proceeding, inquiry or investigation, to which the Company, any of its
subsidiaries or any of their officers or directors is a party, or to
which the property of the Company or any of its subsidiaries is
subject, before or brought by any court or governmental agency or
body, wherein an unfavorable decision, ruling or finding could prevent
or materially hinder the consummation of this Agreement or result in a
material adverse change in the business condition (financial or
other), prospects, financial position, net worth or results of
operations of the Company or any of its subsidiaries.
(l) There are no contracts or other documents required by
the Securities Act or by the Rules and Regulations to be described in
the Registration Statement, the Effective Prospectus or the Final
Prospectus or to be filed as exhibits to the Registration Statement or
required to be filed by the Company under the Exchange Act which have
not been described, incorporated by reference or filed as required.
All such contracts and all real property leases to which the Company
or any of its subsidiaries is a party have been duly authorized,
executed and delivered by the Company or such subsidiary, constitute
valid and binding agreements of the Company or such subsidiary and are
enforceable against the Company or such subsidiary in accordance with
the terms thereof. The Company or such subsidiary has performed all
its obligations required to be performed by it, and is neither in
default nor has it received notice of any default or dispute under (i)
any such contract, (ii) any real property lease, or (iii) other
material instrument to which it is a party or by which its property is
bound or affected. To the best knowledge of the Company, no other
party under any such contract or other material instrument to which it
is a party is in default thereunder.
(m) Except as described in the Effective Prospectus and
the Final Prospectus, the Company and each of its subsidiaries has
good and marketable title to all real and material personal property
owned by it, free and clear of all liens, charges, encumbrances
6
<PAGE> 7
or defects, except those reflected in the financial statements
hereinabove described. The real and personal property and buildings
referred to in the Effective Prospectus and the Final Prospectus which
are leased from others by the Company or its subsidiaries are held
under valid, subsisting and enforceable leases. The Company or its
subsidiaries owns or leases all such properties as are necessary to
their respective operations as now conducted.
(n) The Company's system of internal accounting controls
is sufficient to meet the broad objectives of internal accounting
control insofar as those objectives pertain to the prevention or
detection of errors or irregularities in amounts that would be
material in relation to the Company's financial statements.
(o) The Company and each of its subsidiaries has filed
all foreign, federal, state and local income and franchise tax returns
required to be filed through the date hereof and has paid all taxes
shown as due therefrom to the extent such taxes have become due and
are not being contested in good faith; and there is no tax deficiency
that has been, nor does the Company have knowledge of any tax
deficiency which is likely to be, asserted against the Company or any
of its subsidiaries, which if determined adversely could materially
and adversely affect the earnings, assets, affairs, business prospects
or condition (financial or other) of the Company or any of its
subsidiaries.
(p) The Company and each of its subsidiaries operates its
business in conformity with all applicable statutes, common laws,
ordinances, decrees, orders, rules and regulations of governmental
bodies. The Company and each of its subsidiaries has all licenses,
approvals or consents to operate its businesses in all locations in
which such businesses are currently being operated, and the Company is
not aware of any existing or imminent matter which may materially
adversely impact its or any of its subsidiaries' earnings, assets,
affairs, business prospects or condition (financial or other), other
than as specifically disclosed in the Effective Prospectus and the
Final Prospectus.
(q) Neither the Company nor any of its subsidiaries has
failed to file with the applicable regulatory authorities any
statements, reports, information or forms required by all applicable
laws, regulations or orders; all such filings or submissions were in
compliance with applicable laws when filed, and no deficiencies have
been asserted by any regulatory commission, agency or authority with
respect to such filings or submissions. Neither the Company nor any
of its subsidiaries has failed to maintain in full force and effect
any licenses, registrations or permits necessary or proper for the
conduct of its respective businesses, or received any notification
that any revocation or limitation thereof is threatened or pending,
and there is not to the knowledge of the Company pending any change
under any law, regulation, license or permit which could materially
adversely affect the earnings, assets, affairs, business prospects or
condition (financial or other) of the Company or any of its
subsidiaries. Neither the Company nor any of its subsidiaries has
received any notice of violation of or been threatened with a charge
of violating and
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<PAGE> 8
is not under investigation with respect to a possible violation of any
provision of any law, regulation or order.
(r) No labor dispute exists or is imminent with any of
the employees of the Company or any of its subsidiaries or otherwise
which could materially adversely affect the Company or any of its
subsidiaries. The Company is not aware of any existing or imminent
labor disturbance by employees of the Company or any of its
subsidiaries which could be expected to materially adversely affect
the earnings, assets, affairs, business prospects or condition
(financial or otherwise) of the Company or any of its subsidiaries.
(s) The Company and each of its subsidiaries owns the
licenses, copyrights, trademarks, service marks and trade names
(including the name "Stein Mart") presently employed by it in
connection with the businesses now operated or proposed to be operated
by it, and neither the Company nor any of its subsidiaries has
received any notice of infringement of or conflict with asserted
rights of others with respect to any of the foregoing.
(t) The Company and each of its subsidiaries is insured
by insurers of recognized financial responsibility against such losses
and risks and in such amounts as are prudent and customary in the
businesses in which it is engaged; and neither the Company nor any of
its subsidiaries has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a comparable cost.
(u) Neither the Company nor any of its subsidiaries is in
violation of any federal, state, local or foreign law or regulation
relating to occupational safety and health or to the storage, handling
or transportation of hazardous or toxic materials and the Company and
each of its subsidiaries has received all permits, licenses or other
approvals required of it under applicable federal, state and foreign
occupational safety and health and environmental laws and regulations
to conduct its respective businesses, and the Company and each of its
subsidiaries is in compliance with all terms and conditions of any
such permit, license or approval, except any such violation of law or
regulation, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such
permits, licenses or approvals which would not result in a material
adverse affect on the earnings, assets, affairs, business prospects or
condition (financial or otherwise) of the Company or any of its
subsidiaries.
(v) Neither the Company or any of its subsidiaries nor,
to the knowledge of the Company, any director, officer, agent,
employee or other person acting on behalf of the Company or any of its
subsidiaries has (i) used, or authorized the use of, any corporate or
other funds for unlawful payments, contributions, gifts or
entertainment (ii) made unlawful expenditures relating to political
activity to government officials or others, or (iii)
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<PAGE> 9
established or maintained any unlawful or unrecorded funds in
violation of any federal, state, local or foreign law or regulation,
including Section 30A of the Exchange Act. Neither the Company or any
of its subsidiaries nor, to the knowledge of the Company, any
director, officer, agent, employee or other person acting on behalf of
the Company or any of its subsidiaries has accepted or received any
unlawful contributions, payments, gifts or expenditures.
(w) Neither the Company or any of its subsidiaries nor
any of the directors, officers, employees or agents of the Company or
any of its subsidiaries have taken and will not take, directly or
indirectly, any action designed to cause or result in, or which has
constituted or which might be expected to constitute, stabilization or
manipulation of the price of the Common Stock.
(x) The outstanding shares of Common Stock are traded on
the Nasdaq National Market (the "Nasdaq"). The Company has filed with
the Commission and the NASD all reports, documents and statements
required to be filed pursuant to the Securities Act, the Exchange Act,
the Rules and Regulations and all the rules and regulations of the
NASD relating to qualification for trading on the Nasdaq, and each of
such reports, documents and statements at the time that they were
filed complied with the requirements of the Securities Act, the
Exchange Act and the Rules and Regulations.
2. Representations and Warranties of the Selling Stockholders.
The Selling Stockholders jointly and severally represent and warrant to, and
agree with, each of the Underwriters that:
(a) Such Selling Stockholder at the First Closing Date or
at the Option Closing Date (as defined herein), as the case may be,
will have valid and marketable title to the Shares set forth in
Schedule II to be sold by such Selling Stockholder, free and clear of
any liens, encumbrances, equities and claims (other than as imposed by
the Securities Act or this Agreement), and full right, power and
authority to effect the sale and delivery of such Shares; and upon the
delivery of and payment for the Shares to be sold by such Selling
Stockholder pursuant to this Agreement, valid and marketable title
thereto, free and clear of any liens, encumbrances, equities and
claims, will be transferred to the Underwriters.
(b) Such Selling Stockholder has duly executed and
delivered this Agreement; this Agreement constitutes a legal, valid
and binding obligation of such Selling Stockholder, all authorizations
and consents necessary for the execution and delivery of this
Agreement on behalf of such Selling Stockholder and for the sale and
delivery of the Shares to be sold by such Selling Stockholder
hereunder has been given, except as may be required by the Securities
Act or state securities laws; and such Selling Stockholder has the
legal capacity and full right, power and authority to execute this
Agreement.
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<PAGE> 10
(c) The performance of this Agreement and the
consummation of the transactions contemplated hereby by each of the
Selling Stockholders will not result in a breach or violation of, or
conflict with, any of the terms or provisions of, or constitute a
default by such Selling Stockholder under, any indenture, mortgage,
deed of trust, trust (constructive or other), loan agreement, lease,
franchise, license or other agreement or instrument to which such
Selling Stockholder or any of his or its properties is bound, any
statute, or any judgment, decree, order, rule or regulation or any
court or governmental agency or body applicable to such Selling
Stockholder or any of his or its properties.
(d) Such Selling Stockholder has not distributed nor will
distribute any prospectus or other offering material in connection
with the offer and sale of the Shares other than any Preliminary
Prospectus filed with the Commission or the Final Prospectus or other
material permitted by the Securities Act.
(e) The representations and warranties of the Company
contained in Section 1 of this Agreement are true and correct; such
Selling Stockholder has reviewed and is familiar with the Registration
Statement as originally filed with the Commission and the Preliminary
Prospectus contained therein. Neither the Preliminary Prospectus, the
Effective Prospectus or the Final Prospectus includes an untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; such Selling
Stockholder is not prompted to sell the Shares to be sold by such
Selling Stockholder by any information concerning the Company that is
not set forth in the Preliminary Prospectus, the Effective Prospectus
or the Final Prospectus.
(f) No approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory body,
administrative or other governmental body is necessary in connection
with the execution and delivery of this Agreement by such Selling
Stockholder, and the consummation by him or it of the transactions
herein contemplated (other than as required by the Securities Act,
state securities laws and the NASD).
(g) Any certificates signed by or on behalf of such
Selling Stockholder as such and delivered to the Representatives or to
counsel for the Representatives shall be deemed a representation and
warranty by such Selling Stockholder to each Underwriter as to the
matters covered thereby.
(h) In order to document the Underwriters' compliance
with the reporting and withholding provisions of the Tax Equity and
Fiscal Responsibility Act of 1982 with respect to the transactions
herein contemplated, such Selling Stockholder agrees to deliver to you
prior to or at the First Closing Date (as hereinafter defined) a
properly completed and executed United States Treasury Department Form
W-9 (or other applicable form or statement specified by Treasury
Department regulations in lieu thereof).
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<PAGE> 11
(i) Such Selling Stockholder has not taken, and will not
take, directly or indirectly, any action designed to cause or result
in, or which might constitute or be expected to constitute,
stabilization or manipulation of the price of the Common Stock.
3. Purchase, Sale and Delivery of the Shares.
(a) On the basis of the representations, warranties,
agreements and covenants herein contained and subject to the terms and
conditions herein set forth, the Selling Stockholders, as set forth on
Schedule II hereto, agree to sell to the several Underwriters, and
each of the Underwriters, severally and not jointly, agrees to
purchase at a purchase price of $______ per share, the number of Firm
Shares set forth opposite such Underwriter's name in Schedule I hereto.
(b) The Stein Ventures Limited Partnership, one of the
Selling Stockholders, hereby grants to the Underwriters an option to
purchase 525,000 additional shares of Common Stock, solely for the
purpose of covering over-allotments in the sale of Firm Shares, all or
any portion of the Option Shares at the purchase price per share set
forth above. The option granted hereby may be exercised as to all or
any part of the Option Shares at any time within 30 days after the
date of the Final Prospectus. The Underwriters shall not be under any
obligation to purchase any Option Shares prior to the exercise of such
option. The option granted hereby may be exercised by the
Underwriters by J.C. Bradford & Co. ("Bradford") giving written notice
to the Company and to said Selling Stockholder setting forth the
number of Option Shares to be purchased and the date and time for
delivery of and payment for such Option Shares and stating that the
Option Shares referred to therein are to be used for the purpose of
covering over-allotments in connection with the distribution and sale
of the Firm Shares. If such notice is given prior to the First
Closing Date, the date set forth therein for such delivery and payment
shall not be earlier than two full business days thereafter or the
First Closing Date, whichever occurs later. If such notice is given
on or after the First Closing Date, the date set forth therein for
such delivery and payment shall not be earlier than three full
business days thereafter. In either event, the date so set forth
shall not be more than four full business days after the date of such
notice. The date and time set forth in such notice is herein called
the "Option Closing Date." Upon exercise of the option, said Selling
Stockholder shall become obligated to sell to the Underwriters, and,
subject to the terms and conditions herein set forth, the Underwriters
shall become obligated to purchase, for the account of each
Underwriter, from said Selling Stockholder the number of Option Shares
specified in such notice. Option Shares shall be purchased for the
accounts of the Underwriters in proportion to the number of Firm
Shares set forth opposite such Underwriter's name in Schedule I
hereto, except that the respective purchase obligations of each
Underwriter shall be adjusted so that no Underwriter shall be
obligated to purchase fractional Option Shares.
(c) Certificates in definitive form for the Firm Shares
which each Underwriter has agreed to purchase hereunder shall be
delivered by or on behalf of the Selling
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<PAGE> 12
Stockholders to the Underwriters for the account of such Underwriter
against payment by such Underwriter or on its behalf of the purchase
price therefor by certified or official bank check or checks in next
day funds to the order of the Selling Stockholders, at the offices of
Bradford, 330 Commerce Street, Nashville, Tennessee 37201, or at such
other place as may be agreed upon by Bradford and the Company, at
10:00 A.M., Nashville time, on the third full business day after this
Agreement becomes effective, or, at the election of the
Representatives, on the fourth full business day after this Agreement
becomes effective, if it becomes effective after 4:30 P.M. Eastern
time, or at such other time not later than the seventh full business
day thereafter as the Representatives and the Selling Stockholders may
determine, such time of delivery against payment being herein referred
to as the "First Closing Date." The First Closing Date and the Option
Closing Date are herein individually referred to as the "Closing Date"
and collectively referred to as the "Closing Dates." Certificates in
definitive form for the Option Shares which each Underwriter shall
have agreed to purchase hereunder shall be similarly delivered by or
on behalf of the Selling Stockholders to the extent set forth on
Schedule II on the Option Closing Date. The certificates in
definitive form for the Shares to be delivered will be in good
delivery form and in such denominations and registered in such names
as Bradford may request not less than 48 hours prior to the First
Closing Date or the Option Closing Date, as the case may be. Such
certificates will be made available for checking and packaging at a
location in New York, New York as may be designated by Bradford, at
least 24 hours prior to the First Closing Date or the Option Closing
Date, as the case may be. It is understood that Bradford may (but
shall not be obligated to) make payment on behalf of any Underwriter
or Underwriters for the Shares to be purchased by such Underwriter or
Underwriters. No such payment shall relieve such Underwriter or
Underwriters from any of its or their obligations hereunder.
4. Offering by the Underwriters. After the Registration
Statement becomes effective, the several Underwriters propose to offer for sale
to the public the Firm Shares and any Option Shares which may be sold at the
price and upon the terms set forth in the Final Prospectus.
5. Covenants of the Company and the Selling Stockholders.
(a) The Company covenants and agrees with each of the
Underwriters that:
(i) The Company shall comply with the provisions
of and make all requisite filings with the Commission pursuant to
Rules 424 and 430A of the Rules and Regulations and shall notify the
Representatives promptly (in writing, if requested) of all such
filings. The Company shall notify the Representatives promptly of any
request by the Commission for any amendment of or supplement to the
Registration Statement, the Effective Prospectus or the Final
Prospectus or for additional information; the Company shall prepare
and file with the Commission, promptly upon the Representatives'
request, any amendments of or supplements to the Registration
Statement, the Effective Prospectus or the Final Prospectus which, in
the Representatives' opinion, may be necessary or
12
<PAGE> 13
advisable in connection with the distribution of the Shares; and the
Company shall not file any amendment of or supplement to the
Registration Statement, the Effective Prospectus or the Final
Prospectus which is not approved by the Representatives after
reasonable notice thereof. The Company shall advise the
Representatives promptly of the issuance by the Commission or any
jurisdiction or other regulatory body of any stop order or other order
suspending the effectiveness of the Registration Statement, suspending
or preventing the use of any Preliminary Prospectus, the Effective
Prospectus or the Final Prospectus or suspending the qualification of
the Shares for offering or sale in any jurisdiction, or of the
institution of any proceedings for any such purpose; and the Company
shall use its best efforts to prevent the issuance of any stop order
or other such order and, should a stop order or other such order be
issued, to obtain as soon as possible the lifting thereof.
(ii) The Company will take or cause to be taken
all necessary action and furnish to whomever the Representatives
direct such information as may be reasonably required in qualifying
the Shares for offer and sale under the securities or Blue Sky laws of
such jurisdictions as the Underwriters may designate and will continue
such qualifications in effect for as long as may be reasonably
necessary to complete the distribution of the Shares.
(iii) Within the time during which a Final
Prospectus relating to the Shares is required to be delivered under
the Securities Act, the Company shall comply with all requirements
imposed upon it by the Securities Act, as now and hereafter amended,
and by the Rules and Regulations, as from time to time in force, so
far as is necessary to permit the continuance of sales of or dealings
in the Shares as contemplated by the provisions hereof and the Final
Prospectus. If during such period any event occurs as a result of
which the Final Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light
of the circumstances then existing, not misleading, or if during such
period it is necessary to amend the Registration Statement or
supplement the Final Prospectus to comply with the Securities Act, the
Company shall promptly notify the Representatives and shall amend the
Registration Statement or supplement the Final Prospectus (at the
expense of the Company) so as to correct such statement or omission or
effect such compliance.
(iv) The Company will furnish without charge to
the Representatives and make available to the Underwriters copies of
the Registration Statement (four of which shall be signed and shall be
accompanied by all exhibits, including any which are incorporated by
reference, which have not previously been furnished), each Preliminary
Prospectus, the Effective Prospectus and the Final Prospectus, and all
amendments and supplements thereto, including any prospectus or
supplement prepared after the effective date of the Registration
Statement, in each case as soon as available and in such quantities as
the Underwriters may reasonably request.
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<PAGE> 14
(v) The Company will (A) deliver to the
Representatives at such office or offices as the Representatives may
designate as many copies of the Preliminary Prospectus and Final
Prospectus as the Representatives may reasonably request, and (B) for
a period of not more than nine months after the Registration Statement
becomes effective, send to the Underwriters as many additional copies
of the Final Prospectus and any supplement thereto as the
Representatives may reasonably request.
(vi) The Company shall make generally available to
its security holders, in the manner contemplated by Rule 158(b) under
the Securities Act as promptly as practicable and in any event no
later than 45 days after the end of its fiscal quarter in which the
first anniversary of the effective date of the Registration Statement
occurs, an earnings statement satisfying the provisions of Section
11(a) of the Securities Act covering a period of at least 12
consecutive months beginning after the effective date of the
Registration Statement.
(vii) During a period of five years from the
effective date of the Registration Statement or such longer period as
the Representatives may reasonably request, the Company will furnish
to the Representatives copies of all reports and other communications
(financial or other) furnished by the Company to its stockholders and,
as soon as available, copies of any reports or financial statements
furnished or filed by the Company to or with the Commission, Nasdaq or
any national securities exchange on which any class of securities of
the Company may be listed.
(viii) The Company will, from time to time, after
the effective date of the Registration Statement file with the
Commission such reports as are required by the Securities Act, the
Exchange Act and the Rules and Regulations, and shall also file with
foreign, state and other governmental securities commissions in
jurisdictions where the Shares have been sold by the Underwriters (as
the Representatives shall have advised the Company in writing) such
reports as are required to be filed by the securities acts and the
regulations of those states and jurisdictions.
(ix) Except pursuant to this Agreement or with the
Representatives' written consent, for a period of 90 days from the
effective date of the Registration Statement, the Company will not,
and the Company has provided agreements executed by each of its
executive officers, directors and the Selling Stockholders providing
that for a period of 90 days from the effective date of the
Registration Statement, such person or entity will not, offer for
sale, sell (other than the issuance by the Company of Common Stock
pursuant to the exercise of options granted pursuant to existing
employee benefit plans and agreements, other existing compensation
agreements and existing stock options or outstanding warrants or
securities convertible into Common Stock), grant any options (other
than pursuant to existing employee benefit plans and agreements),
rights or warrants with respect to any shares of Common Stock,
securities convertible into Common Stock or any other capital stock of
the Company beneficially owned by such entity or person, or
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<PAGE> 15
otherwise dispose of, directly or indirectly, any shares of Common
Stock or such other securities or capital stock beneficially owned by
such entity or person.
(x) Neither the Company or any of its
subsidiaries nor any of their officers, directors or affiliates will
take, directly or indirectly, any action designed to cause or result
in, or which might constitute or be expected to constitute,
stabilization or manipulation of the price of the Common Stock.
(xi) The Company and each of its subsidiaries will
either conduct its business and operations as described in the Final
Prospectus or, if the Company or any of its subsidiaries makes any
material change to its business or operations as so conducted,
promptly disclose such change generally to the Company's
securityholders.
(b) Each of the Selling Stockholders, severally and not
jointly, covenants and agrees with the Underwriters that:
(i) Such Selling Stockholder will not take,
directly or indirectly, any action designed to cause or result in, or
which might constitute or be expected to constitute, stabilization or
manipulation of the price of the Common Stock; and
(ii) Except pursuant to this Agreement or with
your prior written consent, for a period of 90 days from the effective
date of the Registration Statement the Selling Stockholders will not,
directly or indirectly, offer for sale, sell, grant any option for the
sale of, or otherwise dispose of any shares of Common Stock.
6. Expenses. The Company and each of the Selling Stockholders
agree with the Underwriters that (a) whether or not the transactions
contemplated by this Agreement are consummated or this Agreement becomes
effective or is terminated, the Company will pay all fees and expenses incident
to the performance of the obligations of the Company and the Selling
Stockholders hereunder, including, but not limited to, (i) the Commission's
registration fee, (ii) the expenses of printing (or reproduction) and
distributing the Registration Statement (including the financial statements
therein and all amendments and exhibits thereto), each Preliminary Prospectus,
the Effective Prospectus, the Final Prospectus, any amendments or supplements
thereto, any Marketing Materials (as defined herein) and this Agreement and
other underwriting documents, including Underwriter's Questionnaires,
Underwriter's Powers of Attorney, Blue Sky Memoranda, Agreements Among
Underwriters and Selected Dealer Agreements, (iii) fees and expenses of
accountants and counsel for the Company, (iv) expenses of registration or
qualification of the Shares under state Blue Sky and securities laws, including
the fees and disbursements of counsel to the Underwriters in connection
therewith, (v) filing fees paid or incurred by the Underwriters in connection
with filings with the NASD, (vi) all travel, lodging and reasonable living
expenses incurred by the Company in connection with marketing, dealer and other
meetings attended by the Company and the Underwriters in marketing the Shares,
(vii) the costs and charges of the Company's transfer agent and registrar and
the cost of preparing the
15
<PAGE> 16
certificates for the Shares, and (viii) all other costs and expenses incident
to the performance of their obligations hereunder not otherwise provided for in
this Section; and (b) all out-of-pocket expenses, including counsel fees,
disbursements and expenses, incurred by the Underwriters in connection with
investigating, preparing to market and marketing the Shares and proposing to
purchase and purchasing the Shares under this Agreement, will be borne and paid
by the Company if the sale of the Shares provided for herein is not consummated
(i) by reason of the termination of this Agreement by the Company pursuant to
Section 14(a)(i) or (ii) by reason of the termination of this Agreement by the
Representatives pursuant to Section 14(b)(ii), (iii), (iv) or (v) of this
Agreement.
The provisions of this section shall not affect any agreement that the
Company and the Selling Stockholders may have for the sharing of such costs and
expenses; provided, however, the Underwriters may deem the Company to be the
primary obligor with respect to all costs, fees, and expenses to be paid by the
Company and the Selling Stockholders.
7. Conditions of the Underwriters' Obligations. The respective
obligations of the Underwriters to purchase and pay for the Firm Shares shall
be subject, in their discretion, to the accuracy of the representations and
warranties of the Company and the Selling Stockholders herein as of the date
hereof and as of the Closing Date as if made on and as of the Closing Date, to
the accuracy of the statements of the Company's officers made pursuant to the
provisions hereof, to the performance by the Company and the Selling
Stockholders of all of their covenants and agreements hereunder and to the
following additional conditions:
(a) The Registration Statement and all post-effective
amendments thereto shall have become effective not later than 5:30
P.M., Washington, D.C. time, on the day following the date of this
Agreement, or such later time and date as shall have been consented to
by the Representatives and all filings required by Rule 424 and Rule
430A of the Rules and Regulations shall have been made; no stop order
suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been
instituted or threatened or, to the knowledge of the Company or the
Underwriters, shall be contemplated by the Commission; any request of
the Commission for additional information (to be included in the
Registration Statement or the Final Prospectus or otherwise) shall
have been complied with to the Representative's satisfaction; and the
NASD, upon review of the terms of the public offering of the Shares,
shall not have objected to such offering, such terms or the
Underwriters' participation in the same.
(b) No Underwriter shall have advised the Company that
the Registration Statement, Preliminary Prospectus, the Effective
Prospectus or Final Prospectus, or any amendment or any supplement
thereto, contains an untrue statement of fact which, in the
Representatives' reasonable judgment, is material, or omits to state a
fact which, in the Representatives' reasonable judgment, is material
and is required to be stated therein or necessary to make the
statements therein not misleading and the Company shall not have
16
<PAGE> 17
cured such untrue statement of fact or stated a statement of fact
required to be stated therein.
(c) The Representatives shall have received an opinion,
dated the Closing Date, from Foley & Lardner, counsel for the Company,
to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation under the laws of the State
of Florida, with corporate power and authority to own its
properties and conduct its business as now conducted, and is
duly qualified to do business as a foreign corporation in good
standing in all other jurisdictions where the failure to so
qualify would have a material adverse effect upon the Company
and its subsidiaries.
(ii) Each of the Company's subsidiaries is validly
existing and in good standing under the laws of the state or
jurisdiction of its incorporation or organization, as the case
may be, with power and authority to own its properties and
conduct it business as now conducted, and is duly qualified or
authorized to do business and is in good standing in all other
jurisdictions where the failure to so qualify would have a
material adverse effect upon the business of the Company and
its subsidiaries. The outstanding stock of each of the
Company's corporate subsidiaries is duly authorized, validly
issued, fully paid and nonassessable. The Company owns all of
the outstanding stock of each of the Company's corporate
subsidiaries, free and clear of all liens, encumbrances,
equities and claims. The partnership and joint venture
interests of each of the partnerships and joint ventures in
which the Company or any subsidiary is a partner or joint
venturer are duly authorized, validly issued, fully paid and
nonassessable and the partnership and joint venture interests
owned by the Company or a subsidiary thereof are owned clear
of any lien, encumbrance, pledge, equity or claim of any kind.
The Company's subsidiaries do not have outstanding any options
to purchase, or any rights or warrants to subscribe for, or
any securities or obligations convertible into, or any
contracts or commitments to issue or sell any shares of
capital stock or an ownership interest of such subsidiary and
there are no preemptive rights or other rights to subscribe
for or purchase any shares of the capital stock or any
ownership interest of the Company's subsidiaries. Each of the
Company's subsidiaries holds all licenses, certificates,
permits, franchises and authorizations from governmental
authorities necessary for the conduct of its business.
(iii) As of the date specified therein, the Company
had authorized and issued capital stock as set forth under the
caption "Capitalization" in the Final Prospectus. All of the
outstanding shares of Common Stock (including the shares to be
sold by the Selling Stockholders) have been duly authorized
and are validly issued, fully paid and nonassessable; none of
the issued shares have been issued in violation of or subject
to any preemptive rights provided for by law, agreement or
17
<PAGE> 18
the Company's articles of incorporation. The Company does not
have outstanding any options to purchase, or any rights or
warrants to subscribe for, or any securities or obligations
convertible into, or any contracts or commitments to issue or
sell any shares of capital stock, and there are no preemptive
rights or other rights to subscribe for or purchase any shares
of the capital stock of the Company, or any restriction upon
the transfer of, the Shares pursuant to the Company's articles
of incorporation or bylaws or any agreement or other
instrument to which the Company is a party or by which it may
be bound, except as described in the Effective Prospectus and
Final Prospectus. Neither the filing of the Registration
Statement nor the offer or sale of the Shares as contemplated
by this Agreement gives rise to any rights, other than those
which have been waived or satisfied, for or relating to the
registration of any shares of Common Stock or any other
securities of the Company. The Underwriters will receive good
and marketable title to the Shares to be issued and delivered
by the Company pursuant to this Agreement, free and clear of
all liens, encumbrances, claims, security interests,
restrictions, stockholders agreements and voting trusts
whatsoever. The capital stock of the Company and the Shares
conform to the description thereof contained in the Final
Prospectus. All offers and sales of the Company's interests
and securities prior to the date hereof were at all relevant
times duly registered or exempt from the registration
requirements of the Securities Act and were duly registered or
the subject of an exemption from the registration requirements
of applicable state securities or Blue Sky laws.
(iv) No consent, approval, authorization or order
of any court or governmental agency or body or third party is
required for the performance of this Agreement by the Company
or the consummation by the Company of the transactions
contemplated hereby, except such as have been obtained under
the Securities Act and such as may be required by the NASD and
under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the several
Underwriters, as to which such counsel need not express an
opinion. The performance of this Agreement by the Company and
the consummation by the Company of the transactions
contemplated hereby will not conflict with or result in a
breach or violation by the Company of any of the terms or
provisions of, or constitute a default by the Company under,
any material indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument known to
such counsel to which the Company or any of its subsidiaries
is a party or to which the Company or any of its subsidiaries
or their properties is subject, the articles of incorporation
or bylaws of the Company or any of its subsidiaries, any
statute, or any judgment, decree, order, rule or regulation of
any court or governmental agency or body known to such counsel
to be applicable to the Company or any of their subsidiaries
or their properties.
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<PAGE> 19
(v) The Company has full legal right, power and
authority to enter into this Agreement, and this Agreement has
been duly authorized, executed and delivered by the Company
and constitutes the valid and legally binding obligation of
the Company enforceable against the Company in accordance with
its terms.
(vi) Except as described in the Final Prospectus,
there is not pending or, to the best knowledge of such
counsel, threatened any action, suit, proceeding, inquiry or
investigation, to which the Company or any of its subsidiaries
is a party, or to which the property of the Company or any of
its subsidiaries is subject, before or brought by any court or
governmental agency or body, which, if determined adversely to
the Company or any of its subsidiaries, could result in any
material adverse change in the business, financial position,
net worth or results of operations, or could materially
adversely affect the properties or assets, of the Company or
any of its subsidiaries.
(vii) No default exists, and no event has occurred
which with notice or after the lapse of time to cure or both,
would constitute a default, in the due performance and
observance of any term, covenant or condition of any material
indenture, mortgage, deed of trust, loan agreement, lease or
other agreement or instrument known to such counsel to which
the Company or any of its subsidiaries is a party or to which
its properties are subject, or of the articles of
incorporation or bylaws of the Company or any of its
subsidiaries.
(viii) Neither the Company nor any of its
subsidiaries is in violation of any law, ordinance,
administrative or governmental rule or regulation applicable
to the Company or any decree of any court or governmental
agency or body having jurisdiction over the Company or any of
its subsidiaries which would have a material adverse effect on
the Company or any of its subsidiaries.
(ix) The Registration Statement and all
post-effective amendments thereto have become effective under
the Securities Act, and, to the knowledge of such counsel, no
stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose
have been instituted or are threatened, pending or
contemplated by the Commission. All filings required by Rule
424 and Rule 430A of the Rules and Regulations have been made;
the Registration Statement, the Effective Prospectus and Final
Prospectus, and any amendments or supplements thereto, as of
their respective effective or issue dates, complied as to form
in all material respects with the requirements of the
Securities Act and the Rules and Regulations; the descriptions
in the Registration Statement, the Effective Prospectus and
the Final Prospectus of statutes, regulations, legal and
governmental proceedings, and contracts and other documents
are accurate in all material respects and present fairly in
all material respects the information required to be stated;
and such counsel does not know of any pending or threatened
legal or
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<PAGE> 20
governmental proceedings, statutes or regulations required to
be described in the Final Prospectus which are not described
as required nor of any contracts or documents of a character
required to be described in the Registration Statement or the
Final Prospectus or to be filed as exhibits to the
Registration Statement which are not described and filed as
required.
In addition to the matters set forth above, such opinion shall also
include a statement to the effect that nothing has come to the attention of
such counsel which leads them to believe that the Registration Statement, the
Effective Prospectus and the Final Prospectus or any amendment or supplement
thereto contains an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they were made
(except that such counsel need express no view as to financial statements,
schedules and other financial or statistical information included, or
incorporated by reference therein).
(d) The Representatives shall have received an opinion,
dated the Closing Date, of Foley & Lardner, counsel for the Selling
Stockholders, reasonably acceptable to the Representatives, to the
effect that:
(i) This Agreement has been duly executed and
delivered by or on behalf of each of the Selling Stockholders
and constitute valid and binding agreements of such Selling
Stockholders enforceable in accordance with their terms.
(ii) The sale of the Shares to be sold by each
Selling Stockholder hereunder and the compliance by such
Selling Stockholder with all of the provisions of this
Agreement and the consummation of the transactions herein
contemplated will not conflict with or result in a breach or
violation of any terms or provisions of, or constitute a
default under any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which such
Selling Stockholder is a party or by which such Selling
Stockholder is bound or to which any of the property or assets
of such Selling Stockholder is subject, or any statute, order,
rule or regulation of any court or governmental agency or body
applicable to such Selling Stockholder or the property of such
Selling Stockholder.
(iii) No consent, approval, authorization or order
of any court or governmental agency or body is required for
the consummation of the transactions contemplated by this
Agreement in connection with the Shares to be sold by each
Selling Stockholder hereunder, except which have been duly
obtained and in full force and effect, such as have been
obtained under the Securities Act and such as may be required
under state securities or Blue Sky laws in connection with the
purchase and distribution of such Shares by the Underwriters,
as to which such counsel need express no opinion.
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<PAGE> 21
(iv) Each of the Selling Stockholders has full
right, power and authority to sell, transfer and deliver such
Shares pursuant to this Agreement. By delivery of a
certificate or certificates therefor, the Selling Stockholders
will transfer to the Underwriters good, valid and marketable
title to such shares, free and clear of any pledge, lien,
security interest, charge, claim, equity, or encumbrance of
any kind, assuming (A) the Underwriters are without notice of
every adverse claim and (B) the Underwriters have purchased
such shares in good faith.
(v) No transfer taxes are required to be paid in
connection with the sale and delivery of the Shares to the
Underwriters hereunder.
(e) The Underwriters shall have received an opinion or
opinions, dated the Closing Date, of Bass, Berry & Sims PLC, counsel
for the Underwriters, with respect to the Registration Statement and
the Final Prospectus, and such other related matters as the
Underwriters may require, and the Company shall have furnished to such
counsel such documents as they may reasonably request for the purpose
of enabling them to pass upon such matters.
(f) The Representatives shall have received from Price
Waterhouse LLP, a letter dated the date hereof and, at the Closing
Date, a second letter dated the Closing Date, in form and substance
satisfactory to the Representatives, stating that they are independent
public accountants with respect to the Company within the meaning of
the Securities Act and the applicable Rules and Regulations, and to
the effect that:
(i) In their opinion, the consolidated financial
statements and schedules examined by them and included or
incorporated by reference in the Registration Statement comply
as to form in all material respects with the applicable
accounting requirements of the Securities Act and the
published Rules and Regulations and are presented in
accordance with generally accepted accounting principles; and
they have made a review in accordance with standards
established by the American Institute of Certified Public
Accountants of the interim consolidated financial statements,
selected financial data and/or condensed financial statements
derived from audited financial statements of the Company;
(ii) The audited selected consolidated financial
information included in the Preliminary Prospectus and the
Final Prospectus under the captions "PROSPECTUS SUMMARY" and
"SELECTED FINANCIAL AND OPERATING DATA" agrees with the
corresponding amounts in the audited consolidated financial
statements included or incorporated by reference in the Final
Prospectus or previously reported on by them;
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<PAGE> 22
(iii) On the basis of a reading of the latest
available interim financial statements (unaudited) of the
Company and its subsidiaries, a reading of the minute books of
the Company and its subsidiaries, inquiries of officials of
the Company and its subsidiaries responsible for financial and
accounting matters and other specified procedures, all of
which have been agreed to by the Representatives, nothing came
to their attention that caused them to believe that:
(A) The amounts included in the
Preliminary Prospectus and the Final Prospectus under
the caption "PROSPECTUS SUMMARY", "SELECTED FINANCIAL
AND OPERATING DATA" and "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" for the three and five years,
respectively, ended December 30, 1995 do not agree
with the corresponding amounts in the audited
consolidated financial statements included or
incorporated by reference in the Final Prospectus or
previously reported on by them;
(B) The unaudited consolidated financial
statements included or incorporated by reference in
the Registration Statement, including the amounts
included under the captions "PROSPECTUS SUMMARY",
"SELECTED FINANCIAL AND OPERATING DATA" and
"MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS" do not comply as to form in
all material respects with the accounting
requirements of the federal securities laws and the
related published rules and regulations thereunder or
are not in conformity with generally accepted
accounting principles applied on a basis
substantially consistent with the basis for the
audited financial statements contained or
incorporated by reference in the Registration
Statement;
(C) Any other unaudited consolidated
financial statement data included in the Final
Prospectus do not agree with the corresponding items
in the audited consolidated financial statements from
which data was derived and any such unaudited data
were not determined on a basis substantially
consistent with the basis for the corresponding
amounts in the audited financial statements contained
or incorporated by reference in the Final Prospectus;
(D) at a specified date not more than
five days prior to the date of delivery of such
respective letter, there was any change in the
capital stock, decline in net current assets (working
capital), total assets or stockholders' equity or
increase in total debt of the Company and its
subsidiaries, in each case as compared with amounts
shown in the latest
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<PAGE> 23
balance sheets included in the Final Prospectus,
except in each case for changes, decreases or
increases which are described in such letters; and
(E) for the period from the closing date
of the latest statements of earnings included in the
Effective Prospectus and the Final Prospectus to a
specified date not more than five days prior to the
date of delivery of such respective letter, there
were any decreases in net sales, income from
operations, income from net income and net income per
share of the Company, in each case as compared with
the corresponding period of the preceding year,
except in each case for decreases which are described
in such letter.
(iv) They have carried out certain specified
procedures, not constituting an audit, with respect to certain
amounts, percentages and financial information specified by
you which are derived from the general accounting records of
the Company and its subsidiaries, which appear in the
Effective Prospectus and the Final Prospectus and have
compared and agreed such amounts, percentages and financial
information with the accounting records of the Company and its
subsidiaries or to analyses and schedules prepared by the
Company and its subsidiaries from its detailed accounting
records.
In the event that the letters to be delivered referred to above set
forth any such changes, decreases or increases, it shall be a further
condition to the obligations of the Underwriters that the Underwriters
shall have determined, after discussions with officers of the Company
responsible for financial and accounting matters and with Price
Waterhouse LLP, that such changes, decreases or increases as are set
forth in such letters do not reflect a material adverse change in the
total assets, stockholders' equity or total indebtedness of the
Company as compared with the amounts shown in the latest balance
sheets of the Company included in the Final Prospectus, or a material
adverse change in net sales, net income or net income per share of the
Company, in each case as compared with the corresponding period of the
prior year.
(g) There shall have been furnished to the
Representatives a certificate, dated the Closing Date and addressed to
you, signed by the Chief Executive Officer and by the Chief Financial
Officer of the Company to the effect that:
(i) the representations and warranties of the
Company in Section 1 of this Agreement are true and correct,
as if made at and as of the Closing Date, and the Company has
complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or
prior to the Closing Date;
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<PAGE> 24
(ii) no stop order suspending the effectiveness of
the Registration Statement has been issued, and no proceedings
for that purpose have been initiated or are pending, or to
their knowledge, threatened under the Securities Act;
(iii) all filings required by Rule 424 and Rule
430A of the Rules and Regulations have been made;
(iv) they have carefully examined the Registration
Statement, the Effective Prospectus and the Final Prospectus,
and any amendments or supplements thereto, and such documents
do not include any untrue statement of a material fact or omit
to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in
light of the circumstances under which they were made; and
(v) since the effective date of the Registration
Statement, there has occurred no event required to be set
forth in an amendment or supplement to the Registration
Statement, the Effective Prospectus or the Final Prospectus
which has not been so set forth.
(h) The representations and warranties of each Selling
Stockholder shall be true and correct as of the Closing Date, and each
such Selling Stockholder shall deliver to the Representatives a
certificate to that effect, dated the Closing Date, signed by each
such Selling Stockholder.
(i) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Final
Prospectus, and except as stated therein, the Company has not
sustained any material loss or interference with its business or
properties from fire, flood, hurricane, accident or other calamity,
whether or not covered by insurance, or from any labor dispute or any
court or governmental action, order or decree, or become a party to or
the subject of any litigation which is material to the Company, nor
shall there have been any material adverse change, or any development
involving a prospective material adverse change, in the business,
properties, key personnel, capitalization, prospects, net worth,
results of operations or condition (financial or other) of the
Company, which loss, interference, litigation or change, in the
Representatives' reasonable judgment shall render it unadvisable to
commence or continue the offering of the Shares at the offering price
to the public set forth on the cover page of the Prospectus or to
proceed with the delivery of the Shares.
All such opinions, certificates, letters and documents delivered
pursuant to this Agreement will comply with the provisions hereof only if they
are reasonably satisfactory to the Representatives and their counsel. The
Company shall furnish to the Representatives such conformed copies of such
opinions, certificates, letters and documents in such quantities as the
Representatives shall reasonably request.
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<PAGE> 25
The respective obligations of the Underwriters to purchase and pay for
the Option Shares shall be subject, in their discretion, to each of the
foregoing conditions to purchase the Firm Shares, except that all references to
the "Closing Date" shall be deemed to refer to the Option Closing Date, if it
shall be a date other than the Closing Date.
8. Condition of the Company's and the Selling Stockholders'
Obligations. The obligations hereunder of the Company and the Selling
Stockholders are subject to the condition set forth in Section 7(a) hereof.
9. Indemnification and Contribution.
(a) The Company and the Selling Stockholders, jointly and
severally, agree to indemnify and hold harmless each Underwriter, and
each person, if any, who controls any Underwriter within the meaning
of the Securities Act, against any losses, claims, damages or
liabilities to which such Underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based in whole or in part upon: (i) any inaccuracy in
the representations and warranties of the Company or the Selling
Stockholders contained herein; (ii) any failure of the Company or the
Selling Stockholders to perform their obligations hereunder or under
law; (iii) any untrue statement or alleged untrue statement of any
material fact contained in (A) the Registration Statement, any
Preliminary Prospectus, the Effective Prospectus or Final Prospectus,
or any amendment or supplement thereto, or (B) in any Blue Sky
application or other written information furnished by the Company or
the Selling Stockholders filed in any state or other jurisdiction in
order to qualify any or all of the Shares under the securities laws
thereof (a "Blue Sky Application"); or (iv) the omission or alleged
omission to state in the Registration Statement, any Preliminary
Prospectus, the Effective Prospectus or Final Prospectus or any
amendment or supplement thereto, any Marketing Materials or Blue Sky
Application a material fact required to be stated therein or necessary
to make the statements therein not misleading; and will reimburse each
Underwriter and each such controlling person for any legal or other
expenses reasonably incurred by such Underwriter or such controlling
person in connection with investigating or defending any such loss,
claim, damage, liability or action as such expenses are incurred;
provided, however, that neither the Company nor the Selling
Stockholders will be liable in any such case to the extent that any
such loss, claim, damage, or liability arises out of or is based upon
any untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement, any Preliminary
Prospectus, the Effective Prospectus or Final Prospectus, or any
amendment or supplement thereto, or any Marketing Materials or Blue
Sky Application in reliance upon and in conformity with written
information furnished to the Company by any Underwriter specifically
for use therein (it being understood that the only information so
provided is the information included in the last paragraph on the
cover page and in the first and third paragraphs under the caption
"Underwriting" in any Preliminary Prospectus and the Final Prospectus
and the Effective Prospectus).
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<PAGE> 26
Notwithstanding the foregoing provisions of this Section 9, the
parties agree that each Selling Stockholder shall be liable in any
case only to the extent of the total net proceeds (before deducting
expenses) received from the Underwriters by such Selling Stockholder
in connection with the sale of the Shares hereunder. For purposes of
this Section 9(a), Jay Stein shall be deemed to be liable to the same
extent as the Stein Ventures Limited Partnership, provided, that the
aggregate liability of Jay Stein and the Stein Ventures Limited
Partnership shall not exceed the total net proceeds received from the
Underwriters by the Stein Ventures Limited Partnership in connection
with the sale of the Shares hereunder.
(b) Each Underwriter will indemnify and hold harmless the
Selling Stockholders and the Company, each of its directors, each of
its officers who signed the Registration Statement and each person, if
any, who controls the Company within the meaning of the Securities Act
against any losses, claims, damages or liabilities to which the
Company or any such director, officer or controlling person may become
subject, under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Effective Prospectus or
Final Prospectus, or any amendment or supplement thereto, any Blue Sky
Application, or arise out of or are based upon the omission or the
alleged omission to state in the Registration Statement, any
Preliminary Prospectus, the Effective Prospectus or Final Prospectus,
or any amendment or supplement thereto or any Blue Sky Application a
material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but
only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon
and in conformity with written information furnished to the Company by
any Underwriter specifically for use therein (it being understood that
the only information so provided is the information included in the
last paragraph on the cover page and in the first and third paragraphs
under the caption "Underwriting" in any Preliminary Prospectus and in
the Effective Prospectus and the Final Prospectus);
(c) Promptly after receipt by an indemnified party under
this Section 9 of notice of the commencement of any action, including
governmental proceedings, such indemnified party will, if a claim in
respect thereof is to be made against the indemnifying party under
this Section 9 notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have to any indemnified
party otherwise than under this Section 9. In case any such action is
brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party
will be entitled to participate therein, and to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel satisfactory to such
indemnified party; and after notice from the indemnifying party to
such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such
26
<PAGE> 27
indemnified party under this Section 9 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation except
that the indemnified party shall have the right to employ separate
counsel if, in the indemnified party's reasonable judgment, it is
advisable for the indemnified party to be represented by separate
counsel, and in that event the fees and expenses of separate counsel
shall be paid by the indemnifying party.
(d) In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement
provided for in the preceding part of this Section 9 is for any reason
held to be unavailable to the Underwriters, the Company or the Selling
Stockholders or is insufficient to hold harmless an indemnified party,
then the Company and the Selling Stockholders shall contribute to the
damages paid by the Underwriters, and the Underwriters shall
contribute to the damages paid by the Company and the Selling
Stockholders; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. In determining
the amount of contribution to which the respective parties are
entitled, there shall be considered the relative benefits received by
each party from the offering of the Shares (taking into account the
portion of the proceeds of the offering realized by each), the
parties' relative knowledge and access to information concerning the
matter with respect to which the claim was asserted, the opportunity
to correct and prevent any statement or omission, and any other
equitable considerations appropriate under the circumstances. The
Company, the Selling Stockholders and the Underwriters agree that it
would not be equitable if the amount of such contribution were
determined by pro rata or per capita allocation (even if the
Underwriters were treated as one entity for such purpose). No
Underwriter or person controlling such Underwriter shall be obligated
to make contribution hereunder which in the aggregate exceeds the
underwriting discount applicable to the Shares purchased by such
Underwriter under this Agreement, less the aggregate amount of any
damages which such Underwriter and its controlling persons have
otherwise been required to pay in respect of the same or any similar
claim. The Underwriters' obligations to contribute hereunder are
several in proportion to their respective underwriting obligations and
not joint. For purposes of this Section, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the
Securities Act shall have the same rights to contribution as such
Underwriter, and each director of the Company, each officer of the
Company who signed the Registration Statement, and each person, if
any, who controls the Company within the meaning of Section 15 of the
Securities Act, shall have the same rights to contribution as the
Company.
(e) No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any
pending or threatened action, suit or proceeding in respect of which
any indemnified party is a party or is (or would be, if a claim were
to be made against such indemnified party) entitled to indemnity
hereunder,
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<PAGE> 28
unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject
matter of such action, suit or proceeding.
10. Default of Underwriters. If any Underwriter defaults in its
obligation to purchase Shares hereunder and if the total number of Shares which
such defaulting Underwriter agreed but failed to purchase is ten percent or
less of the total number of Shares to be sold hereunder, the non-defaulting
Underwriters shall be obligated severally to purchase (in the respective
proportions which the number of Shares set forth opposite the name of each
non-defaulting Underwriter in Schedule I hereto bears to the total number of
Shares set forth opposite the names of all the non-defaulting Underwriters),
the Shares which such defaulting Underwriter or Underwriters agreed but failed
to purchase. If any Underwriter so defaults and the total number of Shares
with respect to which such default or defaults occur is more than ten percent
of the total number of Shares to be sold hereunder, and arrangements
satisfactory to the other Underwriters, the Company and the Selling
Stockholders for the purchase of such Shares by other persons (who may include
the non-defaulting Underwriters) are not made within 36 hours after such
default, this Agreement, insofar as it relates to the sale of the Shares, will
terminate without liability on the part of the non-defaulting Underwriters or
the Company except for (i) the provisions of Section 9 hereof, and (ii) the
expenses to be paid or reimbursed by the Company and the Selling Stockholders
pursuant to Section 6. As used in this Agreement, the term "Underwriter"
includes any person substituted for an Underwriter under this Section 10.
Nothing herein shall relieve a defaulting Underwriter from liability for its
default.
11. Default by the Selling Stockholders. If any of the Selling
Stockholders shall fail to sell and deliver the number of Firm Shares that such
Selling Stockholder is obligated to sell, the Representatives may, at their
option, by notice to the Company and the Selling Stockholders, elect to
purchase the Firm Shares and the Option Shares that the non-defaulting Selling
Stockholders have agreed to sell pursuant to this Agreement.
In the event of a default under this Section that does not result in
the termination of this Agreement, the Representatives shall have the right to
postpone the First Closing Date or Option Closing Date for a period not
exceeding seven days in order to effect any required changes in the
Registration Statement or Prospectus or in any other documents or arrangements.
No action taken pursuant to this Section shall relieve the Company or the
Selling Stockholder so defaulting from liability, if any, in respect of such
default.
12. Survival Clause. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Selling
Stockholders, the Company, its officers and the Underwriters set forth in this
Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement shall remain in full force and effect, regardless of (a) any
investigation made by or on behalf of the Company, any of its officers or
directors, any Underwriter or any controlling person, (b) any termination of
this Agreement and (c) delivery of and payment for the Shares.
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<PAGE> 29
13. Effective Date. This Agreement shall become effective at
whichever of the following times shall first occur: (i) at 11:30 A.M.,
Washington, D.C. time, on the next full business day following the date on
which the Registration Statement becomes effective or (ii) at such time after
the Registration Statement has become effective as the Representatives shall
release the Firm Shares for sale to the public; provided, however, that the
provisions of Sections 6, 9, 12 and 13 hereof shall at all times be effective.
For purposes of this Section 13, the Firm Shares shall be deemed to have been
so released upon the release by the Representatives for publication, at any
time after the Registration Statement has become effective, of any newspaper
advertisement relating to the Firm Shares or upon the release by the
Representatives of telegrams offering the Firm Shares for sale to securities
dealers, whichever may occur first.
14. Termination.
(a) This Agreement may be terminated by the Company or
the Selling Stockholders by notice to the Representatives (i) at any
time before it becomes effective in accordance with Section 13 hereof,
or (ii) in the event that the condition set forth in Section 8 shall
not have been satisfied at or prior to the First Closing Date.
(b) This Agreement may be terminated by the
Representatives by notice to the Company and the Selling Stockholders
(i) at any time before it becomes effective in accordance with Section
13 hereof; (ii) in the event that at or prior to the First Closing
Date the Company or any Selling Stockholder shall have failed, refused
or been unable to perform any agreement on the part of the Company or
such Selling Stockholder to be performed hereunder or any other
condition to the obligations of the Underwriters hereunder is not
fulfilled; (iii) if at or prior to the Closing Date trading in
securities on the New York Stock Exchange, the Nasdaq, the American
Stock Exchange or the over-the-counter market shall have been
suspended or materially limited or minimum or maximum prices shall
have been established on either of such exchanges or such market, or a
banking moratorium shall have been declared by Federal or state
authorities; (iv) if at or prior to the Closing Date trading in
securities of the Company shall have been suspended; or (v) if there
shall have been such a material adverse change in general economic,
political or financial conditions or if the effect of international
conditions on the financial markets in the United States shall be such
as, in your reasonable judgment, makes it inadvisable to commence or
continue the offering of the Shares at the offering price to the
public set forth on the cover page of the Prospectus or to proceed
with the delivery of the Shares.
(c) Termination of this Agreement pursuant to this
Section 14 shall be without liability of any party to any other party
other than as provided in Sections 6 and 9 hereof.
15. Notices. All communications hereunder shall be in writing
and, if sent to any of the Underwriters, shall be mailed or delivered or
telegraphed and confirmed in writing to the Representatives in care of J. C.
Bradford & Co., J. C. Bradford Financial Center, 330 Commerce Street,
Nashville, Tennessee 37201, Attention: James H. Graves, or if sent to the
Company or to
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<PAGE> 30
the Selling Stockholders shall be mailed, delivered or telegraphed and
confirmed in writing to the Company at 1200 Riverplace Boulevard, Jacksonville,
Florida 32207, Attention: John H. Williams, Jr.
16. Miscellaneous. This Agreement shall inure to the benefit of
and be binding upon the several Underwriters, the Company and the Selling
Stockholders and their respective successors and legal representatives.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any other person any legal or equitable right, remedy or
claim under or in respect of this Agreement. This Agreement and all conditions
and provisions hereof are intended to be for the sole and exclusive benefit of
the Company and the Selling Stockholders and the several Underwriters and for
the benefit of no other person except that (a) the representations and
warranties of the Company and the Selling Stockholders contained in this
Agreement shall also be for the benefit of any person or persons who control
any Underwriter within the meaning of Section 15 of the Securities Act, and (b)
the indemnities by the Underwriters shall also be for the benefit of the
directors of the Company, officers of the Company who have signed the
Registration Statement and any person or persons who control the Company within
the meaning of Section 15 of the Securities Act. No purchaser of Shares from
any Underwriter will be deemed a successor because of such purchase. The
validity and interpretation of this Agreement shall be governed by the laws of
the State of Tennessee. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. The Representatives
hereby represent and warrant to the Company and the Selling Stockholders that
the Representatives have authority to act hereunder on behalf of the several
Underwriters, and any action hereunder taken by the Representatives will be
binding upon all the Underwriters.
If the foregoing is in accordance with your understanding of
our agreement, please indicate your acceptance thereof in the space provided
below for that purpose, whereupon this letter shall constitute a binding
agreement among the Company, the Selling Stockholders and each of the several
Underwriters.
Very truly yours,
STEIN MART, INC.
By:
--------------------------------------
Title:
-----------------------------------
Confirmed and accepted as of the
date first above written.
J.C. BRADFORD & CO., L.L.C.
NATWEST SECURITIES LIMITED
WASSERSTEIN PERELLA SECURITIES, INC.
For themselves and as Representatives of the Several
30
<PAGE> 31
Confirmed and accepted as of the
date first above written.
J.C. BRADFORD & CO., L.L.C.
NATWEST SECURITIES LIMITED
WASSERSTEIN PERELLA SECURITIES, INC.
For themselves and as Representatives of the Several
Underwriters
By:
------------------------------------
Partner
SELLING STOCKHOLDERS:
STEIN VENTURES LIMITED PARTNERSHIP
By:
--------------------------------------
Jay Stein, General Partner
By:
--------------------------------------
John H. Williams, Jr.
By:
--------------------------------------
Jay Stein
31
<PAGE> 32
SCHEDULE I
UNDERWRITERS
<TABLE>
<CAPTION>
Number of
Firm Shares to
Underwriter Be Purchased
- ----------- ------------
<S> <C>
J.C. Bradford & Co., L.L.C.. . . . . . . . . . . . . . . . . .
Natwest Securities Limited . . . . . . . . . . . . . . . . . .
Wasserstein Perella Securities, Inc.. . . . . . . . . . . . . .
---------
TOTAL 3,500,000
=========
</TABLE>
32
<PAGE> 33
SCHEDULE II
SELLING STOCKHOLDERS
<TABLE>
<CAPTION>
Number of Number of
Firm Shares Options
Name To Be Sold To Be Sold
- ---- ---------- ----------
<S> <C> <C>
Stein Ventures Limited Partnership 3,200,000 525,000
John H. Williams, Jr. 300,000 --
--------- -------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . 3,500,000 525,000
========= =======
</TABLE>
33
<PAGE> 1
EXHIBIT 5
August 27, 1996
Stein Mart, Inc.
1200 Riverplace Boulevard
Jacksonville, FL 32207
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
This opinion is being furnished in connection with the Registration
Statement on Form S-3 (the "Registration Statement") of Stein Mart, Inc. (the
"Company"), under the Securities Act of 1933, as amended, for the registration
of 4,025,000 shares of common stock, par value $0.01 (the "Shares").
We have examined and are familiar with the following:
A. Articles of Incorporation of the Company, as amended, as filed in
the Office of the Secretary of State of the State of Florida;
B. Bylaws of the Company;
C. The proceedings of the Board of Directors in connection with the
issuance of the Shares;
D. Such other documents, Company records and matters of law as we have
deemed to be pertinent.
Based on the foregoing, it is our opinion that:
1. The Company has been duly incorporated and is validly existing and
in good standing under the laws of the State of Florida.
2. The Shares are duly authorized, legally issued, fully paid and
non-assessable.
We hereby consent to the inclusion of this opinion as Exhibit 5 in the
Registration Statement. In giving this consent, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules or regulations of the
Securities and Exchange Commission promulgated thereunder.
FOLEY & LARDNER
By: /s/ LINDA Y. KELSO
------------------------------------
Linda Y. Kelso
<PAGE> 1
EXHIBIT 23B
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
February 23, 1996, which appears on page 13 of the 1995 Annual Report to the
Shareholders of Stein Mart, Inc., which is incorporated by reference in Stein
Mart, Inc.'s Annual Report on Form 10-K for the year ended December 30, 1995. We
also consent to the references to us under the headings "Experts" and "Selected
Financial and Operating Data" in such Registration Statement. However, it should
be noted that Price Waterhouse LLP has not prepared or certified such "Selected
Financial and Operating Data".
PRICE WATERHOUSE LLP
Orlando, Florida
August 27, 1996
