Securities and Exchange Commission
Washington D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of the earliest event reported)
June 28, 1996
____________________
The Stephan Co.
Florida 1-4436 59-0676812
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
incorporation) Number)
1850 W. McNab Road
Fort Lauderdale, Florida 33309
(Address of principal executive offices) (Zip Code)
(954) 971-0600
(Registrant's telephone number, including area code)
ITEM 2. ACQUISITION or DISPOSITION of ASSETS
On June 28, 1996, the Registrant entered into a Stock
Purchase Agreement with Sorbie Acquisition Co.("Sorbie") and
all the stockholders of Sorbie, including Charles V. Hall,
Sorbie's President and principal stockholder, as well as
related agreements described below with Charles V. Hall,
Trevor Sorbie International, Trevor Sorbie, Samson Arms,
Inc. and Redken Laboratories, Inc. ("Redken").
Pursuant to such agreements, the Registrant exchanged
13,733 shares of restricted common stock, valued at
approximately $220,000, and additional consideration as
described below, for all of the outstanding common and
preferred stock of Sorbie. In addition, the Registrant
issued an additional 18,899 shares of restricted common
stock, valued at approximately $300,000, to terminate an
existing royalty agreement between Samson Arms, Inc. and
Sorbie. The Registrant has agreed to use its best efforts
to register the above stock on Form S-3 under the Securities
Act of 1933, as amended, as soon as practicable.
In addition to the above, and as further consideration
for the acquisition, the Registrant has (i) terminated a
Secured Subordinated Debenture of Sorbie, dated July 20,
1994, held by the Registrant in the principal amount of
$500,000, (ii) assumed liabilities due to Mr. Hall under a
pre-existing employment contract of approximately $500,000
and (iii) replaced a certain Secured Promissory Note of
Sorbie in favor of Redken in the principal amount of
$3,250,000 with a cash payment of $500,000 and a promissory
note of the Registrant due July 19, 1996 in the principal
amount of $2,000,000.
In separate agreements made in connection with the
acquisition, the Registrant amended the existing royalty
contract between Trevor Sorbie of America, Inc. ("TSA"), a
wholly owned subsidiary of Sorbie, Trevor Sorbie
International, Sorbie Trading Limited and Trevor Sorbie. In
accordance with the amended agreement, the royalty payment
percentage rate payable upon future sales was reduced and
further modifications were made making the agreement less
onerous for TSA.
Sorbie, a major customer of the Registrant, is the
parent company of TSA, a company engaged in the distribution
of professional hair care products sold in beauty salons
nationwide. Sorbie's recorded sales for the year ended
December 31, 1995 were approximately $7,700,000 and
approximately $2,500,000 for the period ended June 27, 1996.
The Registrant will use the purchase method of accounting in
accordance with Accounting Principles Board Opinion No. 16
and has used (or will use) current working capital for all
payments due under the above agreements, except for the
$2,000,000 due to Redken. The Registrant has not yet
determined if that amount will be paid using currently
available funds, a recently established $2,000,000 line of
credit with NationsBank, N.A. (South), or a combination of
both.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND
EXHIBITS
(a) Financial Statements of Businesses Acquired.
As of the date of filing this Current Report on Form 8-
K, it is impracticable for the Registrant to provide the
financial statements required by this Item 7(a). In
accordance with Item 7(a)(4) of Form 8-K, such financial
statements will be filed by amendment to this Form 8-K no
later than 60 days after July 15, 1996.
(b) Pro Forma Financial Information.
As of the date of filing this Current Report on Form 8-
K, it is impracticable for the Registrant to provide the pro
forma financial information required by this Item 7(b). In
accordance with Item 7(b) of Form 8-K, such pro forma
financial statements will be filed by amendment to this Form
8-K no later than 60 days after July 15, 1996.
(c) Exhibits.
10.1 - Stock Purchase Agreement dated as of June 26, 1996,
between The Stephan Co., Sorbie Acquisition Co., Charles V.
Hall, the Preferred Stockholders and others, et. al.
10.2 - The Amended and Restated Sorbie Products Agreement
dated June 27, 1996, between Sorbie Acquisition Co. and
Sorbie Trading Limited, Trevor Sorbie International, PLC and
Trevor Sorbie, the individual.
10.3 - Letter Agreement dated as of June 28, 1996, between
The Stephan Co. and Redken Laboratories, Inc.
10.4 - Letter Agreement dated June 27, 1996, between The
Stephan Co. and Samson Arms, Inc.
10.5 - Agreement dated as of June 26, 1996, between The
Stephan Co. and Charles V. Hall.
10.6 - Employment agreement dated as of June 27, 1996
between Charles V. Hall and The Stephan Co.
10.7 - Assumption of Obligations and Indemnity dated June
28, 1996 between The Stephan Co. and Redken Laboratories,
Inc.
10.8 - Secured Promissory note dated June 28, 1996 by The
Stephan Co. in favor of Redken Laboratories, Inc.
The above referenced contracts and agreements will be
provided as soon as practicable.
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly
authorized, in the State of Florida on July 15, 1996.
The Stephan Co.
By:
/s/ David Spiegel
David Spiegel
Chief Financial Officer
