RULE 424(b)
FILE NO. 333-14941
PROSPECTUS
THE STEPHAN CO.
67,165 Shares
of
Common Stock
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The 67,165 shares of Common Stock, par value $.01
per share (the "Common Stock"), of The Stephan Co. offered
hereby are being offered by the persons named under the
caption "Selling Stockholders" (as described therein, the
"Selling Stockholders"). Unless the context requires
otherwise, reference in this Prospectus to the "Company"
means The Stephan Co. and its subsidiaries collectively.
The Common Stock is listed on The American Stock Exchange.
The closing price, as recorded in The Wall Street Journal,
of the Common Stock on October 24, 1996 was $12.00 per
share.
The shares offered hereby may be sold by the
Selling Stockholders or by their pledgees, donees,
transferees or other successors in interest from time to
time. Sales may be made on one or more securities
exchanges, if then listed thereon, or in the over-the-
counter market, or otherwise, at prices and on terms then
prevailing or at prices related to the then current market
price, or in negotiated transactions. Sales may also be
effected by selling the shares by various methods to or
through brokers or dealers or in face-to-face transactions
without a broker or dealer. Any brokers or dealers used by
the Selling Stockholders may receive commissions or
discounts in amounts to be negotiated by the Selling
Stockholders. See "Plan of Distribution". The Company will
receive none of the proceeds from sales by the Selling
Stockholders of the Common Stock offered hereby. See "Use
of Proceeds".
-----------------------------------------
SEE "RISK FACTORS" ON PAGE 5 FOR CERTAIN FACTORS
RELATING TO THE COMPANY AND AN INVESTMENT IN 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.
The date of this Prospectus is November 4, 1996.
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No dealer, salesman or other person has been
authorized to give any information or to make any
representations other than those contained or incorporated
by reference in this Prospectus in connection with the
offering made hereby, and, if given or made, such other
information or representations must not be relied upon as
having been authorized by the Company or the Selling
Stockholders. 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
condition and/or affairs of the Company since the date
hereof.
AVAILABLE INFORMATION
The Company is subject to the informational and
other requirements of the Securities Exchange Act of 1934,
as amended (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 filed
by the Company with the Commission can be inspected and
copied at the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, Room 1024,
and at the public reference facilities maintained by the
Commission at One World Trade Center, 3rd Floor, New York,
New York 10048; Northwest Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511; and 5757
Wilshire Boulevard, Suite 500 East, Los Angeles, California
90063-3648. Copies can also be obtained from the Commission
at prescribed rates by writing to the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. Furthermore,
the Commission maintains a web site that contains reports,
proxy statements and other information regarding the
Company. The address for such web site is
http://www.sec.gov. The Common Stock is listed on the
American Stock Exchange and reports and other information
concerning the Company can be inspected at such Exchange.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with
the Commission are hereby incorporated in this Prospectus by
reference:
(a) The Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995;
(b) The Company's Current Report on Form 8-K,
dated December 31, 1995, as amended on January 22,
1996;
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(c) The Company's Current Report on Form 8-K,
dated June 28, 1996, as amended on August 22, 1996,
September 16, 1996, and October 9, 1996;
(d) The Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended March 31, 1996;
(e) The Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended June 30, 1996;
(f) The Company's Proxy Statement filed under
Section 14(a) of the Exchange Act filed on April 29,
1996; and
(g) The description of the Company's Common Stock
contained in the Company's Registration Statement on
Form 8-A filed under Section 12 of the Exchange Act,
including any amendments or reports filed for the
purpose of updating such description.
All documents filed by the Company pursuant to
Sections 13(a) or 14 of the Exchange Act subsequent to the
date of this Prospectus, including any amendments to
previously filed documents, and prior to the termination of
the offering being made hereby shall be deemed to be
incorporated by reference into this Prospectus and to be a
part hereof from the date of filing of such documents.
Any statement contained in a document incorporated
or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which 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 to whom a copy of this Prospectus is delivered, upon
the written or oral request of such person, a copy of any or
all documents incorporated herein by reference (not
including the exhibits to such documents, unless such
exhibits are specifically incorporated herein by reference
therein). Requests for such copies should be directed to:
The Stephan Co., 1850 West McNab Road, Fort Lauderdale,
Florida 33309, Attn: Secretary, telephone number (954) 971-
0600.
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THE COMPANY
The Stephan Co., a Florida corporation (the
"Company"), is primarily engaged in the manufacture, sale
and distribution of hair care and personal care products,
including dandruff removers, shampoos, hair conditioners,
medicated talc, cosmetics and fragrances.
The Company's principal executive offices are
located at 1850 West McNab Road, Fort Lauderdale, Florida
33309, and its telephone number is (954) 971-0600.
RECENT DEVELOPMENTS
On June 28, 1996, the Company, pursuant to a Stock
Purchase Agreement (the "Agreement"), acquired all of the
outstanding capital stock of Sorbie Acquisition Co., a
Pennsylvania corporation ("Sorbie"), from the former
stockholders of Sorbie in exchange for 13,734 shares of
restricted Common Stock of the Company. In addition, as
further consideration for the acquisition, the Company (i)
terminated a Secured Subordinated Debenture, dated July 20,
1994, of Sorbie held by the Company in the principal amount
of $500,000, (ii) assumed liabilities of $500,208.33 due to
Charles V. Hall, the former principal stockholder of Sorbie,
under a pre-existing employment contract (the "Employment
Liabilities") and (iii) replaced a certain Secured
Promissory Note of Sorbie in favor of Redken Laboratories,
Inc. in the principal amount of $3,250,000 with a cash
payment of $500,000 and a promissory note (the "Note") of
the Company due July 19, 1996 in the principal amount of
$2,000,000. The Company has satisfied its obligations under
the Note and has, pursuant to an agreement with Mr. Hall
(the "Employment Liability Agreement"), decided, in
accordance with the terms thereof, to satisfy the Employment
Liabilities by issuing to Mr. Hall 36,430 shares of Common
Stock of the Company, such shares representing a portion of
the shares to be offered hereby. Sorbie, which prior to the
acquisition had been a major customer of the Company, is the
parent company of Trevor Sorbie of America, Inc., a company
engaged in the distribution of professional hair care
products sold in beauty salons nationwide.
In a related agreement (the "Side Letter"), the
Company issued an additional 18,898 shares of restricted
Common Stock to Sampson Arms, Inc. ("Sampson") to terminate
an existing royalty agreement between Sampson and Sorbie,
such shares also representing a portion of the shares
offered hereby. The Company has agreed to use its best
efforts to register the stock issued to the former
stockholders of Sorbie (including Charles V. Hall) and to
Sampson, who are collectively the Selling Stockholders
hereunder, under the Securities Act of 1933, as amended (the
"Securities Act"), as soon as practicable.
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RISK FACTORS
The following considerations should be carefully
considered, as well as other matters described elsewhere in
this Prospectus and the incorporated materials, in
evaluating the Company and its business, operations and
prospects before any decision is made to purchase any of the
Common Stock offered hereby.
1. Competition.
Many other companies provide products similar to
those provided by the Company. The Company believes that
there are no formidable barriers to entry into the business
areas within which it operates. Many of the Company's
competitors are larger and more established, with
substantially greater marketing, financial, human and other
resources than the Company and, as a result, may provide
significant long-term competition.
2. Limited Dividends.
The Company only recently has paid limited cash
dividends on its Common Stock. The payment of future
dividends on its Common Stock is not assured and is subject
to the discretion of the Board of Directors and is dependent
upon many factors, including the Company's earnings, its
capital requirements and its general financial condition.
The Company does not anticipate a significant (if any)
increase in the payment of cash dividends in the foreseeable
future.
3. Dependence on Frank F. Ferola; Anti-Takeover
Effect of Provision in Employment Agreement.
The current success of the Company is largely
dependent on the efforts of Frank F. Ferola, President and
Chief Executive Officer of the Company. The loss of the
services of Mr. Ferola or his inability to perform services
on behalf of the Company could materially and adversely
affect the operations of the Company, at least until a
qualified replacement is found. Mr. Ferola's employment
agreement with the Company provides that upon a change of
control of the Company as defined therein, Mr. Ferola has
the option to purchase all of the outstanding stock of Old
97 Company, a wholly-owned subsidiary of the Company. Such
provision may have the result of discouraging acquisitions
of the Company.
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4. Products Liability Insurance.
The Company maintains products liability insurance
for possible claims for personal and other injuries
resulting from allegedly defective products. While the
Company has not experienced a significant claim for personal
or other injuries resulting from allegedly defective
products, substantial claims or series of claims, if
successful and in excess of its coverage or subject to an
exclusion from its coverage, would have a material adverse
effect upon the business and financial condition of the
Company.
5. Recent Acquisitions; Potential Dilutive Effect
of Future Acquisitions.
The Company has recently completed some
acquisitions. There can be no assurance that the acquired
businesses will complement one another or be profitable on a
combined basis. In making such acquisitions, the Company
relied, in large part, on representations, warranties and
agreements of the sellers of such businesses. The Company
has not operated such businesses for a sufficient period of
time to determine whether such representations and
warranties were true or accurate or whether such businesses
can operate profitably and/or in a manner compatible with
the Company's other business areas. While the Company may
have certain contractual rights (including indemnification
rights) against the sellers of such businesses upon
discovery of misrepresentations and breaches of warranties
or agreements, there can be no assurance that such rights
will be enforceable and/or adequate to compensate the
Company for any losses it might incur as a result thereof or
whether the sellers will have sufficient assets to satisfy
such claims. In connection with certain of such
acquisitions, the Company has assumed significant
liabilities, both known and unknown, which could have a
material adverse effect on the Company's operations and
financial condition. In addition, the Company is continuing
to review possible acquisition candidates, although there
can be no assurance that any such acquisition(s) will be
successfully consummated. The Company intends, to the
extent practicable, to issue its equity securities in order
to pay a substantial portion of the purchase price(s) of
such acquisitions. Although there can be no assurance that
the Company will be able to consummate any such
acquisitions, or to issue its equity securities in payment
thereof, if it were to do so, such issuance could result in
significant dilution to investors in the Common Stock.
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6. Possible Adverse Effect on Price.
Based upon the historical trading volume of the
Common Stock, substantial sales by the Selling Stockholders
of the Common Stock offered hereby or even the potential of
such sales could have an adverse impact on the market price
of the Common Stock.
SELLING STOCKHOLDERS
The following table sets forth certain information
concerning the beneficial ownership of the Common Stock by
the Selling Stockholders as of October 28, 1996, and the
number of such shares included for sale in this Prospectus.
Such information was furnished to the Company by the Selling
Stockholders. The Selling Stockholders (other than Sampson)
are former stockholders of Sorbie, which was acquired by the
Company on June 28, 1996.
Percentage
of
outstanding
Sahres Shares to Shares to shares to
owned be sold be owned be owned
prior to in the after the after the
Name the offering offering offering* offering
- ----- ------------ -------- --------- -----------
Edward A. Kelly 1,526 1,526 0 --
Charles Ascher-Walsh 6,104 6,104 0 --
Estate of Belle J.
Baldwin 1,526 1,526 0 --
David S. Chadwick 1,526 1,526 0 --
Lawrence Walsh** 3,052 3,052 0 --
Sampson Arms, Inc. 18,898 18,898 0 --
Charles V. Hall*** 34,533 34,533 0 --
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* Assuming all shares of Common Stock offered hereby are eventually sold.
** Lawrence Walsh is deemed the beneficial owner of the 18,898 shares of the
Common Stock being offered hereby with respect to Sampson, as Mr. Walsh
is the President of Sampson and, as such, has dispositive and voting
power with respect to such shares.
*** Mr. Hall has been employed since June 28, 1996, as President of Sorbie, a
wholly-owned subsidiary of the Company.
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PLAN OF DISTRIBUTION
The shares of Common Stock offered hereby may be
sold, for cash only, by the Selling Stockholders or by their
pledgees, donees, transferees or other successors in
interest. Such sales may be made from time to time as
market conditions permit on one or more securities
exchanges, if then listed thereon, or in the over-the-
counter market, or otherwise, at prices and on terms then
prevailing or at prices related to the then current market
price, or in negotiated transactions.
To the Company's knowledge, there are no present
agreements, arrangements or understandings between any of
the Selling Shareholders and any broker or dealer in respect
of the shares offered hereby. The Common Stock offered
hereby may be sold by one or more of the following methods,
subject to the aforementioned limitations: (a) block
trade(s) in which a broker or dealer so engaged will attempt
to sell the Common Stock as agent but may position and
resell a portion of the block as principal to facilitate the
transaction; (b) purchases by a broker or dealer as
principal and resale by such broker or dealer for its
account pursuant to this Prospectus; (c) ordinary brokerage
transactions and transactions in which the broker solicits
purchasers; (d) exchange distribution in accordance with the
rules of such exchange; and (e) face-to-face transactions
between the Selling Stockholders and purchasers without a
broker or dealer. In effecting sales, brokers or dealers
engaged by the Selling Stockholders may arrange for other
brokers or dealers to also participate. Such brokers or
dealers may receive commissions or discounts from the
Selling Stockholders in amounts to be negotiated prior to
the sale. Such brokers or dealers and any other
participating brokers or dealers may be deemed to be
"underwriters" within the meaning of the Securities Act in
connection with such sales.
The Selling Stockholders will pay the expenses of
their counsel in connection with this offering and any
commissions due brokers engaged by the Selling Stockholders.
All other costs in connection with this offering will be
borne solely by the Company.
USE OF PROCEEDS
The Company will receive none of the proceeds from
sales of the shares of Common Stock offered hereby. The
67,165 shares are being registered for sale under the
Securities Act pursuant to the terms of the Agreement, the
Side Letter and the Employment Liability Agreement. See
"Recent Developments".
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EXPERTS
The consolidated financial statements incorporated
by reference in this Prospectus and elsewhere in the
Registration Statement of which this Prospectus forms a part
for the fiscal year ended December 31, 1995 have been
audited by Deloitte & Touche LLP, independent auditors, and
for the fiscal years ended December 31, 1993 and 1994 have
been audited by Kaufman, Rossin & Company, independent
auditors, and as it relates to the consolidated financial
statements of Sorbie Acquisition Company and Subsidiaries
have been audited by Will, Gallagher and Pitzer, Inc.,
independent auditors for the year ended December 31, 1995
and the period from inception May 18, 1994 to December 31,
1994, as indicated in their respective reports, and are
incorporated by reference herein in reliance upon such
reports given upon the authority of said firms as experts in
accounting and auditing.
LEGAL MATTERS
Certain legal matters in connection with the
issuance of the shares of Common Stock offered hereby have
been passed upon for the Company by Bert Sager, Esq., 6129
Southwest 70th Street, Miami, Florida 33143.
INDEMNIFICATION
Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors,
officers or persons controlling the Company pursuant to the
foregoing provisions, the Company has been informed that in
the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable. Section
607.014 of the Florida Business Corporation Act generally
provides that a corporation has the power to indemnify its
officers and directors against liability incurred in
connection with any proceeding (other than an action by, or
in the right of, the corporation) to which he was a party by
reason of the fact that he is or was a director or officer
of the corporation, if he acted in good faith and in a
manner he reasonably believed to be in the best interest of
the corporation. Section 607.014 of the Business
Corporation Act additionally provides that a corporation
shall have the power to indemnify any person who is a party
to any proceeding by or in the right of the corporation by
reason of the fact that he is or was a director or officer
of the corporation against expenses and amounts paid in
settlement not exceeding, in the judgment of such
corporation's board of directors, the estimated expenses of
litigating the proceeding to conclusion. Such
indemnification shall be authorized if such person acted in
good faith and in a manner he reasonably believed to be in
the best interest of the corporation, except that no
indemnification shall be permitted if such person shall
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have been adjudged to be liable unless, and only to the
extent that, a court of competent jurisdiction shall
determine upon application that such person is fairly and
reasonably entitled to indemnity for such expenses as such
court shall deem appropriate. Section 607.014 further
provides that any indemnification, unless pursuant to a
court determination, shall be made by the corporation only
upon a determination that indemnification of the director or
officer was proper in the circumstances because he met the
applicable standards of conduct, as described above. Such
determination shall be made by the corporation's board of
directors or a committee thereof, by independent legal
counsel or by the stockholders of the corporation. The
Company's By-Laws provide that the Company's directors and
officers will be indemnified to the fullest extent permitted
under Florida law.
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No dealer, salesperson or other
person has been authorized in connection
with this offering to give any informa-
tion or make any representations other
than those contained in this Prospectus. THE STEPHAN CO.
This Prospectus does not constitute an
offer or a solicitation in any jurisdic-
tion to any person to whom it is unlawful
to make such an offer or solicitation.
Neither the delivery of this Prospectus
nor any sale made hereunder shall, under
any circumstances, create an implication
that there has been no change in the 67,165 Shares
circumstances of the Company or the facts of Common Stock
herein set forth since the date hereof.
_________________
TABLE OF CONTENTS
Page
----
AVAILABLE INFORMATION 2
INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE 2
THE COMPANY 4
RECENT DEVELOPMENTS 4 --------------------
RISK FACTORS 5
SELLING STOCKHOLDERS 7 PROSPECTUS
PLAN OF DISTRIBUTION 8
USE OF PROCEEDS 8 --------------------
EXPERTS 9
LEGAL MATTERS 9
INDEMNIFICATION 9 November 4, 1996
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