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: December 4, 1998
(Date of earliest event reported)
SEAWAY FOOD TOWN, INC.
(Exact name of Registrant as specified in its charter)
Ohio 0-00080 34-4471466
(State or other jurisdiction (Commission (I.R.S. employer
of incorporation) file number) identification no.)
1020 Ford Street, Maumee, Ohio 43537
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,including area code: (419) 891-4207
ITEMS 5. OTHER EVENTS.
DESCRIPTION OF CAPITAL STOCK
The Company's Articles of Incorporation, as amended (the
"Articles") authorize 12,300,000 shares of capital stock,
consisting of 12,000,000 Common Shares, without par value (the
"Common Shares"), and 300,000 Serial Preferred Shares, without
par value, issuable in series (the "Serial Preferred Shares").
As of November 20, 1998, 6,648,928 Common Shares were issued
and outstanding and held by 429 holders of record. As of
November 20, 1998, the Company had not issued any Serial
Preferred Shares.
COMMON SHARES
The holders of Common Shares are entitled to receive
dividends when, if and as declared from time to time by the
Board of Directors out of funds legally available therefor.
The Common Shares have no preemptive rights or conversion
rights and are not subject to further calls or assessments by
the Company. There are no redemption or sinking fund
provisions applicable to the Common Shares. All currently
outstanding Common Shares are duly authorized, validly issued,
fully paid and nonassessable. The holders of Common Shares
are entitled to one vote per share on all matters to be voted
upon by the shareholders. The holders of Common Shares have
the right to vote cumulatively in the election of Directors.
The Board of Directors consists of nine members divided into
three classes. Each class consists of three members. The
Directors of the class elected at each Annual Meeting of
Shareholders hold office for a term of three years. Subject
to the rights of the holders of Serial Preferred Shares which
may be issued from time to time, the Articles can be amended
by the affirmative vote of the holders of at least a majority
of the Company's then outstanding shares having voting power
thereon, except for certain provisions of the Articles which
may only be amended by the affirmative vote of the holders of
at least two-thirds of the Company's then outstanding shares
having voting power thereon.
SERIAL PREFERRED SHARES
The Articles authorize the Directors, without further
action by the shareholders, to issue, from time to time,
Serial Preferred Shares in one or more classes or series which
would entitle the holder thereof to one vote per share, and to
fix or alter the designations, powers, preferences and rights,
if any, and qualifications, limitations or restrictions
thereof, including, without limitation, dividend rights,
conversion rights, if any, rights and terms of redemption
(including sinking fund provisions, if any), redemption price
and liquidation preferences of any series of Serial Preferred
Shares. In addition, the Board may establish the number of
shares constituting any such class or series and the
designation thereof, and increase or decrease the number of
shares of any such class or series subsequent to the issuance
of shares of such class or series, but not below the number of
shares of such class or series then outstanding.
The Articles provide that the holders of Serial Preferred
Shares of each series, in preference to the holders of Common
Shares and of any other class of shares ranking junior to the
Serial Preferred Shares, shall be entitled to receive out of
funds legally available therefor when and as declared by the
Board of Directors quarterly cash dividends at the rate
fixed by the Board of Directors in the certificate of
designation applicable to such Serial Preferred Shares. The
Articles also provide that, subject to the express terms of
each series, the Company may from time to time redeem all or
any part of the Serial Preferred Shares of any series at the
time outstanding, and the Articles establish certain
procedures applicable to such redemption. In the case of any
liquidation, dissolution or winding up of the affairs of the
Company, the holders of Serial Preferred Shares then
outstanding will be entitled to receive the amounts fixed with
respect to shares of such series in the certificate of
designations, together with accrued and unpaid dividends,
prior to the payment of any amounts to the holders of Common
Shares or any shares ranking junior to the Serial Preferred
Shares. If the net assets of the Company legally available
for distribution are insufficient to permit the payment upon
all outstanding Serial Preferred Shares and any shares ranking
on a parity with such shares, then such net assets will be
distributed ratably among the outstanding Serial Preferred
Shares and any shares ranking on a parity with such shares in
proportion to the full preferential amount to which each such
share is entitled.
The holders of Serial Preferred Shares will be entitled
to one vote per share and, except as otherwise provided in the
Articles or as required by law, will vote together with the
holders of Common Shares as a single class on all matters.
If, and so often as, the Company is in default in dividends in
an amount equal to six full quarterly dividends on any series
of Serial Preferred Shares outstanding, the holders of all
series of Serial Preferred Shares, voting separately as a
class, will be entitled to elect two members of the Board of
Directors (who will be in addition to any other Directors then
in office or proposed to be elected otherwise than pursuant to
this provision of the Articles). Such rights may only be
exercised at a meeting of the shareholders for the election of
Directors at which the holders of not less than 45% of the
outstanding Serial Preferred Shares of all series then
outstanding are present in person or by proxy. Such a meeting
may be called by the written request of the holders of at
least 15% of the Serial Preferred Shares of all series then
outstanding. These special class voting rights will remain
vested until all accrued and unpaid dividends on the Serial
Preferred Shares of all series then outstanding have been
paid, at which time the holders of Serial Preferred Shares
will be divested of these special voting rights (subject to
the revesting of the same in the event of future occurrences
of the type described above).
In addition, the affirmative vote of the holders of a
majority of the outstanding Serial Preferred Shares, voting
separately as a class, will be required in order to amend,
alter or repeal any provision of the Articles or the Code of
Regulations in a manner which adversely affects the voting
powers, rights or preferences of the holders of Serial
Preferred Shares (other than amendments to the Articles
authorizing or creating, or increasing the authorized or
outstanding amount of, Serial Preferred Shares or any share
ranking on a parity with or junior to the Serial Preferred
Shares, and amendments to the Code of Regulations increasing
the number of Directors of the Company). If any such
amendment, alteration or repeal affects adversely the rights
or preferences of one or more but not all series of Serial
Preferred Shares outstanding, only the vote of the holders of
at least a majority of the shares of the series so affected
will be required to authorize such action. The affirmative
vote of the holders of a majority of the outstanding Serial
Preferred Shares, voting separately as a class, also will be
required to:
- authorize, create or increase the authorized amount of
any shares of any class, or any security convertible into
shares of any class, ranking prior to the Serial
Preferred Shares;
- authorize the purchase or redemption of less than all of
the outstanding Serial Preferred Shares (other than in
accordance with a share purchase offer made to all
holders of such shares), unless all dividends on all
Serial Preferred Shares have been declared and paid or
funds for such purpose have been set apart for payment
and all accrued sinking fund obligations have been
complied with;
- approve certain mergers or consolidations involving the
Company in which the surviving or resulting corporation
will have after the transaction outstanding shares
ranking prior to or on a parity with the Serial Preferred
Shares; and
- authorize any shares ranking on a parity with the Serial
Preferred Shares or an increase in the authorized number
of Serial Preferred Shares.
BUSINESS COMBINATIONS
Under the Articles, the affirmative vote of not less than
two-thirds of the outstanding Common Shares, in addition to
the affirmative vote which may be required of any series of
Serial Preferred Shares which may then be outstanding, is
generally required for the approval or authorization of any
(i) any merger or consolidation of the Company with or into
any other corporation, (ii) any dissolution or (iii) any sale,
lease, exchange or other disposition of all or substantially
all of the assets of the Company to or with any other
corporation, person or entity (each, a "Business Combination").
These provisions of the Articles do not apply to any Business
Combination which has been approved by a resolution unanimously
adopted by the Board of Directors of the Company at a meeting
of the Board of Directors at which a quorum is present. For
any Business Combination which is unanimously approved by the
Board of Directors as described above, only the affirmative
vote of a majority of the outstanding Common Shares, in
addition to the affirmative vote which may be required of any
series of Serial Preferred Shares which may then be outstanding,
is needed to approve that Business Combination. The Board of
Directors has the power and duty to determine, on the basis of
information then known to it, whether any sale, lease, exchange
or other disposition of part of the assets of the Company
involves "substantially all" of the assets of the Company.
CERTAIN PROVISIONS OF OHIO LAW
The Company is subject to certain provisions of Ohio law
which may discourage or render more difficult an unsolicited
takeover of the Company. Among these are provisions that (i)
prohibit certain mergers, sales of assets, issuance or
purchases of securities, liquidation or dissolutions, or
reclassification of the then outstanding shares of an Ohio
corporation involving certain holders of stock representing
10% or more of the voting power (other than present
shareholders), unless (a) such transactions are approved by
the Directors prior to the 10% shareholder becoming such, (b)
the acquisition of 10% of the voting power is approved by the
Directors prior to 10% shareholders becoming such, or (c)
involve a 10% shareholder which has been such for at least
three years and the transaction is approved by holders of two-
thirds of the voting power of the Company and the holders of a
majority of the voting power not owned by the 10% shareholders
or certain minimum price and form of consideration
requirements are met; and (ii) provide Ohio corporations, or
in certain circumstances the shareholders of an Ohio
corporation, a cause of action to recover profits
realized under certain circumstances by persons who dispose of
securities of a corporation within 18 months of proposing to
acquire such corporation.
In addition, the acquisition of shares entitling the
holder to execute certain levels of voting power of the
Company (one-fifth or more, one-third or more, or a majority)
can be made only with the prior authorization of (i) the
holders of at least a majority of the total voting power and
(ii) the holders of at least a majority of the total voting
power held by shareholders other than the proposed acquirer,
officers of the Company elected or appointed by the Directors,
and Directors of the Company who are also employees and
excluding certain shares that are transferred after the
announcement of the proposed acquisition and prior to the vote
with respect to the proposed acquisition.
DIRECTOR AND OFFICER INDEMNIFICATION
The Company's Articles contain provisions indemnifying
Directors and officers of the Company against liabilities and
expenses reasonably incurred by him or her in connection with
any action, suit or proceeding to which such Director or
officer may be a party defendant or any claim of liability
asserted against such Director or officer because of his or
her status as such.
GENERAL
It is possible that the division of the Board of
Directors of the Company into classes provided for in the
Articles, the ability of the Board of Directors to issue
Serial Preferred Shares, the heightened shareholder voting
requirements applicable to certain proposed business
combination transactions and/or the provisions of Ohio law
discussed above may discourage other persons from making a
tender offer for or acquisitions of substantial amounts of
Common Shares. This could have an incidental effect of
inhibiting changes in management and may also prevent
temporary fluctuations in the market price of Common Shares
which often result from actual or rumored takeover attempts.
In addition, the indemnification provisions of the Articles
may have the effect of reducing the likelihood of derivative
litigation against Directors and deterring shareholders from
bringing a lawsuit against Directors for breach of their duty
of care, even though such an action, if successful, might
otherwise have benefited the Company and the shareholders.
PROPOSED AMENDMENTS
The Company's Board of Directors unanimously approved
certainly proposed amendments to the Articles and the Code of
Regulations of the Company at a meeting of the Board of
Directors held on October 21, 1998. The proposed amendments:
(1) restrict the ability of shareholders to nominate Directors
unless done so at least 90 days in advance of the Annual
Meeting of Shareholders or 30 days in advance of a special
meeting called for the purpose of electing Directors; (2)
provide that Directors can be removed only for good cause
shown; (3) provide that special meetings of the Board of
Directors can be called on as little as 48 hours' notice; (4)
increase the authorized number of Common Shares from
12,000,000 to 24,000,000 to ensure an adequate supply not only
for defensive purposes, but also for future stock splits or
other uses of Common Shares; (5) amend the provisions
concerning shareholder approval of mergers, consolidations,
sales or similar transactions, by adding combinations and
majority share acquisitions to that list of transactions which
require the affirmative vote of not less than two-thirds of the
outstanding Common Shares for approval; and (6) enact a version
of Ohio's Control Share Acquisition Statute which vests in the
Board of Directors the authority to decline a proposed control
share acquisition under certain circumstances. These proposed
amendments are more fully described in the Company's Preliminary
Schedule 14A, which was filed with the Securities and Exchange
Commission on November 16, 1998 (File No. 000-00080).
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
SEAWAY FOOD TOWN, INC.
By: /S/ Richard B. Iott
Richard B. Iott
President and Chief
Executive Officer
Date: December 4, 1998