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FORM 8-A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
SERVICE MERCHANDISE COMPANY, INC.
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(Exact Name of Registrant as Specified in Its Charter)
Tennessee 62-0816060
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(State of Incorporation or Organization) (I.R.S. Employer
Identification No.)
7100 Service Merchandise Drive, Brentwood, Tennessee 37207
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(Address of Principal Executive Offices) (Zip Code)
If this form relates to the registration If this form relates to the registration
of a class of securities pursuant to Section of a class of securities pursuant to
12(b) of the Exchange Act and is effective Section 12(g) of the Exchange Act and
pursuant to General Instruction A. (c), is effective pursuant to General
please check the following box. [X] Instruction A.(d), please check the
following box. [ ]
Securities Act registration statement file number to which this form
relates: _______________
(If applicable)
Securities to be registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on Which
Title of Each Class to be Registered Each Class is to be Registered
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Series A Junior Preferred Stock Purchase New York Stock Exchange
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Rights
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Securities to be registered pursuant to Section 12(g) of the Act:
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(Title of class)
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(Title of class)
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Item 1. Description of Registrant's Securities to be Registered
On February 3, 1998, the Board of Directors of Service Merchandise
Company, Inc. (the "Company") declared a distribution of one Right for each
outstanding share of common stock, par value $.50 per share (the "Company Common
Stock"), to shareholders of record at the close of business on February 9, 1998
and for each share of Company Common Stock issued (including shares distributed
from Treasury) thereafter and prior to the Distribution Date (as hereinafter
defined). Each Right entitles the registered holder, subject to the terms of the
Rights Agreement, to purchase from the Company one one-hundredth of a share (a
"Unit") of Series A Junior Preferred Stock, par value $1.00 per share (the
"Preferred Stock"), at a Purchase Price of $10.00 per Unit, subject to
adjustment. The Purchase Price is payable in cash or by certified or bank check
or bank draft payable to the order of the Company. The description and terms of
the Rights are set forth in a Rights Agreement (the "Rights Agreement") between
the Company and Harris Trust and Savings Bank, as Rights Agent, dated February
2, 1998.
Initially, the Rights will attach to all certificates representing
shares of outstanding Company Common Stock, and no separate Rights Certificates
will be distributed. The Rights will separate from the Company Common Stock, and
the Distribution Date will occur, upon the earlier of (i) 10 days following a
public announcement (the date of such announcement being the "Stock Acquisition
Date") that a person or group of affiliated or associated persons (other than
the Company, any Subsidiary of the Company or any employee benefit plan of the
Company or any such Subsidiary) (an "Acquiring Person") has acquired, obtained
the right to acquire, or otherwise obtained beneficial ownership of 15% or more
of the then outstanding shares of Company Common Stock, or (ii) 10 days (or such
later date as may be determined by a majority of the Independent Directors prior
to such time as any Person becomes an Acquiring Person) following the
commencement of a tender offer or exchange offer that would result in a person
or group beneficially owning 15% or more of the then outstanding shares of
Company Common Stock. Until the Distribution Date, (i) the Rights will be
evidenced by Company Common Stock certificates and will be transferred with and
only with such Company Common Stock certificates, (ii) new Company Common Stock
certificates issued after February 9, 1998 will contain a notation incorporating
the Rights Agreement by reference, and (iii) the surrender for transfer of any
certificates representing outstanding Company Common Stock will also constitute
the transfer of the Rights associated with the Company Common Stock represented
by such certificate.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on the tenth anniversary of the Rights Agreement
unless earlier redeemed by the Company as described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of Company Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights.
In the event that (i) the Company is the surviving corporation in a
merger with an Acquiring Person and shares of Company Common Stock shall remain
outstanding, (ii) a Person becomes the beneficial owner of 15% or more of the
then outstanding shares of Company Common Stock, or (iii)
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during such time as there is an Acquiring Person, an event occurs which results
in such Acquiring Person's ownership interest being increased by more than 1%
(e.g., by means of a reverse stock split or recapitalization), then, in each
such case, each holder of a Right will thereafter have the right to receive,
upon exercise, Units of Preferred Stock (or, in certain circumstances, Company
Common Stock, cash, property or other securities of the Company) having a value
equal to two times the exercise price of the Right. The exercise price is the
Purchase Price multiplied by the number of Units of Preferred Stock issuable
upon exercise of a Right prior to the events described in this paragraph.
Notwithstanding any of the foregoing, following the occurrence of any of the
events set forth in this paragraph, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by any
Acquiring Person will be null and void.
In the event that, at any time following the Stock Acquisition Date,
(i) the Company is acquired in a merger or other business combination
transaction and the Company is not the surviving corporation (other than a
merger described in the preceding paragraph), (ii) any Person effects a share
exchange or merges with the Company and all or part of the Company Common Stock
is converted or exchanged for securities, cash or property of any other Person
or (iii) 50% or more of the Company's assets or earning power is sold or
transferred, each holder of a Right (except Rights which previously have been
voided as described above) shall thereafter have the right to receive, upon
exercise, common stock of the Acquiring Person having a value equal to two times
the exercise price of the Right.
The Purchase Price payable, and the number of Units of Preferred Stock
issuable, upon exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred Stock, (ii) if
holders of the Preferred Stock are granted certain rights or warrants to
subscribe for Preferred Stock or convertible securities at less than the current
market price of the Preferred Stock, or (iii) upon the distribution to the
holders of the Preferred Stock of evidences of indebtedness or assets (excluding
regular quarterly cash dividends) or of subscription rights or warrants (other
than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. The Company is not required to issue fractional Units. In lieu thereof,
an adjustment in cash may be made based on the market price of the Preferred
Stock prior to the date of exercise.
At any time until ten days following the Stock Acquisition Date, a
majority of the Independent Directors may redeem the Rights in whole, but not in
part, at a price of $.01 per Right (the "Redemption Price"), payable, at the
election of such majority of Independent Directors, in cash or shares of Company
Common Stock. Immediately upon the action of a majority of the Independent
Directors ordering the redemption of the Rights, the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no rights as
a shareholder of the Company, including, without limitation, the right to vote
or to receive dividends. While the distribution of the Rights will not be
taxable to shareholders or to the Company, shareholders may, depending upon the
circumstances, recognize taxable income in the event that the Rights become
exercisable for Units of Preferred
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Stock (or other consideration).
Any of the provisions of the Rights Agreement may be supplemented or
amended at any time prior to the Distribution Date without the consent of the
holders of the Rights. After the Distribution Date, the provisions of the Rights
Agreement may be supplemented or amended without the consent of the holders of
the Rights in order to cure any ambiguity, defect or inconsistency, to make
changes which are consistent with the objectives of the Board in adopting the
Rights Agreement, except that from and after such time as any person becomes an
Acquiring Person, no such amendment may adversely affect the interests of
holders of Rights, or to shorten or lengthen any time period under the Rights
Agreement; provided, however, that no amendment to adjust the time period
governing redemption shall be made at such time as the Rights are not
redeemable.
As of January 30, 1998, 100,376,367 shares of Company Common Stock were
issued and outstanding. Each outstanding share of Company Common Stock on
February 9, 1998 will receive one Right. As long as the Rights are attached to
the Company Common Stock, the Company will issue one Right for each share of
Company Common Stock issued between the Record Date and the Distribution Date.
As of February 9, 1998, no shares of Preferred Stock were issued and
outstanding. A total of 1,100,000 shares of Preferred Stock has been reserved
for issuance upon exercise of the Rights, subject to adjustment.
The Units of Preferred Stock that may be acquired upon exercise of the
Rights will be nonredeemable and subordinate to any other shares of preferred
stock that may be issued by the Company.
Each Unit of Preferred Stock will have a minimum preferential quarterly
dividend rate of $.02 per Unit, but will, in any event, be entitled to a
dividend equal to the per share dividend declared on the Company Common Stock.
In the event of liquidation, the holder of a Unit of Preferred Stock
will receive a preferred liquidation payment equal to the greater of $.01 per
Unit or the per share amount paid in respect of a share of Company Common Stock.
Each Unit of Preferred Stock will have one vote, voting together with
the Company Common Stock. The holders of Units of Preferred Stock, voting as a
separate class, shall be entitled to elect two directors if dividends on the
Preferred Stock are in arrears for six fiscal quarters.
In the event of any merger, share exchange or other transaction in
which shares of Company Common Stock are exchanged, each Unit of Preferred Stock
will be entitled to receive the per share amount paid in respect of each share
of Company Common Stock.
The rights of holders of the Preferred Stock to dividends, liquidation
and voting, and in the event of mergers and share exchanges, are protected by
customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation
and voting rights, the economic value of one Unit of Preferred Stock that may be
acquired upon the exercise of each Right
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should approximate the economic value of one share of Company Common Stock.
The Rights may have certain anti-takeover effects. The Rights will
cause substantial dilution to a person or group that attempts to acquire the
Company on terms not approved by a majority of the Independent Directors unless
the offer is conditioned on a substantial number of Rights being acquired.
However, the Rights should not interfere with any merger or other business
combination approved by a majority of the Independent Directors since the Rights
may be redeemed by the Company at $.01 per Right at any time on or prior to the
tenth day following the Stock Acquisition Date. Thus, the Rights are intended to
encourage persons who may seek to acquire control of the Company to initiate
such an acquisition through negotiations with the Board of Directors. However,
the effect of the Rights may be to discourage a third party from making a
partial tender offer or otherwise attempting to obtain a substantial equity
position in the equity securities of, or seeking to obtain control of, the
Company. To the extent any potential acquirors are deterred by the Rights, the
Rights may have the effect of preserving incumbent management in office.
The form of Rights Agreement between the Company and the Rights Agent
specifying the terms of the Rights, which includes as Exhibit A the form of
Rights Certificate, is attached hereto as Exhibit 1 and is incorporated herein
by reference. The foregoing description of the Rights does not purport to be
complete and is qualified in its entirety by reference to such Exhibit.
Item 2. Exhibits
1. Rights Agreement, dated February 2, 1998, between
Service Merchandise Company, Inc. and Harris Trust
and Savings Bank, including the Form of Rights
Certificate (Exhibit A) and the Form of Summary of
Rights (Exhibit B) is incorporated herein by
reference to Exhibit 99.2 to the Company's Current
Report on Form 8-K filed with the Securities and
Exchange Commission on February 3, 1998.
SIGNATURE
Pursuant to the requirement of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.
SERVICE MERCHANDISE COMPANY, INC.
By: /s/ C. Steven Moore
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Name: C. Steven Moore
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Title: Vice President
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Dated: February 3, 1998