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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 earliest event reported) October 8, 1998
RAILWORKS CORPORATION
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(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 0-24639 58-2382378
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(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
</TABLE>
<TABLE>
<S> <C>
1104 Kenilworth Drive, Suite 301, Baltimore, Maryland 21204
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(Address of principal executive offices) (Zip Code)
</TABLE>
(410 512-0500
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(Registrant's telephone number, including area code)
Not applicable
(Former name of former address, if changed since last report)
The Exhibit Index is at page 4.
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Item 5. Other Events
On October 8, 1998, the Registrant issued 13,700 shares of its non-voting
Series A Convertible Preferred Stock (the "Preferred Stock") to BT Alex. Brown
Incorporated ("BT Alex. Brown") in exchange for 1,370,000 shares of its common
stock. BT Alex. Brown had reported to the Securities and Exchange Commission on
August 31, 1998 that it owned 2,009,062 shares of RailWorks common stock. The
exchange of RailWorks Preferred Stock for common stock reduced BT Alex.
Brown's common stock holdings to satisfy the Bank Holding Company Act (the
"Act"). The Act requires that a bank holding company own less than 5% of the
voting stock of a publicly traded corporation. Each share of Preferred Stock is
convertible into 100 shares of common stock. However, subject to certain
exceptions allowed by the Act, conversion is prohibited if, after the
conversion, BT Alex. Brown would own 5% or more of RailWorks' common stock.
For further information concerning the exchange, see Exhibits 3.1 and 99.1
hereto, which are incorporated herein by reference.
Item 7. Financial Statements and Exhibits
(c) Exhibits.
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<CAPTION>
Exhibit No. Description
<S> <C> <C>
3.1 -- Certificate of Designation of the Series A Convertible Preferred
Stock
99.1 -- Stock Exchange Agreement between the Registrant and BT Alex.
Brown Incorporated.
</TABLE>
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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.
RAILWORKS CORPORATION
(Registrant)
Date: October 13, 1998 By: John G. Larkin
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John G. Larkin
Chief Executive Officer
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EXHIBIT INDEX
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<CAPTION>
Exhibit No. Description Page
<S> <C> <C>
3.1 -- Certificate of Designation of the Series A Convertible Preferred
Stock
99.1 -- Stock Exchange Agreement between the Registrant and BT Alex.
Brown Incorporated.
</TABLE>
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EXHIBIT 3.1
CERTIFICATE OF DESIGNATION
OF
SERIES A CONVERTIBLE PREFERRED STOCK
OF
RAILWORKS CORPORATION
Pursuant to Section 151 of the Delaware General Corporation Law,
RailWorks Corporation (the "Corporation"), a corporation organized and existing
under and by virtue of the provisions of the Delaware General Corporation Law,
pursuant to authority conferred upon the Board of Directors of the Corporation
(the "Board") by the Certificate of Incorporation of the Corporation, the Board
adopted the following resolution authorizing the creation and issuance of a
series of 13,700 shares of Series A Convertible Preferred Stock, (the "Series A
Preferred Stock" or the "Series"), which resolution is as follows:
RESOLVED, that pursuant to authority expressly granted to and vested
in the Board of Directors by the Certificate of Incorporation, as amended, of
the Corporation, the Board hereby creates a series of 13,700 shares of Series A
Preferred Stock, of the Corporation and authorizes the issuance thereof, and
hereby fixes the designation thereof, and the voting powers, preferences and
relative, participating, optional and other special limitations or restrictions
thereon (in addition to the designations, preferences and relative,
participating and other special rights, and the qualifications, limitations or
restrictions thereof, set forth in the Certificate of Incorporation, as
amended, of the Corporation, which are applicable to the preferred stock of all
series, if any) as follows:
1. Designation. The shares of the series shall be designated "Series A
Convertible Preferred Stock," and the number of shares constituting the Series
shall be 13,700.
2. Dividends. Should the Corporation make a dividend or distribution
to the holders of the Corporation's common stock, $.01 par value, (the "Common
Stock") the holders of Series A Preferred Stock (the "Holders") shall be
entitled to participate in such dividend and receive payments as if such
Holders had converted their Series A Convertible Preferred Stock to Common
Stock, in accordance with the terms of this Certificate, on the day prior to
the record date for said dividend. Holders shall not receive a dividend
preference.
3. Liquidation.
(a) Liquidation Preference. Upon any liquidation, dissolution, or
winding up of the Corporation,
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whether voluntary or involuntary, and after provision for the payment of
creditors, the Holders shall be entitled to be paid an amount equal to $0.01
per share of Series A Preferred Stock ("Liquidation Value") before any
distribution or payment is made upon any shares of Common Stock and any other
series of stock junior to the Series A Preferred Stock but subject to the prior
preferences of any series or class of stock of the Corporation which is by its
terms senior to the Series A Preferred Stock.
(b) Ratable Distribution. If upon any liquidation, dissolution
or winding up of the Corporation, the net assets of the Corporation to be
distributed among the Holders shall be insufficient to permit payment in full
of the Liquidation Value to the Holders of such Series A Preferred Stock, then
all remaining net assets of the Corporation after the provision for the payment
of the Corporation's debts and distribution to any senior stockholders shall be
distributed ratably among the Holders in proportion to the full amounts to
which they would otherwise be entitled to receive.
(c) Corporate Changes. The sale, lease or exchange of all or
substantially all of the Corporation's assets or the merger or consolidation of
the Corporation which results in the holders of Common Stock receiving in
exchange for such common stock, cash, notes, debentures or other evidences of
indebtedness or obligations to pay cash, or preferred stock of the surviving
entity which ranks on a parity with or senior to the Series A Preferred Stock
as to dividends or upon liquidation, dissolution or winding-up shall be deemed
to be a liquidation, dissolution or winding up of the affairs of the
Corporation within the meaning of this Section 3.
4. Voting Rights. Except as required under the Delaware General
Corporation Law, the Holders shall not have any right or power to vote on any
question or in any proceeding or to be represented at or to receive notice of
any proceeding or meeting of the stockholders.
5. Conversion Rights. The Series A Preferred Stock shall be convertible
into Common Stock as follows:
(a) Conversion. Subject to and upon compliance with the
provisions of this section 5, a Holder shall have the right at such Holder's
option at any time or from time to time, to convert any of such shares of
Series A Preferred Stock into fully paid and non-assessable shares of the
Common Stock of the Corporation at the then Conversion Rate (as hereinafter
defined), upon the terms hereinafter set forth.
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(b) Conversion Rate. Each share of Series A Preferred Stock
is convertible into 100 shares of Common Stock, subject to adjustment as set
forth in Section 5(d) hereof (the "Conversion Rate").
(c) Mechanics of Conversion. The Holder may exercise the
conversion right specified in subparagraph 5(a) by giving at least five (5)
days prior written notice to the Corporation, that the Holder elects to convert
a stated number of shares of Series A Preferred Stock into a stated number of
shares of Common Stock on a specified date (the "Conversion Date"), and by
surrendering the certificate or certificates representing the Series A
Preferred Stock so to be converted, duly endorsed to the Corporation or in
blank, to the Corporation at its principal office (or at such other office as
the Corporation may designate by written notice, postage prepaid, to all
Holders) at any time during its usual business hours, on or before the
Conversion Date, together with a statement of the name or names (with
addresses) of the person or persons in whose name the certificate or
certificates for Common Stock shall be issued.
(d) Conversion Rate Adjustments. The Conversion Rate shall be
subject to adjustment from time to time as follows:
(1) Consolidation, Merger, Sale, Lease or Conveyance. In
case of any consolidation with or merger of the Corporation with or into
another corporation, or in case of any sale, lease or conveyance to another
corporation of the assets of the Corporation as an entirety or substantially as
an entirety, each share of Series A Preferred Stock shall after the date of
such consolidation, merger, sale, lease or conveyance be convertible into the
number of shares of stock or other securities or property (including cash) to
which the Common Stock issuable (at the time of such consolidation, merger,
sale, lease or conveyance) upon conversion of such share of Series A Preferred
Stock would have been entitled upon such consolidation, merger, sale, lease or
conveyance; and in any such case, if necessary, the provisions set forth herein
with respect to the rights and interests thereafter of the holder of the shares
of Series A Preferred Stock shall be appropriately adjusted so as to be
applicable, as nearly as may reasonably be, to any shares of stock of other
securities or property thereafter deliverable on the conversion of the shares
of Series A Preferred Stock.
(2) Stock Dividends, Subdivisions, Reclassification or
Combinations. If the Corporation shall (i) declare a dividend or make a
distribution on its Common Stock in shares of its Common Stock, (ii) subdivide
or reclassify the
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outstanding shares of Common Stock into a greater number of shares, or (iii)
combine or reclassify the outstanding Common Stock into a smaller number of
shares, the Conversion Rate in effect at the time of the record date for such
dividend or distribution or the effective date of such subdivision, combination
or reclassification shall be proportionately adjusted so that the holder of any
shares of Series A Preferred Stock surrendered for conversion after such date
shall be entitled to receive the number of shares of Common Stock that he would
have owned or been entitled to receive had such Series A Preferred Stock been
converted into Common Stock immediately prior to such date. Successive
adjustments in the Conversion Rate shall be made whenever any event specified
above shall occur.
(e) Approvals. If any shares of Common Stock to be reserved
for the purpose of conversion of shares of Series A Preferred Stock require
registration with or approval of any governmental authority under any Federal
or state law before such shares may be validly issued or delivered upon
conversion, then the Corporation will in good faith and as expeditiously as
possible endeavor to secure such registration or approval, as the case may be.
If, and so long as, any Common Stock into which the shares of Series A
Preferred Stock are then convertible is listed on any national securities
exchange, the Corporation will, if permitted by the rules of such exchange,
list and keep listed on such exchange, upon official notice of issuance, all
shares of such Common Stock issuable upon conversion.
(f) Valid Issuance. All shares of Common Stock that may be
issued upon conversion of shares of Series A Preferred Stock will upon issuance
be duly and validly issued, fully paid and nonassessable and free from all
taxes, liens and charges with respect to the issuance thereof, and the
Corporation shall take no action that will cause a contrary result.
(g) Restrictions on Conversion. Notwithstanding any right of
conversion of the Series A Preferred Stock provided for above, no shares of
Series A Preferred Stock originally issued to a bank holding company or an
affiliate of a bank holding company shall be converted into shares of Common
Stock if immediately following such conversion, such person and its affiliates
(which term, for avoidance of doubt, includes such bank holding company, any
such transferee and their respective affiliates) would own more than 4.9% of
any class of voting securities of the Corporation unless such ownership is
permitted under the Bank Holding Company Act of 1956, as amended, or any
comparable provision of any successor statute (the "Bank Holding Company Act")
or if the shares are being distributed, disposed of or sold in any one of the
following transactions:
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(i) such shares are being sold in a public offering
of such shares registered under the Securities Act of 1933 or
a public sale pursuant to Rule 144 promulgated under the
Securities Act of 1933, or any similar rule then in force;
(ii) such shares are being sold (including by virtue
of a merger, consolidation or similar transaction involving
the Corporation) to a person or group of persons (with the
meaning of the Securities Exchange Act of 1934) if, after
such sale, such person or group or persons in the aggregate
would own or control any voting securities of the Corporation
(excluding any voting securities acquired from such bank
holding company or any of its affiliates) which possess in
the aggregate the ordinary voting power to elect a majority
of the Corporation's directors;
(iii) such shares are being sold to a person or
group of persons (within the meaning of the Securities
Exchange Act of 1934) if, after such sale, such person or
group of persons in the aggregate would not own, control or
have the right to acquire more than two percent of the
outstanding securities of any class of voting securities a of
the Corporation; or
(iv) such shares are being sold in any other manner
permitted under the Bank Holding Company Act or by the
Federal Reserve Board.
For purposes of this paragraph, the term "persons" shall include any natural
person and any corporation, partnership, joint venture, trust, unincorporated
organization, and percentages of the Corporation's outstanding voting
securities shall include shares issuable upon exercise or conversion of Series
A Preferred Stock and other convertible securities, options, warrants or other
similar instruments owned by such bank holding company, its transferees and
their respective affiliates, but shall not include shares issuable upon
exercise or conversion of convertible securities, options, warrants or other
similar instruments owned by any other person.
6. No Preemptive Rights. Except as provided herein, no holders
of Series A Preferred Stock, nor of the security convertible into, nor of any
warrant, option or right to purchase, subscribe for or otherwise acquire Series
A Preferred Stock, whether now or hereafter authorized, shall, as such holder,
have any preemptive right whatsoever to purchase, subscribe for or
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otherwise acquire, stock of any class of the Corporation nor of any security
convertible into, nor of any warrant, option or right to purchase, subscribe for
or otherwise acquire, stock of any class of the Corporation, whether now or
hereafter authorized.
7. Exclusion of Other Rights. Except as may otherwise be
required by law, the shares of Series A Preferred Stock shall not have any
preferences or relative, participating, optional or other special rights, other
than those specifically set forth in this resolution (as such resolution may be
amended from time to time) and in the Corporation's Certificate of
Incorporation. The Shares of Series A Preferred Stock shall have no preemptive
or subscription rights.
8. Headings of Subdivisions. The headings of the various
subdivisions hereof are for convenience of reference only and shall not affect
the interpretation of any of the provisions hereof.
9. Severability of Provisions. If any right, preference or
limitation of the Series A Preferred Stock set forth in this Certificate (as
such Certificate may be amended from time to time) is invalid, unlawful or
incapable of being enforced by reason of any rule of law or public policy, all
other rights, preferences and limitations set forth in this Certificate (as so
amended) that can be given effect without the invalid, unlawful or
unenforceable right, preference or limitation shall, nevertheless, remain in
full force and effect, and no right, preference or limitation herein set forth
shall be deemed dependent upon any other such right, preference or limitation
unless so expressed herein.
10. Status of Reacquired Shares. Shares of Series A Preferred
Stock that have been issued and reacquired in any manner shall (upon compliance
with any applicable provisions of the laws of the State of Delaware) have the
status of authorized and unissued shares of preferred stock issuable in series
undesignated as to series and may be redesignated and reissued.
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IN WITNESS WHEREOF, the Corporation has caused this
Certificate to be signed in its name and on its behalf by its Chief Executive
Officer and attested to this 5th day of October 1998.
RAILWORKS CORPORATION
By: John Larkin
------------------------
John Larkin
Chairman and Chief
Executive Officer
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EXHIBIT 99.1
STOCK EXCHANGE AGREEMENT
This Stock Exchange Agreement dated October 8, 1998 is by and between
RailWorks Corporation ("RW") and BT Alex. Brown Incorporated ("BT AB").
RECITALS
A. BT AB owns in excess of 1,370,000 shares of the Common Stock,
$.01 par value of RW (the "Common Stock").
B. BT AB desires to exchange 1,370,000 shares of Common Stock
(the "Common Shares") for 13,700 shares of Series A
Convertible Preferred Stock, $.01 par value (the "Preferred
Shares").
C. RW desires to issue the Preferred Shares in exchange for the
Common Shares.
NOW THEREFORE, in consideration of the mutual promises contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
1. Effective upon execution of this Agreement, (a) RW will issue to BT
AB the Preferred Shares in consideration of the transfer by BT AB to RW of the
Common Shares, duly endorsed for transfer or accompanied by a stock power duly
executed in blank, and (b) BT AB will acquire the Preferred Shares in exchange
for the Common Shares.
2. BT AB represents and warrants to, and agrees with, RW that the
following representations and warranties are, as of the date of this Agreement,
true, correct and complete:
(A) The execution, delivery and performance by BT AB of this
Agreement and the effectuation of the transactions contemplated hereby are
within its corporate power and have been duly authorized by all proceedings
required to be taken under its certificate of incorporation and the laws of the
State of Delaware.
(B) BT AB is the beneficial and record owner of the Common Shares
free and clear of all liens, pledges or other encumbrances.
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(C) BT AB acknowledges that the Preferred Shares issued to it and
the shares of Common Stock into which the Preferred Shares are convertible will
not be registered under the Securities Act of 1933, as amended (the "Securities
Act"), and may not be sold, transferred or otherwise distributed in the absence
of such registration or an applicable exemption therefrom. BT AB further
acknowledges that RW has not granted it and does not hereby grant it any right
to have the Preferred Shares or the shares of Common Stock into which the
Preferred Shares are convertible registered for sale in accordance with the
Securities Act.
3. RW represents and warrants to, and agrees with, BT AB that the
following representations and warranties are, as of the date of this Agreement,
true, correct and complete:
(A) The execution, delivery and performance by RW of this Agreement
and the effectuation of the transactions contemplated hereby are within its
corporate power and have been duly authorized by all proceedings required to be
taken under its certificate of incorporation and the laws of the State of
Delaware.
(B) The designations, rights and preferences of the Preferred Shares
are as set forth in the Certificate of Designation attached hereto as Exhibit
A.
(C) Upon execution of this Agreement and completion of the
transactions contemplated herein in accordance with the terms of this
Agreement, the Preferred Shares will be duly issued, fully paid and
non-assessable.
4. (a) BT AB agrees to indemnify RW and its affiliated companies and
its and their officers, directors, employees, agents and representatives for
and against all claims, actions, costs, expenses, damages, reasonable attorneys
fees and other losses ("Claims") made, arising or paid with respect to (i)
issuance of the Preferred Shares or (ii) the exchange of the Preferred Shares
for shares of Common Stock to the extent said Claims are not actually paid by
RW's liability and officers and directors insurance policies. Said
indemnification shall, without limiting the generality of the foregoing,
include Claims to the extent subject to any deductibles or retentions under
said insurance policies and any increase in premiums charged to RW as a result
of said Claims. RW makes no representation or warranty as to coverage, or the
scope thereof, of any insurance policies it now has or may in the future have.
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(b) RW agrees to, and to the extent it is reasonably able, to cause
its affiliated companies and its and their officers, directors, employees,
agents and representatives to first pursue recovery of any Claims under the
applicable insurance policies.
5. (a) All claims for indemnification under this Agreement shall be
asserted and resolved as follows in this Section 5.
(b) A party claiming indemnification under this Agreement (an
"Indemnified Party") shall promptly (i) notify BT AB of any Claim that could
give rise to a right of indemnification under this Agreement and (ii) transmit
to BT AB a written notice ("Claim Notice") describing in reasonable detail the
nature of the Claim, a copy of all papers served with respect to that claim (if
any), an estimate of the amount of damages attributable to the Claim to the
extent feasible (which estimate shall not be conclusive of the final amount of
such claim) and the basis for the Indemnified Party's request for
indemnification under this Agreement. The failure to promptly deliver a Claim
Notice shall not relieve BT AB of its obligations to the Indemnified Party with
respect to the related Claim except to the extent that the resulting delay is
materially prejudicial to the defense of that claim.
(c) The Indemnified Party, and/or its insurance carrier(s) pursuant
to the terms of any relevant insurance policy, shall have full control of such
defense. Notwithstanding the foregoing, if BT AB has delivered a written notice
to the Indemnified Party to the effect that BT AB disputes its potential
liability to the Indemnified Party under Sections 4 and 5 and if such dispute
is resolved in favor of BT AB, BT AB shall not be required to bear the costs
and expenses of the Indemnified Party's defense pursuant to this Section 5 or
of BT AB's participation therein at the Indemnified Party's request. BT AB may
participate in, but not control, any defense or settlement controlled by the
Indemnified Party pursuant to this Section 5(c), and BT AB shall bear its own
costs and expenses with respect to such participation.
(d) Payments of all amounts owing by BT AB pursuant to any Claim
under Sections 4 and 5 shall be made (i) with respect to reasonable attorneys
fees and other expenses of defense, as incurred and (ii) with respect to other
Claims, within 30 days after the latest of (A) the settlement of that Claim,
(B) the expiration of the period for appeal of a final adjudication of that
Claim or (C) the expiration of the period for appeal of a final adjudication of
BT AB's liability to the Indemnified Party under this Agreement.
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6. Execution of this Agreement shall be deemed to be BT AB's written
consent, to the extent required by the Underwriting Agreement between RW, BT
AB, Schroder & Co., Inc. and Piper Jaffray, Inc. dated July 29, 1998, for RW to
issue the Preferred Shares.
7. Each party represents and warrants to the other that such person
has not directly or indirectly employed or become obligated to pay any broker,
finder or similar agent in connection with the transactions contemplated hereby
and agrees to indemnify the other party against all claims arising for fees and
commissions of brokers or similar agents employed or promised payment by such
person
8. This Agreement constitutes the entire agreement and understanding
between the parties on the subject matter hereof and supersedes all prior
agreements and understandings, both written and oral, relating to the subject
matter of this Agreement.
9. Each party will pay all fees, costs and expenses incurred by it
connection with the transactions contemplated herein, including, without
limitation, the fees and expenses of attorneys, accountants and other persons,
and no portion thereof shall be or paid by the other party hereto, except if
otherwise specifically provided herein.
10. This Agreement, and the rights and obligations of the parties
hereto, shall be governed and construed and enforced accordance with the
substantive laws of the State of New York without regard to the conflicts of
laws provisions thereof.
(Signatures on following page)
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
BT ALEX. BROWN INCORPORATED
By: Margaret Mary Preston
---------------------------------------
RAILWORKS CORPORATION
By: John G. Larkin
---------------------------------------
John Larkin
Chairman and Chief
Executive Officer
With regard to Section 6 As Representative
of the Several Underwriters listed on
Schedule I of the Underwriting Agreement
dated July 29, 1998 (as each of such terms
are used therein)
BT ALEX. BROWN INCORPORATED
By: Michael T. Ott
----------------------------------------
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