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EXHIBIT 10.25
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into as of
this 21st day of May, 1998, by and between Xxxx X. Xxxxxx, an individual
resident of the State of Maryland ("Employee"), the Founding Companies (as
defined below), and Railworks Corporation, a Delaware corporation (as defined
below the "Holding Company").
W I T N E S S E T H
WHEREAS, the entities listed on Exhibit A, which is attached
hereto and hereby incorporated by reference herein (the "Founding Companies")
intend to form a consolidated group with a common parent (the "Holding Company")
to hold all of the outstanding stock of each of the Founding Companies (the
"Combination");
WHEREAS, the Holding Company will be created for the purpose
of carrying on the businesses of the Founding Companies, and conducting a public
offering of its common stock under applicable law. The Holding Company will be
the Employer hereunder;
WHEREAS, the Employee has significant experience in
structuring and consummating transactions substantially similar to the
Combination, has substantial experience advising entities that are in the same
businesses as the Founding Companies, and has substantial managerial experience;
WHEREAS, the Founding Companies desire that the Holding
Company employ the Employee to help them structure and consummate the
Combination and to be the Chief Executive Officer of the Holding Company
thereafter, on the terms and conditions as contained herein; and
WHEREAS, the Employee desires to be so employed by the Holding
Company, on the terms and conditions as contained herein.
NOW, THEREFORE, in consideration of the premises and the
mutual promises and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged by
the parties hereto, the parties hereto, intending to be legally bound, hereby
agree as follows:
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SECTION 1. EMPLOYMENT.
Subject to the terms hereof, Employer will employ Employee and
Employee hereby accepts such employment. Before the Combination is consummated,
the Employee will serve the Employer as a financial and business advisor,
assisting the Employer in structuring and consummating the Combination. After
the Combination is consummated, the Employee shall serve as the Chief Executive
Officer of the Holding Company and shall be a director of each of the entities
constituting the Founding Companies which participate in the Combination and
shall also serve on any executive committee which oversees the daily operations
of the Holding Company, or any similar committee having such function. In
addition, after the Combination is consummated, the Holding Company shall have
at least two outside directors who shall be selected with the advice and consent
of the Employee.
Subject to the terms and conditions of this Agreement, from
the date hereof until the Combination is consummated, the Employee shall devote
reasonable efforts to the Founding Companies to help consummate the Combination,
but shall be permitted to remain in his present job or any similar job until the
Combination is so consummated. After the Combination is consummated, Employee
agrees to devote substantially all of his business time and best efforts to the
performance of his job as Chief Executive Officer of the Holding Company,
subject to direction by the Board of Directors of the Holding Company (the
"Board of Directors"), as long as such directions are consistent with the
duties, responsibilities and authority customarily given or required of chief
executive officers generally, with the Employee to report his activities
regularly to the Board of Directors. Notwithstanding anything to the contrary
contained herein, after the Combination has been consummated, the Employee shall
be permitted to invest in entities that sell, and sell himself, financial
services and products generally; provided that such activities do not interfere
with the performance of his duties under this Agreement and such activities are
not in contravention of the terms and conditions of Section 5 hereof.
SECTION 2. TERM OF EMPLOYMENT.
The term of the Employee's employment hereunder (the "Term")
shall be from the date this Agreement is fully executed until the occurrence of
any of the following events:
(i) The death or total disability of Employee (total disability
meaning the failure to fully perform his normal required
services hereunder for a period of six (6) consecutive months
during any consecutive twelve (12) month
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period during the term hereof, as determined by an independent
medical doctor jointly chosen by the Employee and the
Employer) by reason of mental or physical disability;
(ii) The termination by Employer of Employee's employment
hereunder, upon thirty (30) days prior written notice to
Employee, for "good cause", as reasonably determined by the
Board of Directors. For purposes of this Agreement, "good
cause" for termination of Employee's employment shall exist
(A) if Employee is convicted of, pleads guilty to or confesses
to any felony or any act of fraud, misappropriation or
embezzlement, (B) if Employee has engaged in a dishonest act
to the material damage or prejudice of Employer or an
affiliate of Employer, or in conduct or activities materially
damaging to the property, business, or reputation of Employer
or an affiliate of Employer, or (C) if Employee violates any
of the provisions contained in Section 5 of this Agreement,
after receiving written notice from the Employer specifically
outlining the alleged violations by the Employee of Section 5
hereof and either (1) the Employee fails to stop the alleged
behavior which is claimed to be such a breach within thirty
(30) days of receipt by the Employee of such written notice or
(2) the Employer prevails in mediation or binding arbitration
pursuant to the commercial arbitration rules of the American
Arbitration Association which arbitration is commenced by the
Employee within thirty (30) days of receipt by the Employer of
such notice in accordance with the provisions of Section 5.6
hereof;
(iii) The termination by the Employee in the event that the
Combination is not consummated or at least Forty Million
Dollars ($40,000,000) has not been raised as part of the
initial public offering (the "IPO") contemplated as part of
the Combination by September 4, 1998, upon thirty (30) days
written notice to the Founding Companies;
(iv) After the Combination and the IPO have both been consummated,
the termination by either the Employee or the Employer, upon
thirty (30) days written notice to the other party, in the
event of a Change of Control of the Employer (as defined
hereinbelow).
For purposes of this Agreement, a "Change of Control"
shall be deemed to have occurred if (A) any "person" (as such
term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as
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amended (the "Exchange Act")), other than a trustee or other
fiduciary holding securities under an employee benefit plan of
the Holding Company, a corporation owned directly or
indirectly by the stockholders of the Holding Company
(immediately after the IPO) or any of their respective
affiliates, becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of
securities of the Holding Company representing 50% or more of
the total voting power represented by the Holding Company's
then outstanding securities that vote generally in the
election of directors (referred to herein as "Voting
Securities"); (B) during any period of two consecutive years,
individuals who at the beginning of such period constitute the
Board of Directors and any new directors whose election by the
Board of Directors or nomination for election by the Holding
Company's stockholders was approved by a vote or a majority of
the directors then still in office who either were directors
at the beginning of the period or whose election or nomination
for election was previously so approved, cease for any reason
to constitute a majority of the Board of Directors; (C) the
stockholders of the Holding Company approve a merger or
consolidation of the Holding Company with any other
corporation, other than a merger or consolidation (i) which
would result in the Voting Securities of the Holding Company
outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into
Voting Securities of the surviving entity) at least 50% of the
total voting power represented by the Voting Securities of the
Holding Company or such surviving entity outstanding
immediately after such merger or consolidation or (ii) in
which 50% or more of the board of directors of the surviving
entity is composed of members from the Board of Directors of
the Holding Company; (D) the stockholders of the Holding
Company approve a plan of complete liquidation of the Holding
Company or an agreement for the sale or disposition by the
Holding Company of (in one transaction or a series of
transactions) all or substantially all of the Holding
Company's assets; (E) the executive offices of the Holding
Company are relocated from the Greater Baltimore Metropolitan
Area or (F) the Employee is not a member of the Board of
Directors or is not on any Executive Committee or similar
committee of the Board of Directors; or
(v) After December 31, 2001, this Agreement shall continue upon a
year-to-year basis unless terminated by either the Employer or
the Employee upon ninety days (90) written notice to the other
before January 1 of the next year.
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SECTION 3. COMPENSATION.
3.1 Term of Employment. Employer will provide Employee
with the following salary, expense reimbursement and additional employee
benefits during the term of employment hereunder.
(a) Salary
(i) Subject to the terms and conditions hereof,
until the IPO is consummated, the Employee
shall receive no salary but shall be
entitled to reimbursement, with ten (10)
days of submission of a reimbursement
report, of any and all of his reasonable
out-of-pocket expenses, of any kind or
nature, incurred by the Employee in
promoting and helping to structure and
facilitate the Combination.
(ii) After the IPO is consummated, Employee will
be paid a salary (the "Base Salary") of no
less than Three Hundred Fifty Thousand
Dollars ($350,000) per annum, less
deductions and withholdings required by
applicable law. For the period from March 1,
1998 until the IPO is consummated, the Base
Salary shall be accrued and shall be paid in
full to the Employee upon consummation of
the IPO. The Base Salary after consummation
of the IPO shall be paid to Employee in
equal monthly installments (or on such more
frequent basis as other executives of
Employer are compensated). The Base Salary
shall be reviewed by the Board of Directors
of Employer on at least an annual basis
thereafter and may be increased but not
decreased as a result of any such review.
(b) Performance Bonuses. In addition to the Base Salary,
the Employee shall have the right to receive from the
Employer, and the Employer shall be obligated to pay
to the Employee, a performance bonus (the
"Performance Bonus") for each fiscal year during the
term of this Agreement, equal to the aggregate amount
determined by the bonus formulas delineated herein
below. Any amount of a Performance Bonus required to
be paid to the Employee for a fiscal year during the
term of this Agreement shall
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be paid by the Employer in the first pay period of
the Employer immediately following the finalization
of the accounting audit for financial accounting
purposes of the Employer for the preceding fiscal
year but in all events by March 31 of the year
immediately following the end of the fiscal year for
which such Performance Bonus is attributable.
The formulas to determine a Performance Bonus for any
fiscal year during the term of this Agreement shall
be as follows:
(i) For each fiscal year of the Employer, .5% of
the pre-tax net income, before any
performance or other periodic bonuses for
any of the employees of the Employer and any
of its consolidated subsidiaries, of the
Employer on a consolidated basis for
financial accounting basis based upon
applying generally accepted accounting
principles and generally accepted auditing
standards on a consistent basis. This bonus
shall be calculated by the independent
certified public accountant regularly
employed by the Employer (the "CPA")
applying such generally accepted accounting
principles and generally accepted auditing
standards on a consistent basis.
Plus
(ii) For each fiscal year of the Employer, five
percent (5%) of the excess of (a) the
consolidated after tax net income of the
Employer and its consolidated subsidiaries
for a fiscal year, computed by the CPA
applying generally accepted accounting
principles and generally accepted auditing
standards on a consistent basis over (b) the
Wall Street Estimate (as hereinafter
defined) for such fiscal year. For purposes
of this subsection (ii)(b), Wall Street
Estimate for a fiscal year shall mean the
simple arithmetical average of the
consolidated earnings per share estimates
for a fiscal year of the Employer and its
consolidated subsidiaries in the possession
of First Call on the Determination Date (as
hereinafter defined), translated by the CPA
into the equivalent consolidated after tax
net income of the Employer and its
consolidated subsidiaries for such fiscal
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year. For purposes of this subsection
(ii)(b), the Determination Date shall mean
the date the IPO is consummated and
thereafter shall be the first day of the
fiscal year for which such computation
applies.
(c) Discretionary Bonus. The Board of Directors may, from
time to time, award the Employee an additional
discretionary bonus based upon such factors as the
Board of Directors deems appropriate. The Employer
shall have no entitlement to such a discretionary
bonus until and unless so awarded by the Board of
Directors.
(d) Vacation. Employee shall receive four (4) weeks
vacation time per calendar year during the term of
this Agreement in addition to customary holidays
afforded other employees of Employer. Any unused
vacation days in any calendar year may not be carried
over to subsequent years. The Employer recognizes the
benefit to it of the Employee attending and
participating in trade seminars, conventions, and
similar gatherings and educational seminars and
encourages the Employee to attend such seminars and
conventions. Accordingly, any reasonable cost and
expenses thereof will be paid for by the Employer and
any time spent by the Employee at such seminars and
conventions shall not constitute vacation time but
shall constitute part of the Employee's duties under
this Agreement.
(e) Expenses. Subsequent to the IPO, Employer shall
reimburse Employee, within thirty (30) days of its
receipt of a reimbursement report from the Employee,
for all reasonable and necessary expenses incurred by
Employee on behalf of Employer.
(f) Benefit Plans. Employee shall have the option of
participating in such medical, dental, disability,
hospitalization, life insurance, stock option and
other benefit plans (such as pension and profit
sharing plans) as Employer maintains from time to
time for the benefit of other senior executives of
Employer, on the terms and subject to the conditions
set forth in such plans.
(g) Notwithstanding anything to the contrary contained
herein, until the IPO is consummated, the Employee
shall not be an employee
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of any of the Funding Companies but shall be the
employee of the Holding Company and to the extent
required to fulfill his duties hereunder be an agent
of each of the Founding Companies. Accordingly, the
Holding Company, and not the Founding Companies,
shall be responsible to provide to the Employee the
compensation and benefits provided by this Section 3;
provided that the provisions of this paragraph shall
not affect any agreement between the Founding
Companies to provide funds to the Holding Company
prior to the IPO or otherwise.
3.2 Effect of Termination. Except as hereinafter provided, upon the
termination of the employment of Employee hereunder for any reason, Employee
shall be entitled to all compensation and benefits earned or accrued under
Section 3.1 as of the effective date of termination (the "Termination Date"),
but from and after the Termination Date no additional compensation or benefits
shall be earned by Employee hereunder. Except upon termination by the Employer
of the employment of the Employee pursuant to the provisions of Section 2(ii)
hereof, Employee shall be deemed to have earned any Performance Bonus payable
with respect to the fiscal year in which the Termination Date occurs on a
prorated basis (based on the number of days in such calendar year through and
including the Termination Date divided by 365). Any such Performance Bonus shall
be payable on the date on which the Performance Bonus would have been paid had
Employee continued his employment hereunder. In addition, the Employee and his
eligible dependents shall be entitled to receive at the sole cost of the
Employer (A) the health insurance benefits specified hereunder for a period of
twelve (12) months following the Termination Date (the "Continuation Period")
and following such time period, the Employee shall be entitled to all rights
afforded to him under the Federal Omnibus Reconciliation Act ("COBRA") to
purchase continuation coverage of such health insurance benefits for himself and
his dependents for the maximum period permitted by law, and the Employee shall
be deemed to have elected to exercise his rights under Cobra as of the first day
of the Continuation Period, and (B) the life insurance benefits specified
hereinabove for the period of the Continuation Period.
(i) Upon termination of this Agreement, pursuant to the provisions
of Sections 2 (i) or (iv) hereof, any stock grants or options previously awarded
to the Employee, either by this Agreement or otherwise, shall fully and
completely vest and the Employee shall be able to retain or obtain as the case
may be, such stock, as though there was no vesting period or criteria of any
kind or nature, with respect to such stock. If stock options have previously
been awarded to the Employee, notwithstanding any terms and conditions of such
award or any plan pursuant to which such stock options were awarded, the
Employee or his authorized representative shall have a period of three (3)
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months from the Termination Date to exercise any or all of such stock options
and acquire for his own benefit the shares of stock covered by such stock
options.
(ii) Upon termination of the Agreement pursuant to the terms of
Section 2(ii) or (v) hereof, all granted but unvested, at the Termination Date,
stock grants or options shall be forfeited upon such termination; provided that
the Employee shall be able to retain or exercise any rights for a period of one
(1) month after the Termination Date, notwithstanding the terms and provisions
of such stock options awarded or the plan under which they were awarded, with
respect to any shares of stock granted or shares of stock covered by stock
options that have fully vested as of the Termination Date.
SECTION 4 COMMON STOCK.
4.1. Term of Employment. So that Employee can share in the
increase in value of the business of Employer over time, Employee will be
granted common stock of Employer as follows:
(i) Stock Grants. Simultaneously with the consummation of the
Combination, Employee will be granted that number of shares of
all classes of stock of the Holding Company equal to four and
one-half (4 1/2%) of the number of shares of all classes of
stock of the Holding Company outstanding immediately upon
consummation of the IPO. Such shares so granted shall fully
and completely vest on the date of issuance.
(ii) Stock Splits and Recapitalization. The number of shares of
common stock granted hereby shall be automatically adjusted to
reflect any change in the capitalization of the Holding
Company, including, but not limited to, such changes as stock
dividends, stock splits or recapitalizations. If any
adjustment under this Section would create the right of
Employee to acquire a fractional share of stock, such
fractional share shall be disregarded and the number of shares
of common stock subject to the grant shall be the next higher
number of whole shares of common stock, rounding all fractions
upward.
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4.2 Stock Loan.
(i) In order to help the Employee pay any required income taxes
with respect to the stock granted to the Employee pursuant to
the provisions of Section 4.1 hereof, at any time after the
IPO has been consummated, the Employer, upon thirty (30) days
written notice from the Employee, shall provide to the
Employee a loan (the "Loan") in an amount equal to such income
taxes, to be interest only for a period of five (5) years, to
require yearly payments of simple interest, at the same
interest rate as the Holding Company incurs to borrow funds
from its institutional lenders, to be collateralized only by
the stock granted and the Employee otherwise will not be
personally obligated to repay the Loan; provided that upon the
termination of this Agreement pursuant to the provisions of
Section 2(i) or (ii), the loan shall be fully paid off within
three (3) months of the Termination Date and upon the
termination of this Agreement to Sections 2 (iii), (iv) or
(v), hereof, the Loan shall be fully paid off within one (1)
year after the Termination Date.
(ii) To the extent that the Employee has not repaid the entire
principal balance of the Loan plus any accrued interest
thereon before January 1, 2001, the Employee agrees to sell,
as promptly as practicable, a sufficient number of shares of
Common Stock to enable the Employee to repay the then
remaining outstanding balance (unpaid principal balance and
unpaid accrued interest from time to time, the ("Unpaid
Balance of the Loan")) of the Loan after any taxes have been
provided for (the "Required Number of Shares"), subject to the
following conditions and requirements:
(A) Such sales shall be made in a manner which shall
reasonably not disrupt the orderly trading of Common
Stock, either through open market or privately
negotiated transactions as long as no sales shall be
made at a price lower that 1/16 below the last sales
price of Common Stock publicly traded immediately
prior to such sale even if such prohibition shall
cause a delay in Employee's compliance with his
obligation to sell Common Stock as provided
hereinabove;
(B) If after January 1, 2001 the Holding Company proposes
to register any of its securities under the
Securities Act for sale to the public for its own
account or for the account of other security holders
or both, the Holding Company may, upon 30 days prior
written notice to the Employee, require the Employee
to include the Required Number of Shares in such
offering and to sell such shares as part of
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such offering. In such event, all of the costs of
registering the Required Number of Shares, including
but not limited to, all registration and filing fees,
printing expenses, fees and disbursements of counsel
and independent public accountants for the Holding
Company; fees of the National Association of
Securities Dealers, Inc., state Blue Sky fees and
expenses, transfer taxes, fees of transfer agents and
registrars and costs of insurance; and all
underwriting discounts and selling commissions
applicable to the sale of shares other than the
Required Number of Shares, shall be paid by the
Holding Company. Notwithstanding the above, the
Employee shall pay all underwriting discounts and
selling commissions directly payable with respect to
the registration of the Required Number of Shares; or
(C) If, as of June 1, 2001, Employee has not yet disposed
of the Required Number of Shares, the Holding Company
will repurchase from the Employee the Required Number
of Shares at a per share price equal to 1/16 lower
than the average of the closing sales price for the
Common Stock as reported on the national stock
exchange on which the Holding Company's stock trades
for a ten (10) day period prior to the date of such
sale to the Holding Company, provided, however, that
such repurchase shall only be required if it can be
effected in a manner that complies with all
applicable securities laws.
Notwithstanding anything contained herein to the contrary, the
Employee shall not be required to sell any of the Required Number of Shares
unless the net proceeds paid to the Employee as a result of such shares equals
or exceeds 150% of the IPO Price per share.
Nothing in this Section 4.2(ii) shall be construed to require
the Employee to sell common stock except in compliance with all applicable
securities laws. Any delay imposed due to compliance with requirements of
applicable securities laws shall suspend the Employee's obligation to sell
Common Stock as otherwise provided hereinabove.
Lastly, notwithstanding anything to the contrary contained in
this Section 4.2(ii), the Employee shall have the right but not the obligation,
at any time and from time to time, to repay the Unpaid Balance of the Loan from
his personal resources.
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4.3 Securities Act. THE SHARES OF COMMON STOCK (THE "SHARES")
GRANTED PURSUANT TO THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS,
THE SHARES ARE OFFERED PURSUANT TO EXEMPTIONS PROVIDED BY SECTION 4(2) OF THE
ACT AND CERTAIN RULES AND REGULATIONS PROMULGATED PURSUANT THERETO. THE SHARES
MAY NOT BE TRANSFERRED BY THE EMPLOYEE IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR
AN OPINION OF COUNSEL ACCEPTABLE TO EMPLOYER AND ITS COUNSEL, WHICH ACCEPTANCE
SHALL NOT BE UNREASONABLY WITHHELD, THAT SUCH REGISTRATION IS NOT REQUIRED.
At such time as counsel for the Employee, which is acceptable
to the Holding Company, which acceptance shall not be unreasonably withheld,
opines that the aforementioned stock restriction and legend can be removed from
the certificates representing stock granted pursuant to Section 4.1(i) hereof in
accordance with applicable securities law, the Holding Company agrees to delete
any such legend from the certificates representing such shares that have been so
granted.
Section 5. Partial Restraint on Competition.
5.1 Definitions. For the purposes of this Section 5, the
following definitions shall apply.
(a) "Company Activities" means the business of
construction and maintenance of railway beds and
tracks; construction and maintenance of elevated
rail systems and structures; construction and
maintenance of railway switching and signaling
equipment, distributorships and supply in the
field of rail and railway construction materials;
distributorships and supply in the field of
electromechanical controls for use in the
railroad industry, namely, railway switching
equipment and railway signaling equipment; and
design for others in the field of railroad
industry, namely, engineering design of rail and
railway related structures and equipment or any
other business of the Employer and its
consolidated (for financial accounting purposes)
subsidiaries (the "Consolidated Group") which
said entities are engaged in on the Termination
Date as long as such
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business generated gross sales of at least 10% or
more of the total gross sales of the Consolidated
Group for the most recent fiscal year of the Employer
before or on the Termination Date.
Company Activities shall not include investing in
entities which sell, or the provision by the Employee
of sales, of financial services or products of any
kind or nature or consulting with respect to such
sales of such services and/or products ("Permitted
Activity" or "Permitted Activities").
(b) "Competitor" means any business, individual,
partnership, joint venture, association, firm,
corporation or other entity, other than the Employer
or its affiliates or subsidiaries, engaged, wholly or
partly, in Company Activities.
(c) "Competitive Position" means (i) having any financial
interest in a Competitor, including but not limited
to, the direct or indirect ownership or control of
all or any portion of a Competitor, or acting as a
partner, officer, director, principal, agent or
trustee of any Competitor or (ii) engaging in any
employment or independent contractor arrangement,
business or other activity with any Competitor
whereby Employee will serve such Competitor in any
senior managerial capacity.
(d) "Confidential Information" means any confidential,
proprietary business information or data belonging to
or pertaining to Employer that does not constitute a
"Trade Secret" (as hereinafter defined) and that is
not generally known by or available through legal
means to the public, including, but not limited to,
information regarding Employer's customers or
actively sought prospective customers, acquisition
targets, suppliers, manufacturers and distributors
gained by Employee as a result of his employment with
Employer; but shall not include any information known
by the Employee before March 1, 1998.
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(e) "Customer" means actual customers or actively sought
prospective customers of Employer during the Term.
(f) "Noncompete Period" or "Nonsolicitation Period" means
the period beginning the date hereof and ending on
the second anniversary of the termination of
Employee's employment with Employer; provided that
such Noncompete Period or Nonsolicitation Period
shall end on the Termination Date in the event this
Agreement is terminated pursuant to the provisions of
Sections 2 (iii) or (iv), hereof.
(g) "Territory" means the area within a one hundred (100)
mile radius of any corporate office or job site of
Employer or any of its subsidiaries, affiliates or
divisions.
(h) "Trade Secrets" means information or data of or about
Employer, including but not limited to technical or
nontechnical data, formulas, patterns, compilations,
programs, devices, methods, techniques, drawings,
processes, financial data, financial plans, products
plans, or lists of actual or potential customers,
clients, distributees or licensees, information
concerning Employer's finances, services, staff,
contemplated acquisitions, marketing investigations
and surveys, that are not generally known to, and/or
are not readily ascertainable by proper means by,
other persons.
(i) "Work Product" means any and all work product
property, data documentation or information of any
kind prepared, conceived, discovered, developed or
created by Employee for Employer or its affiliates,
or any of Employer's or its affiliates' clients or
customers for utilization in Company Activities, not
generally known by or not readily ascertainable by
proper means by other persons who can obtain economic
value from their disclosure or use.
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5.2 Trade Name and Confidential Information.
(a) Employee hereby agrees that (i) with regard to each
item constituting all or any portion of the Trade
Secrets and Confidential Information, at all times
during the Term and all times during which such item
continues to constitute a Trade Secret or
Confidential Information, respectively:
(i) Employee shall not, directly or by assisting
others own, manage, operate, join, control
or participate in the ownership, management,
operation or control of, or be connected in
any manner with, any business conducted
under any corporate or trade name of
Employer or name confusingly similar
thereto, without the prior written consent
of Employer;
(ii) Employee shall hold in confidence all Trade
Secrets and all Confidential Information and
will not, either directly or indirectly,
use, sell, lend, lease, distribute, license,
give, transfer, assign, show, disclose,
disseminate, reproduce, copy, appropriate or
otherwise communicate any Trade Secrets or
Confidential Information, without the prior
written consent of Employer; and
(iii) Employee shall immediately notify Employer
of any unauthorized disclosure or use of any
Trade Secrets or Confidential Information of
which Employee becomes aware. Employee shall
assist Employer, to the extent necessary, in
the procurement or any protection of
Employer's rights to or in any of the Trade
Secrets or Confidential Information.
(b) Upon the request of Employer and, in any event, upon
the termination of Employee's employment with
Employer, Employee shall deliver to Employer all
memoranda, notes, records, manuals and other
documents, including all copies of such materials and
all documentation prepared or produced in connection
therewith, pertaining to the performance of
Employee's services hereunder or
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Employer's business or containing Trade
Secrets or Confidential Information, whether
made or complied by Employee or furnished to
Employee from another source by virtue of
Employee's employment with Employer.
(c) To the greatest extent possible, all Work
Product shall be deemed to be "work made for
hire" (as defined in the Copyright Act, 17
U.S.C.A. xx.xx. 101 et seq., as amended) and
owned exclusively by Employer. Employee
hereby unconditionally and irrevocably
transfers and assigns to Employer all
rights, title and interest Employee may have
in or to any and all Work Product,
including, without limitation, all patents,
copyrights, trademarks, service marks and
other intellectual property rights. Employee
agrees to execute and deliver to Employer
any transfers, assignments, documents or
other instruments which Employer may deem
necessary or appropriate to vest complete
title and ownership of any and all such Work
Product, and all rights therein, exclusively
in Employer.
5.3 Noncompetition.
(a) The parties hereto acknowledge that Employee
is conducting Company Activities throughout
the Territory. Employee acknowledges that to
protect adequately the interest of Employer
in the business of Employer it is essential
that any noncompete covenant with respect
thereto cover all Company Activities and the
entire Territory.
(b) Employee hereby agrees that, during the Term
and the Noncompete Period, Employee will
not, in the Territory, either directly or
indirectly, alone or in conjunction with any
other party, accept, enter into or take any
action in conjunction with or in furtherance
of a Competitive Position with Employer.
Employee shall notify Employer promptly in
writing if Employee receives an offer of a
Competitive Position during the Noncompete
Term, and such notice shall describe all
material terms of such offer.
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Nothing contained in this Section 5 shall prohibit Employee
from acquiring not more than five percent (5%) of any Competitor, or from
acquiring any percentage of any company which is non-competitive with Employer,
whose common stock is publicly traded on a national securities exchange or in
the over-the-counter market or from engaging in Permitted Activities.
5.4 Nonsolicitation During Employment Term. Employee hereby
agrees that Employee will not, during the Term, either directly or indirectly,
alone or in conjunction with any other party:
(a) solicit, divert or appropriate or attempt to
solicit, divert or appropriate, any Customer
for the purpose of providing the Customer with
services or products competitive with those
offered by Employer during the Term, other than
a Permitted Activity, or
(b) solicit or attempt to solicit any officer,
director, employee, consultant, contractor,
agent, lessor, lessee, licensor, licensee,
supplier or any shareholder of any of the
Founding Companies or other personnel of
Employer or any of its affiliates or
subsidiaries to terminate, alter or lessen that
party's affiliation with Employer or such
affiliate or subsidiary or to violate the terms
of any agreement or understanding between such
employee, consultant, contractor or other person
and Employer.
5.5 Nonsolicitation During Nonsolicitation Period. Employee
hereby agrees that Employee will not, during the Nonsolicitation Period, either
directly or indirectly, alone or in conjunction with any other party:
(a) solicit, divert or appropriate or attempt to
solicit, divert or appropriate, any Customer for
the purpose of providing the Customer with
services or products competitive with those
offered by Employer during the Term; provided,
however, that the covenant in this clause shall
limit Employee's conduct only with respect to
those Customers with whom Employee had
substantial contact (through direct or
supervisory interaction with the Customer or the
Customer's account) during a period of time up
to but no
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greater than two (2) years prior to the last day
of the Term; or
(b) solicit or attempt to solicit any officer,
director, employee, consultant, contractor,
agent, lessor, lessee, licensor, licensee,
supplier or any shareholder of any of the
Founding Companies or other personnel of Employer
or any of its affiliates or subsidiaries residing
at the time of the solicitation in the Territory
to terminate, alter or lessen that party's
affiliation with Employer or such affiliate or
subsidiary or to violate the terms of any
agreement or understanding between such employee,
consultant, contractor or other person and
Employer, other than with respect to Permitted
Activities. For purposes of this clause (b),
employees, consultants, contractors, or other
personnel are those with knowledge of or access
to Trade Secrets and Confidential Information of
the Employer.
5.6 Binding Arbitration. The parties shall refer any dispute
as to whether or not the Employee has violated the provisions of this Section 5
to a mediator and, in the event that mediation is unsuccessful, such dispute
shall be resolved by binding arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association. The arbitrator shall
be selected by the mediator. The cost of the mediator and, if necessary, the
arbitrator and all other costs of the mediation and, if necessary, the
arbitration shall be split equally between the Employee and the Employer, except
for attorneys fees which shall be paid by the party employing such attorney.
Section 6. Miscellaneous.
6.1 Severability. The covenants in this Agreement shall be
construed as covenants independent of one another and as obligations distinct
from any other contract between Employee and Employer.
6.2 Survival of Obligations. The covenants in Section 5 of
this Agreement shall survive termination of Employee's employment, except in the
case of termination of this Agreement pursuant to the provisions of Sections
2(iii) or (iv) hereof, in which case they shall terminate also and have no
further force or legal effect as of the Termination Date.
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6.3 Notices. Any notice or other document to be given
hereunder by any party hereto to any other party hereto shall be in writing and
delivered in person or by courier, by telescopy transmission or sent by any
express mail service, postage or fees prepaid at the following addresses:
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FOUNDING COMPANIES - as listed on Exhibit A
HOLDING COMPANY -
c/o RailWorks Corporation
-------------------------
-------------------------
-------------------------
Attention:
---------------
Telecopy No.: ( )
EMPLOYEE
Xx. Xxxx X. Xxxxxx
000 Xxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
or at such other address or number for a party as shall be specified by like
notice. Any notice which is delivered in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon actual
receipt by such party or its agent.
6.4 Binding Effect. This Agreement inures to the benefit of,
and is binding upon, Employer and their respective successors and assigns, and
Employee, together with Employee's executor, administrator, personal
representative, heirs, and legatees.
6.5 Entire Agreement. This Agreement is intended by the
parties hereto to be the final expression of their agreement with respect to the
subject matter hereof and is the complete and exclusive statement of the terms
thereof, notwithstanding any representations, statements or agreements to the
contrary heretofore made. This Agreement supersedes and terminates all prior
employment and compensation agreements, arrangements and understandings between
or among Employer and Employee. This Agreement may be modified only by a written
instrument signed by all of the parties hereto.
6.6 Governing Law. This Agreement shall be deemed to be made
in, and in all respects shall be interpreted, construed, and governed by and in
accordance
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with, the laws of the State of Maryland. No provision of this Agreement shall be
construed against or interpreted to the disadvantage of any party hereto by any
court of other governmental or judicial authority or by any board of arbitrators
by reasons of such party or its counsel having or being deemed to have
structured or drafted such provision.
6.7 Headings. The section and paragraph headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
6.8 Specific Performance. Each party hereby agrees that any
remedy at law for any breach of provisions contained in this Agreement shall be
inadequate and that the other parties hereto shall be entitled to specific
performance and any other appropriate injunctive relief in addition to any other
remedy such party might have under this Agreement or at law or in equity.
6.9 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.
6.10 Other Employment Agreements. Without the prior written
consent of Employee, no person that is subsequently hired by RailWorks in a
position comparable to the position held by Employee shall be offered an
employment agreement that contain benefits that are more favorable to such
person than the terms contained herein.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
ANNEX RAILROAD BUILDERS, INC.
WITNESS
/s/ /s/ Authorized Signature
_________________________ By: _________________________(SEAL)
Name:
Title:
COMTRAK CONSTRUCTION, INC.
/s/ /s/ Authorized Signature
_________________________ By: _________________________(SEAL)
Name:
Title:
XXXXXX BROTHERS, INC.
/s/ /s/ Authorized Signature
_________________________ By: _________________________(SEAL)
Name:
Title:
CPI CONCRETE PRODUCTS, INC.
/s/ /s/ Authorized Signature
_________________________ By: _________________________(SEAL)
Name:
Title:
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HP XXXXXXXX, INC.
/s/ /s/ Authorized Signature
_________________________ By: _________________________(SEAL)
Name:
Title:
XXXXXXX RAILROAD BUILDERS, INC.
/s/ /s/ Authorized Signature
_________________________ By: _________________________(SEAL)
Name:
Title:
XXXXXXXX HOLDINGS, INC.
/s/ /s/ Authorized Signature
_________________________ By: _________________________(SEAL)
Name:
Title:
MERIT RAILROAD CONTRACTORS, INC.
/s/ /s/ Authorized Signature
_________________________ By: _________________________(SEAL)
Name:
Title:
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MIDWEST CONSTRUCTION SERVICES, INC.
/s/ /s/ Authorized Signature
_________________________ By: _________________________(SEAL)
Name:
Title:
NEW ENGLAND CONSTRUCTION, INC.
/s/ /s/ Authorized Signature
_________________________ By: _________________________(SEAL)
Name:
Title:
RAILROAD SERVICE, INC.
/s/ /s/ Authorized Signature
_________________________ By: _________________________(SEAL)
Name:
Title:
SOUTHERN INDIANA WOOD
PRESERVING CO.
_________________________ By: _________________________(SEAL)
Name:
Title:
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U.S. TRACKWORKS, INC.
/s/ /s/ Authorized Signature
_________________________ By: ___________________________(SEAL)
Name:
Title:
W. A. XXXXX CONSTRUCTION CO., INC.
/s/ /s/ Authorized Signature
_________________________ By: _________________________(SEAL)
Name:
Title:
HOLDING COMPANY
RAILWORKS CORPORATION
/s/ /s/ Authorized Signature
_________________________ By: _________________________(SEAL)
Name:
Title:
EMPLOYEE
/s/ /s/ Xxxx X. Xxxxxx
_________________________ _______________________________(SEAL)
Xxxx X. Xxxxxx
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EXHIBIT A
Annex Railroad Builders, Inc.
Xxxx Construction Company
Railroad Specialties, Inc.
Comtrak Construction, Inc.
Xxxxxx Brothers, Inc.
HP XxXxxxxx, Inc.
Xxxxxxx Railroad Builders, Inc.
Alpha-Keystone Engineering, Inc.
Railcorp, Inc.
Merit Railroad Contractors, Inc.
Midwest Construction Services, Inc.
New England Railroad Construction Co.
Xxxxxxxx Holdings, Inc.
Railroad Service, Inc.
Minnesota Railroad Service, Inc.
Southern Indiana Wood Preserving Co.
U.S. Trackworks, Inc.
Northern Rail Service & Supply Co.
W.A. Xxxxx Construction Co., Inc.
W.A. Xxxxx Rerailing Serviceds, Inc.
CPI Concrete Products, Inc.
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