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EXHIBIT 10.28
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into as of this ____
day of ________, 1998, by and between ___________, an individual resident of the
State of ___________ ("Employee"), ____________________, a ______________
corporation ("Employer"), a wholly owned subsidiary of RailWorks Corporation
("RailWorks"), a Delaware corporation, and RailWorks Corporation, a Delaware
corporation.
W I T N E S S E T H:
WHEREAS, pursuant to a merger that became effective on the date of this
Agreement (the "Merger"), Employer became a wholly owned subsidiary of
RailWorks;
WHEREAS, as a condition to the Merger, each of the Employee and
Employer agreed to enter into this Agreement;
WHEREAS, Employer desires to employ Employee, and Employee desires to
be employed by Employer, on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
promises and agreements contained herein, the parties hereto, intending to be
legally bound, hereby agree as follows:
Section 1 Employment.
Subject to the terms hereof, Employer hereby employs Employee, and
Employee hereby accepts such employment. Employee will serve as [INSERT CURRENT
TITLE] of Employer or in such other capacity as the Board of Directors of
Employer (the "Board of Directors") may hereafter from time to time determine
and will have duties and responsibilities customarily assigned to a person with
such title within Employer's industry. Employee agrees to devote his full
business time and best efforts to the performance of the duties that Employer
may assign Employee from time to time.
Section 2 Term of Employment.
2.1 The term of Employee's employment hereunder (the "Initial Term")
shall be from the date hereof until the earlier of (a) the two year anniversary
of the date of this Agreement or (b) 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 period during the
term hereof, as
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determined by an independent medical doctor jointly chosen by
the Employee and the Employer), by reason of mental or
physical disability; or
(ii) The termination by Employer of Employee's employment
hereunder, upon seven (7) days prior written notice to
Employee, for "good cause", as 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, (C) if Employee violates any of
the provisions contained in Section 4 of this Agreement, after
receiving written notice from Employer specifically outlining
the alleged violations by the Employee of Section 4 hereof and
either (1) the Employee fails to stop the alleged behavior
which is claimed to be such a breach and within thirty (30)
days of receipt by the Employer of such written notice or (2)
the Employee prevails in 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 provision of Section 4.6 hereof;
or
(iii) The termination by the Employee or Employer, upon thirty (30)
days written notice to the other party, in the event of a
Change of Control of RailWorks (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 amended (the "Exchange Act")), other than a
trustee or other fiduciary holding securities under an
employee benefit plan of RailWorks, a corporation owned
directly or indirectly by the stockholders of RailWorks 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 RailWorks representing 50% or
more of the total voting power represented by RailWorks' 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 RailWorks' stockholders was
approved by a vote or at least 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 RailWorks approve a merger or consolidation of
RailWorks with any other corporation, other than a merger or
consolidation (i) which would
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result in the Voting Securities of RailWorks 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 RailWorks
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 RailWorks; or (D) the
stockholders of RailWorks approve a plan of complete
liquidation of RailWorks or an agreement for the sale or
disposition by RailWorks of (in one transaction or a series of
transactions) all or substantially all of RailWorks' assets.
(iv) The termination of the Employee by Employee for Good Cause (as
defined). "Good Cause" shall be defined as (A) any material
and adverse change in the position or duties of the Employee
or (B) relocation of the primary office of Employer to a
location over 60 miles from its current location (a
"Relocation"). RailWorks agrees to reimburse Employee for
reasonable moving expenses incurred in connection with the
relocation of Employee following any Relocation of Employer.
2.2 Successive Terms. After the Initial Term, this Agreement
shall continue upon a year-to-year basis (the "Successive Terms"; together with
the Initial Term, the "Term") unless terminated by either the Employer or the
Employee upon one years' written notice to the other (which notice may not be
given until the two year anniversary of this Agreement).
2.3 Retirement. Notwithstanding the provisions of Sections 2.1
and 2.2, Employee may retire upon reaching age 65, or any time thereafter, at
his or her election, provided that Employee gives Employer and RailWorks six (6)
months advance written notice of such election and the date of such retirement.
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. During the Initial Term, Employee will be
paid a salary (the "Salary"), that shall be no less
than _______ ($_______) per annum, less deductions
and withholdings required by applicable law.
Thereafter, and during the Successive Terms, Employee
will be paid a salary (the "Successive Terms Salary")
that shall be commensurate with the duties and
responsibilities of the Employee, as determined by a
council consisting of the president of each
subsidiary of RailWorks on the date of the initial
public offering of RailWorks (the "Executive
Council") in consultation with a reputable industry
consultant and approved by the Board of Directors of
RailWorks. The Salary and
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Successive Terms Salary shall be paid to Employee in
equal monthly installments (or on such more frequent
basis as other executives of Employer are
compensated). The Salary and Successive Terms Salary
shall be reviewed by the Board of Directors of
RailWorks on at least an annual basis and may be
increased but not decreased as a result of such
review.
(b) Performance Bonuses. In addition to the Salary and
the Successive Terms 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 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.
Employee shall have the option, with regard to any
amount due to him as part of the Performance Bonus,
to direct RailWorks to make distribution of all or
any part of such bonus to any employee or employees
of Employer, or any entity established solely for the
benefit of such employee or employees, as determined
in the Employee's sole discretion. At least thirty
(30) days prior to the intent to distribute such
bonus, RailWorks shall advise the Employee in writing
of the amount due the Employee under the bonus pool
and the Employee shall have ten (10) days from such
date in which to advise RailWorks in writing of his
intent to distribute all or any portion of such bonus
to any such person. In the event of such written
notification, RailWorks hereby agrees to so
distribute the bonus. Absent such written
notification, the bonus shall be payable in full to
the Employee as described herein.
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 RailWorks, a portion
of the bonus pool (the "First Bonus Pool")
as determined by the Board of Directors of
RailWorks, as set forth in this section. The
First Bonus Pool will consist of four (4)
percent of pre-tax income (computed before
performance or other periodic bonuses for
any of the employees of RailWorks and any of
its consolidated subsidiaries) on a
consolidated basis for financial accounting
based upon applying generally accepted
accounting principles and generally
accepted auditing
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standards on a consistent basis. This bonus
shall be calculated by the independent
certified public accountant regularly
employed by RailWorks (the "CPA") applying
such generally accepted accounting
principles and generally accepted auditing
standards on a consistent basis. The
Employer's portion ("Employer First Bonus
Pool") of the First Bonus Pool (i) for the
first year of the Term, shall be equal to
____% [BASED ON THE % OF THE DIVISION
FORMULA] and (ii) for all successive years,
shall be equal to the percentage of the
Employer's contribution to the operating
income of RailWorks, as determined by the
CPA. The First Bonus Pool shall be allocated
as designated by the Board of Directors of
Employer.
Plus
(ii) For each fiscal year of RailWorks, a portion
of the bonus pool (the "Second Bonus Pool")
as determined by the Board of Directors of
RailWorks, as set forth in this section. The
Second Bonus Pool For each fiscal year of
RailWorks will consist of five (5) percent
of the excess of (a) the consolidated after
tax net income of RailWorks 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 RailWorks 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 RailWorks and its consolidated
subsidiaries for such fiscal year. For
purposes of this subsection (ii)(b), the
Determination Date shall mean the date of
this Agreement and thereafter shall be the
first day of the fiscal year for which such
computation applies. This bonus shall be
calculated by the CPA applying such
generally accepted accounting principles and
generally accepted auditing standards on a
consistent basis. The Employer's portion
("Employer Second Bonus Pool") of the Second
Bonus Pool (i) for the first year of the
Term, shall be equal to ____% [BASED ON THE
% OF THE DIVISION FORMULA] and (ii) for all
successive years, shall be equal to the
percentage of the Employer's contribution to
the operating income of RailWorks, as
determined by the CPA. The Second Bonus Pool
shall be allocated as designated by the
Board of Directors of Employer.
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(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 employees of RailWorks. Any unused vacation
days in any calendar year may not be carried over to
subsequent years.
(e) Expenses. 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 at the
request of and on behalf of Employer or RailWorks.
(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 employees of Employer,
on the terms and subject to the conditions set forth
in such plans.
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 or RailWorks of the employment of the Employee
pursuant to the provisions of Section 2(ii) hereof, Employee shall be deemed to
have earned any Bonus payable with respect to the calendar 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 Bonus shall be payable on the date on which the 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 generally made available to persons
in similar positions within RailWorks 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 generally made
available to persons in similar positions within RailWorks for the period of the
Continuation Period. Notwithstanding any of the foregoing, in the event that the
employment of Employee is terminated by Employer (A) pursuant to Section
2.1(iii) or 2.1(iv) or (B) for any reason
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that is not set forth in Section 2.1 and that is unrelated to the performance of
the duties of Employee in a manner reasonably satisfactory to RailWorks,
Employer shall pay as severance pay to Employee a lump sum payment in an amount
equal to Fifty Thousand Dollars ($50,000). Such payment shall be made to the
Employee within thirty (30) days of the Termination Date.
(i) Upon termination of this Agreement pursuant to the
provisions of Sections 2.1 (i), (iii) 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) 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 2.1 (ii) hereof, all granted but unvested, at the Termination Date,
stock grants and/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 Noncompetition and Nonsolicitation During
Employment.
4.1 Definitions. For the purposes of this Section 4, 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.
(b) "Competitor" means any business, individual,
partnership, joint venture, association, firm,
corporation or other entity, other than the RailWorks
or Employer or their affiliates or subsidiaries,
engaged, wholly or partly, in Company Activities.
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(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 RailWorks or 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 RailWorks' or the
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.
(e) "Customer" means actual customers or actively sought
prospective customers of RailWorks or Employer.
(f) "Territory" means the area within a one hundred (100)
mile radius of any corporate office or job site of
RailWorks or any of its subsidiaries, affiliates or
divisions.
(g) "Trade Secrets" means information or data of or about
RailWorks or Employer, including but not limited to
technical or non-technical 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 RailWorks' or 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.
(h) "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 RailWorks or its subsidiaries
or affiliates, or any of RailWorks' or its
affiliates' clients or customers for utilization in
Company Activities, not generally
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known by or not readily ascertainable by proper means
by other persons who can obtain economic value from
their disclosure or use.
4.2 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:
(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 RailWorks;
(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 RailWorks; and
(iii) Employee shall immediately notify RailWorks
of any unauthorized disclosure or use of any
Trade Secrets or Confidential Information of
which Employee becomes aware. Employee shall
assist RailWorks, to the extent necessary,
in the procurement or any protection of
RailWorks' or Employer's rights to or in any
of the Trade Secrets or Confidential
Information.
(b) Upon the request of RailWorks or 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 RailWorks' or Employer's business or
containing Trade Secrets or Confidential
Information, whether made or complied by Employee or
furnished to Employee from another source by virture
of Employee's employment with Employer.
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