1
EXHIBIT 10.26
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into as of
this 21st day of May, 1998, by and between Xxxxxx X. Xxxxx, Xx., an individual
resident of the State of Pennsylvania ("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 Founding Companies desire that the Holding
Company employ the Employee to be the Vice President and Chief Accounting
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:
SECTION 1. EMPLOYMENT.
Subject to the terms hereof, Employer will employ Employee and
Employee hereby accepts such employment. After the Combination is consummated,
the Employee shall serve as the Vice President and Chief Accounting Officer of
the Holding Company.
2
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 Vice President and Chief Accounting 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 accounting officers generally, with the Employee to report his activities
regularly to the Board of Directors.
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 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;
2
3
(iii) The termination by the Employee in the event that the
Combination is not consummated and/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 August 15, 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 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
3
4
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; 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.
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. All such
expenses shall be paid from the interim
monthly corporate budget of Employer, equal
to $33,000 per month until consummation of
the IPO. Every Founding Company has
contributed to, and hereby agrees to
continue to contribute to, the interim
monthly corporate budget on a pro rata
basis.
(ii) After the IPO is consummated, Employee will
be paid a salary (the "Base Salary") of no
less than One Hundred Eighty Five Thousand
Dollars ($185,000) per annum, less
deductions and withholdings required by
applicable law. The Base Salary 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
4
5
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.
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, .15% 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, one point five
percent (1.5%) 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
5
6
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
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) Relocation. In addition to other compensation and
reimbursement of expenses required to be paid under
this Agreement, Employer shall
6
7
reimburse Employee within ten (10) days of submission
of a reimbursement report:
(A) Any and all of his out-of-pocket expenses of
any kind or nature, incurred by Employee
relating to the relocation ("Relocation") of
Employee and/or his family from Pennsylvania
to the Baltimore Metropolitan area
including, but not limited to:
I. Packing, storage and professional
mover costs relating to the
furniture, clothing, household
belongings and other personal
property of Employee and his
family.
II. Travel expenses incurred by
Employee and his family in
connection with commuting to and
from Pennsylvania and Maryland
relating to searching for a new
residence ("Maryland Home") in
Maryland and the sale of Employee's
existing home ("Pennsylvania Home")
in Pennsylvania.
III. Real estate commissions paid
relating to the sale of the
Pennsylvania Home.
IV. Mortgage application, points, fees,
charges, appraisal, attorney fees
of the mortgage lender, title
insurance, survey, and all other
costs and expenses associated with
obtaining a loan and mortgage and
the purchase of the Maryland Home.
V. Attorney fees incurred by Employee
relating to the sale of the
Pennsylvania Home and purchase of
the Maryland Home.
(B) Temporary housing costs in Maryland for
Employee and/or his family pending
completion of the Relocation, for a period
not exceeding six months from the effective
date of the IPO.
(h) Notwithstanding anything to the contrary contained
herein, until the IPO is consummated, the Employee
shall not be an employee of any of the Founding
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
7
8
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)
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.
8
9
(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 Grant. 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 one percent (1.0%) 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.
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
9
10
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 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
10
11
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.
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
11
12
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
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.
(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.
12
13
(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.
(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 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,
13
14
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.
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
14
15
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 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.
15
16
(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.
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.
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,
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
16
17
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 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. 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.
17
18
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 telecopy transmission or sent by any
express mail service, postage or fees prepaid at the following addresses:
FOUNDING COMPANIES - as listed on Exhibit A
HOLDING COMPANY -
c/o RailWorks Corporation
-----------------------------------
-----------------------------------
-----------------------------------
Attention: Chief Executive Officer
Telecopy No.: ( )
EMPLOYEE
Xx. Xxxxxx X. Xxxxx, Xx.
-----------------------------------
-----------------------------------
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 enures 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.
18
19
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 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 terms that are more favorable to such
person than the terms contained herein.
19
20
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
ANNEX RAILROAD BUILDERS, INC.
WITNESS
/s/ By: /s/ Authorized Signature (SEAL)
------------------------- ---------------------------
Name:
Title:
COMTRAK CONSTRUCTION, INC.
/s/ By: /s/ Authorized Signature (SEAL)
------------------------- ---------------------------
Name:
Title:
XXXXXX BROTHERS, INC.
/s/ By: /s/ Authorized Signature (SEAL)
------------------------- ---------------------------
Name:
Title:
CPI CONCRETE PRODUCTS, INC.
/s/ By: /s/ Authorized Signature (SEAL)
------------------------- ---------------------------
Name:
Title:
20
21
HP XXXXXXXX, INC.
/s/ By: /s/ Authorized Signature (SEAL)
------------------------- ---------------------------
Name:
Title:
XXXXXXX RAILROAD BUILDERS, INC.
/s/ By: /s/ Authorized Signature (SEAL)
------------------------- ---------------------------
Name:
Title:
XXXXXXXX HOLDINGS, INC.
/s/ By: /s/ Authorized Signature (SEAL)
------------------------- ---------------------------
Name:
Title:
MERIT RAILROAD CONTRACTORS, INC.
/s/ By: /s/ Authorized Signature (SEAL)
------------------------- ---------------------------
Name:
Title:
MIDWEST CONSTRUCTION SERVICES, INC.
/s/ By: /s/ Authorized Signature (SEAL)
------------------------- ---------------------------
Name:
Title:
21
22
NEW ENGLAND CONSTRUCTION, INC.
/s/ By: /s/ Authorized Signature (SEAL)
------------------------- ---------------------------
Name:
Title:
RAILROAD SERVICE, INC.
/s/ By: /s/ Authorized Signature (SEAL)
------------------------- ---------------------------
Name:
Title:
SOUTHERN INDIANA WOOD
PRESERVING CO.
/s/ By: /s/ Authorized Signature (SEAL)
------------------------- ---------------------------
Name:
Title:
U.S. TRACKWORKS, INC.
/s/ By: /s/ Authorized Signature (SEAL)
------------------------- ---------------------------
Name:
Title:
W. A. XXXXX CONSTRUCTION CO., INC.
/s/ By: /s/ Authorized Signature (SEAL)
------------------------- ---------------------------
Name:
Title:
22
23
HOLDING COMPANY
RAILWORKS CORPORATION
/s/ By: /s/ Xxxx X. Xxxxxx (SEAL)
------------------------- ---------------------------
Xxxx X. Xxxxxx
Chief Executive Officer
EMPLOYEE
/s/ /s/ Xxxxxx X. Xxxxx, Xx. (SEAL)
------------------------- -------------------------------
Xxxxxx X. Xxxxx, Xx.
23
24
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.
24
