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                                                                   EXHIBIT 10.49

                    AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS AGREEMENT ("Agreement") is executed this 1st day of March, 2001 but
effective as of the 1st day of October 2000, by and between John G. Larkin, an
individual resident of the State of Maryland ("Employee"), and RailWorks
Corporation, a Delaware corporation ("Employer").

                                   WITNESSETH

WHEREAS, the Employee has been employed by Employer pursuant to an Amended and
Restated Employment Agreement dated as of January 1, 2000 ("Prior Agreement");

WHEREAS, Employer and Employee desire to amend the Prior Agreement and restate
it as so amended; and

WHEREAS, the Employee desires to be so employed by the Employer, 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. The Employee shall serve as the Chairman and
Chief Executive Officer of Employer and shall be a director of Employer.

         Subject to the terms and conditions of this Agreement, from the date
hereof, Employee agrees to devote substantially all of his business time and
best efforts to the performance of his job as Chairman and Chief Executive
Officer of Employer (or such other senior executive position as to which
Employee may be appointed by the Board of Directors with Employee's consent),
subject to direction by the Board of Directors of the Employer (the "Board of
Directors"), as long as such directions are consistent with the duties,
responsibilities and authority customarily given or required of persons holding
such office 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 May 21, 1998, the effective date of the commencement of Employee's
employment by Employer, 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


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                  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 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 Employer, a corporation owned
                  directly or indirectly by the stockholders of Employer
                  (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 Employer representing 50% or more of the total
                  voting power represented by Employer's then outstanding
                  securities that vote generally in the election of directors
                  (referred to herein as "Voting Securities"), including,
                  without limitation, by reason of the agreement of a third
                  party (including Employee) to vote the Voting Securities owned
                  by such third party in the same manner as such person votes
                  the Voting Securities owned by such person; (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 Employer'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
                  Employer approve a merger or consolidation of Employer with
                  any other corporation, other than a merger or consolidation
                  (i) which would result in the Voting Securities of Employer
                  outstanding immediately prior thereto continuing


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                  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 Employer 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
                  Employer; (D) the stockholders of Employer approve a plan of
                  complete liquidation of Employer or an agreement for the sale
                  or disposition by the Employer of (in one transaction or a
                  series of transactions) all or substantially all of the
                  Employer's assets; (E) the executive offices of Employer 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

         (iv)     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. Effective as of October 1, 2000, Employee will be paid
                  a salary of no less than Three Hundred Twenty Five Thousand
                  Dollars ($325,000) per annum, and subject to increase as
                  hereinafter provided (the salary then in effect is referred to
                  as the "Base Salary"), 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 below the
                  then Base Salary 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, the amount of which
                  (if any) will be determined in accordance with the terms of
                  Employer's Annual Incentive Plan, as adopted from time to time
                  by the Compensation Committee of the Board of Directors.

          (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 ten-n of this Agreement in
                  addition to customary holidays afforded other employees of
                  Employer. Any unused vacation days in any calendar year


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                  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. 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. Employee is a participant in, and unless
                  otherwise mutually agreed by the parties, during the Term,
                  shall be entitled to the benefits of, Employer's Long-Term
                  Incentive Plan adopted by the Compensation Committee of
                  Employer and ratified by the Board of Directors of Employer at
                  a meeting of each held on April 18, 2000, pursuant to which
                  the "Loan," as hereinafter defined, may be forgiven in whole
                  or in part.

3.2      Effect of Termination or Change in Control. 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)      Immediately upon a Change in Control or upon termination of
                  this Agreement, pursuant to the provisions of Sections 2 (i)
                  or (iii) 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


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                  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(ii) or (iv) 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.

3.3      Loan Forgiveness on Change in Control. Immediately upon a Change of
         Control, any balance of the Loan, together with any accrued but unpaid
         interest thereon to the date of forgiveness, shall be forgiven
         automatically without further action by the Employer or the Employee,
         and in addition, Employer shall pay to Employee an amount equal to the
         difference between (i) the actual federal, state and local income taxes
         payable by Employee for the year in which the Loan is forgiven,
         including for the purpose of such calculation the taxes resulting from
         the inclusion in Employee's income of the gross up payments under this
         Section and (ii) the amount of such taxes which would have been paid by
         Employee had the Loan not been forgiven. In the event it is determined
         that any payment hereunder is an "excess parachute payment" as defined
         in Section 280G of the Internal Revenue Code of 1986, as amended, the
         Employer shall reimburse Employee for the excise tax imposed under such
         section and in addition shall pay Employee an amount equal to the
         additional federal, state and local income taxes payable or paid by
         Employee for the year in which such payment is made to Employee,
         including for the purpose of such calculation, the taxes resulting from
         the inclusion in Employee's income of the gross up payments made under
         this Section. The amounts payable to Employee hereunder shall be paid
         by Employer within five business days after Employee submits a
         calculation of the amount due to him under this Section, which
         statement may be an estimated statement based upon the information
         available to Employee at the time the statement is submitted. If
         payment is made by Employer based on such estimated payment, Employee
         shall submit to Employer a final statement based upon the Employee's
         tax return as filed for the year in question, which final statement
         shall be submitted not later than 30 days after the date on which
         Employee files his federal income tax return for such year. Such final
         statement shall contain a reconciliation of to the estimated statement
         and payment of the amounts due to or from Employee shall be paid within
         3 days after the final statement has been submitted.

                            SECTION 4. COMMON STOCK.

4.1      Terms 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:


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         (i)      Stock Grant. Under the prior agreements, and upon the
                  consummation of the public offering of Employer's common stock
                  ("IPO"), Employee has been granted that number of shares of
                  all classes of stock of Employer equal to one percent (1.0%)
                  of the number of shares of all classes of stock of Employer
                  outstanding immediately upon consummation of the IPO. Such
                  shares so granted fully and completely vested 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 Employer,
                  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, Employer has provided to
                  the Employee a loan (the "Loan"). The Loan provides for
                  payment of interest only until June 30, 2005, requires yearly
                  payments of simple interest at the same interest rate as
                  Employer incurs to borrow funds from its institutional
                  lenders, is collateralized only by the stock granted and the
                  Employee otherwise is not 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; upon the termination of this Agreement
                  pursuant to Section (iv), hereof, the Loan shall be fully paid
                  off within one (1) year after the Termination Date and upon a
                  Change of Control, the Loan shall be forgiven as hereinabove
                  provided.

         (ii)     To the extent that the Employee has not repaid the entire
                  principal balance of the Loan plus any accrued interest
                  thereon before June 30, 2005, 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 June 30, 2005 the Employer proposes to
                           register any of its securities


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                           under the Securities Act for sale to the public for
                           its own account or for the account of other security
                           holders or both, Employer 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 Employer; 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 Employer. 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 December 31, 2005, Employee has not yet
                           disposed of the Required Number of Shares, Employer
                           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 Employer's stock trades for a ten
                           (10) day period prior to the date of such sale to
                           Employer, 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 EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
                  AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
                  COUNSEL ACCEPTABLE TO EMPLOYER AND ITS COUNSEL, WHICH


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                  ACCEPTANCE SHALL NOT BE UNREASONABLY WITHHELD, THAT SUCH
                  REGISTRATION IS NOT REQUIRED.

                  At such time as counsel for the Employee, which is acceptable
                  to Employer, 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, Employer 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.

         (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. Information shall
                  be excluded from this definition if (i) it, at the time of
                  disclosure, is generally known to the trade or public, (ii) it
                  becomes at a later date


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                  generally known to the trade or public through no fault of the
                  Employee, (iii) it is known or possessed by the Employee prior
                  to the effectiveness of this Agreement, (iv) it is disclosed
                  to the Employee in good faith by a third party who has a right
                  to such information, (v) it is disclosed in compliance with a
                  subpoena or court order or (vi) it is possessed by the
                  recipient of the information prior to receipt of same from the
                  Employee.

         (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 first
                  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 Section 2(iii), hereof and, provided further,
                  that the Noncompete Period or Nonsoliciation Period may be
                  shortened at the discretion of the Board of Directors of
                  Employer.

         (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, 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 legal means by, other
                  persons. Information and/or data shall be excluded from this
                  definition if (i) it, at the time of disclosure, is generally
                  known to the trade or public or (ii) it becomes at a later
                  date generally known to the trade or public through no fault
                  of the Employee.

(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 and/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 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:

          (b)     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


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                  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;

          (c)     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

          (d)     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.

          (e)     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.

          (f)     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. ss.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


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<PAGE>   11

                  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 that qualify as Company
                  Activities 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 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


                                       37
<PAGE>   12

         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 Section
         2(iii) hereof, in which case they shall terminate also and have no
         further force or legal effect as of the Termination Date.

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:

         Employer
                           RailWorks Corporation
                           6225 Smith Avenue
                           Suite 200
                           Baltimore, MD 21209
                           Attention: RailWorks Chief Executive Officer
                           Telecopy No.: (410) 580-6099

         Employee

                           Mr. John G. Larkin
                           403 Somerset Road
                           Baltimore, MD 21030

         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 ensures 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


                                       38
<PAGE>   13

         agreements, arrangements and understandings between or among Employer
         and Employee including, without limitation, the Prior Agreement. 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 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.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

                                             RAILWORKS CORPORATION


                                             By:
                                                --------------------------------
                                                      Michael R. Azarela
                                                    Chief Operating Officer

                                             EMPLOYEE


                                             By:
                                                --------------------------------
                                                        John G. Larkin


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