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                                                                   EXHIBIT 10.45

                    AMENDED AND RESTATED EMPLOYMENT AGREEMENT


                  THIS AGREEMENT ("Agreement") is made and entered into as of
the 1st day of January 2000, by and between Michael R. Azarela, an individual
resident of the State of New York ("Employee"), and RailWorks Corporation, a
Delaware corporation ("Employer").

                               W I T N E S S E T H

                  WHEREAS, the Employee has been employed by Employer pursuant
to an Amended and Restated Employment Agreement dated as of August 4, 1998
("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
Executive Vice President and Chief Financial Officer of the Employer and shall
be a director of the 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 Executive Vice President
and Chief Financial Officer of the Employer, 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 chief financial officers generally, with the
Employee to report his activities regularly to the Board of Directors.



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                  SECTION 2.  TERM OF EMPLOYMENT. The term of the Employee's
employment hereunder (the "Term") shall be from May 21, 1998, the commencement
date of the Prior Agreement, 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;

         (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 the Employer, a corporation owned directly or
indirectly by the stockholders of the 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
the Employer representing 50% or more of the total voting power represented by
the 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 the 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 the
Employer approve a merger or consolidation of the Employer with any other
corporation, other than a merger or consolidation (i) which would result in the
Voting Securities of the Employer 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 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 the Employer; (D) the stockholders of
the Employer approve a plan of complete liquidation of the 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 the 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


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         (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 I 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. Employee will be paid a salary of no less
                           than Two Hundred Seventy Five Thousand Dollars
                           ($275,000) 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, 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, .2% 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, two
                                    percent (2%) of the excess of (a) the
                                    consolidated after tax net income of the
                                    Employer and its consolidated subsidiaries
                                    for a fiscal year, computed by the CPA
                                    applying generally accepted accounting
                                    principles and generally accepted auditing
                                    standards on a consistent basis over (b) the
                                    Wall Street Estimate (as hereinafter
                                    defined) for such fiscal year. For purposes
                                    of this subsection (ii)(b), Wall Street
                                    Estimate for a fiscal year shall mean the
                                    simple arithmetical average of the
                                    consolidated earnings per share estimates
                                    for a fiscal year of the Employer and its
                                    consolidated subsidiaries in the possession
                                    of First Call on the Determination Date (as
                                    hereinafter defined), translated by the CPA
                                    into the equivalent consolidated after tax
                                    net income of the Employer and its
                                    consolidated subsidiaries for such fiscal



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                                    year. For purposes of this subsection
                                    (ii)(b), the Determination Date shall mean
                                    the 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 ten-n 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. 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.

                  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 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.



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                  (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", as defined in Section 4.2
hereof, 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:

                  (i)      Stock Grant. Under the Prior Agreement, 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 the
                           Employer equal to one percent (1.0%) of the number of
                           shares of all classes of stock of the 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 the 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



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                           rate as the 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 under the
                                    Securities Act for sale to the public for
                                    its own account or for the account of other
                                    security holders or both, the 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 the
                                    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 the
                                    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, the 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 the
                                    Employer's stock trades for a ten (10) day
                                    period prior to the date of such sale to the
                                    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



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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 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 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, the 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.


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                           (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
                                    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 Nonsolicitation 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 (i) with regard
                                    to each item constituting all or any portion
                                    of the Trade Secrets and Confidential
                                    Information, at all times during the



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                                    Term and all times during which such item
                                    continues to constitute a Trade Secret or
                                    Confidential Information, respectively:

                           (i)      Employee shall not, directly or by assisting
                                    others own, manage, operate, join, control
                                    or participate in the ownership, management,
                                    operation or control of, or be connected in
                                    any manner with, any business conducted
                                    under any corporate or trade name of
                                    Employer or name confusingly similar
                                    thereto, without the prior written consent
                                    of Employer;

                           (ii)     Employee shall hold in confidence all Trade
                                    Secrets and all Confidential Information and
                                    will not, either directly or indirectly,
                                    use, sell, lend, lease, distribute, license,
                                    give, transfer, assign, show, disclose,
                                    disseminate, reproduce, copy, appropriate or
                                    otherwise communicate any Trade Secrets or
                                    Confidential Information, without the prior
                                    written consent of Employer; and

                           (iii)    Employee shall immediately notify Employer
                                    of any unauthorized disclosure or use of any
                                    Trade Secrets or Confidential Information of
                                    which Employee becomes aware. Employee shall
                                    assist Employer, to the extent necessary, in
                                    the procurement or any protection of
                                    Employer's rights to or in any of the Trade
                                    Secrets or Confidential Information.

                  (b)      Upon the request of Employer and, in any event, upon
                           the termination of Employee's employment with
                           Employer, Employee shall deliver to Employer all
                           memoranda, notes, records, manuals and other
                           documents, including all copies of such materials and
                           all documentation prepared or produced in connection
                           therewith, pertaining to the performance of
                           Employee's services hereunder or 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. "101 et
                           seq., as amended) and owned exclusively by
                           Employer. Employee hereby unconditionally and
                           irrevocably transfers and assigns to Employer all
                           rights, title and interest Employee may have in or to
                           any and all Work Product, including, without
                           limitation, all patents, copyrights, trademarks,
                           service marks and other intellectual property rights.
                           Employee agrees to execute and deliver to Employer
                           any transfers, assignments, documents or other
                           instruments which Employer may deem necessary or
                           appropriate to vest complete title and ownership of
                           any and all such Work Product, and all rights
                           therein, exclusively in Employer.

                  5.3      Noncompetition.

                           (a)      The parties hereto acknowledge that Employee
                                    is conducting Company Activities throughout
                                    the Territory. Employee acknowledges that to
                                    protect adequately the interest of Employer
                                    in the business of Employer it is essential
                                    that any noncompete covenant with respect
                                    thereto cover all Company Activities and the
                                    entire Territory.

                           (b)      Employee hereby agrees that, during the Term
                                    and the Noncompete Period, Employee will
                                    not, in the Territory, either directly or
                                    indirectly, alone or in conjunction with any
                                    other party, accept, enter into or take any
                                    action in conjunction with or in
                                    furtherance of a Competitive Position with
                                    Employer. Employee shall notify Employer
                                    promptly in writing if Employee receives an
                                    offer of a Competitive Position during the
                                    Noncompete Term, and such notice shall
                                    describe all material terms of such offer.


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<PAGE>   10

                  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 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.


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                  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
                           1104 Kenilworth Drive
                           Suite 301
                           Baltimore, MD 21204
                           Attention: RailWorks Chief Executive Officer
                           Telecopy No.: (410) 825-6920

                  EMPLOYEE

                           Mr. Michael R. Azarela
                           12310 Cleghorn Road
                           Cockeysville, 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 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.



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                  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.

SIGNATURES APPEAR ON NEXT PAGE.


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



                                 RAILWORKS CORPORATION



                                 By:                                      (SEAL)
                                    --------------------------------------
                                    John G. Larkin
                                    Chief Executive Officer



                                 EMPLOYEE



                                                                          (SEAL)
                                 -----------------------------------------
                                 Michael R. Azarela



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