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                                                                   EXHIBIT 10.50


                    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 Michael R. Azarela,
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 President and Chief
Operating 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 President and Chief Operating 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)


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                  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 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


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                  Voting Securities of 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 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 Thousand Dollars
                  ($300,000) 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 term of this Agreement in
                  addition to customary holidays afforded


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                  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. 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


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                  or obtain as the case may be, such stock, as though there was
                  no vesting period or criteria of any kind or nature, with
                  respect to such stock. If stock options have previously been
                  awarded to the Employee, notwithstanding any terms and
                  conditions of such award or any plan pursuant to which such
                  stock options were awarded, the Employee or his authorized
                  representative shall have a period of three (3) months from
                  the Termination Date to exercise any or all of such stock
                  options and acquire for his own benefit the shares of stock
                  covered by such stock options.

         (ii)     Upon termination of the Agreement pursuant to the terms of
                  Section 2(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.

4.1      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;


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                  (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,
                           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


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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
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 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 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:


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          (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
                  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.

5.2      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.


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<PAGE>   11


                  Employee shall notify Employer promptly in writing if Employee
                  receives an offer of a Competitive Position during the
                  Noncompete Term, and such notice shall describe all material
                  terms of such offer.

Nothing contained in this Section 5 shall prohibit Employee from acquiring not
more than five percent (5%) of any Competitor, or from acquiring any percentage
of any company which is non-competitive with Employer, whose common stock is
publicly traded on a national securities exchange or in the over-the-counter
market.

5.4      Nonsolicitation During Employment Term. Employee hereby agrees that
Employee will not, during the Term, either directly or indirectly, alone or in
conjunction with any other party:

         (a)      solicit, divert or appropriate or attempt to solicit, divert
                  or appropriate, any Customer for the purpose of providing the
                  Customer with services or products competitive with those
                  offered by Employer during the Term, or

         (b)      solicit or attempt to solicit any officer, director, employee,
                  consultant, contractor, agent, lessor, lessee, licensor,
                  licensee, supplier or any shareholder of any of the Founding
                  Companies or other personnel of Employer or any of its
                  affiliates or subsidiaries to terminate, alter or lessen that
                  party's affiliation with Employer or such affiliate or
                  subsidiary or to violate the terms of any agreement or
                  understanding between such employee, consultant, contractor or
                  other person and Employer.

5.5      Nonsolicitation During Nonsolicitation Period.  Employee hereby agrees
that Employee will not, during the Nonsolicitation Period, either directly or
indirectly, alone or in conjunction with any other party:

         (a)      solicit, divert or appropriate or attempt to solicit, divert
                  or appropriate, any Customer for the purpose of providing the
                  Customer with services or products 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


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<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. 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


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<PAGE>   13


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:
                                        ---------------------------------------
                                                    John  G. Larkin
                                               Chief Executive Officer


                                     EMPLOYEE


                                     By:
                                        ---------------------------------------
                                                  Michael R. Azarela


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