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                                                                   EXHIBIT 10.63

                  AMENDED AND RESTATED EMPLOYMENT AGREEMENT

                  THIS AGREEMENT ("Agreement") is executed this 1st day of
March, 2001 but effective as of the 1st day of January 2001, by and between
John Kennedy, an individual resident of the State of Pennsylvania ("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
Director, Business Development of Employer.

                  Subject to the terms and conditions of this Agreement,
Employee will devote a mutually agreeable portion of his business time and
efforts in the rail and rail supply industries to the performance of his job as
Director, Business Development, of Employer; subject to direction of Employer's
Vice President, Corporate Business Development.

         SECTION 2.        TERM OF EMPLOYMENT. The term of the Employee's
employment hereunder (the "Term") shall be from May 21, 1998, the effective
date of the commencement of Employee's employment by Employer, until the
occurrence of any of the following events:

         (i)      The death or total disability of Employee (total disability
                  meaning the failure to fully perform his normal required
                  services hereunder for a period of six (6) consecutive months
                  during any consecutive twelve (12) month period during the
                  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


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                  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
                  herein below).

                  For purposes of this Agreement, a "Change of Control" shall
                  be deemed to have occurred if (A) any "person" (as such term
                  is used in Sections 13(d) and 14(d) of the Securities
                  Exchange Act of 1934, as amended (the "Exchange Act")), other
                  than a trustee or other fiduciary holding securities under an
                  employee benefit plan of Employer, a corporation owned
                  directly or indirectly by the stockholders of Employer
                  (immediately after the IPO) or any of their respective
                  affiliates, becomes the "beneficial owner" (as defined in
                  Rule 13d-3 under the Exchange Act), directly or indirectly,
                  of securities of Employer representing 50% or more of the
                  total voting power represented by Employer's then outstanding
                  securities that vote generally in the election of directors
                  (referred to herein as "Voting Securities"), including,
                  without limitation, by reason of the agreement of a third
                  party (including Employee) to vote the Voting Securities
                  owned by such third party in the same manner as such person
                  votes the Voting Securities owned by such person; (B) during
                  any period of two consecutive years, individuals who at the
                  beginning of such period constitute the Board of Directors
                  and any new directors whose election by the Board of
                  Directors or nomination for election by Employer's
                  stockholders was approved by a vote or a majority of the
                  directors then still in office who either were directors at
                  the beginning of the period or whose election or nomination
                  for election was previously so approved, cease for any reason
                  TO constitute a majority of the Board of Directors; (C) the
                  stockholders of Employer approve a merger or consolidation of
                  Employer with any other corporation, other than a merger or
                  consolidation (i) which would result in the Voting Securities
                  of Employer outstanding immediately prior thereto continuing
                  to represent (either by remaining outstanding or by being
                  convened 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


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                  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 (the "Base Salary") of Fifty Thousand Dollars
                  ($50,000) per annum, less deductions and withholdings
                  required by applicable law. The Base Salary will 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 Employer
                  on at least an annual basis after August 1, 2000, but may not
                  be decreased below the Base Salary set forth above as a
                  result of any such review.

         (b)      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.

         (c)      Vacation. Employee shall receive four (4) weeks vacation
                  time per calendar year during the term of this Agreement in
                  addition to customary holidays afforded other employees of
                  Employer. Any unused vacation days in any calendar year may
                  not be carried over to subsequent years.

         (d)      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


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

                  3.2      Effect of Termination or Change in Control. Except
as hereinafter provided, upon the termination of the employment of Employee
hereunder for any reason, Employee shall be entitled to all compensation and
benefits earned or accrued under Section 3.1 as of the effective date of
termination (the "Termination Date"), but from and after the Termination Date
no additional compensation or benefits shall be earned by Employee hereunder.
Except upon termination by the Employer of the employment of the Employee
pursuant to the provisions of Section 2(ii) hereof, Employee shall be deemed to
have earned any Performance Bonus payable with respect to the fiscal year in
which the Termination Date occurs on a prorated basis (based on the number of
days in such calendar year through and including the Termination Date divided
by 365). Any such Performance Bonus shall be payable on the date on which the
Performance Bonus would have been paid had Employee continued his employment
hereunder. In addition, the Employee and his eligible dependents shall be
entitled to receive at the sole cost of the Employer (A) the health insurance
benefits specified hereunder for a period of twelve (12) months following the
Termination Date (the "Continuation Period") and following such time period,
the Employee shall be entitled to all rights afforded to him under the Federal
Omnibus Reconciliation Act ("COBRA") to Purchase continuation coverage of such
health insurance benefits for himself and his dependents for the maximum
period permitted by law, and the Employee shall be deemed to have elected to
exercise his rights under Cobra as of the first day of the Continuation Period,
and (B) the life insurance benefits specified hereinabove for the period of the
Continuation Period.

         (i)      Immediately upon a Change in Control or upon termination of
                  this Agreement, pursuant to the provisions of Sections 2 (i)
                  or (iii) hereof, any stock grants or options previously
                  awarded to the Employee, either by this Agreement or
                  otherwise, shall fully and completely vest and the Employee
                  shall be able to retain or obtain as the case may be, such
                  stock, as though there was no vesting period or 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 invested, 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.


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                  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:

                  (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.


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                  4.2      Stock Loan.

                  (i)      In order to help the Employee pay any required
                           income taxes with respect to the stock granted to
                           the Employee pursuant to the provisions of Section
                           4.1 hereof, Employer has provided to the Employee a
                           loan (the "Loan"). The Loan provides for payment
                           of interest only until June 30, 2005, requires
                           yearly payments of simple interest at the same
                           interest rate as Employer incurs to borrow funds
                           from its institutional lenders, is collateralized
                           only by the stock granted and the Employee otherwise
                           is not personally obligated to repay the Loan;
                           provided that upon the termination of this
                           Agreement pursuant to the provisions of Section 2(i)
                           or (ii), the Loan shall be fully paid off within
                           three (3) months of the Termination Date; upon the
                           termination of this Agreement pursuant to Section
                           (iv), hereof, the Loan shall be fully paid off
                           within one (1) year after the Termination Date and
                           upon a Change of Control, the Loan shall be
                           forgiven as hereinabove provided.

                  (ii)     To the extent that the Employee has not repaid the
                           entire principal balance of the Loan plus any
                           accrued interest thereon before June 30, 2005, the
                           Employee agrees to sell, as promptly as practicable,
                           a sufficient number of shares of Common Stock to
                           enable the Employee to repay the then remaining
                           outstanding balance (unpaid principal balance and
                           unpaid accrued interest from time to time, the
                           ("Unpaid Balance of the Loan")) of the Loan after
                           any taxes have been provided for (the "Required
                           Number of Shares"), subject to the following
                           conditions and requirements:

                           (A)      Such sales shall be made in a manner which
                                    shall reasonably not disrupt the orderly
                                    trading of Common Stock, either through
                                    open market or privately negotiated
                                    transactions as long as no sales shall be
                                    made at a price lower that 1/16 below the
                                    last sales price of Common Stock publicly
                                    traded immediately prior to such sale even
                                    if such prohibition shall cause a delay in
                                    Employee's compliance with his obligation
                                    to sell Common Stock as provided
                                    hereinabove;

                           (B)      If after June 30, 2005 the Employer
                                    proposes to register any of its securities
                                    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


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                                    costs of insurance; and all underwriting
                                    discounts and selling commissions
                                    applicable to the sale of shares other than
                                    the Required Number of Shares, shall be
                                    paid by Employer. Notwithstanding the
                                    above, the Employee shall pay all
                                    underwriting discounts and selling
                                    commissions directly payable with respect
                                    to the registration of the Required Number
                                    of Shares; or

                           (C)      If, as of December 31, 2005, Employee has
                                    not yet disposed of the Required Number of
                                    Shares, Employer will repurchase from the
                                    Employee the Required Number of Shares at a
                                    per share price equal to 1/16 lower than
                                    the average of the closing sales price for
                                    the Common Stock as reported on the
                                    national stock exchange on which Employer's
                                    stock trades for a ten (10) day period
                                    prior to the date of such sale to Employer,
                                    provided, however, that such repurchase
                                    shall only be required if it can be
                                    effected in a manner that complies with all
                                    applicable securities laws.

                  Notwithstanding anything contained herein to the contrary,
the Employee shall not be required to sell any of the Required Number of Shares
unless the net proceeds paid to the Employee as a result of such shares equals
or exceeds 150% of the IPO Price per share.

                  Nothing in this Section 4.2(ii) shall be construed to require
the Employee to sell common stock except in compliance with all applicable
securities laws. Any delay imposed due to compliance with requirements of
applicable securities laws shall suspend the Employee's obligation to sell
Common Stock as otherwise provided hereinabove.

                  Lastly, notwithstanding anything to the contrary contained in
this Section 4.2(ii), the Employee shall have the right but not the obligation,
at any time and from time to time, to repay the Unpaid Balance of the Loan from
his personal resources.

                  4.3      Securities Act. THE SHARES OF COMMON STOCK (THE
"SHARES") GRANTED PURSUANT TO THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY APPLICABLE STATE
SECURITIES LAWS, THE SHARES ARE OFFERED PURSUANT TO EXEMPTIONS PROVIDED BY
SECTION 4(2) OF THE ACT AND CERTAIN RULES AND REGULATIONS PROMULGATED PURSUANT
THERETO. THE SHARES MAY NOT BE TRANSFERRED BY THE EMPLOYEE IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL ACCEPTABLE TO EMPLOYER AND ITS
COUNSEL, WHICH 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


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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
                           generally known to the trade or


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                           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


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                           or any portion of the Trade Secrets and Confidential
                           Information, at all times during the Term and all
                           times during which such item continues to constitute
                           a Trade Secret or Confidential Information,
                           respectively;

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

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

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

                  (e)      Upon the request of Employer and, in any event, upon
                           the termination of Employee's employment with
                           Employer, Employee shall deliver to Employer all
                           memoranda, notes, records, manuals and other
                           documents, including all copies of such materials
                           and all documentation prepared or produced in
                           connection therewith, pertaining to the performance
                           of Employee's services hereunder or Employer's
                           business or containing Trade Secrets or Confidential
                           Information, whether made or complied by Employee or
                           furnished to Employee from another source by virtue
                           of Employee's employment with Employer.

                  (f)      To the greatest extent possible, all Work Product
                           shall be deemed to be "work made for hire" (as
                           defined in the Copyright Act, 17 U.S.C.A. ss.101 et
                           seq., as amended) and owned exclusively by Employer.
                           Employee hereby unconditionally and irrevocably
                           transfers and assigns to Employer all rights, title
                           and interest Employee may have in or to any and all
                           Work Product, including, without limitation, all
                           patents, copyrights, trademarks, service marks and
                           other intellectual property rights. Employee agrees
                           to execute and deliver to Employer any transfers,
                           assignments, documents or other instruments which
                           Employer may deem necessary or appropriate to vest
                           complete title and ownership of any and all such
                           Work Product, and all rights therein, exclusively in
                           Employer.

                  5.3      Noncompetition.


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<PAGE>

                  (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.

                  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


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<PAGE>

                           greater than two (2) years prior to the last day of
                           the Term; or

                  (b)      solicit or attempt to solicit any officer, director,
                           employee, consultant, contractor, agent, lessor,
                           lessee, licensor, licensee, supplier or any
                           shareholder of any of the Founding Companies or
                           other personnel of Employer or any of its affiliates
                           or subsidiaries residing at the time of the
                           solicitation in the Territory to terminate, alter or
                           lessen that party's affiliation with Employer or
                           such affiliate or subsidiary or to violate the terms
                           of any agreement or understanding between such
                           employee, consultant, contractor or other person and
                           Employer. For purposes of this clause (b),
                           employees, consultants, contractors, or other
                           personnel are those with knowledge of or access to
                           Trade Secrets and Confidential Information of the
                           Employer.

                  5.6      Binding Arbitration. The parties shall refer any
dispute as to whether or not the Employee has violated the provisions of this
Section 5 to a mediator and, in the event that mediation is unsuccessful, such
dispute shall be resolved by binding arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. The
arbitrator shall be selected by the mediator. The cost of the mediator and, if
necessary, the arbitrator and all other costs of the mediation and, if
necessary, the arbitration shall be split equally between the Employee and the
Employer, except for attorneys fees which shall be paid by the party employing
such attorney.

         SECTION 6.        MISCELLANEOUS.

                  6.1      Severability. The covenants in this Agreement shall
be construed as covenants independent of one another and as obligations
distinct from any other contract between Employee and Employer.

                  6.2      Survival of Obligations. The covenants in Section 5
of this Agreement shall survive termination of Employee's employment, except in
the case of termination of this Agreement pursuant to the provisions of 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


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<PAGE>

                  Employee

                           Mr. John Kennedy
                           561 Brentwater Road
                           Camp Hill, PA 17011

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.

                  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.


                                      13
<PAGE>

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

                                    RAILWORKS CORPORATION


                                    By: /s/ John G. Larkin
                                       -----------------------
                                       John G. Larkin
                                       Chief Executive Officer

                                    EMPLOYEE


                                    By: /s/ John Kennedy
                                       -----------------------
                                       John Kennedy


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