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Plan Of Reorganization For Runnin' Rebels Railroad

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Sectors: Transportation
Governing Law: Nevada, View Nevada State Laws
Effective Date: May 21, 1998
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EXHIBIT 10.17


AGREEMENT AND PLAN OF REORGANIZATION


DATED AS OF MAY 21, 1998


BY AND BETWEEN


RAILWORKS CORPORATION,


RUNNIN' REBELS RAILROAD SERVICE COMPANY,


RAILROAD SERVICE, INC.


AND


THE STOCKHOLDERS NAMED HEREIN


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TABLE OF CONTENTS


Page
---- ARTICLE I DEFINITIONS...................................................................................1
Section 1.01. Certain Defined Terms.................................................1


ARTICLE II THE MERGER AND RELATED MATTERS................................................................4
Section 2.01. Certificate of Merger.................................................4
Section 2.02. The Effective Time....................................................4
Section 2.03. Certain Effects of the Merger.........................................4
Section 2.04. Effect of the Merger on Capital Stock.................................5
Section 2.05. Delivery, Exchange and Payment........................................6
Section 2.06. Merger Consideration Calculation......................................7
Section 2.07. Fractional Shares.....................................................7


ARTICLE III REPRESENTATIONS AND WARRANTIES OF
EACH STOCKHOLDER .............................................................................8
Section 3.01. By Each Stockholder...................................................8


ARTICLE IV REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE PRIMARY STOCKHOLDERS......................................................9
Section 4.01. By the Company and Each Primary Stockholder...........................9


ARTICLE V REPRESENTATIONS AND WARRANTIES OF RW AND NEWCO................................................9
Section 5.01. By RW and Newco.......................................................9


ARTICLE VI COVENANTS EXTENDING TO THE EFFECTIVE TIME ...................................................10
Section 6.01. Of Each Party........................................................10


ARTICLE VII THE CLOSING AND CONDITIONS TO CLOSING AND
CONSUMMATION.................................................................................10
Section 7.01. The Closing and Certain Conditions...................................10


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ARTICLE VIII COVENANTS FOLLOWING THE EFFECTIVE TIME.......................................................12
Section 8.01. Of Each Party Other than the Company.................................12


ARTICLE IX INDEMNIFICATION..............................................................................12
Section 9.01. Indemnification Rights and Obligations...............................12


ARTICLE X [Intentionally Ommitted].....................................................................12


ARTICLE XI GENERAL PROVISIONS...........................................................................12
Section 11.01. Treatment of Confidential Information................................12
Section 11.02. Restrictions on Transfer of RW Common Stock..........................12
Section 11.03. Brokers and Agents...................................................14
Section 11.04. Assignment; No Third Party Beneficiaries.............................14
Section 11.05. Entire Agreement; Amendment; Waivers.................................15
Section 11.06. Counterparts.........................................................15
Section 11.07. Expenses.............................................................15
Section 11.08. Notices..............................................................15
Section 11.09. Governing Law........................................................16
Section 11.10. Exercise of Rights and Remedies......................................16
Section 11.11. Time.................................................................16
Section 11.12. Reformation and Severability.........................................17
Section 11.13. Remedies Cumulative..................................................17
Section 11.14. Respecting the IPO...................................................17


ARTICLE XII TERMINATION..................................................................................17
Section 12.01. Termination of this Agreement........................................17
Section 12.02. Liabilities in Event of Termination..................................18


EXHIBITS


Exhibit A - List of Primary Stockholders


Exhibit B - Form of Employment Agreement


Exhibit C - IPO Cost Liability Sharing Agreement


Exhibit D - Merger Consideration


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AGREEMENT AND PLAN OF REORGANIZATION


THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made as of May 21, 1998, by and among RailWorks Corporation, a Delaware corporation ("RW"), Runnin' Rebels Railroad Service Company, a Nevada corporation and a wholly owned subsidiary of RW("Newco"), Railroad Service, Inc., a Nevada corporation (the "Company"), and the persons listed on the signature pages hereof under the caption "Stockholders" (collectively, the "Stockholders," and each of those persons, individually, a "Stockholder").


PRELIMINARY STATEMENT


The parties to this Agreement have determined it is in their best long-term interests to effect a business combination pursuant to which:


(a) Newco will merge into the Company on the terms and subject to the conditions set forth herein (that merger being the "Merger");


(b) RW will acquire the stock of all or some of the entities listed in the accompanying Addendum 1 (each an "Other Founding Company" and, collectively with the Company, the "Founding Companies") pursuant to agreements that are (i) similar in all material respects to this Agreement and (ii) entered into among those entities and their equity owners, RW and subsidiaries of RW (collectively, the "Other Agreements"); and


(c) RW shall at such time as specified herein and if certain conditions are met, effect a public offering of shares of its common stock and issue and sell those shares.


The respective boards of directors of RW, Newco and the Company have approved and adopted this Agreement to effect a transaction subject to Section 351 of the Code.


NOW, THEREFORE, in consideration of the premises and the mutual agreements, representations and undertakings contained herein, the parties hereto hereby agree as follows:


ARTICLE I


DEFINITIONS


Section 1.01. Certain Defined Terms. As used in this Agreement and in the related Addendums, Annexes, Schedules and Exhibits, the following terms have the meanings assigned to them below in this Section 1.01. Capitalized terms used in this Agreement and not defined below in this Section 1.01 have the meanings assigned to them in the Preliminary Statement or Article I of the Uniform Provisions (the text of which Article hereby is incorporated herein by this reference), as the case may be.


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"Agreed Rate" means 8.0% per annum.


"Agreement" means this Agreement and all attached Schedules, Addendums, Annexes and Exhibits, as each of the same may be amended, modified or supplemented from time to time pursuant to the provisions hereof or thereof.


"Applicable Corporate Code" means the laws of the Organization State of the Company that govern corporations incorporated in such state.


"Closing Date Balance Sheet" of the Company means a balance sheet of the Company as at the IPO Closing Date which is prepared on a basis consistent with the basis on which the Current Balance Sheet was prepared.


"Closing Memorandum" means the form of closing memorandum to be prepared by RW for the Closing under this Agreement in which are included the forms of certificates of officers, the opinions of counsel and certain other documents to be delivered at the Closing as provided in Article VII.


"Company Accounts Receivable" shall mean the accounts and notes or other advances receivable of the Company and the Company Subsidiaries, excluding any Retainages, as of the IPO Closing Date.


"Company Common Stock" means the common stock, no par value, of the Company.


"Company Indebtedness" means the indebtedness of the Company, as of the IPO Closing Date (including, with respect to CPI Concrete Products, Inc., the value of the Cash Company Consideration to be received by its Employee Stock Ownership Plan), that the Company has elected to repay (or repurchase, as the case may be) with a portion of the RW Common Stock to be received as part of the Merger Consideration. At least five days prior to the Delivery Date, the Company will deliver to RW a schedule of the aggregate principal amount of the Company Indebtedness, certified by the President of the Company, that will be outstanding on the IPO Closing Date, and RW will repay such Company Indebtedness on the IPO Closing Date. To the extent that the actual amount of Company Indebtedness exceeds the amount shown on such schedule, such excess shall be repaid by the Stockholders on or prior to the IPO Closing Date.


"Counsel for RW and Newco" means King & Spalding.


"Counsel for the Company and the Stockholders" means such counsel as shall be designated by the Company in writing on or prior to the Delivery Date.


"Current Balance Sheet" means the balance sheet of the Company as at March 31, 1998 which is included in the Initial Financial Statements.


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"Current Balance Sheet Date" means December 31, 1997.


"Defined Net Worth" as of the IPO Closing Date shall mean (i) the total assets of the Company, as set forth on the balance sheet of the Company as of such date, except that (A) expenses of the Company directly attributable to the IPO and/or the transactions contemplated by this Agreement, including but not limited to, costs incurred pursuant to the HSR Act, shall be added back to the assets of the company and (B) the value of inventory, machinery, equipment and real estate shall be determined pursuant to Section 2.06(a), less (ii) the total liabilities of the Company, as set forth on the balance sheet of the Company as of such date, excluding the Company Indebtedness. Notwithstanding the foregoing, in the case of Comstock, Comstock's contractual obligation to Spie Group, Inc., as successor to Comstock Group, Inc., shall not be deemed to be a liability for purposes of determining Defined Net Worth.


"Delivery" or "Delivery Date" shall have the meaning set forth in Section 7.01.


"Earnings Percentage" shall have the meaning set forth in Exhibit D.


"Employment Agreement" means each of the Employment Agreements entered into as of the Closing Date between RW and each of the Stockholders set forth on Exhibit A hereto, a form of which is attached hereto as Exhibit B.


"fair market value" means that value at which goods and/or services would be exchanged between a willing buyer and willing seller in a transaction entered into at arms length with each party having relevant facts of all aspects of the transaction.


"Initial Financial Statements" means (a) the balance sheets of the Company as at December 31, 1997 and March 31, 1998 and the related reviewed statements of operations and retained earnings for each of the Company's two fiscal years in the period ended December 31, 1997, and (b) the Current Balance Sheet and the related statement of income for the Company's fiscal year ended December 31, 1997, which the Company has delivered to RW prior to the date hereof.


"IPO Closing Date" means the date on which RW first receives payment for the shares of RW Common Stock it sells to the Underwriter in the IPO.


"Merger Consideration" has the meaning specified in Section 2.04.


"Newco" means Runnin' Rebels Railroad Service Company, a Nevada corporation.


"Responsible Officer" means the President, Chief Executive Officer or any Vice President of the Company.


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"Retainages" means the portion of progress payments due to a Company for contracting projects that is withheld by a customer of such Company until completion of a project, pursuant to the terms of a contract with such customer, as security for the completion of the project.


"RW" means RailWorks Corporation, a Delaware corporation.


"Scheduled Related Party Agreements" means the agreements described in Schedule 4.11.


"Surviving Corporation" means the Person to be designated in the Certificate of Merger as the surviving corporation of the Merger.


"Threshold Amount" means 2.0% of the Merger Consideration.


"Transaction Value" means the (i)(A) the total number of shares of RW outstanding immediately upon the closing of the IPO and the transactions contemplated by this Agreement and the Other Agreements multiplied by (B) the IPO Price multiplied by (C) 92% minus (ii) actual expenses of RW incurred with respect to the IPO, an estimate of which will be set forth in Item 13 of Part II of the Registration Statement minus (iii) the underwriting discounts and commissions paid to the Underwriter pursuant to the IPO minus (iv) the proceeds received by RW in connection with any shares of RW Common Stock sold by RW to finance the working capital needs of RW, which shares shall not exceed 5% of the number of shares to be sold in the IPO.


"Transfer Taxes" has the meaning specified in Section 11.07.


"Uniform Provisions" means the Uniform Provisions of RW for the Acquisition of Founding Companies attached hereto as Annex 1.


ARTICLE II


THE MERGER AND RELATED MATTERS


Section 2.01. Certificate of Merger. Subject to the terms and conditions hereof, the Company will cause a Certificate of Merger to be duly executed and delivered on or promptly after the Delivery Date to the Department of State of the State of Nevada.


Section 2.02. The Effective Time. The effective time of the Merger (the "Effective Time") will be the time on the IPO Closing Date as specified in the Certificate of Merger or, if the Certificate of Merger does not specify another time, 8:00 a.m., eastern daylight standard time, on the IPO Closing Date.


Section 2.03. Certain Effects of the Merger. At and as of the Effective Time, (a) Newco will be merged with and into the Company in accordance with the provisions of the Nevada General Corporation Law, (b) Newco will cease to exist as a separate legal entity, (c) the articles of


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incorporation of the Company will be amended to change its authorized capital stock to 100 shares, par value $0.01 per share, of Common Stock, (d) the Company will be the Surviving Corporation and, as such, will, all with the effect provided by the Nevada General Corporation Law, (i) possess all the properties and rights, and be subject to all the restrictions and duties, of the Company and Newco and (ii) be governed by the laws of the State of Nevada, (e) the Charter Documents of the Company then in effect (after giving effect to the amendment of the Company's articles of incorporation specified in clause (c) of this sentence) will become and thereafter remain (until changed in accordance with (i) applicable law (in the case of the articles of incorporation) or (ii) their terms (in the case of the bylaws)) the Charter Documents of the Surviving Corporation, (f) the initial board of directors of the Surviving Corporation will be the Chief Executive Officer of RW and the other persons named in Schedule 2.03, and those persons will hold the office of director of the Surviving Corporation subject to the provisions of the applicable laws of the State of Nevada and the Charter Documents of the Surviving Corporation, and (g) the initial officers of the Surviving Corporation will be as set forth in Schedule 2.03, and each of those persons will serve in each office specified for that person in Schedule 2.03, subject to the provisions of the Charter Documents of the Surviving Corporation, until that person's successor is duly elected to, and, if necessary, qualified for, that office.


Section 2.04. Effect of the Merger on Capital Stock. As of the Effective Time, as a result of the Merger and without any action on the part of any holder thereof:


(a) the shares of Company Common Stock issued and outstanding immediately prior to the Effective Time will (i) be converted into the right to receive, subject to the provisions of Section 2.05 and Exhibit D, without interest, on surrender of the certificate evidencing those shares, the amount of cash and the number of whole and fractional shares of RW Common Stock set forth or determined as provided in Exhibit D (the "Merger Consideration"), (ii) cease to be outstanding and to exist and (iii) be canceled and retired;


(b) each share of Company Common Stock held in the treasury of the Company or any Company Subsidiary will (i) cease to be outstanding and to exist and (ii) be canceled and retired; and


(c) each share of Newco Common Stock issued and outstanding immediately prior to the Effective Time will be converted into one share of Common Stock, no par value, of the Surviving Corporation, and the shares of Common Stock of the Surviving Corporation issued on that conversion will constitute all the issued and outstanding shares of Capital Stock of the Surviving Corporation. Each holder of a certificate representing shares of Company Common Stock immediately prior to the Effective Time will, as of the Effective Time and thereafter, cease to have any rights respecting those shares other than the right to receive, subject to the provisions of Section 2.05, without interest, the Merger Consideration and the additional cash, if any, owing with respect to those shares as provided in Section 2.07.


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Section 2.05. Delivery, Exchange and Payment.


(a) At or after the Effective Time: (i) each Stockholder, as the holder of certificates representing shares of Company Common Stock, will, on surrender of those certificates to RW (or any agent that may be appointed by RW for purposes of this Section 2.05), receive, subject to the provisions of this Article II and the Escrow Agreement, such Stockholder's share of the Merger Consideration pursuant to Section 2.04 and Exhibit D; and (ii) until any certificate representing Company Common Stock has been surrendered and replaced pursuant to this Section 2.05, that certificate will, for all purposes, be deemed to evidence ownership of the number o
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