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                    [NATIONAL BANK OF CANADA LETTERHEAD]

                                March 3, 1997

RAILAMERICA, INC.
KALYN/SIEBERT, INCORPORATED
RAILAMERICA INTERMODAL SERVICES, INC.
RAILAMERICA CARRIERS, INC.
STEEL CITY CARRIERS INC.
SAGINAW VALLEY RAILWAY COMPANY, INC.
HURON AND EASTERN RAILWAY COMPANY, INC.
WEST TEXAS AND LUBBOCK RAILROAD COMPANY, INC.
PLAINVIEW TERMINAL COMPANY
CASCADE AND COLUMBIA RIVER RAILROAD COMPANY
OTTER TAIL VALLEY RAILROAD COMPANY, INC.
MINNESOTA NORTHERN RAILROAD, INC.
DELAWARE VALLEY RAILWAY COMPANY, INC.
301 Yamato Road
Suite 1190
Boca Raton, Florida  33431

ATTN: GARY O. MARINO, CEO and President

         Re:     $40,000,000.00 Revolving Line of Credit / Term Loan Facility

Dear Gary:

         NATIONAL BANK OF CANADA, a Canadian Chartered Bank ("NBC"), as agent,
and as sixty-two and one-half (62.5%) percent pro-rata lender, and COMERICA
BANK, a Michigan banking corporation ("Comerica"), as thirty-seven and one-half
(37.5%) percent pro-rata lender, are pleased to offer a credit facility in the
form of a revolving line of credit/term loan facility in the amount of Forty
Million and 00/100 Dollars ($40,000,000.00) (the "Loan") to RAILAMERICA, INC.,
a Delaware corporation, KALYN/SIEBERT, INCORPORATED, a Texas corporation,
RAILAMERICA INTERMODAL SERVICES, INC., a Delaware corporation, RAILAMERICA
CARRIERS, INC., a corporation organized under the laws of the Province of
Ontario, STEEL CITY CARRIERS INC., a corporation organized under the laws of
the Province of Ontario, SAGINAW VALLEY RAILWAY COMPANY, INC., a Delaware
corporation, HURON AND EASTERN RAILWAY COMPANY, INC., a Michigan corporation,
WEST TEXAS AND LUBBOCK RAILROAD COMPANY, INC., a Texas corporation, PLAINVIEW
TERMINAL COMPANY, a Texas corporation, CASCADE AND COLUMBIA RIVER RAILROAD
COMPANY, a Delaware corporation, OTTER TAIL VALLEY RAILROAD COMPANY, INC., a
Minnesota corporation, MINNESOTA NORTHERN RAILROAD, INC., a Delaware
corporation, and, DELAWARE VALLEY RAILWAY COMPANY, INC., a Delaware corporation
(sometimes hereinafter collectively referred to as "Borrower" or "Borrowers").
NBC and Comerica are sometimes hereinafter collectively referred to as "Lender"
or "Lenders".  In connection with the administration of the Loan, it is
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acknowledged that NBC shall act as agent on behalf of the Lenders, such that
all requests and information required to be provided to Lenders in connection
with the funding and administration of the Loan shall be provided to NBC, on
behalf of the Lenders, at the local office of NBC in Boca Raton, Florida.  It
is further acknowledged that in connection with all decisions to be made by the
Lenders in connection with the administration of the Loan, all monetary matters
shall require the consent of all of the Lenders, and all non-monetary matters
shall require the consent of Lenders holding sixty-six and two-thirds (66 2/3%)
percent or greater percentage participation interests in the Loan in the
aggregate.  A more detailed description of the funding, administration and
enforcement actions to be taken in connection with the Loan by the Lenders
shall be set forth in the Loan Agreement to be entered into by and between the
Borrowers and the Lenders at the time of the closing of the Loan.  The Loan is
more particularly described below, which Loan shall be subject to all of the
following terms and conditions.

         1.      LOAN AMOUNT: Forty Million and 00/100 Dollar ($40,000,000.00)
                 Revolving Line of Credit/Term Loan facility.

         2.      PURPOSE OF THE LOANS AND USE OF PROCEEDS:  The purpose of the
Loan is to (i) refinance an existing Fifteen Million and 00/100 Dollar
($15,000,000.00) Line of Credit facility and an existing Ten Million and 00/100
Dollar ($10,000,000.00) Acquisition Line of Credit facility currently
outstanding and due and owing by certain of the Borrowers to NBC, (ii)
refinance an existing Four Million Five Hundred Thousand and 00/100 Dollar
($4,500,000.00) Term Loan facility currently outstanding and due and owing by
MINNESOTA NORTHERN RAILROAD, INC., a Delaware corporation ("Minnesota") to
Comerica, (iii) support short term working capital requirements of the
Borrowers, and, (iv) provide for the financing of future acquisitions by one or
more of the Borrowers or by an entity owned by or affiliated with one or more
of the Borrowers (hereinafter referred to as an "Affiliate") of transportation
related businesses, said acquisitions to be subject to review by and the
consent of Lender, which consent shall not be unreasonably withheld; provided
further that the assets acquired pursuant to an acquisition financed by Lender
shall be pledged in favor of Lender as security for the Loan in the event the
pro-forma asset ratio coverage of the Borrowers immediately after the time of
the acquisition advance does not meet the required Minimum Asset Ratio (as said
term is defined herein) of not less than 1.4 to 1 (as more particularly
described herein).  Any funds disbursed for the above set forth acquisition
purposes are hereinafter referred to individually as an "Acquisition Advance"
and collectively as "Acquisition Advances".  Any Acquisition Advance
effectuated under the Loan which does not meet the required Minimum Asset Ratio
and therefore requires a pledge of the acquired assets in favor of Lender, is
sometimes hereinafter referred to as a "Collateralized Acquisition Advance".

         For purposes of this letter, "Eligible Receivables" shall be defined
as accounts receivable of Borrowers which are accounts receivable arising out
of sales of tangible personal property made by Borrowers or services provided
by Borrowers in the ordinary course of their
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businesses, which are no more than ninety (90) days old from its invoice date,
according to the original terms of sale or the original terms and provisions of
the services, and, the payment of which is not in dispute and in which the
Lender has a first priority security interest.  The Lender may treat any
Receivable as ineligible (i) if any warranty contained in this or any related
agreement is breached with respect thereto; (ii) if the customer or account
debtor has disputed liability or made any claim with respect to the Receivable
or the Receivable due from said customer to Borrowers; (iii) if the customer or
account debtor has filed a petition for bankruptcy or any other application for
relief under the Bankruptcy Act has been filed against the said customer or
account debtor, or if the customer or account debtor has failed, suspended
business, become insolvent, or had or suffered a receiver or trustee to be
appointed for any of its assets or affairs; (iv) if the customer or account
debtor is located outside the United States, provided however, that Canadian
Receivables of Steel City Carriers Inc. shall be included as Eligible
Receivables within the Borrowing Base, provided that Lender is able to obtain a
perfected security interest in said Canadian Receivables, and provided further
that all Canadian Receivables will be adjusted to U.S. Dollars for purposes of
inclusion with in the Borrowing Base; (v) if the Receivable is due and owing
from an account debtor who is also a creditor of Borrowers; (vi) if the
Receivable is a government receivable in which the Lender will not be able to
perfect its lien under the Federal Assignment of Claims Act for any reason
whatsoever; (vii) if the Receivable arises from a progress billing for work not
yet completed and delivered to the customer; or (viii) if the Lender believes,
in its credit judgment based on Lender's sole discretion, that collection of
such Receivable is insecure or that it may not be paid by reason of financial
inability to pay or otherwise or that such Receivable is not suitable for use
as collateral hereunder.  It is acknowledged that a more expanded definition of
Eligible Receivables shall be set forth in the Loan Agreement, to be entered
into between Borrowers and Lender at the time of closing.

         For purposes of this letter, "Eligible Inventory" shall be defined as
Borrower's raw material and finished goods inventory, which inventory must be
satisfactory to Lender, provided that Lender shall determine in its reasonable
discretion, which inventory shall be eligible for financing hereunder, provided
however, that in connection with Canadian Eligible Inventory, the same will be
converted into U.S. Dollars for valuation purposes.

         For purposes of this letter, "Real Estate" shall be defined as the
Texas Real Property, the Michigan Real Property, the Ontario Real Property, the
West Texas and Lubbock Real Property, the Washington Real Property, the
Minnesota Real Property and the Gettysburg Real Property (as such terms are
hereinafter defined).

         For purposes of this letter, "Machinery and Equipment" shall be
defined as all machinery, equipment, furniture, fixtures, computer hardware and
software, hand and power tools, trucks, forklifts, automobiles, heavy
equipment, railroad equipment and other equipment, rolling stock (exclusive of
locomotives financed by other lenders) and other motor vehicles,
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trucks, machinery and equipment of all classes, together with parts thereof and
accessions thereto, wherever located, now owned or hereafter acquired by any of
the Borrowers excluding (i) locomotives and other Machinery and Equipment
financed by other Lenders or with purchase money financing and (ii) new assets
acquired by any of the Borrowers for cash or through financing sources other
than Lender, except for any new assets acquired by any Borrower which are
replacements of any existing Machinery and Equipment.

         For purposes of this letter, "Railroad Trackage" shall be defined as
all rails, tracks, trackage, track materials, ties and timber owned by the
Borrowers or any of them, whether now owned or hereafter acquired, by them or
any of them, including but not limited to (i) all rail and track owned by
Borrowers, but not yet affixed to any real estate or incorporated within
existing railroad lines, and (ii) all rail and track owned by Borrowers and
affixed to real estate or incorporated within existing railroad lines, together
with all fixtures, equipment, machinery, structures, buildings, tracks, rails,
ties, switches, crossings, bridges, trestles, culverts, signals, crossing
protection devices, loading platforms, pools, communication lines, powerlines
and appurtenances of every kind or nature, used or useful in connection with
laying, maintaining and operating such rail and track, including without
limitation all rails, tracks, trackage, track materials, ties and timber
described and set forth in that certain Amended, Restated and Consolidated
Security Agreement entered into by and between NBC and certain of the Borrowers
dated as of the 21st day of October, 1996 (the "Existing NBC Security
Agreement"), as additionally described and set forth in that certain Security
Agreement entered into by and between Comerica and Minnesota dated as of the
27th day of December, 1996, and as additionally described in the Gettysburg
Railroad Trackage Appraisal (as defined herein).

         For purposes of this letter, "Franchises" shall be defined as all
franchises, sanctions, rights, licenses, privileges and operating agreements or
authorities, including without limitation agreement(s) between Borrowers or any
of them and the State of Michigan Department of Transportation, to operate over
153 miles of track, or thereabouts, the State of Texas Department of
Transportation, to operate over 131 miles of track, or thereabouts, the State
of Washington Department of Transportation, to operate over 131 miles of track,
or thereabouts, the State of Minnesota Department of Transportation, to operate
over 235 miles of track, or thereabouts, and the State of Pennsylvania
Department of Transportation, to operate over ___ miles of track or
thereabouts.

         Except as specifically otherwise noted herein, for purposes of this
letter, all references to dollar ($) amounts shall be in United States dollars.

         The aggregate amounts advanced under the Loans shall not exceed an
amount equal to (i) the Eligible Receivables, less such reserves as Lender, in
its reasonable discretion elects to establish, provided further that a
receivable may be devalued in such amount as shall be determined by Lender in
its reasonable discretion due to "Dilution" which is defined as and is
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the result of non-cash credits posted against the Receivable which results in
payment or other satisfaction of all or any portion of the Receivable for
reasons other than full payment of the Receivable in cash, together with an
amount equal to (ii) the Eligible Inventory, together with an amount equal to
(iii) the appraised aggregate fair market value of the Real Estate as
determined by that certain Real Property "Market Value" Appraisal dated May 9,
1994, as updated by Appraisal Update dated August 19, 1996, both the appraisal
and the update prepared by M.B. Valuation Services, Inc. in connection with the
Texas Real Property, that certain Appraisal of Corridors, Land and Buildings,
HURON & EASTERN RAILWAY COMPANY, INC., SAGINAW VALLEY RAILWAY COMPANY, INC.,
State of Michigan, dated February 28, 1994 prepared by Oetzel Hanton Williams
in connection with the Michigan Real Property, said appraisals updated by two
(2) appraisal updates prepared by Main Line Management Services, Inc., both
updates dated August 30, 1996, that certain Appraisal of Commercial Property
located at 710 Second Line West, Sault Ste. Marie, Ontario, prepared by Area
Real Estate Appraisals, Inc. dated August 1994 in connection with the Ontario
Real Property, that certain Development of Net Liquidation Value Appraisal
prepared by Main Line Management Services, Inc., dated October 17, 1995, as
updated by update appraisal prepared by Main Line Management Services, Inc.,
dated August 16, 1996, in connection with the West Texas and Lubbock Real
Property, that certain Fair Market Value of Real Property prepared by Main Line
Management Services, Inc., dated August 13, 1996, in connection with the
Washington Real Property, and, that certain Fair Market Value Appraisal of the
Real Property and the Railroad Trackage prepared by Main Line Management
Services, Inc., dated December 12, 1996 in connection with the Minnesota Real
Property and an appraisal of the Gettysburg Real Property to be provided by
Borrower to Lender, which appraisal must be in form and content satisfactory to
Lender, in its sole and absolute discretion, in order for the Gettysburg Real
Property to be eligible for financing under the Loan (it being acknowledged
that no valuation attributed to any of the Railroad Trackage as set forth in
the above set forth Real Estate Appraisals shall be included within the
valuation attributable to the Real Estate), which (aggregate) fair market
values as determined by the above set forth appraisals are subject to
adjustment by the Lender, as set forth below, together with an amount equal to
(iv) the forced liquidation value of the Machinery and Equipment as determined
by a Machinery and Equipment Appraisal prepared by Truck Locators, Inc., dated
January 20, 1995 (related to STEEL CITY CARRIERS, INC.) which (aggregate)
forced liquidation value is subject to adjustment by the Lender as set forth
below, together with an amount equal to (v) the net liquidation value of the
Railroad Trackage as determined by the Railroad Trackage Appraisal (as defined
in that certain Loan Agreement entered into by and between NBC and certain of
the Borrowers dated as of the 21st day of October, 1996) as further determined
by the Real Estate/Railroad Trackage Appraisal (as defined in that certain Loan
Agreement entered into by and between Comerica and Minnesota dated as of the
27th day of December, 1996), and as determined by an appraisal (the "Gettysburg
Railroad Trackage Appraisal") of the Railroad Trackage owned by DELAWARE VALLEY
RAILWAY COMPANY, INC. located in Gettysburg, Pennsylvania (the "Gettysburg
Railroad Trackage") to be provided by Borrower to Lender, which must result in
findings satisfactory to
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Lender, in its sole and absolute discretion, in order for the Gettysburg
Railroad Trackage to be eligible for financing under the Loan (it being
acknowledged that no value attributed to the Real Estate as set forth in the
Railroad Trackage Appraisal, the Real Estate/Railroad Trackage Appraisal or the
Gettysburg Railroad Trackage Appraisal shall be included in the valuation
attributable to the Railroad Trackage), which net liquidation value is subject
to adjustment by the Lender as set forth below, such that all of the above set
forth appraisals and values shall be subject to adjustment by Lender, such that
the final amounts of the fair market values, the forced liquidation values and
the net liquidation values, shall be determined by Lender in their sole and
absolute discretion (the "Borrowing Base"); or, the aggregate sum of Forty
Million and 00/100 Dollars ($40,000,000.00), whichever is less, provided that
in connection with the Loan that up to Five Million and 00/100 Dollars
($5,000,000.00) of the Loan may be used for the issuance of Trade Letters of
Credit and Standby Letters of Credit (collectively the "Letters of Credit")
provided, however, that collateral for the Letters of Credit will be one
hundred (100%) percent reserved and will reduce availability for direct
borrowings under the Loan on a dollar-for-dollar basis in an amount equal to
the face amount of the Letters of Credit outstanding, and provided further that
the outstanding amount of the Loan shall in no event exceed the maximum sum of
Forty Million and 00/100 Dollars ($40,000,000.00), and provided further, that
at no time shall the Minimum Asset Ratio be less than 1.4 to 1, which "Minimum
Asset Ratio" is defined as the Borrowing Base divided by the total outstanding
principal amount of the Loan ("Minimum Asset Ratio"), and in the event that the
Minimum Asset Ratio is less than 1.4 to 1, then the outstanding principal
balance of the Loan must be reduced by the amount necessary to achieve a
Minimum Asset Ratio of equal to or greater than 1.4 to 1.  The principal
payment necessary to effectuate such reduction shall be due and payable in full
on DEMAND.

         Advances will be made based on the most recent "Minimum Asset Ratio
Certificate" submitted by Borrower to NBC, which must be submitted by Borrower
to NBC no less than one (1) time in each month within thirty (30) days of the
end of the prior month evidencing the Minimum Asset Ratio for the immediately
preceding month, provided however, that the Minimum Asset Ratio Certificate
must also be submitted by Borrower to NBC each time an Advance is requested,
reflecting the above borrowing formula, the form of said Minimum Asset Ratio
Certificate to be provided by Lender to Borrower at the time of the closing of
the Loan.

         In connection with any requests for an Acquisition Advance, said
request shall be subject to Lender's approval, which approval will not be
unreasonably withheld.  ADDITIONALLY, ALL ACQUISITIONS BY ONE OR MORE OF THE
BORROWERS OR BY AN AFFILIATE OF TRANSPORTATION RELATED BUSINESSES OR ANY OTHER
BUSINESSES MUST BE APPROVED BY LENDER, WHICH APPROVAL WILL NOT BE UNREASONABLY
WITHHELD.  In connection with the same, Borrower shall provide to NBC at the
time of the request for an Acquisition Advance or at the time Borrower seeks
approval from Lender in connection with a proposed acquisition by Borrower, as
applicable, certified copies of the Contract for Purchase and Sale and all
associated documentation associated with the applicable
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Borrower's acquisition of a transportation related business, including, without
limitation, all contracts, breakout of purchase price, cash flow analysis,
projected income from the acquisition, historical performance of the business
being acquired, and all appraisals and environmental audits related to the
property being acquired by a Borrower or an Affiliate.  Based upon Lender's
review of all of the above, Lender may effectuate or not effectuate the
Acquisition Advance or approve or not approve the acquisition, as applicable,
in Lender's reasonable discretion.  Lender shall approve or not approve each
request for an Acquisition Advance, or approve or not approve an acquisition,
as applicable, no later than five (5) business days after the time that NBC has
received the last item required to be reviewed by Lender in connection with the
applied for Acquisition Advance or approval of an acquisition, as applicable.
Lender shall approve or not approve each request for a Collateralized
Acquisition Advance no later ten (10) business days after the time that NBC has
received the last item required to be reviewed by Lender in connection with the
applied for Collateralized Acquisition Advance.  Borrower shall additionally
provide to NBC copies of all closing documentation associated with the
acquisition and sale at the time of the closing of said acquisition and shall
execute all documentation required by Lender, in order to evidence and perfect
Lender's security interest in the newly acquired assets.

         3.   INTEREST RATE, REPAYMENT TERMS AND MATURITY DATE:  The Loan shall
be evidenced by the execution and delivery of two (2) master revolving/term
promissory notes, one from Borrower in favor of NBC in the amount of Twenty
Five Million and 00/100 Dollars ($25,000,000.00) and one from Borrower in favor
of Comerica in the amount of Fifteen Million and 00/100 Dollars
($15,000,000.00), which notes are sometimes hereinafter collectively referred
to as the "Note" or the "Notes".  Advances made pursuant to the Note shall bear
interest (at the option of Borrower) at a rate of one-quarter of one (.25%)
percent over the Prime Rate (as defined herein) in effect from time to time, to
be adjusted daily with any change in said Prime Rate, OR, an interest rate of
two and one-half (2.5%) percent above the Libor Rate (as defined herein), which
rate shall be fixed for each calendar month, 3-month period or 6-month period,
the applicable interest rate to be chosen by Borrower, during the term of the
Loan, and, shall be calculated using the Libor Rate published two (2) days
prior to renewal of an existing Libor Rate contract.  In the event and at such
time as the Borrower elects to have interest charged under the Note based upon
the Libor Rate, said rate shall remain in effect for the following calendar
month, 3-month period or 6-month period, as applicable, so as to correspond
with the Libor Rate chosen by the Borrower.  The same rate of interest shall be
charged under both Notes at all times.  For the first year of the Note,
payments of interest only shall be due and payable on a monthly basis, with the
first payment due and owing on the first day of the first month, following the
date of the execution of the Note, with monthly payments of interest only (all
of said payments to be debited from Borrower's depository account held with
NBC), due and payable on like date each month thereafter, through and until the
Change Date (as defined and set forth below).  On a date being one (1) year
from the date of the execution of the Note (the "Change Date") the outstanding
principal balance under the Note on the Change Date
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(the "Outstanding Principal Balance") will convert into a term loan such that
the Outstanding Principal Balance shall amortize over a ten (10) year period
with monthly payments of principal (based upon a ten (10) year amortization of
the Outstanding Principal Balance) plus accrued interest (all of said payments
to be debited from Borrower's depository account held with NBC), due and
payable on a monthly basis on the first day of each month, through and until
the Maturity Date (as defined and set forth below) with additional monthly
payments of interest only due and payable on the remaining revolving portion of
the Note on the first day of each month (all of said payments to be debited
from Borrower's depository account held with NBC) through and until the
Maturity Date with the entire principal balance and all accrued and unpaid
interest under the Note together with all other applicable charges to be
payable in full three (3) years from the date of the execution of the Note (the
"Maturity Date").

         Interest on the Loan shall be calculated on the basis of a year
containing three hundred sixty (360) days for the actual number of days
elapsed.

         "Prime Rate" shall be defined as the interest rate announced by
National Bank of Canada as its United States Prime Lending Rate, which rate is
purely discretionary and is not necessarily the best or lowest rate charged
borrowing customers of the Lender (the "Prime Rate").

         "LIBOR Rate" shall be defined as the interest rate published daily in
Dow Jones Telerate, page 3750 for promissory notes maturing one (1) month,
three (3) months or six (6) months, as applicable, after issuance under the
caption "Money Rates, London Interbank Offered Rates (LIBOR)", which rate is
not necessarily the best or lowest rate charged to borrowing customers of the
Lender (the "LIBOR Rate").

         Borrower shall advise Lender, in writing, as to the interest rate
which is to be applied at the time of the execution of the Notes, and, prior to
the first day of any calendar month in which Borrower wishes for the Libor Rate
option to become effective.  Failure of Borrower to provide Lender with said
notice shall be deemed an election by Borrower to have interest charged at an
interest rate of one-quarter of one (.25%) percent above the Prime Rate in
effect from time to time, adjusted on a daily basis.

         In the event of a default, the Loan shall bear interest  at the
maximum rate permitted by law.  Regardless of the above, in connection with the
Loan, said interest rate shall never exceed the maximum rate permitted by law.

         4.      LATE CHARGE:  A late charge equal to three (3%) percent of the
amount of any payment shall be due and payable with the payment then due and
owing in the event such payment is not made within ten (10) days after the date
such payment is due under the Loan.
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         5.      PREPAYMENT:  If during the term of the Loan (i) the Loan is
paid down to a zero (0) balance or (ii) the Lender's obligation to make
advances under the Loan ceases for reasons other than the fact that there is no
availability under the Borrowing Base for the effectuation of an advance, the
Borrower shall pay to the Lender a prepayment fee in an amount equal to (i)
three-quarters of one (.75%) percent of the face amount of the Note during the
first year; (ii) one-half of one (.50%) percent of the face amount of the Note
during the second year, and (iii) one-quarter of one (.25%) percent of the face
amount of the Note during the third year.

         The above set forth prepayment fee shall be due and payable whether
such prepayment or cessation of Lenders' obligation to make advances is
voluntary or involuntary, or a result of an event of default and/or the result
of acceleration of all or other sums due as a result of such acceleration or
default.

         6.      LOAN CLOSING FEE AND OTHER FEES:  In connection with the Loan,
the Loan Closing Fee due and owing from Borrower shall be in the amount of One
Hundred Thousand and 00/100 Dollars ($100,000.00).  It is acknowledged that in
consideration of the issuance of this letter and the reserving of sufficient
funds by the Lender from which to make Loan disbursements, Lender has earned
the above set forth NON-REFUNDABLE Loan Closing Fee in the amount of One
Hundred Thousand and 00/100 Dollars ($100,000.00), which Loan Closing Fee shall
be due and payable as follows:

                 A.       Receipt of the sum of Fifteen Thousand and 00/100
         Dollars ($15,000.00) is hereby acknowledged by Lender, which sum shall
         be applied against closing costs.

                 B.       The sum of One Hundred Thousand and 00/100 Dollars
         ($100,000.00) shall be due and payable in full on the date of the
         closing of the Loan.

         AUDIT FEES:  There shall be semi-annual audits (the frequency of which
may be adjusted at any time by Lender, in the event Lender deems the same
necessary due to an adverse change or trend in the Borrower's business) of the
Borrower performed in each fiscal year of Borrower during the term of the Loan.
There shall be a semi-annual audit fee due and owing from Borrower to Lender in
connection with said audits based upon a charge of Four Hundred and 00/100
Dollars ($400.00) per day plus expenses, provided further that so long as
audits are not conducted more often than on a semi-annual basis, the annual
fees for said audits shall not exceed the sum of Nine Thousand and 00/100
Dollars ($9,000.00) plus expenses.

         UNUSED LINE FEE:  An unused line fee shall be charged in connection
with the Loans, such that the unused portion of the Loans shall be subject to an
annual fee of one-quarter of one (.25%) percent per annum, to be calculated and
payable upon a quarterly basis.
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         ADMINISTRATIVE FEE - COLLATERALIZED ACQUISITION ADVANCES:  An
administrative fee in the  sum of Five Thousand and 00/100 Dollars ($5,000.00)
shall be due and payable at the time of the effectuation of a Collateralized
Acquisition Advance, for each Collateralized Acquisition Advance effectuated
under the Loan.  No administrative fee shall be due and owing in connection
with the effectuation of an Acquisition Advance which is not collateralized.

         LETTER OF CREDIT FEES:  A fee of one and one-quarter (1.25%) percent
per annum shall be charged in connection with all Standby Letters of Credit.

         There shall be standard, customary Letter of Credit fees and charges
for all Trade Letters of Credit issued under the Line of Credit, which shall
include all customary bank charges associated therewith.

         7.      COLLATERAL FOR THE LOAN:  The Loan shall be secured by:

                 A.       A first priority security interest in all accounts
         receivable, inventory, chattel paper, general intangibles, fixtures,
         furniture, Machinery and Equipment, Franchises, instruments and
         personal property now owned or hereafter acquired by Borrower, and,
         all proceeds of the foregoing.  Additionally, in connection with any
         government accounts receivable, the same shall be perfected by filing
         such assignments and other documents as shall be required by the
         Federal Assignment of Claims Act.  Additionally, any assets acquired
         by Borrower from the proceeds of an Acquisition Advance shall, as
         applicable, be the subject of a negative pledge and encumbrance
         agreement in favor of Lender or shall be pledged in favor of Lender as
         additional security for the Loan, all as set forth in Paragraph 2
         above.  A specific listing of Machinery and Equipment shall be set
         forth in the security documentation associated with the Loan.  The
         security agreement, financing statements and other lien instruments
         associated therewith shall be filed in such jurisdictions as shall be
         required by Lender and its counsel, including without limitation the
         Surface Transportation Board.

                 B.       A first priority deed of trust on certain real
         property previously encumbered in favor of NBC, located in Gatesville,
         Texas owned by KALYN/SIEBERT, INCORPORATED, a Texas corporation (the
         "Texas Real Property"), which deed of trust shall be in the amount of
         Two Million Forty Five Thousand and 00/100 Dollars ($2,045,000.00)
         together with all improvements, fixtures and appurtenances, now
         located or hereafter placed and/or located thereon, and, a first
         priority security interest in all machinery, equipment, licenses,
         contract rights, goods, general intangibles, rents, receivables,
         issues, proceeds, profits and agreements affecting the Texas Real
         Property, and all other personal property (tangible or intangible),
         now located thereon, or usable
<PAGE>   11

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Page 11



         in connection with the Texas Real Property, and all replacements
         thereof, and, which is owned by the applicable Borrower, at any given
         time.

                 C.       A first priority mortgage lien on certain real
         property previously encumbered in favor of NBC, located in Saginaw
         County, Tuscola County, Huron County and Sanilac County, Michigan,
         owned by HURON & EASTERN RAILWAY COMPANY, INC., a Michigan railroad
         corporation, and SAGINAW VALLEY RAILWAY COMPANY, INC., a Delaware
         corporation, as applicable (the "Michigan Real Property"), which
         mortgage shall be in the amount of One Million Seven Hundred Forty
         Thousand and 00/100 Dollars ($1,740,000.00), together with all
         improvements, fixtures and appurtenances, now located or hereafter
         placed and/or located thereon, and, a first priority security interest
         in all machinery, equipment (excluding locomotives and other machinery
         and equipment acquired with cash or financed by other lenders or with
         purchase money financing), licenses, contract rights, goods, general
         intangibles, rents, receivables, issues, proceeds, profits and
         agreements affecting the Michigan Real Property and all replacements
         thereof, and all other personal property (tangible or intangible), now
         located thereon, or usable in connection with the Michigan Real
         Property, and, which is owned by the applicable Borrower, at any given
         time.

                 D.       A first priority mortgage lien on certain real
         property, previously encumbered in favor of NBC, located at 710 Second
         Line West, Sault Ste. Marie, Ontario, owned by Steel City Carriers
         Inc. (the "Ontario Real Property"), which mortgage shall be in the
         amount of Five Hundred Thirty Thousand and 00/100 Canadian Dollars
         (C$530,000.00), together with all improvements, fixtures and
         appurtenances, now located or hereafter placed and/or located thereon,
         and, a first priority security interest in all machinery, equipment,
         licenses, contract rights, goods, general intangibles, rents,
         receivables, issues, proceeds, profits and agreements affecting the
         Ontario Real Property, and all other personal property (tangible or
         intangible), now located thereon, or usable in connection with the
         Ontario Real Property and all replacements thereof, and, which is
         owned by the applicable Borrower, at any given time.

                 E.       A first priority deed of trust on certain real
         property, previously encumbered in favor of NBC, located in Lubbock
         County, Hockley County, Cochran County, Terry County, and Gaines
         County, Texas, owned by WEST TEXAS AND LUBBOCK RAILROAD COMPANY, INC.,
         a Texas corporation (the "West Texas and Lubbock Real Property"), in
         the amount of Three Million Six Hundred Ninety Nine Thousand and
         00/100 Dollars ($3,699,000.00), together with all improvements,
         fixtures and appurtenances, now located or hereafter placed and/or
         located thereon, and, a first priority security interest in all
         machinery, equipment, licenses, contract rights, goods, general
         intangibles, rents, receivables, issues, proceeds, profits and
         agreements affecting the West Texas and Lubbock Real Property, and all
         other personal property (tangible or
<PAGE>   12

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Page 12



         intangible), now located thereon, or usable in connection with the
         West Texas and Lubbock Real Property and all replacements thereof,
         and, which is owned by the applicable Borrower, at any given time.

                 F.       A first priority deed of trust on certain real
         property previously encumbered in favor of NBC located in Chelan
         County and Okanogan County, Washington, owned by CASCADE AND COLUMBIA
         RIVER RAILROAD COMPANY, a Delaware corporation (the "Washington Real
         Property"), in the amount of Seven Million Eight Hundred Thousand and
         00/100 Dollars ($7,800,000.00), together with all improvements,
         fixtures and appurtenances, now located or hereafter placed and/or
         located thereon, and, a first priority security interest in all
         machinery, equipment, licenses, contract rights, goods, general
         intangibles, rents, receivables, issues, proceeds, profits and
         agreements affecting the Washington Real Property, and all other
         personal property (tangible or intangible), now located thereon, or
         usable in connection with the Washington Real Property and all
         replacements thereof, and, which is owned by the applicable Borrower,
         at any given time.

                 G.       A first priority mortgage lien on certain real
         property previously encumbered in favor of Comerica located in Red
         Lake County, Polk County, Norman County, Pennington County, Marshall
         County, and Roseau County, Minnesota, owned by Minnesota (the
         "Minnesota Real Property"), in the amount of One Million Five Hundred
         Thousand and 00/100 Dollars ($1,500,000.00), together with all
         improvements, fixtures and appurtenances, now located or hereafter
         placed and/or located thereon, and, a first priority security interest
         in all machinery, equipment, licenses, contract rights, goods, general
         intangibles, rents, receivables, issues, proceeds, profits and
         agreements affecting the Minnesota Real Property, and all other
         personal property (tangible or intangible), now located thereon, or
         usable in connection with the Minnesota Real Property and all
         replacements thereof, and, which is owned by the applicable Borrower,
         at any given time.

                 H.       A first priority mortgage lien on certain real
         property owned by DELAWARE VALLEY RAILWAY COMPANY, INC., located in
         Gettysburg, Pennsylvania (the "Gettysburg Real Property"), in an
         amount of not less than One Million and 00/100 Dollars ($1,000,000.00)
         together with all improvements, fixtures and appurtenances, now
         located or hereafter placed and/or located thereon, and, a first
         priority security interest in all machinery, equipment, licenses,
         contract rights, goods, general intangibles, rents, receivables,
         issues, proceeds, profits and agreements affecting the Gettysburg Real
         Property, and all other personal property (tangible or intangible),
         now located thereon, or usable in connection with the Gettysburg Real
         Property and all replacements thereof, and, which is owned by the
         applicable Borrower, at any given time.
<PAGE>   13

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Page 13




                 I.       A first priority lien and security interest in all
         corridor use of real property rights (including, without limitation
         the corridor use of real property rights associated with the Michigan
         Real Property, the West Texas and Lubbock Real Property, the
         Washington Real Property, the Minnesota Real Property and the
         Gettysburg Real Property) and Railroad Trackage (including, without
         limitation, all of the Gettysburg Railroad Trackage) now owned or
         possessed by any Borrower, and all proceeds of the foregoing.

                 J.       If applicable, a first priority security interest
         and/or mortgage lien and/or deed of trust, as applicable, in all
         property, real and personal, and all other assets acquired from the
         proceeds of a Collateralized Acquisition Advance, all in accordance
         with the terms and provisions of Paragraph 2 above.

NOTE:    Notwithstanding anything to the contrary set forth above, the first
         priority security interest in the above described collateral shall be
         subject to any liens permitted under the terms and provisions of
         Section 4 of the Existing NBC Security Agreement.

         (The above are hereinafter collectively referred to as the
"Collateral").

         8.      CONDITIONS PRECEDENT:  Lender's obligations hereunder are
                 wholly contingent upon the following:

                 A.       Tangible Net Worth:  At the time of closing, the
         tangible net worth of the Borrowers must exceed the sum of Twenty
         Million and 00/100 Dollars ($20,000,000.00).

                 B.       No Material Adverse Change: No material adverse
         change shall have occurred in the business or financial condition of
         any of the Borrowers as represented in the September 30, 1996
         Consolidated Financial Statements and no financial covenant default
         shall be in existence at the time of the closing of the Loan.

                 C.       Evidence of Title and Lien and Judgment Searches:
         Lender and Lender's Counsel shall be in receipt of satisfactory
         evidence of title concerning all real property pledged in favor of
         Lender as security for the Loan, together with Lender's and Lender's
         Counsel's receipt of satisfactory lien and judgment searches and
         Surface Transportation Board searches in all jurisdictions required by
         Lender in connection with each Borrower, which searches must result in
         findings satisfactory to Lender and Lender's Counsel in their sole and
         absolute discretion.

                 D.       Compliance with Post Closing Letters: Borrower shall
         have complied in full with all matters set forth in that certain
         Closing Letter, as marked-up, executed
<PAGE>   14

March 3, 1997
Page 14



         between Comerica and Minnesota dated December 27, 1996, excepting for
         items A, B, and C contained on pages 2 and 3 of said Closing Letter,
         which items have either been satisfied or are no longer applicable, a
         copy of which letter is attached hereto and made a part hereof as
         Exhibit "A", and shall have additionally complied with all
         requirements set forth in that certain letter, as marked-up, from
         NBC's Counsel to Borrower's Counsel dated January 16, 1997 (the "NBC
         Letter"), excepting for the requirement of the Modification and
         Spreader Agreement set forth in item No. 3 of said letter, which is no
         longer applicable, due to the fact that the same shall be encumbered
         by the new deed of trust to be executed in favor of Lender, and
         excepting for item No. 5 of said letter, which item has been
         satisfied, a copy of which letter is attached hereto and made a part
         hereof as Exhibit "B".  Certain additional items set forth in the NBC
         Letter have been satisfied as evidenced by that certain letter from
         Kelleher, Laidlaw, Paciocco, Priddle, Melville to Borrower's Counsel
         dated February 21, 1997 (the "Kelleher Letter") a copy of which is
         appended hereto and made a part hereof as Exhibit "C", provided
         however, that the items set forth on page 2 of the Kelleher Letter
         must be satisfied prior to the time of closing.

         IT IS AGREED, ACKNOWLEDGED AND UNDERSTOOD THAT COMPLIANCE WITH THE
ABOVE SET FORTH CONDITIONS AND ALL OTHER CONDITIONS SET FORTH IN THIS LETTER
ARE CONDITIONS PRECEDENT TO LENDER'S OBLIGATIONS HEREUNDER AND THE CLOSING OF
THE LOAN.

         9.      LENDER'S COUNSEL:  The Lender's counsel, in connection with
the closing of the Loan, is Mombach, Boyle & Hardin, P.A.  The Lender's
counsel's fees shall be in the range of Fifty Two Thousand Five Hundred and
00/100 Dollars ($52,500.00) to Fifty Five Thousand and 00/100 Dollars
($55,000.00), provided however, that under no circumstances shall said fees
exceed the sum of Fifty Five Thousand and 00/100 Dollars ($55,000.00)
(exclusive of title insurance and costs).  Additionally, as set forth in
previous letters from Mombach, Boyle & Hardin, P.A. to Borrower in connection
with any Collateralized Acquisition Advance closed by Mombach, Boyle & Hardin,
P.A. on behalf of the Lender, Lender's Counsels Fees shall not exceed the sum
of Ten Thousand and 00/100 Dollars ($10,000.00) per Collateralized Acquisition
Advance.  Borrower shall be jointly and severally responsible for the payment
of Lender's foregoing counsel fees and expenses.

NOTE:            LENDER SHALL REQUIRE SPECIAL LOCAL COUNSEL IN THE STATE OF
                 TEXAS, THE STATE OF MICHIGAN, THE STATE OF WASHINGTON, THE
                 STATE OF MINNESOTA, THE STATE OF PENNSYLVANIA, AND THE
                 PROVINCE OF ONTARIO, AND, BORROWER SHALL BE RESPONSIBLE FOR
                 THE PAYMENT OF ALL OF SUCH LOCAL COUNSEL'S FEES AND EXPENSES
                 INCURRED IN CONNECTION THEREWITH.  SUCH LOCAL COUNSEL SHALL BE
                 REQUIRED TO
<PAGE>   15

March 3, 1997
Page 15



                 PROVIDE LENDER AND ITS COUNSEL WITH SUCH REASONABLE OPINIONS
                 AS SHALL BE REQUIRED BY LENDER AND ITS COUNSEL.  THE ABOVE SET
                 FORTH LOCAL COUNSEL MAY BE HIRED DIRECTLY BY THE BORROWER,
                 PROVIDED THAT SUCH COUNSEL MUST BE REASONABLY ACCEPTABLE TO
                 LENDER AND LENDER'S COUNSEL, IN THEIR REASONABLE DISCRETION.

         10.     QUALITY OF LOAN:  Each document and item required to be
submitted to Lender pursuant to this letter shall be satisfactory in form and
substance to Lender and its counsel.  All instruments and documents required
hereby or affecting the Collateral for the Loan or relating to Borrowers'
capacity and authority to enter into the Loan, and to execute the Loan
documents and such other documents, opinions and assurances as Lender or its
counsel may reasonably request, and all procedures in connection herewith shall
be subject to approval as to form and substance of the Lender and its counsel.
All such documents shall be submitted to the Lender for approval within five
(5) business days prior to actual closing.

         11.     LOAN DOCUMENTS AND ITEMS REQUIRED FOR CLOSING:  At least five
(5) days prior to the closing of the Loan, Lender shall have received the
following documents at the Borrower's expense:

         A.      The Notes:  The Notes evidencing the Loan, which shall contain
                 the terms and provisions set forth above.

         B.      Security Agreements:  Security agreements or reaffirmations
                 thereof, wherein each Borrower grants to Lender a first
                 priority security interest in the applicable portion of the
                 Collateral, including, without limitation, all accounts,
                 accounts receivable, inventory, chattel paper, general
                 intangibles, all Machinery and Equipment, Franchises, corridor
                 use rights, railroad rights of way, railroad trackage,
                 railroad equipment and railroad rolling stock, used in
                 connection with the Borrower's business operations, together
                 with UCC-1 Financing Statements or other applicable and
                 appropriate instruments associated therewith.  A specific
                 description of particular equipment and machinery shall be
                 annexed as an exhibit to each security agreement. All of the
                 above security instruments shall be filed with all required
                 jurisdictions, at all state and county levels as required in
                 the United States and the Province of Ontario (at the local,
                 state and federal levels), together with filing with the
                 Surface Transportation Board, as necessary and as required by
                 Lender and its counsel, in their sole discretion.

NOTE:            Additionally, Borrower shall execute such documentation as
                 shall be required by Lender and its counsel in order to
                 perfect Lender's security interest in governmental receivables
                 under the Federal Assignment of Claims Act.
<PAGE>   16

March 3, 1997
Page 16




         C.      Uniform Commercial Code Financing Statements:  UCC-1 Financing
                 Statements executed, recorded, and filed with the appropriate
                 Secretaries of States, and, the Public Records of applicable
                 cities and counties of the States of Florida, Michigan, Texas,
                 Washington, Minnesota, Delaware, Pennsylvania, and all such
                 other jurisdictions as shall reasonably be required by Lender
                 and its counsel, and such governmental offices as shall be
                 required in Ontario, Canada and other parts of Canada, and,
                 any other necessary jurisdiction, creating a perfected
                 security interest in the foregoing Collateral.  A specific
                 description of particular equipment and machinery shall be
                 annexed as an exhibit to each UCC-1 Financing Statement.

         D.      UCC-3 Amendment Statements: If and as necessary, UCC-3
                 Amendment Statements executed, recorded, and filed with the
                 appropriate Secretaries of States, and, the Public Records of
                 applicable cities and counties of the States of Florida,
                 Michigan, Texas, Washington, Minnesota, Delaware, the Province
                 of Ontario, and all such other jurisdictions as shall be
                 required by Lender and its counsel.

NOTE:            SURFACE TRANSPORTATION BOARD SEARCHES AND UCC LIEN AND
                 JUDGMENT SEARCHES OF EACH BORROWER SHALL BE CONDUCTED IN SUCH
                 JURISDICTIONS AS SHALL BE REQUIRED BY LENDER, WHICH MUST
                 RESULT IN FINDINGS SATISFACTORY TO LENDER AND ITS COUNSEL,
                 INCLUDING POST-CLOSING SEARCHES, AS SHALL BE REQUIRED BY
                 LENDER.  ALL OF SAID SEARCHES SHALL BE AT BORROWER'S SOLE COST
                 AND EXPENSE.

         E.      Loan Agreement, which shall contain such provisions and such
                 other affirmative and negative covenants, as may be required
                 by the Lender.

         F.      Deed of Trust:  A deed of trust (the "Deed of Trust") shall be
                 a perfected first lien and title priority on the Texas Real
                 Property.  NOTE: THE LEGAL DESCRIPTION INCLUDED WITHIN THE
                 DEED OF TRUST SHALL INCLUDE ALL ADDITIONAL PROPERTY ACQUIRED
                 BY KALYN/SIEBERT, INCORPORATED AS DESCRIBED IN WRITING BY
                 BORROWER'S COUNSEL TO LENDER'S COUNSEL.

         G.      Security Agreement and Financing Statements:  A security
                 agreement shall be combined with the Deed of Trust instrument
                 form.  It and the financing statements shall provide a
                 perfected, first priority, security interest in all fixtures,
                 appurtenances and personal property now located on the Texas
                 Real Property and any replacements thereof and/or necessary or
                 useable in connection with the
<PAGE>   17

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Page 17



                 operation of the Texas Real Property for its intended uses,
                 which is owned by the Borrower, and shall cover all tangible
                 and intangible personal property relating to the Texas Real
                 Property in which Borrower has any proprietary interest.  The
                 financing statements shall be executed and recorded with the
                 Texas Secretary of State and in the Public Records of the
                 appropriate county where the Texas Real Property is located in
                 Texas.

         H.      Assignment of Leases:  A perfected, first priority, assignment
                 of Borrower's interest in all present and future leases of the
                 Texas Real Property (including rights to receive rents).

         I.      Subordination of Leases:  If applicable, a subordination of
                 all leases affecting the Texas Real Property to the lien and
                 effect of the Deed of Trust and related collateral.

         J.      Title Insurance:  A standard ALTA mortgagee policy or
                 endorsement, as required by Lender and Lender's Counsel,
                 insuring the Deed of Trust which shall encumber the Texas Real
                 Property, from a national title company approved by Lender.
                 It shall provide coverage in the amount of Two Million Forty
                 Five Thousand and 00/100 Dollars ($2,045,000.00), and shall
                 not contain any title exceptions not approved by Lender or its
                 counsel.  A title insurance binder or commitment and copies of
                 documents creating title insurance exceptions shall be
                 submitted to Lender's counsel at least fifteen (15) days prior
                 to the intended date of the Loan closing.  The title
                 commitment and the title policy shall provide for a
                 Comprehensive Endorsement, a Variable Rate Endorsement and an
                 Environmental Lien Endorsement, if possible, a Survey
                 Endorsement, together with any other endorsements required by
                 Lender or Lender's Counsel.

         K.      Mortgage Instrument:  A mortgage (the "Michigan Mortgage")
                 shall be a perfected first lien and title priority on the
                 Michigan Real Property.

         L.      Security Agreement and Financing Statements:  A security
                 agreement shall be combined with the Michigan Mortgage
                 instrument form.  It and the financing statements shall
                 provide a perfected, first priority, security interest in all
                 fixtures, appurtenances and personal property now located on
                 the Michigan Real Property and any replacements thereof and/or
                 necessary or useable in connection with the operation of the
                 Michigan Real Property for its intended uses, which is owned
                 by the Borrower, and shall cover all tangible and intangible
                 personal property relating to the Michigan Real Property in
                 which Borrower has any proprietary interest.  The financing
                 statements shall be executed and recorded with the
<PAGE>   18

March 3, 1997
Page 18



                 Michigan Secretary of State and in the Public Records of the
                 appropriate counties where the Michigan Real Property is
                 located in Michigan.

         M.      Assignment of Leases:  A perfected, first priority, assignment
                 of Borrower's interest in all present and future leases of the
                 Michigan Real Property (including rights to receive rents).

         N.      Subordination of Leases:  A subordination of all leases
                 affecting the Michigan Real Property to the lien and effect of
                 the Michigan Mortgage and related collateral.

         O.      Title Evidence:  Such title evidence as shall be acceptable to
                 Lender and its counsel.

         P.      Mortgage Instrument: A mortgage instrument (the "Ontario
                 Mortgage") shall be a perfected first lien and title priority
                 on the Ontario Real Property.

         Q.      Security Agreement and Financing Statements:  A security
                 agreement shall be combined with the Ontario Mortgage
                 instrument form.  It and the financing statements shall
                 provide a perfected, first priority, security interest in all
                 fixtures, appurtenances and personal property now located on
                 the Ontario Real Property and any replacements thereof and/or
                 necessary or useable in connection with the operation of the
                 Ontario Real Property for its intended uses, which is owned by
                 the Borrower, and shall cover all tangible and intangible
                 personal property relating to the Ontario Real Property in
                 which Borrower has any proprietary interest.  The financing
                 statements shall be executed and recorded with the Ministry of
                 Consumer and Commercial Relations in Ontario, and if
                 applicable, in the Land Registry Office of the appropriate
                 region where the Ontario Real Property is located in Ontario,
                 and/or in such other governmental offices as are appropriate
                 in the Province of Ontario.

         R.      Assignment of Leases:  A perfected, first priority, assignment
                 of Borrower's interest in all present and future leases of the
                 Ontario Real Property (including rights to receive rents).

         S.      Subordination of Leases:  A subordination of all leases
                 affecting the Ontario Real Property to the lien and effect of
                 the Ontario Mortgage and related collateral.

         T.      Title Insurance:  A standard mortgagee policy insuring the
                 Ontario Mortgage, from a national title company approved by
                 Lender.  It shall provide coverage in the amount of Five
                 Hundred Thirty Thousand and 00/100 Canadian Dollars
<PAGE>   19

March 3, 1997
Page 19



                 (C$530,000.00), and shall not contain any title exceptions not
                 approved by Lender or its counsel.  A title insurance binder
                 or commitment and copies of documents creating title insurance
                 exceptions shall be submitted to Lender's counsel at least
                 fifteen (15) days prior to the intended date of the Loan
                 closing.  The title commitment and the title policy shall
                 provide for all endorsements required by Lender and Lender's
                 counsel.

         U.      Deed of Trust:  A deed of trust (the "West Texas Deed of
                 Trust") shall be a perfected first lien and title priority on
                 the West Texas and Lubbock Real Property.

         V.      Security Agreement and Financing Statements:  A security
                 agreement shall be combined with the West Texas Deed of Trust
                 instrument form.  It and the financing statements shall
                 provide a perfected, first priority, security interest in all
                 fixtures, appurtenances and personal property now located on
                 the West Texas and Lubbock Real Property and any replacements
                 thereof and/or necessary or useable in connection with the
                 operation of the West Texas and Lubbock Real Property for its
                 intended uses, which is owned by the Borrower, and shall cover
                 all tangible and intangible personal property relating to the
                 West Texas and Lubbock Real Property in which Borrower has any
                 proprietary interest.  The financing statements shall be
                 executed and recorded with the Texas Secretary of State and in
                 the Public Records of the appropriate counties where the West
                 Texas and Lubbock Real Property is located in Texas.

         W.      Assignment of Leases:  A perfected, first priority, assignment
                 of Borrower's interest in all present and future leases of the
                 West Texas and Lubbock Real Property (including rights to
                 receive rents).

         X.      Subordination of Leases:  If applicable, a subordination of
                 all leases affecting the West Texas and Lubbock Real Property
                 to the lien and effect of the West Texas Deed of Trust and
                 related collateral.

         Y.      Title Evidence:  Such title evidence as shall be acceptable to
                 Lender and its counsel.

         Z.      Deed of Trust:  A deed of trust (the "Washington Deed of
                 Trust") shall be a perfected first lien and title priority on
                 the Washington Real Property.

         AA.     Security Agreement and Financing Statements:  A security
                 agreement shall be combined with the Washington Deed of Trust
                 instrument form.  It and the financing statements shall
                 provide a perfected, first priority, security interest in
<PAGE>   20

March 3, 1997
Page 20



                 all fixtures, appurtenances and personal property now located
                 on the Washington Real Property and any replacements thereof
                 and/or necessary or useable in connection with the operation
                 of the Washington Real Property for its intended uses, which
                 is owned by the Borrower, and shall cover all tangible and
                 intangible personal property relating to the Washington Real
                 Property in which Borrower has any proprietary interest.  The
                 financing statements shall be executed and recorded with the
                 Washington Secretary of State and in the Public Records of the
                 appropriate counties where the Washington Real Property is
                 located in Washington.

         BB.     Assignment of Leases:  A perfected, first priority, assignment
                 of Borrower's interest in all present and future leases of the
                 Washington Real Property (including rights to receive rents).

         CC.     Subordination of Leases:  If applicable, a subordination of
                 all leases affecting the Washington Real Property to the lien
                 and effect of the Washington Deed of Trust and related
                 collateral.

         DD.     Title Evidence: Such title evidence as shall be acceptable to
                 Lender and its counsel.

         EE.     Mortgage Instrument:  A mortgage (the "Minnesota Mortgage")
                 shall be a perfected first lien and title priority on the
                 Minnesota Real Property.

         FF.     Security Agreement and Financing Statements:  A security
                 agreement shall be combined with the Minnesota Mortgage
                 instrument form.  It and the financing statements shall
                 provide a perfected, first priority, security interest in all
                 fixtures, appurtenances and personal property now located on
                 the Minnesota Real Property and any replacements thereof
                 and/or necessary or useable in connection with the operation
                 of the Minnesota Real Property for its intended uses, which is
                 owned by the Borrower, and shall cover all tangible and
                 intangible personal property relating to the Minnesota Real
                 Property in which Borrower has any proprietary interest.  The
                 financing statements shall be executed and recorded with the
                 Minnesota Secretary of State and in the Public Records of the
                 appropriate counties where the Minnesota Real Property is
                 located in Minnesota.

         GG.     Assignment of Leases:  A perfected, first priority, assignment
                 of Borrower's interest in all present and future leases of the
                 Minnesota Real Property (including rights to receive rents).
<PAGE>   21

March 3, 1997
Page 21




         HH.     Subordination of Leases:  A subordination of all leases
                 affecting the Minnesota Real Property to the lien and effect
                 of the Minnesota Mortgage and related collateral.

         II.     Title Evidence: Such title evidence as shall be acceptable to
                 Lender and its counsel.

         JJ.     Mortgage Instrument: A mortgage (the "Gettysburg Mortgage")
                 shall be a perfected first lien and title priority on the
                 Gettysburg Real Property.

         KK.     Security Agreement and Financing Statements:  A security
                 agreement shall be combined with the Gettysburg Mortgage
                 instrument form.  It and the financing statements shall
                 provide a perfected, first priority, security interest in all
                 fixtures, appurtenances and personal property now located on
                 the Gettysburg Real Property and any replacements thereof
                 and/or necessary or useable in connection with the operation
                 of the Gettysburg Real Property for its intended uses, which
                 is owned by the Borrower, and shall cover all tangible and
                 intangible personal property relating to the Gettysburg Real
                 Property in which Borrower has any proprietary interest.  The
                 financing statements shall be executed and recorded with the
                 Pennsylvania Secretary of State and in the Public Records of
                 the appropriate counties where the Gettysburg Real Property is
                 located in Pennsylvania.

         LL.     Assignment of Leases:  A perfected, first priority, assignment
                 of Borrower's interest in all present and future leases of the
                 Gettysburg Real Property (including rights to receive rents).

         MM.     Subordination of Leases:  A subordination of all leases
                 affecting the Gettysburg Real Property to the lien and effect
                 of the Gettysburg Mortgage and related collateral.

         NN.     Title Evidence: Such title evidence as shall be acceptable to
                 Lender and its counsel.

NOTE:            IN CONNECTION WITH ALL SECURITY INTERESTS AND LIENS DESCRIBED
                 AND SET FORTH IN THE SECURITY DOCUMENTATION SET FORTH ABOVE,
                 THE SAME SHALL BE SUBJECT TO ALL PERMITTED LIENS AND
                 ENCUMBRANCES AS PERMITTED UNDER THE TERMS AND PROVISIONS OF
                 SECTION 4 OF THE EXISTING NBC SECURITY AGREEMENT.
                 ADDITIONALLY, IF DEEMED ACCEPTABLE BY LENDER'S COUNSEL AND
                 APPLICABLE LOCAL COUNSEL, AND, AS SHALL BE DETERMINED BY
                 LENDER AND ITS COUNSEL, IN THEIR
<PAGE>   22

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Page 22



                 SOLE AND ABSOLUTE DISCRETION, BORROWER MAY EXECUTE CERTAIN
                 ASSIGNMENTS AND MODIFICATION AGREEMENTS AND/OR AMENDED AND
                 RESTATED AGREEMENTS IN LIEU OF NEW SECURITY DOCUMENTATION IN
                 CONNECTION WITH CERTAIN OF THE SECURITY DOCUMENTATION SET
                 FORTH ABOVE.

         OO.     Authority and Capacity Instruments:  Documents appropriate to
                 the form of each borrowing entity which evidence the necessary
                 authorization of, and capacity for, the actions to be taken by
                 each Borrower in connection with this letter and the Loan.
                 Appropriate documents can include borrowing resolutions and
                 certificates of good standing for corporations, partnership
                 agreements and certificates of partnership for general and
                 limited partnerships and joint venture agreements and
                 appropriate certificates for joint venturers.

         PP.     Survey:  Five (5) copies of a recent survey of the Texas Real
                 Property and the Ontario Real Property by a registered
                 surveyor.  Each survey shall be certified to Lender, the title
                 insurer, and the issuing agent, and shall show all boundaries
                 of the Texas Real Property and the Ontario Real Property, with
                 courses and distances indicated, including chord bearings and
                 arc and chord distances for all curves, and shall show
                 dimensions and locations of all existing improvements and of
                 all easements, roads, encroachments, and utility lines, and
                 shall shown the distances to, and names of, the nearest
                 intersecting streets, and other facts in any way affecting the
                 Texas Real Property and the Ontario Real Property and shall
                 show in other details as Lender may request.  The land area
                 must also be included, together with a certification as to the
                 location of the Texas Real Property and the Ontario Real
                 Property within any special flood hazard area.  The survey
                 shall be required to be delivered to Lender and its counsel,
                 at least fifteen (15) days prior to the date of the Loan
                 closing.

         QQ.     Flood Hazards:  At least fifteen (15) days prior to the
                 closing of the Loan, evidence as to whether or not the Texas
                 Real Property and the Gettysburg Real Property, if applicable,
                 are located within an area identified pursuant to the Flood
                 Disaster Protection Act of 1973 as having special flood
                 hazards.

         RR.     Casualty Insurance:  "All-risk" casualty insurance policies
                 insuring the Texas Real Property, the Michigan Real Property,
                 the Ontario Real Property, the West Texas and Lubbock Real
                 Property, the Washington Real Property, the Minnesota Real
                 Property, the Gettysburg Real Property and the Collateral in
                 favor of Borrower, naming Lender as mortgagee and loss-payee,
                 and written through a company and in an amount as shall be
                 satisfactory to Lender, with a standard mortgagee and
                 loss-payee endorsement in favor of Lender, and providing at
                 least
<PAGE>   23

March 3, 1997
Page 23



                 30-days written notice of any cancellation, modification or
                 non-renewal of the insurance coverage, shall be in effect
                 throughout the term of the Loan.

         SS.     Flood Insurance:  In the event the Texas Real Property or the
                 Gettysburg Real Property is located in a federally designated
                 flood hazard area, a Flood Insurance Policy naming the Lender
                 as mortgagee and loss-payee, and written through a company and
                 in an amount as shall be satisfactory to Lender, with a
                 standard mortgagee endorsement in favor of Lender, and
                 providing at least thirty (30) days' written notice of
                 cancellation, modification or non-renewal of the insurance
                 coverage, shall be in effect throughout the term of the Loan.

         TT.     Liability Insurance:  Liability Insurance Policies in favor of
                 Borrower, and written through a company and in an amount as
                 shall be satisfactory to Lender, with a standard mortgagee and
                 additional insured endorsement in favor of Lender, naming
                 Lender as mortgagee and additional insured, shall be in effect
                 throughout the term of the Loan.

With regard to the insurance set forth above, policies or certificates
of insurance coverage in favor of Borrower shall be delivered to Lender, with
coverage types and amounts satisfactory to Lender, and satisfactory evidence of
premium payments must also be provided.

         UU.     Mortgagor's No-Lien Affidavits:  To be executed by an
                 appropriate officer of each Borrower, as applicable, at the
                 time of closing.

         VV.     Anti-Coercion Acknowledgments:  A written acknowledgement from
                 Borrower as to receipt of notice from Lender regarding the
                 anti-coercion provisions of the Florida insurance laws.

         WW.     Certificates of Good Standing evidencing that the each
                 Borrower is in good standing under the laws of the state or
                 province of their incorporation and in any other states in
                 which they conduct business.

         XX.     Corporate Resolutions and Incumbency Certificate of each
                 Borrower authorizing effectuation of the Loan.


         YY.     Attorney's Opinion:  A written opinion, addressed to Lender,
                 from Borrower's attorney(s), as may be approved by Lender,
                 concerning, without limitation, the following matters:
<PAGE>   24

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Page 24




                 (i)      Usury: The fees and interest charged or to be charged
                          by Lender in connection with the Loan do not violate
                          any usury or other similar federal laws or laws of
                          the State of New York.

                 (ii)     Security Interests:  The security agreements,
                          assignments, financing statements and all related
                          security instruments provide to Lender perfected
                          security interests of the priorities required by
                          Lender, which is of a first priority security
                          interest in the described personal property,
                          receivables, inventory, fixtures, railroad corridors,
                          railroad rights of way, railroad trackage, railroad
                          equipment, railroad rolling stock and all associated
                          property.

                 (iii)    Mortgages and Deed of Trust:  That the Mortgages
                          and/or Deeds of Trust, as applicable, provide to
                          Lender a valid mortgage or deed of trust, as
                          applicable.

                 (iv)     Good Standing of Borrower:

                          (a)     RAILAMERICA, INC. is a Delaware corporation
                                  in good standing under the laws of the State
                                  of Delaware and in all states in which it
                                  conducts business, including, without
                                  limitation, the State of Florida.
                                  RAILAMERICA, INC. has all requisite power and
                                  authority to own, mortgage and encumber its
                                  property, and, to the best of counsel's
                                  knowledge, RAILAMERICA, INC. is in compliance
                                  with all material laws affecting its
                                  business.

                          (b)     KALYN/SIEBERT, INCORPORATED is a Texas
                                  corporation in good standing under the laws
                                  of the State of Texas and in all states in
                                  which it conducts business.  KALYN/SIEBERT,
                                  INCORPORATED has all requisite power and
                                  authority to own, mortgage and encumber its
                                  property, and, to the best of counsel's
                                  knowledge, KALYN/SIEBERT, INCORPORATED is in
                                  compliance with all material laws affecting
                                  its business.

                          (c)     RAILAMERICA INTERMODAL SERVICES, INC. is a
                                  Delaware corporation in good standing under
                                  the laws of the State of Delaware and in all
                                  states in which it conducts business.
                                  RAILAMERICA INTERMODAL SERVICES, INC. has all
                                  requisite power and authority to own,
                                  mortgage and encumber its property, and, to
                                  the best of counsel's knowledge,
<PAGE>   25

March 3, 1997
Page 25



                                  RAILAMERICA INTERMODAL SERVICES, INC. is in
                                  compliance with all material laws affecting
                                  its business.

                          (d)     RAILAMERICA CARRIERS, INC. is a corporation
                                  organized under the laws of the Province of
                                  Ontario, and, is in good standing under the
                                  laws of the Province of Ontario and in all
                                  other jurisdictions in which it conducts
                                  business.  RAILAMERICA CARRIERS, INC. has all
                                  requisite power and authority to own,
                                  mortgage and encumber its property, and, to
                                  the best of counsel's knowledge, RAILAMERICA
                                  CARRIERS, INC. is in compliance with all
                                  material laws affecting its business.

                          (e)     STEEL CITY CARRIERS INC. is a corporation
                                  organized under the laws of the Province of
                                  Ontario, and, is in good standing under the
                                  laws of the Province of Ontario and in all
                                  other jurisdictions in which it conducts
                                  business.  STEEL CITY CARRIERS INC. has all
                                  requisite power and authority to own,
                                  mortgage and encumber its property, and, to
                                  the best of counsel's knowledge, STEEL CITY
                                  CARRIERS INC. is in compliance with all
                                  material laws affecting its business.

                          (f)     SAGINAW VALLEY RAILWAY COMPANY, INC. is a
                                  Delaware corporation in good standing under
                                  the laws of the State of Delaware and in all
                                  states in which it conducts business,
                                  including, without limitation, the State of
                                  Michigan.  SAGINAW VALLEY RAILWAY COMPANY,
                                  INC. has all requisite power and authority to
                                  own, mortgage and encumber its property, and,
                                  to the best of counsel's knowledge, SAGINAW
                                  VALLEY RAILWAY COMPANY, INC. is in compliance
                                  with all material laws affecting its
                                  business.

                          (g)     HURON AND EASTERN RAILWAY COMPANY, INC. is a
                                  Michigan corporation in good standing under
                                  the laws of the State of Michigan and in all
                                  states in which it conducts business.  HURON
                                  AND EASTERN RAILWAY COMPANY, INC. has all
                                  requisite power and authority to own,
                                  mortgage and encumber its property, and, to
                                  the best of counsel's knowledge, HURON AND
                                  EASTERN RAILWAY COMPANY, INC. is in
                                  compliance with all material laws affecting
                                  its business.
<PAGE>   26

March 3, 1997
Page 26




                          (h)     WEST TEXAS AND LUBBOCK RAILROAD COMPANY, INC.
                                  is a Texas corporation in good standing under
                                  the laws of the State of Texas and in all
                                  states in which it conducts business.  WEST
                                  TEXAS AND LUBBOCK RAILROAD COMPANY, INC. has
                                  all requisite power and authority to own,
                                  mortgage and encumber its property, and, to
                                  the best of counsel's knowledge, WEST TEXAS
                                  AND LUBBOCK RAILROAD COMPANY, INC. is in
                                  compliance with all material laws affecting
                                  its business.

                          (i)     PLAINVIEW TERMINAL COMPANY is a Texas
                                  corporation in good standing under the laws
                                  of the State of Texas and in all states in
                                  which it conducts business.  PLAINVIEW
                                  TERMINAL COMPANY has all requisite power and
                                  authority to own, mortgage and encumber its
                                  property, and, to the best of counsel's
                                  knowledge, PLAINVIEW TERMINAL COMPANY is in
                                  compliance with all material laws affecting
                                  its business.

                          (j)     CASCADE AND COLUMBIA RIVER RAILROAD COMPANY
                                  is a Delaware corporation in good standing
                                  under the laws of the State of Delaware and
                                  in all states in which it conducts business,
                                  including, without limitation, the State of
                                  Washington.  CASCADE AND COLUMBIA RIVER
                                  RAILROAD COMPANY has all requisite power and
                                  authority to own, mortgage and encumber its
                                  property, and, to the best of counsel's
                                  knowledge, CASCADE AND COLUMBIA RIVER
                                  RAILROAD COMPANY is in compliance with all
                                  material laws affecting its business.

                          (k)     OTTER TAIL VALLEY RAILROAD, INC. is a
                                  Minnesota corporation in good standing under
                                  the laws of the State of Minnesota and in all
                                  states in which it conducts business.  OTTER
                                  TAIL VALLEY RAILROAD, INC. has all requisite
                                  power and authority to own, mortgage and
                                  encumber its property, and, to the best of
                                  counsel's knowledge, OTTER TAIL VALLEY
                                  RAILROAD, INC. is in compliance with all
                                  material laws affecting its business.

                          (l)     MINNESOTA NORTHERN RAILROAD, INC. is a
                                  Delaware corporation in good standing under
                                  the laws of the State of Delaware and in all
                                  states in which it conducts business,
                                  including without limitation, the State of
                                  Minnesota.  MINNESOTA NORTHERN RAILROAD, INC.
                                  has all requisite power and
<PAGE>   27

March 3, 1997
Page 27



                                  authority to own, mortgage and encumber its
                                  property, and, to the best of counsel's
                                  knowledge, MINNESOTA NORTHERN RAILROAD, INC.
                                  is in compliance with all material laws
                                  affecting its business.

                          (m)     DELAWARE VALLEY RAILWAY COMPANY, INC. is a
                                  Delaware corporation in good standing under
                                  the laws of the State of Delaware and in all
                                  states in which it conducts business,
                                  including without limitation, the State of
                                  Pennsylvania. DELAWARE VALLEY RAILWAY
                                  COMPANY, INC. has all requisite power and
                                  authority to own, mortgage and encumber its
                                  property, and, to the best of counsel's
                                  knowledge, DELAWARE VALLEY RAILWAY COMPANY,
                                  INC. is in compliance with all material laws
                                  affecting its business.

                 (v)      Authorization: Execution of the Loan documents has
                          been duly authorized by all necessary actions of each
                          Borrower and such executions have been performed by
                          the persons authorized to do so.

                 (vi)     Enforceability:  All of the loan documents establish
                          binding obligations of each Borrower, as applicable,
                          and, each such document is enforceable in accordance
                          with its terms, subject to any applicable bankruptcy,
                          insolvency, reorganization, moratorium or similar
                          laws affecting the rights of creditors generally.

                 (vii)    No Conflict:  There is no charter, partnership
                          agreement, by-law or preference stock provision of
                          any Borrower, and, no provision of any existing
                          mortgage, indenture, contract or agreement known to
                          be binding on any Borrower affecting its property
                          which would conflict with or in any way prevent the
                          execution, delivery and carrying out of the terms of
                          the Loan Documents.  Accordingly, the Borrower's
                          execution of the Loan Documents does not violate any
                          other instrument, agreement, order or decree to which
                          any Borrower is a party or by which any Borrower is
                          bound.

                 (viii)   Documentary Stamp Tax, Transfer and Recording Taxes:
                          Payment of all applicable documentary stamp, if any,
                          required by the State of Florida and transfer and
                          recording taxes required by the State of Texas, the
                          State of Michigan, the State of Washington, the State
                          of Minnesota, the State of Pennsylvania, the Province
                          of Ontario and any local municipalities in
<PAGE>   28

March 3, 1997
Page 28



                          connection with the closing of the Loan have been
                          collected and remitted to the proper taxing
                          authorities.

                 (ix)     Litigation:  To the best of counsel's knowledge, each
                          Borrower is not a party to any pending litigation,
                          which, if adversely determined, would impair the
                          ability of any of them to meet its obligations to
                          Lender under the Loan.

                 (x)      Such other matters as shall be required by Lender and
                          its counsel.

         ZZ.     Fees and Charges:  Payment of all fees and charges as required
                 for the Loan closing and matters related thereto, including
                 all legal fees, closing costs, recording fees and any other
                 charges.

        AAA.     Covenants and Restrictions:  Copies of all covenants and
                 restrictions affecting the Texas Real Property, the Michigan
                 Real Property, the Ontario Real Property, the West Texas and
                 Lubbock Real Property, the Washington Real Property, the
                 Minnesota Real Property, and the Gettysburg Real Property
                 which shall be subject to the approval of Lender.

        BBB.     Affidavit of Leases having attached thereto certified copies
                 of all leases affecting each Borrower and its business
                 operations.

        CCC.     Landlord's Waiver of Lien Agreement to be executed by each
                 Landlord of each Borrower, for each of Borrower's business
                 locations.

        DDD.     Default:  There shall be no default in existence with regard
                 to any other obligations of Borrower to Lender.

        EEE.     Leases:  Duplicate originals or certified copies of all leases
                 and any lease amendments affecting all or any part of the
                 Texas Real Property, the Michigan Real Property, the Ontario
                 Real Property, the West Texas and Lubbock Real Property, the
                 Washington Real Property, the Minnesota Real Property, and the
                 Gettysburg Real Property together with the standard form lease
                 to be used in future leasing.  The leases and form must be
                 satisfactory to Lender, and the leases shall be subordinate to
                 the mortgage or deed of trust instrument.

        FFF.     Miscellaneous:  All other Loan documents or items that are
                 customarily provided in loan transactions of this type and all
                 other Loan documents or items as may be required by Lender or
                 its counsel.
<PAGE>   29

March 3, 1997
Page 29




         12.     GENERAL TERMS AND CONDITIONS:  At or prior to the closing of
the Loan, and, for so long as the Loan is outstanding, the Borrower shall
comply with the following terms and conditions:

         A.      Each of the Borrowers, together with all subsidiary
                 corporations of RailAmerica, Inc. (the "Subsidiary
                 Corporations") shall on a consolidated basis comply with all
                 of the covenants, terms and conditions set forth on Exhibit
                 "D" appended hereto and made a part hereof.  For purposes of
                 the Exhibit, each reference to the Borrower shall refer to the
                 Borrowers, together with the Subsidiary Corporations on a
                 collective basis.

         B.      Assignability:  Neither this letter nor any interest in it may
                 be assigned by Borrower without Lender's prior written
                 approval.

         C.      Expenses:  Unless otherwise expressly provided in this letter,
                 each Borrower shall jointly and severally be responsible and
                 liable for, and shall hold Lender harmless from, and shall
                 pay, all costs and expenses incurred in connection with the
                 Loan (pre- and post-closing) including, but not limited to:
                 Loan fees, title, hazard and other insurance premiums;
                 surveys; appraisals, brokerage commissions and claims of
                 brokerage; property, document and intangible taxes; attorney's
                 fees; UCC lien searches; and recording charges.  Borrower
                 shall reimburse Lender for all such costs and expenses paid by
                 Lender.

         D.      Operating and Rent Statements:  Borrower shall, at Lender's
                 request, submit to Lender financial statements of income and
                 expenses accurately setting forth the operations of the Texas
                 Real Property, the Michigan Real Property, the Ontario Real
                 Property, the West Texas and Lubbock Real Property, the
                 Washington Real Property, the Minnesota Real Property, and the
                 Gettysburg Real Property for each fiscal year and/or monthly
                 financial statements, in form and substance acceptable to
                 Lender.  Also, when so requested, Borrower will submit to
                 Lender rent schedules showing, among other things as may be
                 required by Lender, occupied tenant space, rents and vacant
                 space and proposed rents.

         E.      Publicity:  The Lender shall have the right to secure printed
                 publicity (at Lender's sole expense) through newspapers and
                 other media concerning the Loan.

         F.      Subordinate Financing and Alienation:  There shall be no
                 subordinate financing of the personal or real property
                 included in the Collateral, and no sale or transfer of
                 ownership of the Texas Real Property, the Michigan Real
                 Property, the Ontario Real Property, the West Texas and
                 Lubbock Real Property, the Washington Real Property, the
                 Minnesota Real Property, or the Gettysburg Real
<PAGE>   30

March 3, 1997
Page 30



                 Property and no changes in any borrowing entity without
                 Lender's prior consent, which shall not be unreasonably
                 withheld.  Notwithstanding anything to the contrary set forth
                 above, the liens and encumbrances permitted under the terms
                 and provisions of Section 4 of the Existing NBC Security
                 Agreement shall continue to be permitted.

         G.      Additional Leases:  Borrower shall provide Lender with
                 duplicate originals or certified copies of each lease entered
                 into in connection with the Texas Real Property, the Michigan
                 Real Property, the Ontario Real Property, the West Texas and
                 Lubbock Real Property, the Washington Real Property, the
                 Minnesota Real Property, and the Gettysburg Real Property for
                 all leases entered into subsequent to the time of closing, if
                 any.

         H.      Loan Application:  The issuance of this letter is based upon
                 the accuracy of your representations and statements, any loan
                 application and all additional information, representations,
                 exhibits and other matters submitted to Lender for its
                 consideration.  Lender shall have the option to declare this
                 commitment to be breached if there shall have been any
                 material misrepresentation or misstatement or any material
                 error in anything submitted to Lender, or, if prior to the
                 initial disbursement under the Loan, there shall have been a
                 material adverse change in the state of facts submitted to
                 Lender, or any Borrower has become insolvent, bankrupt or
                 incapacitated.

         I.      Anti-Coercion Notice:  The insurance laws of the State of
                 Florida provide that Lender may not require Borrower to take
                 insurance through any particular insurance agent or company to
                 insure the Collateral.  Borrower, subject to the rules adopted
                 by the Florida Insurance Commissioner, has the right to have
                 insurance placed with the insurance agent or company of
                 Borrower's choice, provided the company meets Lender's
                 requirements.  Lender has the right to designate reasonable
                 financial requirements as to the company and the adequacy of
                 the insurance coverage.

         J.      Hazardous Wastes:  By its acceptance of this letter, the
                 Borrowers expressly warrant and represent to the Lender that:
                 (i) the Texas Real Property, the Michigan Real Property, the
                 Ontario Real Property, the West Texas and Lubbock Real
                 Property, the Washington Real Property, the Minnesota Real
                 Property, and the Gettysburg Real Property are not currently
                 used in a manner by Borrowers, which violates any applicable
                 federal, state or local environmental laws; (ii) except as set
                 forth in prior loan documents in connection with the Michigan
                 Real Property, neither the Borrower nor any tenant has
                 received any notice from a government agency for violation of
                 such laws, and, if such notice is received, the
<PAGE>   31

March 3, 1997
Page 31



                 Borrower shall immediately notify the Lender; (iii) the
                 Borrower shall not cause nor permit any tenant to cause a
                 violation of any applicable federal, state or local
                 environmental laws, nor permit any environmental liens to be
                 placed on the Texas Real Property, the Michigan Real Property,
                 the Ontario Real Property, the West Texas and Lubbock Real
                 Property, the Washington Real Property, the Minnesota Real
                 Property, and the Gettysburg Real Property; (iv) the
                 Borrowers, jointly and severally, shall indemnify Lender for
                 all costs incurred by Lender in connection with the removal of
                 hazardous wastes from the Texas Real Property, the Michigan
                 Real Property, the Ontario Real Property, the West Texas and
                 Lubbock Real Property, the Washington Real Property, the
                 Minnesota Real Property, and the Gettysburg Real Property
                 regardless of whether Borrower has caused the presence of such
                 hazardous wastes; and (v) Borrowers, jointly and severally,
                 shall indemnify Lender against any loss, cost, damage or
                 expense that Lender may incur, directly or indirectly, as a
                 result of or in connection with the assertion against Lender
                 of any claims relating to the presence or removal of any
                 hazardous wastes on the Texas Real Property, the Michigan Real
                 Property, the Ontario Real Property, the West Texas and
                 Lubbock Real Property, the Washington Real Property, the
                 Minnesota Real Property, or the Gettysburg Real Property.

                 In connection with the above, Borrower agrees to provide
                 Lender, throughout the term of the Loan, with copies of all
                 reports issued by environmental agencies, concerning the Texas
                 Real Property, the Michigan Real Property, the Ontario Real
                 Property, the West Texas and Lubbock Real Property, the
                 Washington Real Property, the Minnesota Real Property, and the
                 Gettysburg Real Property  including, but not limited to, any
                 Environmental Protection Agency ("EPA") Reports.  Further,
                 Lender shall have the right, prior to making advances under
                 the Loan, and throughout the term of the Loan to directly
                 contact the EPA and other governmental agencies regarding the
                 status of the Texas Real Property, the Michigan Real Property,
                 the Ontario Real Property, the West Texas and Lubbock Real
                 Property, the Washington Real Property, the Minnesota Real
                 Property, and the Gettysburg Real Property, and, in the event
                 of any violations, the same must be cured before the closing
                 of the Loan.

                 Borrowers shall execute Hazardous Substance Certificates and
                 Indemnification Agreements in connection with the Texas Real
                 Property, the Michigan Real Property, the Ontario Real
                 Property, the West Texas and Lubbock Real Property, the
                 Washington Real Property, the Minnesota Real Property, and the
                 Gettysburg Real Property at the time of closing.
<PAGE>   32

March 3, 1997
Page 32




         K.      Closing:  Closing of the Loan, in accordance with the terms
                 and conditions of this letter, shall take place on or before
                 April 25, 1997, at such hour and place as designated by
                 Lender.

         L.      Applicable Law:  This letter, and such of the Loan instruments
                 as do not otherwise provide, shall be construed in accordance
                 with the internal laws (and not the laws of conflicts) of the
                 STATE OF NEW YORK.

         M.      No Waiver of Rights by Lender:  Neither any failure nor any
                 delay on the part of Lender in exercising any right, power or
                 privilege hereunder shall operate as a waiver  thereof, nor
                 shall a single or partial exercise thereof preclude any other
                 or further exercise or the exercise of any other right, power
                 or privilege.

         N.      Survival of Representations: All covenants, agreements,
                 representations and warranties made herein shall survive the
                 funding by Lender of the Loan herein described, and shall
                 continue in full force and effect so long as any portion of
                 said Loan is outstanding and unpaid.  In this letter,
                 reference to any of the parties herein shall be deemed in
                 include the successors and assigns of such party.  All
                 covenants, promises and agreements by or on behalf of the
                 Borrower which are contained in this letter, or in any other
                 loan instrument, shall inure to the benefit of the successors
                 and assigns of Lender.  In the event of any conflict between
                 the terms and provisions of this  letter and the terms and
                 provisions of the Loan documents, the terms and provisions of
                 the Loan documents shall control and prevail.

         O.      Americans with Disabilities Act:  Borrower shall comply with,
                 as applicable, the Americans with Disabilities Act, and, all
                 other laws and regulations affecting the Texas Real Property,
                 the Michigan Real Property, the West Texas and Lubbock Real
                 Property, the Washington Real Property, the Minnesota Real
                 Property, and the Gettysburg Real Property.  Borrowers shall
                 execute an Americans with Disabilities Act Certificate and
                 Indemnification Agreement at the time of closing for each of
                 said properties.

         P.      Documentary Stamps and Intangible Tax:  Borrowers do hereby
                 jointly and severally indemnify and shall jointly and
                 severally hold harmless Lender of and from any and all
                 liability in connection with the payment or non-payment of any
                 and all necessary documentary stamp tax, intangible tax and
                 all other governmental taxes due and owing in connection with
                 the Loan, including without limitation, any and all
                 non-recurring intangible tax due and owing in connection with
                 the Mortgages and the Deeds of Trust securing the Loan, which
<PAGE>   33

March 3, 1997
Page 33



                 indemnification shall survive this letter and the closing of
                 and repayment of the Loan.

         Q.      Severability:  In the event that any one or more of the
                 provisions contained in this letter, or any documentation
                 incident hereto, should be invalid, illegal or unenforceable
                 in any respect, the validity, legality or enforceability of
                 the remaining provisions contained herein and therein shall
                 not in any way be affected or impaired thereby.

         R.      Commercial Use:  Borrower warrants and represents that the
                 proceeds of the Loan shall be used for commercial purposes.

         S.      Modification:  This letter may be amended or modified only by
                 written instrument signed by Borrower and Lender.  any waiver
                 or consent granted hereunder shall be effective only in the
                 specific instance and for the purpose for which given.

         T.      Termination of this Letter:  The Lender may terminate all
                 rights provided under this letter by notice in writing to the
                 Borrower that, in the event (i) any Borrower shall fail and
                 refuse to comply in a timely way with any of the requirements
                 or conditions of this letter, or (ii) prior to the closing of
                 the Loan, any material or adverse change shall occur in the
                 financial condition of any Borrower from the condition
                 represented in the Loan application or any supporting
                 documentation or (iii) prior to the closing of the Loan, any
                 Borrower shall either admit in writing their inability to pay
                 their debts generally as they become due, or (iv) consent to
                 the appointment of a Receiver of all or any part of their
                 property or make any assignment for the benefit of creditors,
                 or file a petition in bankruptcy, or for reorganization
                 pursuant to the Federal Bankruptcy Act, or similar law, or (v)
                 prior to the closing of the Loan any of the creditors of any
                 Borrower shall file a Petition in Bankruptcy against any
                 Borrower or for the reorganization or liquidation of any
                 Borrower pursuant to the Federal Bankruptcy Act or similar
                 law.  Upon such termination, the obligations and liability of
                 Lender under this letter shall cease and terminate without
                 further act.

         U.      Entire Agreement:  This letter, when accepted, shall
                 constitute the entire agreement between Borrower and Lender,
                 and it may not be altered or amended unless agreed to in
                 writing by Lender and Borrower.


                          INTENTIONALLY LEFT BLANK

<PAGE>   34
March 3, 1997
Page 34




         V.      Waiver of Jury Trial:  THE BORROWER AND THE LENDER HEREBY
                 MUTUALLY, KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY WAIVE
                 TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
                 BROUGHT BY EITHER THE BORROWER OR LENDER AGAINST THE OTHER AND
                 BASED UPON, ARISING OUT OF, OR CONNECTED WITH, THIS LETTER OR
                 ANY OTHER DOCUMENT EXECUTED IN CONNECTION WITH THE LOAN.

The credit facility offered by this letter will expire on Monday, March 10,
1997, unless this original letter is signed where indicated, and returned to my
attention, prior to said expiration date.  Unless the Loan closes on or before
April 25, 1997, Lender's obligations hereunder shall terminate.  By your
acceptance of the credit facility set forth in this letter, the Borrowers,
jointly and severally agree to pay any out-of-pocket expenses incurred by the
Lender in connection with the underwriting of the Loan including, but not
limited to, applicable documentary stamps and intangible taxes, recording fees,
lien searches, and the reasonable fees and expenses of Lender's counsel, where
applicable, whether or not the Loan is closed and the proceeds disbursed
thereunder.

This letter replaces and supersedes that certain credit facility letter dated
January 31, 1997, the terms and provisions of which are null and void.

We are pleased to be able to offer this Loan and look forward to its closing.

                                                   Very truly yours,

                                                   NATIONAL BANK OF CANADA

                                                   /s/ Michael S. Bloomenfeld
                                                   --------------------------
                                                   Michael S. Bloomenfeld
                                                   Vice President

                                                   /s/ Jean E. Page
                                                   --------------------------
                                                   Jean E. Page
                                                   Vice President


                                                   COMERICA BANK

                                                   /s/ Michael J. Orozco
                                                   --------------------------
                                                   Michael J. Orozco
                                                   Vice President

<PAGE>   35

March 3, 1997
Page 35




ACCEPTED this ____ day of March, 1997.




                           RAILAMERICA, INC., a Delaware
                           corporation



                           By: /s/ Gary O. Marino
                               ----------------------------------------

                           Its: /s/Chairman, President, C.E.O.
                               ----------------------------------------

                                            (Corporate Seal)





                           KALYN/SIEBERT, INCORPORATED, a
                           Texas corporation



                           By: /s/ Gary O. Marino
                               ----------------------------------------

                           Its: Chairman, President & C.E.O.
                               ----------------------------------------

                                            (Corporate Seal)




                           RAILAMERICA INTERMODAL
                           SERVICES, INC., a Delaware
                           corporation

                           By: /s/ Gary O. Marino
                               ----------------------------------------

                           Its: Chairman, C.E.O. & Treasurer
                               ----------------------------------------

                                            (Corporate Seal)


<PAGE>   36

March 3, 1997
Page 36






                              RAILAMERICA CARRIERS, INC., an
                              Ontario corporation


                              By: /s/ Gary O. Marino
                                 ---------------------------------------

                              Its: Chairman, President & C.E.O.
                                 ---------------------------------------


                                               (Corporate Seal)


                              STEEL CITY CARRIERS INC., an Ontario
                              corporation



                              By: /s/ Gary O. Marino
                                 ---------------------------------------


                              Its: Chairman, C.E.O., Executive V.P.
                                 ---------------------------------------


                                               (Corporate Seal)


                              SAGINAW VALLEY RAILWAY
                              COMPANY, INC., a Delaware
                              corporation

                              By: /s/ Gary O. Marino
                                 ---------------------------------------


                              Its: Chairman, C.E.O., Treasurer
                                 ---------------------------------------


                                               (Corporate Seal)

<PAGE>   37

March 3, 1997
Page 37






                                HURON AND EASTERN RAILWAY
                                COMPANY, INC., a Michigan corporation

                                By: /s/ Gary O. Marino
                                   ----------------------------------------

                                Its: Chairman, C.E.O., Treasurer
                                   ----------------------------------------

                                                 (Corporate Seal)



                                WEST TEXAS AND LUBBOCK
                                RAILROAD COMPANY, INC.  a Texas
                                corporation

                                By: /s/ Gary O. Marino
                                   ----------------------------------------

                                Its: Chairman, C.E.O., Treasurer
                                   ----------------------------------------

                                                 (Corporate Seal)



                                PLAINVIEW TERMINAL COMPANY, a
                                Texas corporation

                                By: /s/ Gary O. Marino
                                   ----------------------------------------

                                Its: Chairman, C.E.O., Treasurer
                                   ----------------------------------------

                                             (Corporate Seal)

<PAGE>   38

March 3, 1997
Page 38




                           CASCADE AND COLUMBIA RIVER
                           RAILROAD COMPANY, a Delaware
                           corporation

                           By: /s/ Gary O. Marino
                               ----------------------------------

                           Its: Chairman, President & C.E.O.
                               ----------------------------------

                                            (Corporate Seal)


                           OTTER TAIL VALLEY RAILROAD,
                           INC., a Minnesota corporation

                           By: /s/ Gary O. Marino
                               ----------------------------------

                           Its:  C.E.O., Treasurer
                               ----------------------------------

                                            (Corporate Seal)


                           MINNESOTA NORTHERN RAILROAD,
                           INC., a Delaware corporation

                           By: /s/ Gary O. Marino
                               ----------------------------------

                           Its: Chairman, President & C.E.O.
                               ----------------------------------

                                            (Corporate Seal)

                           DELAWARE VALLEY RAILWAY
                           COMPANY, INC., a Delaware
                           corporation

                           By: /s/ Gary O. Marino
                               ----------------------------------

                           Its: Chairman, C.E.O., Treasurer
                               ----------------------------------

                                            (Corporate Seal)


<PAGE>   39

           RAILAMERICA, INC. NONQUALIFIED DEFERRED COMPENSATION TRUST



           This RailAmerica, Inc. Nonqualified Deferred Compensation Trust
Agreement is made this 3rd day of January, 1997 by and between RailAmerica,
Inc. (the "Company") and Donald D. Redfearn (the "Trustee");

         WHEREAS, the Company has adopted the nonqualified deferred
compensation Plans as listed in Appendix One hereto and may adopt additional
nonqualified deferred compensation Plans for the benefit of eligible employees
(the "Plan");

         WHEREAS, the Company has incurred or expects to incur liability under
the terms of such Plans with respect to the individuals participating in such
Plans;

         WHEREAS, the Company wishes to establish a trust (hereinafter called
"Trust") and to contribute to the Trust assets that shall be held therein,
subject to the claims of the Company's creditors in the event of the Company's
Insolvency, as herein defined, until paid to Plan participants and their
beneficiaries in such manner and at such times as specified in the Plans;

         WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the Plans
as an unfunded plan maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
for purposes of Title I of the Employee Retirement Income Security Act of 1974;

         WHEREAS, it is the intention of the Company to make contributions to
the Trust to provide itself with a source of funds to assist it in the meeting
of its liabilities under the Plans;

         NOW, THEREFORE, the parties do hereby establish the Trust and agree
that the Trust shall be comprised, held and disposed of as follows:

1.       ESTABLISHMENT OF TRUST.

         (a)     The Company hereby deposits with the Trustee in trust the
                 amount shown on Appendix Two hereto, which shall become the
                 principal of the Trust to be held, administered and disposed
                 of by the Trustee as provided in this Trust Agreement.

         (b)     The Trust hereby established is irrevocable.

         (c)     The Trust is intended to be a grantor trust, of which the
                 Company is the grantor, within the meaning of subpart E, part
                 I, subchapter J, chapter 1, subtitle A of the Internal Revenue
                 Code of 1986, as amended, and shall be construed accordingly.

         (d)     The principal of the Trust, and any earnings thereon shall be
                 held separate and apart from other funds of the Company and
                 shall be used exclusively for the uses and purposes of Plan
                 participants and general creditors as herein set forth.
                 Plan participants and their beneficiaries shall have no
                 preferred claim on, or any beneficial ownership interest in,
                 any assets of the Trust.  Any rights created under the Plans
                 and this Trust Agreement shall be mere unsecured contractual
                 rights of Plan participants and their beneficiaries against the
                 Company.  Any assets held by the Trust will be subject to the
                 claims of the Company's general creditors under federal and
                 state law in the event of Insolvency, as defined in Section
                 3(a) herein.


<PAGE>   40


         (e)     The Company, in its sole discretion, may at any time, or from
                 time to time, make additional deposits of cash or other
                 property in trust with the Trustee to augment the principal to
                 be held, administered and disposed of by the Trustee as
                 provided in this Trust Agreement.  Neither the Trustee nor any
                 Plan participant or beneficiary shall have any right to compel
                 such additional deposits.


2.               PAYMENTS TO PLAN PARTICIPANTS AND THEIR BENEFICIARIES.

         (a)     The Company shall deliver to the Trustee a schedule (the
                 "Payment Schedule") that indicates the amounts payable in
                 respect of each Plan participant (and his or her
                 beneficiaries), that provides a formula or other instructions
                 acceptable to the Trustee for determining the amounts so
                 payable, the form in which such amount is to be paid (as
                 provided for or available under the Plans), and the time of
                 commencement for payment of such amounts.  Except as otherwise
                 provided herein, the Trustee shall make payments to the Plan
                 participants and their beneficiaries in accordance with such
                 Payment Schedule.  The Trustee shall make provision for the
                 reporting and withholding of any federal, state or local taxes
                 that may be required to be withheld with respect to the
                 payment of benefits pursuant to the terms of the Plans and
                 shall pay amounts withheld to the appropriate taxing
                 authorities or determine that such amounts have been reported,
                 withheld and paid by the Company.

         (b)     The entitlement of a Plan participant or his or her
                 beneficiaries to benefits under the Plans shall be determined
                 by the Company or such party as it shall designate under the
                 Plans, and any claim for such benefits shall be considered and
                 reviewed under the procedures set out in the Plans.

         (c)     The Company may make payment of benefits directly to Plan
                 participants or their beneficiaries as they become due under
                 the terms of the Plans.  The Company shall notify the Trustee
                 of its decision to make payment of benefits directly prior to
                 the time amounts are payable to participants or their
                 beneficiaries.  In addition, if the principal of the Trust,
                 and any earnings thereon, are not sufficient to make payments
                 of benefits in accordance with the terms of the Plans, the
                 Company shall make the balance of each such payment as it
                 falls due.  The Trustee shall notify the Company where
                 principal and earnings are not sufficient.

          3.     TRUSTEE RESPONSIBILITY REGARDING PAYMENTS
                 TO TRUST BENEFICIARY WHEN COMPANY IS INSOLVENT.

         (a)     The Trustee shall cease payment of benefits to Plan
                 participants and their beneficiaries if the Company is
                 Insolvent.  The Company shall be considered "Insolvent" for
                 purposes of this Trust Agreement if (i) the Company is unable
                 to pay its debts as they become due, or (ii) the Company is
                 subject to a pending proceeding as a debtor under the United
                 States Bankruptcy Code.

         (b)     At all times during the continuance of this Trust, as provided
                 in Section 1(d) hereof, the principal and income of the Trust
                 shall be subject to claims of general creditors of the Company
                 under federal and state law as set forth below.

                          (1)     The Board of Directors and the Chief
Executive Officer of the Company shall have the duty to inform the Trustee in
writing of the Company's Insolvency.  If a person claiming to be a creditor
of the Company alleges in writing to the Trustee that the Company has become
Insolvent, the Trustee shall determine whether the Company is Insolvent





                                      -2-
<PAGE>   41

and, pending such determination, the Trustee shall discontinue payment of
benefits to Plan participants or their beneficiaries.

                          (2)     Unless the Trustee has actual knowledge of
the Company's Insolvency, or has received notice from the Company or a person
claiming to be a creditor alleging that the Company is Insolvent, the
Trustee shall have no duty to inquire whether the Company is Insolvent. The
Trustee may in all events rely on such evidence concerning the Company's
solvency as may be furnished to the Trustee and that provides the Trustee with a
reasonable basis for making a determination concerning the Company's solvency.

                          (3)     If at any time the Trustee has determined
that the Company is Insolvent, the Trustee shall discontinue payments to Plan
participants or their beneficiaries and shall hold the assets of the Trust for
the benefit of the Company's general creditors.  Nothing in this Trust Agreement
shall in any way diminish any rights of Plan participants or their beneficiaries
to pursue their rights as general creditors of the Company with respect to
benefits due under the Plans or otherwise.

                          (4)     The Trustee shall resume the payment of
benefits to Plan participants or their beneficiaries in accordance with Section
2 of this Trust Agreement only after the Trustee has determined that the
Company is not Insolvent (or is no longer Insolvent).

         (a)     Provided that there are sufficient assets, if the Trustee
discontinues the payment of benefits from the Trust pursuant to Section 3(b)
hereof and subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to Plan
participants or their beneficiaries under the terms of the Plans for the period
of such discontinuance, less the aggregate amount of any payments made to Plan
participants or their beneficiaries by the Company in lieu of the payments
provided for hereunder during any such period of discontinuance.

4.               PAYMENTS TO COMPANY.

        Except as provided in Section 3 hereof, after the Trust has become
irrevocable, the Company shall have no right or power to direct the Trustee to
return to the Company or to divert to others any of the Trust assets before all
payment of benefits have been made to Plan participants and their beneficiaries
pursuant to the terms of the Plans.

5.       INVESTMENT AUTHORITY.

         (a)     The Trust Fund shall be held in trust by the Trustee and shall
be invested and reinvested as provided in this Section 5, without distinction
between principal and income and without regard to the restrictions of
the laws of the State of Florida, or any other jurisdiction, relating to the
investment of Trust Funds.  The Trustee shall invest and reinvest the Trust Fund
in its discretion, except as otherwise directed by the Company, or in accordance
with Section 5(d) in accordance with the directions of an Investment Manager.
The Trustee shall be under no duty or obligation to review any investment to be
acquired, held or disposed of pursuant to such directions nor to make any
recommendation with respect to the disposition or continued retention of any
such investment.

         (b)     In addition to the more general investment powers provided
below, the Trustee may invest in securities (including stock or rights to
acquire stock) or obligations issued





                                      -3-
<PAGE>   42

by the Company.  All rights associated with assets of the Trust shall be
exercised by the Trustee or the person designated by the Trustee, and shall in
no event be exercisable by or rest with Plan participants.  The Company shall
have the right at anytime, and from time to time in its sole discretion, to
substitute assets of equal fair market value for any asset held by the Trust.
This right is exercisable by the Company in a nonfiduciary capacity without the
approval or consent of any person in a fiduciary capacity.

         (c)     The Company shall establish specific investment policies and
guidelines for Trust Funds.  The Trustee shall be responsible only for investing
the Trust Fund in accordance with such policies and guidelines.  If any
change in such policies or guidelines is subsequently deemed appropriate,
notice of such change shall be promptly communicated by the Company to the
Trustee, but the Trustee shall be under no duty to take or refrain from taking
any action based on such changes prior to receiving such notice.

         (d)     The Company may appoint one or more than one Investment
Manager to direct the investment of the Trust Fund.  Upon the effective date of
such appointment, such Investment Manager shall have the sole power,
without prior consultation with the Trustee, to manage and direct the
acquisition and disposition of the Trust Fund.  The Investment Manager shall
keep such records and make such reports to the Trustee as may be specified in
the agreement appointing such Investment Manager. The Company at its discretion
also may terminate the appointment of any Investment Manager.  The Company shall
notify the Trustee of such termination and, in the absence of specific
directions from the Company or the appointment of a successor Investment Manager
for the Investment Account, the Company shall be responsible for the management
and control of the assets formerly managed by the Investment Manager.

         (e)       To the extent neither the Company nor an Investment Manager
furnishes directions as to the investment of the Trust Fund, the Trustee may
retain uninvested cash or cash balances, without being required to pay
interest thereon, or may invest such assets in short-term investments and one of
the commingled funds described in Section 5(f)(8).

         (f)     The Trustee shall have the power to do all things and execute
such instruments as it may deem necessary or proper to carry out its
responsibilities under this Trust Agreement, including the following powers:

                          (1)     To invest any and all monies in stock of the
Company, other stocks, bonds, securities, insurance policies insuring the
lives of employees covered by any Plan, mutual funds, investment company or
trust shares, mortgages, notes, choses in action, real estate, improvements
thereon, and other property acceptable to the Trustee;

                          (2)     To sell, exchange, or otherwise dispose of
any property at any time held or acquired by the Trust Fund, at public or
private sale, for cash or on terms, without advertisement, including the right
to lease for any term;

                          (3)     To vote in person or by proxy any corporate
stock or other security and to agree to or take, or refrain from taking, any
other action necessary or appropriate for a shareholder or owner in regard to
any reorganization, merger, consolidation, liquidation, bankruptcy or other
procedure or proceeding affecting any stock, bond, note or other property;





                                      -4-
<PAGE>   43

                          (4)     To compromise, settle, adjust or otherwise
act in any reasonable manner whatsoever on any claim or demand by or against
the Trust Fund and to agree to any rescission or modification of any contract
or agreement affecting the Trust Fund;

                          (5)     To deposit any stock, bond or other security
in any depository or other similar institution and to register any stock, bond
or other security in the name of any nominee, ithout the addition of words
indicating that such security is held in a fiduciary capacity, but accurate
records shall be maintained showing that such security is a Trust Fund asset
and the Trustee shall be responsible for the acts of such depository or
nominee;

                          (6)     To hold cash (including, without limitation,
in non-interest bearing accounts) in such amounts and for such time as  may be
in its opinion reasonable for the proper management of the Trust Fund;

                          (7)      To grant, sell, purchase, or exercise any
option of any kind or description whatsoever to purchase or sell any security
or other property which is a permissible investment under this Section 5,
provided the Trustee in no event shall grant or sell any option under which any
person can require the Trust Fund to sell any security or other property
which the Trust Fund at the time of such grant or sale does not hold in an
amount sufficient to cover such option and any other outstanding option granted
or sold by the Trustee, and the Trustee in no event shall dispose of any
security or other property covering any option until such option is exercised
or otherwise expires;

                          (8)     To invest all, or any part, of the assets of
the Trust Fund in any common, collective or group trust fund which is
maintained under section 584 of the Code or Revenue Ruling 81-100, 1981-1 C.B.
326, by the Trustee or  any bank which is a member of an "affiliated group" (as
that term is defined in section 1504 of the Code) with the Trustee, the
provisions of which common, collective or group trust fund upon such investment
shall automatically be adopted and made a part of this Trust Agreement for the
period such investment is made in such common, collective or group trust fund;


                          (9)     To make such other investments without regard
to any law now or hereafter in force limiting the investments of trustees
or other fiduciaries.

                  (g)     With respect to any policy of life insurance
that the Trustee owns or under which the death benefits are made payable
to the Trustee, the Trustee shall have the following specific powers and
responsibilities:

                          (1)     If the Trustee is the owner of any such
policy, the Trustee reserves all available benefits, privileges, payments,
dividends, surrender values, options, conversion rights and elections,
including the right at any time or times to change the beneficiary, to borrow
or otherwise receive the surrender value, to pledge or assign the policy or its
proceeds as collateral security for any loan which the owner or owners may
obtain from any lender, including a Trustee under this agreement individually
or a parent or affiliate company, and to withdraw the policy if deposited with
the trustees, without any duty on the trustees to see its return.

                          (2)     Upon the death of the insured under the
policy the Trustee shall take such action as they deem best to collect the
policy proceeds, paying the expenses of collection from the Trust Fund,
but the Trustee need not enter into or maintain any litigation to





                                      -5-
<PAGE>   44

enforce payment on the policy until indemnified to their satisfaction against
all expenses and liabilities to which it might by any such litigation be
subjected.  The Trustee may release the insurance company from its liability
under the policy and make any compromise which the trustees deem proper.

                          (3)     The insurance company shall not take notice
of the provisions of this Agreement or see to the application of the policy
proceeds, and the Trustee's receipt to the insurance company shall be a
complete release for any payment made and shall bind every participant or
beneficiary under this Agreement.

         6.      DISPOSITION OF INCOME.

During the term of this Trust, all income received by the Trust, net of
expenses and taxes, shall be accumulated and reinvested.

         7.      ACCOUNTING BY TRUSTEE.

The Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions required to be made,
including such specific records as shall be agreed upon in writing between the
Company and the Trustee.  Within 90 days following the close of each calendar
year and within 30 days after the removal or resignation of the Trustee, the
Trustee shall deliver to the Company a written account of its administration of
the Trust during such year or during the period from the close of the last
preceding year to the date of such removal or resignation, setting forth all
investments, receipts, disbursements and other transactions effected by it,
including a description of all securities and investments purchased and sold
with the cost or net proceeds of such purchases or sales (accrued interest paid
or receivable being shown separately), and showing all cash, securities and
other property held in the Trust at the end of such year or as of the date of
such removal or resignation, as the case may be.

         8.      RESPONSIBILITY OF TRUSTEE.

         (a)     The Trustee shall act with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent person acting
in like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims, provided, however, that the
Trustee shall incur no liability to any person for any action taken
pursuant to a direction, request or approval given by the Company which is
contemplated by, and in conformity with, the terms of the Plans or this Trust
and is given in writing by the Company.  In the event of a dispute between the
Company and a party, the Trustee may apply to a court of competent jurisdiction
to resolve the dispute.

         (b)     If the Trustee undertakes or defends any litigation arising in
connection with this Trust, the Company agrees to indemnify the Trustee against
the Trustee's costs, expenses and liabilities (including, without limitation,
attorneys' fees and expenses) relating  thereto and to be primarily liable for
such payments.  If the Company does not pay such costs, expenses and
liabilities in a reasonably timely manner, the Trustee may obtain payment from
the Trust.

         (c)     The Trustee may consult with legal counsel (who may also be
counsel for the Company generally) with respect to any of its duties or
obligations hereunder.





                                      -6-
<PAGE>   45


         (d)     The Trustee may hire agents, accountants, actuaries,
investment advisors, financial consultants or other professionals to assist it
in performing any of its duties or obligations hereunder.

         (e)     The Trustee shall have, without exclusion, all powers conferred
on Trustees by applicable law, unless expressly provided otherwise herein,
provided, however, that if an insurance policy is held as an asset of the
Trust, the Trustee shall have no power to name a beneficiary of the policy
other than the Trust, to assign the policy (as distinct from conversion of
the policy to a different form) other than to a successor Trustee, or to loan
to any person the proceeds of any borrowing against such policy.

         (f)     Notwithstanding any powers granted to the Trustee pursuant to
this Trust Agreement or to applicable law, the Trustee  shall not have any
power that could give this Trust the objective of carrying on a business and
dividing the gains therefrom, within the meaning of section 301.7701-2 of the
Procedure and Administrative Regulations promulgated pursuant to the Internal
Revenue Code.

         9.      COMPENSATION AND EXPENSES OF TRUSTEE.

                 The Company shall pay all administrative and the Trustee's
fees and expenses. If not so paid, the fees and expenses shall be paid from
the Trust.

         10.     RESIGNATION AND REMOVAL OF TRUSTEE.

                 (a)     The Trustee may resign at any time by written notice
to the  Company, which shall be effective 45 days after receipt of such notice
unless the Company and the Trustee agree otherwise.

                 (b)     The Trustee may be removed by the Company on 30 days
notice  or upon shorter notice accepted by the Trustee.

                 (c)     Upon a Change of Control, as defined herein, the
Trustee may not be removed by the Company for 5 years.

                 (d)     If the Trustee resigns or is removed within 5 years of
a Change of Control, as defined herein, the Trustee shall select asuccessor
Trustee in accordance with the provisions of Section 11(b) hereof prior to the
effective date of the Trustee's resignation or removal.

                 (e)     Upon resignation or removal of the Trustee and
appointment of  a successor Trustee, all assets shall subsequently be
transferred to the successor Trustee.  The transfer shall be completed within
30 days after receipt of notice of resignation, removal or transfer, unless the
Company extends the time limit.

                 (f)     If the Trustee resigns or is removed, a successor
shall be appointed, in accordance with Section 11 hereof, by the effective date
of resignation or removal under paragraphs (a) and (b) of this section.
If no such appointment has been made, the Trustee may apply to a court of
competent jurisdiction for appointment of a successor or for instructions.  All
expenses of the Trustee in connection with the proceeding shall be allowed as
administrative expenses of the Trust.





                                      -7-
<PAGE>   46

         11.     APPOINTMENT OF SUCCESSOR.

         (a)     If the Trustee resigns or is removed in accordance with Section
10(a) or (b) hereof, the Company may appoint any third party, such as a bank
trust department or other party that may be granted corporate trustee powers
under state law, as a successor to replace the Trustee upon resignation or
removal. The appointment shall be effective when accepted in writing by the new
Trustee, who shall have all of the rights and powers of the former Trustee,
including ownership rights in the Trust assets.  The former Trustee shall
execute any instrument necessary or reasonably requested by the Company or the
successor Trustee to evidence the transfer.

         (b)     If the Trustee resigns or is removed pursuant to the provisions
of Section 10(d) hereof and selects a successor Trustee, the Trustee may
appoint any third party such as a bank trust department or other party that may
be granted corporate trustee powers under state law.  The appointment of a
successor Trustee shall be effective when accepted in writing by the new
Trustee.  The new Trustee shall have all the rights and powers of the
former Trustee, including ownership rights in Trust assets.  The former Trustee
shall execute any instrument necessary or reasonably requested by the successor
Trustee to evidence the transfer.

         12.     AMENDMENT AND TERMINATION.

         (a)     The Trust is irrevocable but this Agreement may be amended with
the written consent of the Trustee and all beneficiaries.  No amendment will be
permitted that would vest the assets of the Trust in, or at the direction
of, the Company except as required pursuant to Section 1(d) hereof.

         (b)     The Trust shall not terminate until the date on which Plan
participants and their beneficiaries are no longer entitled to benefits
pursuant to the terms of the Plans.  Upon termination of the Trust, any
assets remaining in the Trust shall be returned to the Company.

         13.     MISCELLANEOUS.

         (a)     Any provisions of this Trust Agreement prohibited by law
shall be ineffective to the extent of any such prohibition, without
invalidating the remaining provisions hereof.

         (b)     Benefits payable to Plan participants and their beneficiaries
under this Trust Agreement may not be anticipated, assigned (either at law or
in equity), alienated, pledged, encumbered or subjected to attachment,
garnishment, levy, execution or other legal or equitable process.

         (c)     This Trust Agreement shall be governed by and construed in
accordance with the laws of the State of Florida.

         (d)     For purposes of this Trust, Change of Control shall mean the
purchase or other acquisition by any person, entity or group of persons,
within the meaning of section 13(d) or 14(d) of the Securities Exchange Act of
1934 ('Act'), or any comparable successor provisions, of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Act) of 30 percent or
more of either the outstanding shares of common stock or the combined





                                      -8-
<PAGE>   47

voting power of the Company's then outstanding voting securities entitled to
vote generally, or the approval by the stockholders of the Company of a
reorganization, merger, or consolidation, in each case, with respect to which
persons who were stockholders of the Company immediately prior to such
reorganization, merger or consolidation do not, immediately thereafter, own
more than 50 percent of the combined voting power entitled to vote generally in
the election of directors of the reorganized, merged or consolidated the
Company's then outstanding securities, or a liquidation or dissolution of the
Company or of the sale of all or substantially all of the Company's assets.

         14.     EFFECTIVE DATE.

                 The effective date of this Trust Agreement shall be
         January 3, 1997.


         The Company and the Trustee have executed this Trust Agreement
effective as provided herein.


                                           RAILAMERICA, INC.

                                           By:/s/ Donald Redfearn
                                              -----------------------------
                                           TITLE:  EXECUTIVE VICE PRESIDENT
ATTEST:

(CORPORATE SEAL)



By:/s/ Larry W. Bush
   ------------------------
   Ass't. Secretary

                                           TRUSTEE:

                                           /s/ Donald D. Redfearn
                                           --------------------------------
                                           Donald D. Redfearn






                                      -9-
<PAGE>   48

                                  APPENDIX ONE
                                       TO
           RAILAMERICA, INC. NONQUALIFIED DEFERRED COMPENSATION TRUST




   Plans Currently in Place Reflecting Agreements with the Following Employees:

   1.      Nonqualified Deferred Compensation Agreement with Gary O. Marino.

   2.      Nonqualified Deferred Compensation Agreement with John Marino.






<PAGE>   49

                                  APPENDIX TWO
                                       TO
           RAILAMERICA, INC. NONQUALIFIED DEFERRED COMPENSATION TRUST




         The amount of the initial deposit to the RailAmerica, Inc.
Nonqualified Deferred Compensation Trust is ___________________________
Dollars ($____________).






<PAGE>   50

                  NONQUALIFIED DEFERRED COMPENSATION AGREEMENT



         THIS AGREEMENT, made and entered into as of this 3rd day of January,
1997, by and between RailAmerica, Inc., a corporation headquartered in Boca
Raton, Florida (the "Employer"), and Gary O. Marino, a resident of the State of
Florida (the "Employee").

         WHEREAS, the Employee has been employed by the Employer as its
Chairman;

         WHEREAS, the Employer recognizes the value of the services performed
by the Employee and wishes to encourage his continued employment;

         WHEREAS, the Employee wishes to be afforded the opportunity to defer
payment of compensation until a future date and the Employer desires to
facilitate that goal and to also contribute an additional amount toward the
Employee's retirement pay;

         WHEREAS, the parties hereto wish to provide the terms and conditions
upon which the Employee may defer compensation and the Employer may contribute
toward the Employee's retirement pay; and

         WHEREAS, the parties hereto intend that this Agreement be considered
an unfunded arrangement, maintained primarily to provide deferred compensation
and retirement benefits for the Employee, a member of a select group of
management or highly compensated employees of the Employer, for purposes of the
Employee Retirement Income Security Act of 1974, as amended;

         NOW, THEREFORE, in consideration of the premises and of the mutual
promises herein contained, the parties hereto agree as follows:

         1.      DEFERRAL OF COMPENSATION OR BONUS.  Commencing with the date
of this Agreement, and continuing through the date on which the Employee's
employment terminates because of his death or any other cause, the Employee and
the Employer agree that the Employee shall be entitled to elect to defer any
percentage of the compensation that the Employee would otherwise be entitled to
receive from the Employer in each Fiscal Year of the Employer.  In addition,
the Employee shall be entitled to elect to defer all or any portion of any
bonus that the Employer may award during or for any Fiscal Year.

         2.      ELECTION TO DEFER COMPENSATION.  The Employee may elect to
defer compensation or bonus hereunder by filing a written notice to that effect
with the Employer, referred to as an Election of Deferral.  Any such Election
of Deferral shall be made before the Employee has earned the right to the
compensation or bonus deferred and shall continue until changed in writing by
the Employee.  Any change in the Employee's Election of Deferral shall be
effective with the first payment of compensation or bonus that the Employee
earns and that otherwise would be paid following delivery of notice of a change
in the Employee's Election of Deferral.  Any amount of compensation or bonus
deferred shall be referred to as the "Deferral Amount."

         3.      TRANSFER OF DEFERRAL AMOUNT TO TRUSTEE.  The Employer shall
transfer to the then acting trustee (the "Trustee") of the RailAmerica, Inc.
Nonqualified Deferred Compensation Trust (the "Trust") the Employee's Deferral
Amount, as soon as practical following the date that the Deferral Amount
otherwise would have been paid to the Employee but for the Employee's Election
of Deferral.  The Deferral Amount shall thereafter be invested and reinvested
by such trustee and paid from the Trust to the Employee, or his designated

<PAGE>   51

beneficiary, in accordance with this Agreement and the Trust.  The Trust and
any assets held by the Trust to assist it in meeting its obligations hereunder
will conform to the substantive terms of the trust described in Internal
Revenue Service Revenue Procedure 92-64.

         4.      EMPLOYER'S ADDITIONS TO DEFERRAL AMOUNT.  In addition to the
Employee's Deferral Amount, the Employer also shall transfer to the Trust for
the Employee's benefit each calendar year at least $20,000, with the first
payment to be made as soon as practical following execution of this Agreement
and subsequent payments to be made during the first quarter of each subsequent
calendar year.  This amount shall be referred to as the "Employer's Additions,"
shall be invested and reinvested by such trustee and paid from the Trust to the
Employee, or his designated beneficiary, in accordance with this Agreement and
the Trust.

         5.      EMPLOYEE'S DEFERRAL ACCOUNT.

                 a.  DEFERRAL ACCOUNT ESTABLISHED UNDER TRUST.  The Employee's
Deferral Amount, the Employer's Additions and the proceeds of the investment
and reinvestment of both, shall be credited to an account maintained by the
Trustee, called the Employee's Deferral Account, and shall be accounted for
separately so long as any amount remains to be paid to the Employee or his
beneficiary hereunder.  The Employer shall cause the Trustee to provide to the
Employee periodically, and no less often than once every 12 months, a statement
of the Employee's Deferral Account that shows the current investment status of
the Employee's Deferral Account.

                 b.  TRUST'S INVESTMENT OF DEFERRAL ACCOUNT IN INSURANCE
POLICY.  As described in the agreement establishing the Trust, the Trustee may
also invest the assets of the Employee's Deferral Account in one or more life
insurance policies issued on the life of the Employee.  If the Trustee elects
to invest all or any portion of the Deferral Account in any life insurance
policy issued on the life of the Employee, then the Employee agrees to assist
the Trustee in making application for any such policy by submitting to any
required physical examination and supplying any information necessary for
completion of such application.  To the extent that the Trustee invests the
Deferral Account in any life insurance policy, the value of the Deferral
Account attributable to such investment shall be as provided under such life
insurance policy to the owner thereof.  If the Trust elects to invest all or
any portion of the Deferral Account in any life insurance policy paying a death
benefit to the Employer upon the Employee's death, then the amount of any such
proceeds shall be deemed to have been paid to the Deferral Account and shall
increase the death benefit payable under Section 7 hereof to the Employee's
designated beneficiary.

         6.      TERMINATION BENEFIT.  From and after the termination of the
Employee from the service of the Employer, the Trustee thereafter shall
distribute to the Employee's Deferral Account held under the Trust to the
Employee in 120 substantially equal monthly payments.  The Employee at his sole
option may make an election before the date benefit payments begin from his
Deferral Account to receive his Deferral Account in equal monthly installment
payments over a shorter period or commencing at a later date than otherwise
would apply, or in a single payment.  The election referred to in the preceding
sentence must be made at least 15 days before the date benefit payments are
scheduled to begin and shall be irrevocable.  The first designated monthly
payment hereunder or the single payment, as the case may be, shall be due and
payable on the first business day of the second month following the Employee's
termination of employment.  Subsequent monthly payments, if any, shall be made
on the first business day of each month thereafter for the applicable payment
period.  In addition to the





                                      -2-
<PAGE>   52

election referred to above, the Employee at his sole option at least 15 days
before each annual anniversary date of the commencement of monthly payments
hereunder also may make an election to receive the balance of his Deferral
Account in equal monthly installment payments over a shorter period than
otherwise would apply, or in a single payment.  Notwithstanding the foregoing,
the Employer may at any time direct the Trustee to accelerate payments to the
Employee hereunder.

         7.      DEATH BENEFIT.

                 a.       BEFORE PAYMENT OF TERMINATION BENEFIT BEGINS.  In
event of the Employee's death before commencement of termination benefits
hereunder, the Employee's Deferral Account held under the Trust shall be paid
in 120 substantially equal monthly payment to the Employee's designated
beneficiary, in accordance with the last such designation received by the
Employer from the Employee before his death.  Alternatively, the designated
beneficiary at his or her sole option may make an election before the date
benefit payments begin to receive monthly installment payments over a shorter
period or commencing at a later date than otherwise would apply, or in a single
payment.  The election referred to in the preceding sentence must be made at
least 15 days before the date benefits payments are scheduled to begin and
shall be irrevocable.  In any event, the first designated monthly payment or
the single payment, as the case may be, shall be due and payable on the first
business day of the second month following the Employee's death.  Subsequent
monthly payments, if any, shall be made on the first business day of each month
thereafter for the applicable payment period.  Notwithstanding the foregoing,
the Employer may at any time direct the Trustee to accelerate payments to the
Employee's designated beneficiary hereunder.

                 b.       AFTER PAYMENT OF TERMINATION BENEFIT BEGINS.  In the
event of the Employee's death after commencement of termination benefits
hereunder but before completion of all such payments due and owning
hereunder, the Trustee shall continue to make such payments, in equal monthly
installments, over the remainder of the period during which the Employee would
have received such payments, and at the time and in the same manner, had the
Employee survived,  Such continuing payments shall be made to the Employee's
designated beneficiary, in accordance with the last such designation
received by the Employer from the Employee before his death.  Notwithstanding
the foregoing, the Employer may at any time direct the Trustee to accelerate
payments to the Employee's designated beneficiary hereunder.

                 c.       DESIGNATED BENEFICIARY.  The Employee's designated
beneficiary shall be the person(s) named in accordance with the last such
designation received by the Employer from the Employee before his death.  If no
such designation has been received by the Employer from the Employee before his
death, said payments shall be made to the Employee's surviving spouse, so long
as she shall live and thereafter to such person or persons, including her
estate, as the Employee's surviving spouse may appoint under her Will, making
specific reference hereto.  If the Employee is not survived by a spouse or if
she shall fail to so appoint, then said payments shall be made to the then
living children of the Employee, if any, in equal shares, or to the survivor of
such children.

         8.      HARDSHIP BENEFIT.  In the event the Employee suffers a
financial hardship (as hereinafter defined), the Trustee may, if it deems it to
be in the Employee's best interests, distribute to or on behalf of the Employee
as a hardship benefit (the "Hardship Benefit") any portion of the Employee's
Deferral Account attributable to the Employee's Deferral Amount, including
earnings thereon.  Financial hardship shall mean an immediate and heavy
financial need of the Employee caused by temporary or permanent disability or
incapacity of the





                                      -3-
<PAGE>   53

Employee or a dependent of the Employee, medical or educational expenses of any
dependent of the Employee, the purchase or maintenance of a residence of the
Employee or a dependent of the Employee, death of the Employee's spouse or a
material reduction in the Employee's family income (the Employee's and spouse's
income).

         9.      BENEFIT UPON CHANGE IN CONTROL OF EMPLOYER.  In the event of a
Change of Control of the Employer, as defined herein, the Trustee immediately
shall distribute the Employee's Deferral Account held under the Trust to the
Employee in a lump sum.  For purposes of this Agreement, Change of Control
shall mean (a) the purchase or other acquisition by any person, entity or group
of persons, within the meaning of section 13(d) or 14(d) of the Securities
Exchange Act of 1934 (the "Act"), or any comparable successor provisions, of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Act) of 30 percent or more of either the outstanding shares of common stock or
the combined voting power of the Employer's then outstanding voting securities
entitled to vote generally, (b) the approval by the stockholders of the
Employer of a reorganization, merger, or consolidation, with respect to which
persons who were stockholders of the Employer immediately prior to such
reorganization, merger or consolidation do not, immediately thereafter, own
more than 50 percent of the combined voting power entitled to vote generally in
the election of directors of the reorganized, merged or consolidated Employer's
then outstanding securities, (c) a liquidation or dissolution of the Employer
or (d) the sale of all or substantially all of the Employer's assets.

         10.     ADDITIONAL PERMITTED DISTRIBUTION.  In the event that the
Employer and the Employee enter into a salary continuation agreement, or the
Employer institutes a salary continuation plan covering the Employee, the
Employee shall be permitted to request distribution of all or a portion of the
Employee's aggregate Deferral Amount through the date of such agreement or
plan, and the Trustee shall make prompt distribution to the Employee pursuant
to such request.  The Employee shall have a limited period of 30 days from the
date of such agreement or plan within which to request such a distribution from
the Trust.

         11.     NON-COMPETITION DURING EMPLOYMENT.  In consideration of the
foregoing agreements of the Employer, the Employee hereby agrees that, so long
as he remains employed by the Employer, he will devote substantially all of his
time, skill, diligence and attention to the business of the Employer, and will
not actively engage, either directly or indirectly, in any business or other
activity which is or may be deemed to be in any way competitive with or adverse
to the best interests of the business of the Employer.

         12.     DETERMINATION OF BENEFITS, CLAIMS
                 PROCEDURE AND ADMINISTRATION.

                 a.       REQUEST FOR BENEFIT.  A person who believes that he
is being denied a benefit to which he is entitled under this Agreement
(hereinafter referred to as a "Claimant") may file a written request for such
benefit with the Employer, setting forth his claim.  The request must be
addressed to the Chairman of the Board of Directors of the Employer at its then
principal place of business.

                 b.       CLAIM PROCEDURE.  Upon receipt of a claim, the
Employer shall advise the Claimant that a reply will be forthcoming within
ninety (90) days and shall, in fact, deliver such reply within such period.
The Employer may, however, extend the reply period for an additional ninety
(90) days for reasonable cause.  If the claim is denied in whole or in part,
the Employer shall adopt a written opinion, using language calculated to be
understood by the Claimant, setting forth:  (a) the specific reason or reasons
for such denial; (b) the specific





                                      -4-
<PAGE>   54

reference to pertinent provisions of this Agreement on which such denial is
based; (c) a description of any additional material or information necessary
for the Claimant to perfect his claim and an explanation why such material or
such information is necessary; (d) appropriate information as to the steps to
be taken if the Claimant wishes to submit the claim for review; and (e) the
time limits for requesting a review under subsection c and for review under
subsection d hereof.

                 c.       REQUEST FOR REVIEW.  Within sixty (60) days after the
receipt by the Claimant of the written opinion described above, the Claimant
may request in writing that the Secretary of the Employer review the
determination of the corporation.  Such request must be addressed to the
Secretary of the Employer, at its then principal place of business.  The
Claimant or his duly authorized representative may, but need not, review the
pertinent documents and submit issues and comments in writing for consideration
by the Employer.  If the Claimant does not request a review of the
corporation's determination by the Secretary of the Employer within such sixty
(60) day period, he shall be barred and estopped from challenging the
Employer's determination.

                 d.       DECISION ON REVIEW.  Within sixty (60) days after the
Secretary's receipt of a request for review, he will review the Employer's
determination.  After consideration of all materials presented by the Claimant,
the Secretary will render a written opinion, written in a manner calculated to
be understood by the Claimant, setting forth the specific reasons for the
decision and containing specific references to the pertinent provisions of this
Agreement on which the decision is based.  If special circumstances require
that the sixty (60) day time period be extended, the Secretary will so notify
the Claimant and will render the decision as soon as possible, but no later
than one hundred twenty (120) days after receipt of the request for review.

         13.     BINDING ARBITRATION.  If any dispute arises with respect to
this Agreement, each party shall use its best efforts to resolve the dispute
using the claims procedure provided above.  If, after 30 days the dispute has
not been resolved, either party may elect to submit the dispute to mediation by
an independent certified circuit civil mediator selected jointly by the parties
by giving notice to the other party of its election to mediate (the "Mediation
Notice").  If a party elects to mediate a dispute, the other party must mediate
the dispute, although the result of the mediation will not be binding on either
party.  The mediator shall convene a meeting of the parties to the dispute
within 60 days after his or her appointment.

                 Either party may elect to submit the dispute to binding
arbitration before a panel of arbitrators in accordance with the Florida
Arbitration Code and the Florida Evidence Code after the conclusion of the
mediation of the dispute by giving the other party a notice of arbitration in
accordance with section 12 (the "Arbitration Notice").  If the parties do not
resolve the dispute through mediation, arbitration will be the sole and
exclusive method of resolving the dispute.  All parties must arbitrate the
dispute, and each party will be barred from filing a lawsuit concerning the
subject matter of the dispute, except to obtain an equitable remedy.

                 The parties shall select a mutually acceptable Florida
corporate lawyer who is rated "AV" by the Martindale-Hubbell law directory to
arbitrate the dispute.  If within ten (10) days after the effective date of the
Arbitration Notice the parties are unable to select such an arbitrator, an
arbitration panel will be selected.  The arbitration panel will consist of
three arbitrators selected by agreement of the parties.  At least one of the
arbitrators must be a Florida corporate lawyer who is rated "AV" by the
Martindale-Hubbell law directory.  Each party shall select an arbitrator within
twenty (20) days after the effective date of the Arbitration Notice.  A party
who fails to select an arbitrator within the prescribed 20-day period waives
the right to





                                      -5-
<PAGE>   55

select an arbitrator, and the arbitrators chosen by the other party will
constitute the "arbitration panel" for purposes of this Agreement.  If each
party selects an arbitrator, the two arbitrators so selected shall select the
third arbitrator.

                 Every mediator or arbitrator must be independent (not a lawyer
or relative of a party to this Agreement or an officer, director, employee, or
shareholder of the Employer) without any economic or financial interest of any
kind in the outcome of the mediation or arbitration.  Each arbitrator's conduct
will be governed by the Code of Ethics for Arbitrators in Commercial Disputes
(1986) that has been approved and recommended by the American Bar Association
and the American Arbitration Association.

                 Within 60 days after the effective date of their election or
appointment, the arbitration panel shall convene a hearing for the dispute to
be held on such date and at such time and place in Broward County or Palm Beach
County, Florida, as the arbitration panel designates upon 45 days' advance
notice to the parties.  The arbitration panel shall render its decision within
30 days after the conclusion of the hearing.  The decision of the arbitration
panel will be binding and conclusive as to all the parties and, upon the
pleading of any party, any court having jurisdiction may enter a judgment of
any award rendered in the arbitration, which may include an award of any
damages.  The arbitration panel shall hear and decide the dispute based on the
evidenced produced, notwithstanding the failure or refusal to appear by a party
who has been duly notified of the date, time and place of the hearing.

         14.     NON-ASSIGNABILITY OF BENEFITS.  Neither the Employee, his
designated beneficiary nor any other beneficiary under this Agreement shall
have any power or right to transfer, assign, anticipate, hypothecate or
otherwise encumber any part or all of the amounts payable hereunder, which are
expressly declared to be unassignable and non- transferable.  Any such
attempted assignment or transfer shall be void and shall terminate this
Agreement; the Employer shall thereupon have no further liability hereunder.
No amount payable hereunder shall, before actual payment thereof, be subject to
seizure by any creditor of any such beneficiary for the payment of any debt,
judgment or other obligation, by a proceeding at law or in equity, nor
transferable by operation of law in the event of the bankruptcy, insolvency or
death of the Employee, his designated beneficiary or any other beneficiary
hereunder.

         15.     AMENDMENT.  This Agreement may not be amended, altered or
modified, except by a written instrument signed by the parties hereto or their
respective successors and may not be otherwise terminated except as provided
herein.

         16.     INUREMENT.  This Agreement shall be binding upon and inure to
the benefit of the Employer and its successors and assigns, and the Employee,
his successors, heirs, executors, administrators and beneficiaries.

         17.     INTENDED TAX CONSEQUENCES.  The parties acknowledge that it is
their intent that the Employee's Deferral Amount, the Employer's Additions and
any earnings thereon while held by the Trust will not be subject to income
taxes to the Employee until the Employee (or his Designated Beneficiary)
receives any amount hereunder and will not be deductible by the Employer until
payment hereunder.  The Employee's Deferral Amount and the Employer's Additions
may be subject to employment taxes, with respect to which the Employer shall
report and withhold appropriately.

         18.     NOTICES.  Any notice, consent or demand required or permitted
to be given under the provisions of this Agreement shall be in writing, and
shall be signed by the party





                                      -6-
<PAGE>   56

giving or making the same.  If such notice, consent or demand is mailed to a
party hereto, it shall be sent by United States certified mail, postage
prepaid, addressed to such party's last known address as shown on the records
of the Employer.  The date of such mailing shall be deemed the date of notice,
consent or demand.

         19.     GOVERNING LAW; VENUE.  This Agreement, and the rights of the
parties hereunder, shall be governed by and construed in accordance with the
laws of the State of Florida.  This Agreement shall be subject to the exclusive
jurisdiction of the courts of Broward County or Palm Beach County, Florida.
The parties irrevocably waive, to the fullest extent permitted by law, any
objection which they may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement, or any
judgment entered by any court in respect hereof brought in Broward County or
Palm Beach County, Florida, and further irrevocably waive any claim that any
suit, action or proceeding brought in Broward County or Palm Beach County,
Florida has been brought in an inconvenient forum.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
in duplicate, as of the day and year first above written.



                                        RAILAMERICA, INC.


ATTEST:/s/ Larry W. Bush                By:/s/ Donald Redfearn
       -----------------                   ------------------------
       Ass't. Secretary                    EXECUTIVE VICE PRESIDENT




                                        /s/ Gary O. Marino
                                        ---------------------------
                                        GARY O. MARINO





                                      -7-
<PAGE>   57

                  NONQUALIFIED DEFERRED COMPENSATION AGREEMENT



         THIS AGREEMENT, made and entered into as of this 3rd day of January,
1997, by and between RailAmerica, Inc., a corporation headquartered in Boca
Raton, Florida (the "Employer"), and John H. Marino, a resident of the State of
Virginia (the "Employee").

         WHEREAS, the Employee has been employed by the Employer as its
President and Chief Operating Officer;

         WHEREAS, the Employer recognizes the value of the services performed
by the Employee and wishes to encourage his continued employment;

         WHEREAS, the Employee wishes to be afforded the opportunity to defer
payment of compensation until a future date and the Employer desires to
facilitate that goal and to also contribute an additional amount toward the
Employee's retirement pay;

         WHEREAS, the parties hereto wish to provide the terms and conditions
upon which the Employee may defer compensation and the Employer may contribute
toward the Employee's retirement pay; and

         WHEREAS, the parties hereto intend that this Agreement be considered
an unfunded arrangement, maintained primarily to provide deferred compensation
and retirement benefits for the Employee, a member of a select group of
management or highly compensated employees of the Employer, for purposes of the
Employee Retirement Income Security Act of 1974, as amended;

         NOW, THEREFORE, in consideration of the premises and of the mutual
promises herein contained, the parties hereto agree as follows:

         1.      DEFERRAL OF COMPENSATION OR BONUS.  Commencing with the date
of this Agreement, and continuing through the date on which the Employee's
employment terminates because of his death or any other cause, the Employee and
the Employer agree that the Employee shall be entitled to elect to defer any
percentage of the compensation that the Employee would otherwise be entitled to
receive from the Employer in each Fiscal Year of the Employer.  In addition,
the Employee shall be entitled to elect to defer all or any portion of any
bonus that the Employer may award during or for any Fiscal Year.

         2.      ELECTION TO DEFER COMPENSATION.  The Employee may elect to
defer compensation or bonus hereunder by filing a written notice to that effect
with the Employer, referred to as an Election of Deferral.  Any such Election
of Deferral shall be made before the Employee has earned the right to the
compensation or bonus deferred and shall continue until changed in writing by
the Employee.  Any change in the Employee's Election of Deferral shall be
effective with the first payment of compensation or bonus that the Employee
earns and that otherwise would be paid following delivery of notice of a change
in the Employee's Election of Deferral.  Any amount of compensation or bonus
deferred shall be referred to as the "Deferral Amount."

         3.      TRANSFER OF DEFERRAL AMOUNT TO TRUSTEE.  The Employer shall
transfer to the then acting trustee (the "Trustee") of the RailAmerica, Inc.
Nonqualified Deferred Compensation Trust (the "Trust") the Employee's Deferral
Amount, as soon as practical following the date that the Deferral Amount
otherwise would have been paid to the Employee but for the Employee's Election
of Deferral.  The Deferral Amount shall thereafter be invested

<PAGE>   58

and reinvested by such trustee and paid from the Trust to the Employee, or his
designated beneficiary, in accordance with this Agreement and the Trust.  The
Trust and any assets held by the Trust to assist it in meeting its obligations
hereunder will conform to the substantive terms of the trust described in
Internal Revenue Service Revenue Procedure 92-64.

         4.      EMPLOYER'S ADDITIONS TO DEFERRAL AMOUNT.  In addition to the
Employee's Deferral Amount, the Employer also shall transfer to the Trust for
the Employee's benefit each calendar year at least $20,000, with the first
payment to be made as soon as practical following execution of this Agreement
and subsequent payments to be made during the first quarter of each subsequent
calendar year.  This amount shall be referred to as the "Employer's Additions,"
shall be invested and reinvested by such trustee and paid from the Trust to the
Employee, or his designated beneficiary, in accordance with this Agreement and
the Trust.

         5.      EMPLOYEE'S DEFERRAL ACCOUNT.

                 a.  DEFERRAL ACCOUNT ESTABLISHED UNDER TRUST.  The Employee's
Deferral Amount, the Employer's Additions and the proceeds of the investment
and reinvestment of both, shall be credited to an account maintained by the
Trustee, called the Employee's Deferral Account, and shall be accounted for
separately so long as any amount remains to be paid to the Employee or his
beneficiary hereunder.  The Employer shall cause the Trustee to provide to the
Employee periodically, and no less often than once every 12 months, a statement
of the Employee's Deferral Account that shows the current investment status of
the Employee's Deferral Account.

                 b.  TRUST'S INVESTMENT OF DEFERRAL ACCOUNT IN INSURANCE
POLICY.  As described in the agreement establishing the Trust, the Trustee may
also invest the assets of the Employee's Deferral Account in one or more life
insurance policies issued on the life of the Employee.  If the Trustee elects
to invest all or any portion of the Deferral Account in any life insurance
policy issued on the life of the Employee, then the Employee agrees to assist
the Trustee in making application for any such policy by submitting to any
required physical examination and supplying any information necessary for
completion of such application.  To the extent that the Trustee invests the
Deferral Account in any life insurance policy, the value of the Deferral
Account attributable to such investment shall be as provided under such life
insurance policy to the owner thereof.  If the Trust elects to invest all or
any portion of the Deferral Account in any life insurance policy paying a death
benefit to the Employer upon the Employee's death, then the amount of any such
proceeds shall be deemed to have been paid to the Deferral Account and shall
increase the death benefit payable under Section 7 hereof to the Employee's
designated beneficiary.

         6.      TERMINATION BENEFIT.  From and after the termination of the
Employee from the service of the Employer, the Trustee thereafter shall
distribute to the Employee's Deferral Account held under the Trust to the
Employee in 120 substantially equal monthly payments.  The Employee at his sole
option may make an election before the date benefit payments begin from his
Deferral Account to receive his Deferral Account in equal monthly installment
payments over a shorter period or commencing at a later date than otherwise
would apply, or in a single payment.  The election referred to in the preceding
sentence must be made at least 15 days before the date benefit payments are
scheduled to begin and shall be irrevocable.  The first designated monthly
payment hereunder or the single payment, as the case may be, shall be due and
payable on the first business day of the second month following the Employee's
termination of employment.  Subsequent monthly payments, if any, shall be made
on the first





                                      -2-
<PAGE>   59

business day of each month thereafter for the applicable payment period.  In
addition to the election referred to above, the Employee at his sole option at
least 15 days before each annual anniversary date of the commencement of
monthly payments hereunder also may make an election to receive the balance of
his Deferral Account in equal monthly installment payments over a shorter
period than otherwise would apply, or in a single payment.  Notwithstanding the
foregoing, the Employer may at any time direct the Trustee to accelerate
payments to the Employee hereunder.

         7.      DEATH BENEFIT.

                 a.       BEFORE PAYMENT OF TERMINATION BENEFIT BEGINS.  In
event of the Employee's death before commencement of termination benefits
hereunder, the Employee's Deferral Account held under the Trust shall be paid
in 120 substantially equal monthly payment to the Employee's designated
beneficiary, in accordance with the last such designation received by the
Employer from the Employee before his death.  Alternatively, the designated
beneficiary at his or her sole option may make an election before the date
benefit payments begin to receive monthly installment payments over a shorter
period or commencing at a later date than otherwise would apply, or in a single
payment.  The election referred to in the preceding sentence must be made at
least 15 days before the date benefits payments are scheduled to begin and
shall be irrevocable.  In any event, the first designated monthly payment or
the single payment, as the case may be, shall be due and payable on the first
business day of the second month following the Employee's death.  Subsequent
monthly payments, if any, shall be made on the first business day of each month
thereafter for the applicable payment period.  Notwithstanding the foregoing,
the Employer may at any time direct the Trustee to accelerate payments to the
Employee's designated beneficiary hereunder.

                 b.       AFTER PAYMENT OF TERMINATION BENEFIT BEGINS.  In the
event of the Employee's death after commencement of termination benefits
hereunder but before completion of all such payments due and owning hereunder,
the Trustee shall continue to make such payments, in equal monthly installments,
over the remainder of the period during which the Employee would have received
such payments, and at the time and in the same manner, had the Employee
survived, Such continuing payments shall be made to the Employee's designated
beneficiary, in accordance with the last such designation received by the
Employer from the Employee before his death.  Notwithstanding the foregoing, the
Employer may at any time direct the Trustee to accelerate payments to the
Employee's designated beneficiary hereunder.

                 c.       DESIGNATED BENEFICIARY.  The Employee's designated
beneficiary shall be the person(s) named in accordance with the last such
designation received by the Employer from the Employee before his death.  If no
such designation has been received by the Employer from the Employee before his
death, said payments shall be made to the Employee's surviving spouse, so long
as she shall live and thereafter to such person or persons, including her
estate, as the Employee's surviving spouse may appoint under her Will, making
specific reference hereto.  If the Employee is not survived by a spouse or if
she shall fail to so appoint, then said payments shall be made to the then
living children of the Employee, if any, in equal shares, or to the survivor of
such children.

         8.      HARDSHIP BENEFIT.  In the event the Employee suffers a
financial hardship (as hereinafter defined), the Trustee may, if it deems it to
be in the Employee's best interests, distribute to or on behalf of the Employee
as a hardship benefit (the "Hardship Benefit") any portion of the Employee's
Deferral Account attributable to the Employee's Deferral Amount, including
earnings thereon.  Financial hardship shall mean an immediate and heavy
financial





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<PAGE>   60

need of the Employee caused by temporary or permanent disability or incapacity
of the Employee or a dependent of the Employee, medical or educational expenses
of any dependent of the Employee, the purchase or maintenance of a residence of
the Employee or a dependent of the Employee, death of the Employee's spouse or
a material reduction in the Employee's family income (the Employee's and
spouse's income).

         9.      BENEFIT UPON CHANGE IN CONTROL OF EMPLOYER.  In the event of a
Change of Control of the Employer, as defined herein, the Trustee immediately
shall distribute the Employee's Deferral Account held under the Trust to the
Employee in a lump sum.  For purposes of this Agreement, Change of Control
shall mean (a) the purchase or other acquisition by any person, entity or group
of persons, within the meaning of section 13(d) or 14(d) of the Securities
Exchange Act of 1934 (the "Act"), or any comparable successor provisions, of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Act) of 30 percent or more of either the outstanding shares of common stock or
the combined voting power of the Employer's then outstanding voting securities
entitled to vote generally, (b) the approval by the stockholders of the
Employer of a reorganization, merger, or consolidation, with respect to which
persons who were stockholders of the Employer immediately prior to such
reorganization, merger or consolidation do not, immediately thereafter, own
more than 50 percent of the combined voting power entitled to vote generally in
the election of directors of the reorganized, merged or consolidated Employer's
then outstanding securities, (c) a liquidation or dissolution of the Employer
or (d) the sale of all or substantially all of the Employer's assets.

         10.     ADDITIONAL PERMITTED DISTRIBUTION.  In the event that the
Employer and the Employee enter into a salary continuation agreement, or the
Employer institutes a salary continuation plan covering the Employee, the
Employee shall be permitted to request distribution of all or a portion of the
Employee's aggregate Deferral Amount through the date of such agreement or
plan, and the Trustee shall make prompt distribution to the Employee pursuant
to such request.  The Employee shall have a limited period of 30 days from the
date of such agreement or plan within which to request such a distribution from
the Trust.

         11.     NON-COMPETITION DURING EMPLOYMENT.  In consideration of the
foregoing agreements of the Employer, the Employee hereby agrees that, so long
as he remains employed by the Employer, he will devote substantially all of his
time, skill, diligence and attention to the business of the Employer, and will
not actively engage, either directly or indirectly, in any business or other
activity which is or may be deemed to be in any way competitive with or adverse
to the best interests of the business of the Employer.

         12.     DETERMINATION OF BENEFITS, CLAIMS
                 PROCEDURE AND ADMINISTRATION.

                 a.       REQUEST FOR BENEFIT.  A person who believes that he
is being denied a benefit to which he is entitled under this Agreement
(hereinafter referred to as a "Claimant") may file a written request for such
benefit with the Employer, setting forth his claim.  The request must be
addressed to the Chairman of the Board of Directors of the Employer at its then
principal place of business.

                 b.       CLAIM PROCEDURE.  Upon receipt of a claim, the
Employer shall advise the Claimant that a reply will be forthcoming within
ninety (90) days and shall, in fact, deliver such reply within such period.
The Employer may, however, extend the reply period for an additional ninety
(90) days for reasonable cause.  If the claim is denied in whole or in part,
the Employer shall adopt a written opinion, using language calculated to be
understood by the





                                      -4-
<PAGE>   61

Claimant, setting forth:  (a) the specific reason or reasons for such denial;
(b) the specific reference to pertinent provisions of this Agreement on which
such denial is based; (c) a description of any additional material or
information necessary for the Claimant to perfect his claim and an explanation
why such material or such information is necessary; (d) appropriate information
as to the steps to be taken if the Claimant wishes to submit the claim for
review; and (e) the time limits for requesting a review under subsection c and
for review under subsection d hereof.

                 c.       REQUEST FOR REVIEW.  Within sixty (60) days after the
receipt by the Claimant of the written opinion described above, the Claimant
may request in writing that the Secretary of the Employer review the
determination of the corporation.  Such request must be addressed to the
Secretary of the Employer, at its then principal place of business.  The
Claimant or his duly authorized representative may, but need not, review the
pertinent documents and submit issues and comments in writing for consideration
by the Employer.  If the Claimant does not request a review of the
corporation's determination by the Secretary of the Employer within such sixty
(60) day period, he shall be barred and estopped from challenging the
Employer's determination.

                 d.       DECISION ON REVIEW.  Within sixty (60) days after the
Secretary's receipt of a request for review, he will review the Employer's
determination.  After consideration of all materials presented by the Claimant,
the Secretary will render a written opinion, written in a manner calculated to
be understood by the Claimant, setting forth the specific reasons for the
decision and containing specific references to the pertinent provisions of this
Agreement on which the decision is based.  If special circumstances require
that the sixty (60) day time period be extended, the Secretary will so notify
the Claimant and will render the decision as soon as possible, but no later
than one hundred twenty (120) days after receipt of the request for review.

         13.     BINDING ARBITRATION.  If any dispute arises with respect to
this Agreement, each party shall use its best efforts to resolve the dispute
using the claims procedure provided above.  If, after 30 days the dispute has
not been resolved, either party may elect to submit the dispute to mediation by
an independent certified circuit civil mediator selected jointly by the parties
by giving notice to the other party of its election to mediate (the "Mediation
Notice").  If a party elects to mediate a dispute, the other party must mediate
the dispute, although the result of the mediation will not be binding on either
party.  The mediator shall convene a meeting of the parties to the dispute
within 60 days after his or her appointment.

                 Either party may elect to submit the dispute to binding
arbitration before a panel of arbitrators in accordance with the Florida
Arbitration Code and the Florida Evidence Code after the conclusion of the
mediation of the dispute by giving the other party a notice of arbitration in
accordance with section 12 (the "Arbitration Notice").  If the parties do not
resolve the dispute through mediation, arbitration will be the sole and
exclusive method of resolving the dispute.  All parties must arbitrate the
dispute, and each party will be barred from filing a lawsuit concerning the
subject matter of the dispute, except to obtain an equitable remedy.

                 The parties shall select a mutually acceptable Florida
corporate lawyer who is rated "AV" by the Martindale-Hubbell law directory to
arbitrate the dispute.  If within ten (10) days after the effective date of the
Arbitration Notice the parties are unable to select such an arbitrator, an
arbitration panel will be selected.  The arbitration panel will consist of
three arbitrators selected by agreement of the parties.  At least one of the
arbitrators must be a Florida corporate lawyer who is rated "AV" by the
Martindale-Hubbell law directory.  Each party shall select an arbitrator within
twenty (20) days after the effective date of the Arbitration Notice.





                                      -5-
<PAGE>   62

A party who fails to select an arbitrator within the prescribed 20-day period
waives the right to select an arbitrator, and the arbitrators chosen by the
other party will constitute the "arbitration panel" for purposes of this
Agreement.  If each party selects an arbitrator, the two arbitrators so
selected shall select the third arbitrator.

                 Every mediator or arbitrator must be independent (not a lawyer
or relative of a party to this Agreement or an officer, director, employee, or
shareholder of the Employer) without any economic or financial interest of any
kind in the outcome of the mediation or arbitration.  Each arbitrator's conduct
will be governed by the Code of Ethics for Arbitrators in Commercial Disputes
(1986) that has been approved and recommended by the American Bar Association
and the American Arbitration Association.

                 Within 60 days after the effective date of their election or
appointment, the arbitration panel shall convene a hearing for the dispute to
be held on such date and at such time and place in Broward County or Palm Beach
County, Florida as the arbitration panel designates upon 45 days' advance
notice to the parties.  The arbitration panel shall render its decision within
30 days after the conclusion of the hearing.  The decision of the arbitration
panel will be binding and conclusive as to all the parties and, upon the
pleading of any party, any court having jurisdiction may enter a judgment of
any award rendered in the arbitration, which may include an award of any
damages.  The arbitration panel shall hear and decide the dispute based on the
evidenced produced, notwithstanding the failure or refusal to appear by a party
who has been duly notified of the date, time and place of the hearing.

         14.     NON-ASSIGNABILITY OF BENEFITS.  Neither the Employee, his
designated beneficiary nor any other beneficiary under this Agreement shall
have any power or right to transfer, assign, anticipate, hypothecate or
otherwise encumber any part or all of the amounts payable hereunder, which are
expressly declared to be unassignable and non- transferable.  Any such
attempted assignment or transfer shall be void and shall terminate this
Agreement; the Employer shall thereupon have no further liability hereunder.
No amount payable hereunder shall, before actual payment thereof, be subject to
seizure by any creditor of any such beneficiary for the payment of any debt,
judgment or other obligation, by a proceeding at law or in equity, nor
transferable by operation of law in the event of the bankruptcy, insolvency or
death of the Employee, his designated beneficiary or any other beneficiary
hereunder.

         15.     AMENDMENT.  This Agreement may not be amended, altered or
modified, except by a written instrument signed by the parties hereto or their
respective successors and may not be otherwise terminated except as provided
herein.

         16.     INUREMENT.  This Agreement shall be binding upon and inure to
the benefit of the Employer and its successors and assigns, and the Employee,
his successors, heirs, executors, administrators and beneficiaries.

         17.     INTENDED TAX CONSEQUENCES.  The parties acknowledge that it is
their intent that the Employee's Deferral Amount, the Employer's Additions and
any earnings thereon while held by the Trust will not be subject to income
taxes to the Employee until the Employee (or his Designated Beneficiary)
receives any amount hereunder and will not be deductible by the Employer until
payment hereunder.  The Employee's Deferral Amount and the Employer's Additions
may be subject to employment taxes, with respect to which the Employer shall
report and withhold appropriately.





                                      -6-
<PAGE>   63


         18.     NOTICES.  Any notice, consent or demand required or permitted
to be given under the provisions of this Agreement shall be in writing, and
shall be signed by the party giving or making the same.  If such notice,
consent or demand is mailed to a party hereto, it shall be sent by United
States certified mail, postage prepaid, addressed to such party's last known
address as shown on the records of the Employer.  The date of such mailing
shall be deemed the date of notice, consent or demand.

         19.     GOVERNING LAW; VENUE.  This Agreement, and the rights of the
parties hereunder, shall be governed by and construed in accordance with the
laws of the State of Florida.  This Agreement shall be subject to the exclusive
jurisdiction of the courts of Broward County or Palm Beach County, Florida.
The parties irrevocably waive, to the fullest extent permitted by law, any
objection which they may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement, or any
judgment entered by any court in respect hereof brought in Broward County or
Palm Beach County, Florida, and further irrevocably waive any claim that any
suit, action or proceeding brought in Broward County or Palm Beach County,
Florida has been brought in an inconvenient forum.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
in duplicate, as of the day and year first above written.


                                        RAILAMERICA, INC.



ATTEST:/s/ Larry W. Bush                By:/s/ Donald Redfearn
       ----------------                    ------------------------
       Ass't. Secretary                    EXECUTIVE VICE PRESIDENT




                                           /s/ John H. Marino
                                           ------------------------
                                           JOHN H. MARINO






                                      -7-