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                                                                    EXHIBIT 10.a









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                              EMPLOYMENT AGREEMENT

                                     between

                                ROBERT W. ANESTIS

                                       and

                       FLORIDA EAST COAST INDUSTRIES, INC.

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                                                                October 30, 1998






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                                TABLE OF CONTENTS

                                                                           Page
                                                                           ----
 1.   Employment Period...................................................   1
 2.   Terms of Employment.................................................   1
      (a)      Position and Duties........................................   1
      (b)      Compensation...............................................   2
 3.   Early Termination of Employment.....................................   6
      (a)      Death or Disability........................................   6
      (b)      Cause......................................................   6
      (c)      Good Reason................................................   6
      (d)      Termination for Other Reasons..............................   7
      (e)      Notice of Termination......................................   7
      (f)      Date of Termination........................................   7
 4.   Obligations of FECI upon Early Termination..........................   8
      (a)      Accelerating Event.........................................   8
      (b)      Good Reason; Other than for Cause, Death or Disability.....   8
      (c)      Death......................................................   9
      (d)      Cause; Other Than for Good Reason..........................   9
      (e)      Disability.................................................   9
      (f)      Nondisclosure to Media.....................................   9
 5.   Change in Control...................................................   9
      (a)      Defined....................................................   9
      (b)      Accelerating Event.........................................  10
      (c)      Supplemental Payment to Executive..........................  10
 6.   Nonexclusivity of Executive's Rights................................  10
 7.   Confidential Information............................................  11
 8.   Non-Compete; Non-Solicitation.......................................  11
 9.   Remedies for Executive's Breach.....................................  12
10.   Dispute Resolution..................................................  12
11.   No Conflicting Obligations of Executive.............................  13
12.   Certain Obligations of FECI Regarding Stock Awards..................  13
13.   Indemnity of Executive..............................................  13
14.   Successors..........................................................  14
15.   Miscellaneous.......................................................  14


TAB A     Undertaking by Majority Shareholder Regarding Approval of Restricted 
          Stock & Stock Options

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                              EMPLOYMENT AGREEMENT


                  THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of
October 30, 1998, between ROBERT W. ANESTIS, an individual (the "Executive"),
and FLORIDA EAST COAST INDUSTRIES, INC. ("FECI"), a Florida corporation, recites
and provides as follows:

                  WHEREAS, the Board of Directors of FECI (the "Board") desires
that FECI retain the services of the Executive, and the Executive desires to be
employed with FECI, all on the terms and subject to the conditions set forth
herein.

                  NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants herein contained, FECI and the Executive agree as follows:

                  1. Employment Period. FECI hereby agrees to employ the
Executive, and the Executive hereby agrees to accept employment by FECI, in
accordance with the terms and provisions of this Agreement, for the period
commencing on January 1, 1999 (the "Effective Date") and ending at midnight on
December 31, 2003 (the "Employment Period").

                  2. Terms of Employment.

                     (a)   Position and Duties.

                           (i) During the Employment Period, the Executive shall
serve as Chairman, President and Chief Executive Officer of FECI and shall have
such authority and perform such executive duties as are commensurate with his
position as Chairman, President and Chief Executive Officer with respect to FECI
and its subsidiaries. The Executive shall serve as a member of the Board, as
Chairman of the Board, as a member of the Executive Committee of the Board, and
as a member of such other committees of the Board to which he may be appointed,
throughout the Employment Period. The Executive's services shall be performed at
FECI's headquarters in St. Augustine, Florida and other facilities of the
Corporation.

                           (ii) During the Employment Period, and excluding any
periods of vacation and leave to which the Executive is entitled, the Executive
agrees to devote reasonable attention and time during normal business hours to
the business and affairs of FECI and, to the extent necessary to discharge the
duties assigned to the Executive hereunder, to use the Executive's reasonable
efforts to perform faithfully such responsibilities. During the Employment
Period it shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic, charitable, and professional association boards or
committees, subject to the approval of the Compensation Committee of the Board
(the "Compensation Committee,") in each instance, which approval shall not be
unreasonably withheld, (B) deliver lectures or fulfill speaking engagements and
(C) manage personal investments, so long as such activities do not materially
interfere with the performance of the Executive's responsibilities as an
employee of FECI in accordance with this Agreement. Without limiting the
foregoing, the Executive may continue his service as a Director of Vector
Distributors, Inc., a privately held distributor of building products, a
consultant to Herzog Contracting Corporation, a privately held company, in


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connection with a proposed venture relating to public transit (which engagement
is expected to be substantially completed by December 31, 1998), a member of the
Yale University Development Board, a fund-raising group, a Director of Champion
Enterprises, Inc., a publicly held company, and as a member of the Advisory
Board of CHB Capital Partners, a privately held leveraged buy-out fund, and
retain for his account all compensation and benefits relating thereto. Further,
the Executive may undertake the winding up of the affairs of Anestis & Company,
which winding up is expected to be substantially completed by December 31, 1998.

                    (b)     Compensation.

                           (i) Base Salary. During the Employment Period, the
Executive shall receive a base salary ("Annual Base Salary"), which shall be
paid in equal installments on a semi-monthly basis, at the annual rate of not
less than Four Hundred Thousand Dollars ($400,000) per year. During the
Employment Period, the Annual Base Salary shall be reviewed at least annually by
the Compensation Committee. Any increase in Annual Base Salary shall not serve
to limit or reduce any other obligation to the Executive under this Agreement.
Annual Base Salary shall not be reduced and the term "Annual Base Salary" as
used in this Agreement shall mean the Annual Base Salary as so increased.

                           (ii) Short-Term Incentive Bonus. In addition to
Annual Base Salary, the Executive shall participate in an annual incentive bonus
plan. Such plan shall provide the Executive with the opportunity to earn a bonus
based on satisfaction of performance criteria. The incentive bonus plan shall be
structured such that the Executive shall receive up to fifty percent (50%) of
Annual Base Salary for attainment of certain target performance goals (prorated
for any partial year of employment), with a maximum bonus of one hundred percent
(100%) of Annual Base Salary for extraordinary performance (prorated for any
partial year of employment). The Compensation Committee will establish the
performance criteria and goals in consultation with the Executive.
Notwithstanding the foregoing, in no event shall the annual bonus earned with
respect to the period between the Effective Date and December 31, 1999 be less
than thirty percent (30%) of the Annual Base Salary earned during such period.
The bonus payable pursuant to this Section 2(b)(ii) for any fiscal year shall be
paid to the Executive no later than the 30th day following the issuance of the
audited financial statements of FECI for such year.

                           (iii) Restricted Stock. The Executive shall receive a
grant of restricted stock for forty thousand (40,000) shares of FECI common
stock. Such shares shall be subject to restrictions which shall provide that the
Executive shall not transfer such shares during the restriction period and shall
forfeit such shares if during the restriction period he is discharged by FECI
for Cause (as hereinafter defined in Section 3(b)) or resigns from employment
with FECI without Good Reason (as hereinafter defined in Section 3(c)). The
restriction period shall lapse with respect to such shares in equal annual
installments on the first through fifth anniversaries of the Effective Date.
Notwithstanding the foregoing, the restriction period shall lapse immediately as
to all such shares in the event that an Accelerating Event (as hereinafter
defined in Section 4(a)) occurs. The Executive shall be entitled to receive any
dividends or other distributions payable with respect to such shares of
restricted stock beginning on the date of award of such shares. Such stock award
shall be evidenced by a written restricted stock award 

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agreement between FECI and the Executive, the terms of which shall be agreed to
by the parties in good faith as soon as practical.

                           (iv) Long-Term Incentives: Basic Stock Options. The
Executive shall receive a grant of nonstatutory stock options on four hundred
thousand (400,000) shares of FECI common stock. The options shall have a term of
ten (10) years (subject to earlier expiration as hereinafter provided), shall
have an exercise price equal to 100% of the fair market value, as of the close
of trading on the date of this Agreement (being $29.9375), of the shares of
common stock subject to such stock options, and shall vest and become
exercisable in five (5) equal annual installments on the first through the fifth
anniversaries of the Effective Date; provided, however, that such stock options
shall vest immediately and become exercisable in their entirety in the event
that an Accelerating Event (as hereinafter defined in Section 4(a)) occurs. To
the extent not previously exercised, all such stock options shall expire
immediately following the Date of Termination (as hereinafter defined in Section
3(f)); provided, however, that the Executive, or his heirs or legal
representatives in the event of the Executive's death, may exercise all or any
part of such stock options as were exercisable as of the close of business on
the Date of Termination for a period of two (2) years following such Date of
Termination in the event (i) an Accelerating Event (as hereinafter defined in
Section 4(a)) occurs; or (ii) the Executive retires at normal retirement age
under any retirement plan of FECI. Such stock options shall include a provision
for adjustment in the option price to reflect any extraordinary distribution
made with respect to the common stock during the term of the options. In the
event of a capital adjustment resulting from a stock dividend, stock split,
reorganization, merger, consolidation, spinoff, a combination or exchange of
shares or other transaction having a similar substantive effect, the number
shares of stock subject to the stock options and the option price shall be
equitably adjusted. Such stock options shall be evidenced by a written stock
option award agreement between FECI and the Executive, the terms of which shall
be agreed to by the parties in good faith as soon as practical.

                           (v) Long Term Incentives: Supplemental Stock Options.
The Executive shall receive a grant of non-statutory stock options on one
hundred thousand (100,000) shares of FECI common stock. The options shall have a
term of ten (10) years (subject to earlier expiration as hereinafter provided),
shall have an exercise price equal to one hundred percent (100%) of the fair
market value, as of the close of trading on the date of this Agreement (being
$29.9375), of the shares of common stock subject to such stock options, and
shall vest and become exercisable immediately upon the earlier of (i) the first
date as of which the average closing price of a share of FECI common stock over
twenty (20) consecutive trading days is not less than Fifty Dollars ($50.00);
(ii) the occurrence of an Accelerating Event (as hereinafter defined in Section
4(a)); or (iii) the fifth anniversary of the Effective Date. To the extent not
previously exercised, all such stock options shall expire immediately following
the Date of Termination (as hereinafter defined in Section 3(f)); provided,
however, that the Executive, or his heirs or legal representatives in the event
of the Executive's death, may exercise all or any part of such stock option as
was exercisable as of the close of business on the Date of Termination for a
period of two (2) years following such Date of Termination in the event (i) the
occurrence of an Accelerating Event (as hereinafter defined in Section 4(a)); or
(ii) the Executive retires at normal retirement age under any retirement plan of
FECI. Such stock options shall include a provision for adjustment in the option
price to reflect any extraordinary distribution 



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made with respect to the common stock during the term of the options. In the
event of a capital adjustment resulting from a stock dividend, stock split,
reorganization, merger, consolidation, spinoff, a combination or exchange of
shares or other transaction having a similar substantive effect, the number
shares of stock subject to the stock options and the option price shall be
equitably adjusted. Such stock option shall be evidenced by a written stock
option award agreement between FECI and the Executive, the terms of which shall
be agreed to by the parties in good faith as soon as practical.

                           (vi) Long-Term Incentives: Other. During the
Employment Period, the Executive shall be entitled to participate in long-term
incentive plans and programs applicable generally to other peer executives of
FECI and its affiliated companies. Such participation shall commence with
respect to FECI's 1999 fiscal year. The size and criteria for such awards shall
be generally consistent with prevailing compensation practices as they relate to
Chief Executive Officers of similarly sized publicly held companies and in any
event not less favorable to the Executive than FECI's recent past practice. As
used in this Agreement, the term "affiliated companies" shall mean any company
controlled by FECI.

                           (vii) Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all savings
and retirement plans, practices, policies and programs applicable generally to
other peer executive of FECI and its affiliated companies.

                           (viii) Welfare Benefit Plans. During the Employment
Period, the Executive and/or the Executive's family and dependents, as the case
may be, shall be eligible for participation in and shall receive all benefits
under all welfare benefit plans, practices, policies and programs provided by
FECI and its affiliated companies (including, without limitation, medical,
prescription, dental, disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and programs) to the extent
applicable generally to other peer executives of FECI and its affiliated
companies.

                           (ix) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
employment-related expenses incurred by the Executive in accordance with the
most favorable policies, practices and procedures of FECI and its affiliated
companies as in effect generally from time to time after the Effective Date with
respect to other peer executives of FECI and its affiliated companies.

                           (x) Relocation Expense. FECI shall make the Executive
whole by reimbursing him for all reasonable costs associated with his relocation
from Connecticut to the St. Augustine, Florida, area. Such costs shall include,
without limitation, closing costs associated with the sale of the Executive's
Connecticut residence and closing costs associated with the Executive's purchase
and financing of a new primary residence in Florida. For purposes of this
Section, "closing costs" shall mean loan origination fees, loan discount fees,
appraisal fees, credit report fees, assumption fees, settlement or closing fees,
title examination fees, title insurance binder, document preparation fees,
notary fees, attorneys' fees, real estate brokers' commissions, title insurance
fees, recording fees, tax stamps, transfer taxes, survey fees and costs of pest,
radon and home inspections. FECI shall also arrange for and pay for the move 



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of the Executive's household goods and personal effects (including packing and
unpacking charges) from his Connecticut residence to his new primary residence
in Florida. FECI shall pay for the Executive's reasonable temporary living costs
in the St. Augustine area for up to eight months (or such later time as may be
requested by the Executive and approved by the Compensation Committee, which
approval shall not be unreasonably withheld) until Executive is moved into his
new residence in Florida. FECI will pay the costs associated with a reasonable
number of trips to St. Augustine for the Executive and his spouse to look for a
new residence. FECI shall also pay for the Executive's costs to visit his family
prior to the relocation of his family to the St. Augustine area. In addition, in
the event that the Executive's Connecticut residence is placed on the market for
sale at a reasonable price and is not sold within ninety (90) days after being
placed on the market, at the Executive's request FECI shall provide the
Executive with an interest-free bridge loan for a term of up to twelve (12)
months for an amount up to the asking price of the Connecticut residence, which
loan shall be repayable upon the earlier of five (5) days following the closing
of the sale of the Connecticut residence or the first anniversary of the making
of such loan. In addition, FECI shall pay the Executive an amount determined by
its accountants equal to the Executive's federal, state and local taxes on the
foregoing reimbursement and imputed interest under the aforesaid loan (the "Tax
Gross-up") and the federal, state and local taxes on the Tax Gross-up, all to
the end that the Executive be held harmless, on an after-tax basis, from the tax
impact thereof.

                           (xi) Fringe Benefits. During the Employment Period,
the Executive and/or the Executive's family and dependents shall be entitled to
fringe benefits in accordance with the most favorable plans, practices, programs
and policies of FECI and its affiliated companies as in effect generally from
time to time after the Effective Date with respect to other peer executives of
FECI and its affiliated companies.

                           (xii) Office and Support Staff. During the Employment
Period, the Executive shall be entitled to an office or offices of a size and
with furnishings and other appointments, and to exclusive personal secretarial
and other assistance, and to facilities and equipment, at least equal to the
most favorable of the foregoing provided generally from time to time after the
Effective Date with respect to other peer executives of FECI and its affiliated
companies.

                           (xiii) Vacation. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance with the most
favorable plans, policies, programs and practices of FECI and its affiliated
companies as in effect generally from time to time after the Effective Date with
respect to other peer executives of FECI and its affiliated companies.

                           (xiv) Car Allowance. During the Employment Period,
the Executive shall be entitled to a car allowance in accordance with FECI's car
allowance policy, in lieu of expenses associated with the operation of his
automobile.

                           (xv) Golden Parachute Excise Tax. If FECI determines
that any amounts payable under this Agreement are subject to the excise tax
imposed under Code Section 4999 on "excess parachute payments", FECI will
compute the excise tax imposed under Code Section 4999 and shall pay that amount
to the Executive, including any federal, state, local and 



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excise taxes imposed on the foregoing payment under this Section 4(f). The
determination will be made before the taxes are due and payable by the
Executive, to the extent possible. The calculations under this Section will be
made in a manner consistent with the requirements of Code Sections 280G and
4999, as in effect at the time the calculations are made.

                           (xvi) Right to Change Plans. FECI shall not be
obligated to institute, maintain or refrain from changing, amending or
discontinuing any benefit plan, program, or perquisite referred to in Sections
2(b)(vii), 2(b)(viii) and 2(b)(xi), so long as such changes are similarly
applicable to other FECI executives.

         3.        Early Termination of Employment.

                  (a) Death or Disability. The Executive's employment shall
terminate automatically upon the Executive's death during the Employment Period.
If FECI determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of disability
set forth below), it may give to the Executive notice of its intention to
terminate the Executive's employment. In such event, the Executive's employment
with FECI shall terminate effective on the thirtieth (30th) day after receipt of
such notice by the Executive (the "Disability Effective Date"), provided that,
within the thirty (30) days after such receipt, the Executive shall not have
returned to full-time performance of the Executive's duties. For purposes of
this Agreement, "Disability" shall mean the absence of the Executive from the
Executive's duties with FECI on a full-time basis for one hundred eighty (180)
consecutive business days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a physician selected by
FECI or its insurers and acceptable to the Executive or the Executive's legal
representative (such agreement as to acceptability not to be withheld
unreasonably).

                  (b) Cause. FECI may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement, "Cause"
shall mean (i) a material breach by the Executive of the Executive's obligations
under this Agreement (other than as a result of incapacity due to physical or
mental illness) which is demonstrably willful and deliberate on the Executive's
part, which is committed in bad faith or without reasonable belief that such
breach is in the best interests of FECI and which is not remedied in a
reasonable period of time after receipt of notice from FECI specifying such
breach; (ii) the conviction of the Executive for committing an act of fraud,
embezzlement, theft or other act constituting a felony or the guilty or nolo
contendere plea of the Executive to such a felony; (iii) insubordination or the
willful engaging by Executive in gross misconduct or the willful violation of an
FECI policy which results in material and demonstrable injury to FECI; or (iv) a
material act of dishonesty or breach of trust on the part of the Executive
resulting or intending to result directly or indirectly in material personal
gain or enrichment at the expense of FECI. Any act, or failure to act, based
upon authority given pursuant to a resolution duly adopted by the Board or based
upon the advice of counsel for FECI shall be conclusively presumed to be done,
or omitted to be done, by the Executive in good faith and in the best interests
of FECI.

                  (c) Good Reason. The Executive may terminate his employment
for Good Reason. For purposes of this Agreement, "Good Reason" shall mean, in
the absence of the 



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consent of the Executive, a reasonable determination by the Executive that any
of the following has occurred:

                           (i) the assignment to the Executive of any duties
inconsistent in any material respect with the Executive's position (including
status, offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 2(a) of this Agreement, or any other
action by FECI which results in a material diminution in such position,
authority, duties or responsibilities, excluding for this purpose an isolated
and insubstantial action not taken in bad faith and which is remedied by FECI
promptly after receipt of notice thereof given by the Executive; or

                           (ii) any failure by FECI to comply with any of the
provisions of this Agreement applicable to it, other than any isolated and
insubstantial failure not occurring in bad faith and which is remedied promptly
after notice thereof from the Executive.

                  (d) Termination for Other Reasons. FECI may terminate the
employment of the Executive without Cause by giving notice to the Executive at
least sixty (60) days prior to the Date of Termination. The Executive may resign
from his employment without Good Reason hereunder by giving notice to FECI at
least sixty (60) days prior to the Date of Termination.

                  (e) Notice of Termination. Any termination shall be
communicated by Notice of Termination to the other party. For purposes of this
Agreement, a "Notice of Termination" means a notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the
provision so indicated and (iii) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the termination date
(which date shall be not more than fifteen (15) days after the giving of such
notice, unless otherwise required by Section 3(f)). The failure by the Executive
or FECI to set forth in the Notice of Termination any fact or circumstance shall
not waive any right of the Executive or FECI hereunder or preclude the Executive
or FECI from asserting such fact or circumstance in enforcing the Executive's or
FECI's rights hereunder.

                  (f) Date of Termination. "Date of Termination" shall mean (i)
if the Executive's employment is terminated by FECI for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any permitted later date specified therein, as the case may be, (ii) if the
Executive's employment is terminated by FECI other than for Cause or Disability
or by the Executive other than for Good Reason, the Date of Termination shall be
the sixtieth (60th) day following the date of receipt of the Notice of
Termination or any later date specified therein, as the case may be, and (iii)
if the Executive's employment is terminated by reason of the Executive's death
or Disability, the Date of Termination shall be the date of death of the
Executive or the Disability Effective Date, as the case may be.



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         4.       Obligations of FECI upon Early Termination.

                  (a) Accelerating Event. As used in this Agreement, the term
"Accelerating Event" shall mean any of the following: (i) the Executive's
employment terminates under the circumstances described in Section 3(a), (ii)
the Executive is discharged without Cause, (iii) the Executive resigns with Good
Reason, or (iv) a Change in Control (as defined in Section 5(a)) occurs.

                  (b) Good Reason; Other than for Cause, Death or Disability.
If, during the Employment Period, FECI shall terminate the Executive's
employment other than for Cause, death or Disability or the Executive shall
terminate employment for Good Reason:

                           (i) FECI shall pay to the Executive in a lump sum in
cash within thirty (30) days after the Date of Termination the sum of (A) the
Executive's Annual Base Salary through the Date of Termination to the extent not
theretofore paid; (B) to the extent not theretofore paid, any annual bonus
payable to the Executive for any prior completed fiscal year; (C) the product of
(x) the greater of any annual bonus paid or payable, including by reason of any
deferral, to the Executive (annualized for any fiscal year consisting of less
than twelve (12) full months or for which the Executive has been employed for
less than twelve (12) full months) for the most recently completed fiscal year
during the Employment Period, if any, and the average annualized (annualized for
any fiscal year consisting of less than twelve (12) full months or with respect
to which the Executive has been employed for less than twelve (12) full months)
bonus paid or payable, including by reason of any deferral, to the Executive by
FECI and its affiliated companies in respect of the three (3) fiscal years
immediately preceding the fiscal year in which the Date of Termination occurs
(such greater amount shall be hereinafter referred to as the "Highest Annual
Bonus") and (y) a fraction, the numerator of which is the number of days in the
current fiscal year through the Date of Termination, and the denominator of
which is 365; (D) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) to the extent not
theretofore paid; and (E) any accrued vacation pay, expense reimbursement and
any other entitlements accrued by the Executive under Section 2(b), to the
extent not theretofore paid (the sum of the amount described in clauses (A),
(B), (C), (D) and (E) shall be hereinafter referred to as the "Accrued
Obligations"); and

                           (ii) FECI shall pay to the Executive in twenty-four
(24) monthly installments beginning thirty (30) days following the Date of
Termination an amount equal to twice the sum of the Executive's Annual Base
Salary and Highest Annual Bonus (without duty of mitigation); and

                           (iii) If a Change in Control (as defined in Section
5(a)) occurs within one hundred twenty (120) days following the Date of
Termination, FECI shall pay to the Executive the supplemental payment referred
to in Section 5(c) notwithstanding that the Date of Termination preceded the
Change in Control.

                           (iv) For the remainder of the Employment Period (as
it would continue but for such early termination), or such longer period as any
plan, program, practice or policy may provide, FECI shall continue benefits to
the Executive and/or the Executive's family and dependents at least equal to
those which would have been provided to them in accordance


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with the plans, programs, practices and policies described in Section 2(b)(viii)
if the Executive's employment had not been terminated, in accordance with the
most favorable plans, practices, programs or policies of FECI and its affiliated
companies as in effect generally at any time thereafter with respect to other
peer executives of FECI and its affiliated companies and their families
("Welfare Benefit Continuation"). If the Executive becomes reemployed with
another employer and is eligible to receive medical or other welfare benefits
under another employer-provided plan, the medical and other welfare benefits
described herein shall be secondary to those provided under such other plan
during such applicable period of eligibility. For purposes of determining
eligibility (but not the time of commencement of benefits), the Executive shall
be considered to have remained employed until the end of the Employment Period
(as it would continue but for such early termination) and to have retired on the
last day of such period.

                  (c) Death. If the Executive's employment is terminated by
reason of the Executive's death during the Employment Period, this Agreement
shall terminate without further obligation to the Executive's legal
representatives under this Agreement, other than for payment of Accrued
Obligations (which shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within thirty (30) days of the Date of
Termination) and the timely payment or provision of the Welfare Benefit
Continuation.

                  (d) Cause; Other Than for Good Reason. If the Executive's
employment shall be terminated for Cause or the Executive terminates his
employment without Good Reason during the Employment Period, this Agreement
shall terminate without further obligations to the Executive other than the
obligation to pay to the Executive the Accrued Obligations and the amount of any
compensation previously deferred by the Executive, in each case to the extent
theretofore unpaid, all of which shall be paid in cash within thirty (30) days
of the Date of Termination.

                  (e) Disability. If the Executive's employment shall be
terminated by reason of the Executive's Disability during the Employment Period,
this Agreement shall terminate without further obligation to the Executive,
other than for payment of Accrued Obligations and the timely payment or
provision of the Welfare Benefit Continuation. Accrued Obligations shall be paid
to the Executive in a lump sum in cash within thirty (30) days of the Date of
Termination. The Executive shall be entitled after the Disability Effective Date
to receive disability and other benefits as in effect at the Disability
Effective Date with respect to other peer executives of FECI and its affiliated
companies and their families.

                  (f) Nondisclosure to Media. After the Date of Termination or
the end of Employment Period, the Executive and FECI agree that they will not
discuss the Executive's employment and resignation or termination (including the
terms of this Agreement) with any representatives of the media, either directly
or indirectly, without the consent of the other party hereto.

         5.       Change in Control.

                  (a) Defined. For purposes of this Agreement, a "Change in
Control" of FECI shall be deemed to have occurred as of the first day that any
one or more of the following conditions shall have occurred:



                                       9
<PAGE>   12

                           (i) Any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Act")),
other than the present majority owner, The St. Joe Company, or any
majority-owned subsidiary of The St. Joe Company becomes the "beneficial owner"
(as defined in Rule 13-d under the Act) directly or indirectly, of securities
representing more than fifty percent (50%) of the total voting power represented
by FECI's then outstanding voting securities; or

                           (ii) A change in the composition of the Board, as a
result of which fewer than a majority of the directors are Incumbent Directors.
"Incumbent Directors" shall mean directors who either (A) are directors of FECI
as of the date hereof, or (B) are elected, or nominated for election, to the
Board with the affirmative votes of at least a majority of the Incumbent
Directors at the time of such election or nomination (but shall not include an
individual whose election or nomination is in connection with an actual or
threatened proxy contest relating to the election of directors of FECI); or

                           (iii) FECI merges or consolidates with any other
corporation, including The St. Joe Company or any subsidiary thereof, or FECI
adopts, and the stockholders approve, if necessary, a plan of complete
liquidation of FECI, or FECI sells or disposes of substantially all of its
assets.

                  (b) Accelerating Event. A Change in Control shall be an
Accelerating Event as defined in Section 4(a).

                  (c) Supplemental Payment to Executive. Upon a Change in
Control, FECI shall pay to the Executive in a lump sum in cash within thirty
(30) days of the date of such Change in Control, an amount equal to the excess,
if any, of Five Million Dollars ($5,000,000) over the sum of (i) the current
fair market value of all restricted FECI stock granted under Section 2(b)(iii)
on which restrictions have lapsed (including any lapse due to the Change in
Control), (ii) the sum of the difference between the fair market value of the
FECI stock subject to each stock option granted under Section 2(b)(iv) or
Section 2(b)(v) which is vested (including any vesting due to the Change in
Control) over the exercise price of such options, and (iii) the amount payable
to Executive under Section 4(b)(ii). As used in this Section, fair market value
shall mean the fair market value of FECI stock as of the close of trading on the
date of the Change in Control.

         6.       Nonexclusivity of Executive's Rights. Except as provided in
Sections 4(b)(iii), 4(c) and 4(e), nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any plan, program,
policy or practice provided by FECI or any of its affiliated companies and for
which the Executive may qualify, nor shall anything herein limit or otherwise
affect such rights as the Executive may have under any contract or agreement
with FECI or any of its affiliated companies. Amounts which are vested benefits
or which the Executive is otherwise entitled to receive under any plan, policy,
practice or program of or any contract or agreement with FECI or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.



                                       10
<PAGE>   13

         7.       Confidential Information.

                  (a) The Executive shall hold in a fiduciary capacity for the
benefit of FECI all secret or confidential information, knowledge or data
relating to FECI or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by FECI or any of its affiliated companies and which
shall not be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with FECI, the Executive shall not,
without the prior written consent of FECI or except as may otherwise be required
by law or legal process, communicate or divulge any such information, knowledge
or data to anyone other than FECI and those designated by it. In no event shall
an asserted violation of the provisions of this Section 7 constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.

                  (b) All records, files, memoranda, reports, price lists,
customer lists, drawings, designs, proposals, plans, sketches, documents,
computer programs, CAD systems, CAM systems, disks, computer printouts and the
like (together with all copies thereof) relating to the business of FECI, which
Executive shall use or prepare or otherwise have in his possession in the course
of, or as a result of, his employment hereunder shall, as between the parties
hereto, remain the sole property of FECI. Executive shall use such materials
solely for the benefit of FECI and shall not divulge any such materials other
than in furtherance of FECI's interests. Executive hereby agrees that he will
return all such materials, including copies, to FECI upon demand, or upon the
cessation of his employment.

                  (c) Any termination of the Executive's employment hereunder or
of this Agreement shall have no effect on the continuing operation of this
Section 7.

         8.       Non-Compete; Non-Solicitation.

                  (a) Except as is set forth below, for a period commencing on
the Effective Date hereof and ending on the first anniversary of the date the
Executive ceases to be employed by FECI (the "Non-Competition Period"), the
Executive shall not, directly or indirectly, either for himself or any other
person, own, manage, control, materially participate in, invest in, permit his
name to be used by, act as consultant or advisor to, render material services
for (alone or in association with any person, firm, corporation or other
business organization) or otherwise assist in any manner any business which is a
competitor of a substantial portion of FECI's business at the date the Executive
ceases to be employed by FECI (collectively, a "Competitor"); provided, however,
that the restrictions set forth above shall immediately terminate and shall be
of no further force or effect (i) in the event of a default by FECI of the
performance of any of the obligations hereunder, which default is not cured
within ten (10) days after notice thereof, or (ii) if the Executive's employment
has been terminated by FECI other than for Cause, or (iii) if the Executive
resigns for Good Reason provided that the Executive gives written notice to FECI
whenever during the Non-Competition Period that he desires to accept employment
with a Competitor; and that the payment specified in Section 4(b)(ii) hereof
shall be mitigated by the amount of salary and pro rata target bonus payable to
the Executive by the Competitor based on the Executive?s initial terms of
employment and attributable to



                                       11
<PAGE>   14

employment during the Non-Competition Period. Nothing herein shall prohibit the
Executive from being a passive owner of not more than five percent (5%) of the
equity securities of an enterprise engaged in such business which is publicly
traded, so long as he has no active participation in the business of such
enterprise.

                  (b) During the Non-Competition Period, the Executive shall
not, directly or indirectly, (i) induce or attempt to induce or aid others in
inducing an employee of FECI to leave the employ of FECI, or in any way
interfere with the relationship between FECI and an employee of FECI except in
the proper exercise of the Executive's authority, or (ii) in any way interfere
with the relationship between FECI and any customer, supplier, licensee or other
business relation of FECI.

                  (c) If, at the time of enforcement of this Section 8, a court
shall hold that the duration, scope, area or other restrictions stated herein
are unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope, area or other restrictions reasonable under such
circumstances shall be substituted for the stated duration, scope, area or other
restrictions.

                  (d) The covenants made in this Section 8 shall be construed as
an agreement independent of any other provisions of this Agreement, and shall
survive the termination of this Agreement. Moreover, the existence of any claim
or cause of action of the Executive against FECI or any of its affiliates,
whether or not predicated upon the terms of this Agreement, shall not constitute
a defense to the enforcement of these covenants.

         9.       Remedies for Executive's Breach. In the event Executive
violates any provision of Sections 7 or 8 and such violation continues after
notice thereof to the Executive and the expiration of a reasonable opportunity
to cure, then FECI may thereafter terminate the payment of any post-termination
benefits hereunder, and FECI will have no further obligation to Executive under
this Agreement. The parties acknowledge that any violation of Section 7 or 8 can
cause substantial and irreparable harm to FECI. Therefore, FECI shall be
entitled to pursue any and all legal and equitable remedies, including but not
limited to any injunctions.

         10.      Dispute Resolution. Any dispute or controversy arising under
or in connection with this Agreement shall be settled by binding arbitration,
which shall be the sole and exclusive method of resolving any questions, claims
or other matters arising under this Agreement or any claim that FECI has in any
way violated the non-discrimination and/or other provisions of Title VII of the
Civil Rights Act of 1964, as amended; the Age Discrimination in Employment Act
of 1967, as amended; the Americans with Disabilities Act; the Family and Medical
Leave Act; the Employee Retirement Income Security Act of 1974, as amended; and,
in general, any federal law or the law of the State of Florida. Such proceeding
shall be conducted by final and binding arbitration before a panel of one or
more arbitrators under the administration of the American Arbitration
Association, and in a location mutually agreed to by the Executive and FECI. The
Federal and State courts located in the United States of America are hereby
given jurisdiction to render judgment upon, and to enforce, each arbitration
award, and the parties hereby expressly consent and submit to the jurisdiction
of such courts. Notwithstanding the foregoing, in the event that a violation of
the Agreement would cause irreparable injury, FECI



                                       12
<PAGE>   15

and the Executive agree that in addition to the other rights and remedies
provided in this Agreement (and without waiving their rights to have all other
matters arbitrated as provided above) the other party may immediately take
judicial action to obtain injunctive relief.

         11.      No Conflicting Obligations of Executive. Executive represents
and warrants that he is not subject to any duties or restrictions under any
prior agreement with any previous employer or other person, and that he has no
rights or obligations except as previously disclosed to FECI which may conflict
with the interests of FECI or with the performance of the Executive's duties and
obligations under this Agreement. Executive agrees to notify FECI immediately if
any such conflicts occur in the future.

         12.      Certain Obligations of FECI Regarding Stock Awards. At its
expense, and as soon as practicable hereafter, with respect to the shares of
common stock described in Section 2(b)(iii) and the shares of common stock
issuable upon exercise of the stock options described in Section 2(b)(iv) and
2(b)(v), FECI shall (i) seek the approval of its shareholders with regard to the
grant of such restricted stock and stock options, (ii) register such shares
under the Securities Act of 1933, as amended, on Form S-8, (iii) qualify such
shares for issuance under all applicable state securities laws and (iv) ensure
that such shares are listed for trading on the New York Stock Exchange.
Notwithstanding any other provision of this Agreement to the contrary, FECI
shall be under no obligation to issue any shares of common stock to the
Executive pursuant to this Agreement until, in accordance with the immediately
preceding sentence, such shares are so registered and qualified and either (x)
FECI is able to repurchase in the open market or private transactions, on a
legal, practical and prudent basis, a number of shares of common stock equal to
the number issuable to the Executive or (y) shares of common stock which are
listed for trading on the New York Stock Exchange are otherwise available for
issuance by FECI hereunder. In this regard, The St. Joe Company, being the
holder of a majority of the outstanding shares of the capital stock, has given
its approval of the grant of such shares and options and its commitment to vote
its shares in favor thereof, which approval and commitment is attached hereto as
Exhibit "A." With respect to the shares of common stock described in Section
2(b)(iii), in the event that the issuance of any such shares to the Executive
shall be delayed by reason of the provisions of this Section, FECI shall pay to
the Executive in cash on the date of issuance of such shares in the amount or
cash-equivalent thereof that would have been paid to the Executive as dividends
or other distributions payable with respect to such shares had such issuance not
been so delayed.

         13.      Indemnity of Executive. FECI shall indemnify and defend the
Executive against all claims relating to the performance of his duties hereunder
to the fullest extent permitted by FECI's Articles of Incorporation and Bylaws,
the relevant provisions of which shall not be amended in their application to
the Executive to be any less favorable to him than as at present, except as
required by law. During the Employment Period, FECI shall maintain in effect
uninterrupted standard directors and officers liability insurance coverage
insuring the Executive against such claims, with limits of coverage of not less
than $10,000,000 per occurrence and without deductibles, which insurance shall
include a standard SEC coverage endorsement.



                                       13
<PAGE>   16

         14.      Successors.

                  (a) This Agreement is personal to the Executive and without
the prior consent of FECI shall not be assignable by the Executive otherwise
than by will or the laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Executive's legal representatives.

                  (b) This Agreement shall inure to the benefit of and be
binding upon FECI and its successors and assigns.

                  (c) FECI will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of FECI to assume expressly and
agree to perform this Agreement in the same manner and to the same extent that
FECI would be required to perform it if no such succession had taken place. As
used in this Agreement, "FECI" shall mean FECI as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.

         15.      Miscellaneous.

                  (a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.

                  (b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, or by telecopier,
or by courier, addressed as follows:

         If to the Executive to:           If to FECI to:
         ----------------------            -------------
         Robert W. Anestis.                Florida East Coast Industries, Inc.
         23 White Oak Lane.                One Malaga Street
         Weston, CT  06883.                St. Augustine, FL 32084
         Facsimile:  203/222-9072          Attention:  Corporate Secretary
                                           Facsimile:  904/396-4042

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

                  (c) In the event of a dispute arising out of this Agreement,
any party receiving any monetary or injunctive remedy, whether at law or in
equity, which is final and not subject to appeal shall be entitled to its
reasonable attorneys' fees and costs incurred with respect to obtaining such
remedy from the other party.



                                       14
<PAGE>   17

                  (d) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.

                  (e) FECI may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.

                  (f) The Executive's or FECI's failure to insist upon strict
compliance with any provision hereof or any other provision of this Agreement or
the failure to assert any right the Executive or FECI may have hereunder, shall
not be deemed to be a waiver of such provision or right or any other provision
or right of this Agreement.

                  (g) Any entitlements to the Executive created under Section
2(b) shall be contract rights to the extent not prohibited by law, except as
provided in Section 2(b)(xvi).


         IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, FECI has caused
these presents to be executed in its name on its behalf, all as of the day and
year first above written.

                                    Company:

                                    FLORIDA EAST COAST INDUSTRIES, INC.

                                    By                                          
                                       -----------------------------------------
                                                      President
                 

                                    Executive:


                                       -----------------------------------------
                                                  Robert W. Anestis
   

                                       15
<PAGE>   18

    ------------------------------------------------------------------------


            UNDERTAKING BY MAJORITY SHAREHOLDER REGARDING APPROVAL OF
                        RESTRICTED STOCK & STOCK OPTIONS
    ------------------------------------------------------------------------


                                                     October 30, 1998



Robert W. Anestis
191 Post Road West
Westport, CT  06880

                  Re:     Florida East Coast Industries, Inc.
                          Approval of Restricted Stock & Stock Options
                          --------------------------------------------

Dear Mr. Anestis:

                  Reference is made to that certain Employment Agreement of even
date herewith between you and Florida East Coast Industries, Inc. ("FECI"). The
undersigned owns 54.0% of the outstanding voting shares of capital stock of
FECI.

                  As an inducement to you to enter into the aforesaid Employment
Agreement, the undersigned irrevocably and unconditionally approves of (i) the
restricted stock to be issued to you pursuant to Section 2(b)(iii) of the
aforesaid Employment Agreement and (ii) the stock options to be granted to you
pursuant to Sections 2(b)(iv) and 2(b)(v) of the aforesaid Employment Agreement.
The undersigned irrevocably and unconditionally agrees to vote in favor of any
corporate action necessary to implement the foregoing grants of restricted stock
and stock options.

                                            Very truly yours,

                                            THE ST. JOE COMPANY



                                            By                                  
                                               ---------------------------------



cc:    Corporate Secretary
       Florida East Coast Industries, Inc.


       -----------------------------------------------------------------


<PAGE>   19








                          BASIC STOCK OPTION AGREEMENT

                                     between

                       FLORIDA EAST COAST INDUSTRIES, INC.

                                       and

                                ROBERT W. ANESTIS












                                                                October 30, 1998





<PAGE>   20

         THIS AGREEMENT, dated October 30, 1998 between Florida East Coast
Industries, Inc. (the "Company"), and Robert W. Anestis (the "Employee") is made
pursuant to the provisions of Section 2(b)(iv) of that certain Employment
Agreement of even date herewith between the Company and the Employee (the
"Employment Agreement").

         In fulfillment of the aforesaid provisions of the Employment Agreement,
the parties agree as follows:

                  1. Non-Statutory Option. Under the Company's 1998 Stock
         Incentive Plan, as amended (the "Plan"), the Company hereby grants the
         Employee a non-statutory option ("NSO") to purchase from the Company
         400,000 shares of the Company's Common Stock. The exercise price of the
         NSO is $29.9375 per share, being the fair market value of the Company's
         Common Stock on the date hereof.

                  2. Shareholder Approval. The NSO is granted subject to
         shareholder approval of the First Amendment to the Plan dated October
         1, 1998, which approval shall be sought by the Company at the next
         meeting of shareholders following grant of this NSO.

                  3. Entitlement to Exercise the NSO. The grant of the NSO is
         subject to the following terms and conditions:

                               (a) Vesting. One-fifth of the NSO, 80,000 shares,
                  shall vest on and may be exercised at any time on or after
                  October 30, 1999. Another one-fifth of the NSO, 80,000 shares,
                  shall vest on and may be exercised at any time on or after
                  October 30, 2000. Another one-fifth of the NSO, 80,000 shares,
                  shall on vest and may be exercised at any time on or after
                  October 30, 2001. Another one-fifth of the NSO, 80,000 shares,
                  shall vest on and may be exercised at any time on or after
                  October 30, 2002. The remaining one-fifth of the NSO, 80,000
                  shares, shall vest on and may be exercised at any time on or
                  after October 30, 2003. In addition, all of the NSO shall vest
                  on and may be exercised at any time on or after an
                  Accelerating Event (as defined in Section 4(a) of the
                  Employment Agreement). The vesting of any portion of the NSO
                  is conditioned on the Employee's 

                                       1
<PAGE>   21

                  continued employment by the Company or a parent or subsidiary
                  of the Company as of the relevant vesting date.

                               (b) Exercise Period. Except as otherwise stated
                  in this Agreement, the vested portion of the NSO may be
                  exercised, in whole or in part, from the dates described in
                  subsections (a) above until the earliest of (i) November 1,
                  2008, (ii) two years following the effective date that the
                  Employee's employment terminates by reason of an Accelerating
                  Event (as defined in Section 4(a) of the Employment Agreement)
                  or normal retirement (as determined under any retirement plan
                  of the Company), or (iii) the effective date that the Employee
                  terminates employment for any other reason (but in no event
                  earlier than two years following a Change in Control (as
                  defined in Section 5(a) of the Employment Agreement)).

                               (c) Exercise Following Death. If the Employee
                  dies while employed by the Company or a parent or subsidiary
                  corporation, then the person to whom the Employee's rights
                  under the NSO shall have passed by will or by the laws of
                  distribution may exercise any of the NSO within two years
                  after the Employee's death.

                  4. Payment Under NSO. Payment of the NSO price may be made in
         cash, in shares of the Company's Common Stock, or in any combination
         thereof. If shares of the Company's Common Stock are delivered to make
         any such payment, the shares shall be valued at the fair market value
         (as defined below) thereof on the date of exercise of the NSO. For
         purposes of this Agreement, "fair market value" means, as of any given
         date, the closing price of the Company's Common Stock on such date as
         quoted in the NYSE Composite Transactions Report in the Wall Street
         Journal. If there were no sales reported as of a particular date, fair
         market value will be computed as of the last date preceding such date
         on which a sale was reported.

                  5. Limited Transferability of NSO. The NSO is not transferable
         (other than by will or by the laws of descent and distribution) and,
         except as otherwise stated in this Agreement, may be exercised during
         the Employee's lifetime only by the Employee.



                                       2
<PAGE>   22

                  6. Adjustments. The NSO shall be equitably adjusted with
         respect to the exercise price to reflect any extraordinary distribution
         made with respect to the Company's Common Stock during the term of the
         options. In the event of a capital adjustment resulting from a stock
         dividend, stock split, reorganization, merger, consolidation, spinoff,
         a combination or exchange of shares or other transaction having a
         similar substantive effect, the number of shares of stock subject to
         the NSO and the exercise price shall be equitably adjusted.

                  7. Exercise. The vested portion of the NSO may be exercised in
         whole or in part, but only with respect to whole shares of the
         Company's Common Stock, and may be exercised more than once until all
         shares which are subject to the NSO have been purchased. An NSO may be
         exercised by delivery to the Company of written notice stating the
         number of shares elected to be purchased, and by payment to the Company
         as described in paragraph 4.

                  8. Withholding. By signing this Agreement, the Employee agrees
         to make arrangements satisfactory to the Company to comply with any
         income tax withholding requirements that may apply upon the exercise of
         the NSO or the disposition of the Company's Common Stock received upon
         the exercise of the NSO. The Employee will be entitled to elect to
         satisfy his tax withholding obligation by the withholding by the
         Company, at the appropriate time, of shares of the Company's Common
         Stock otherwise issuable to the Employee under this Agreement in a
         number sufficient, based upon the fair market value (as defined above)
         of such Common Stock on the relevant date, to satisfy such tax
         withholding requirements.

                  9. Delivery of Certificates. The Company may delay delivery of
         the certificate for shares purchased pursuant to the exercise of an NSO
         until (i) the admission of such shares to listing on any stock exchange
         on which the Company's Common Stock may then be listed, (ii) completion
         of any registration or other qualification of such shares under any
         state or federal law regulation that the Company's counsel shall
         determine as necessary or advisable, and (iii) receipt by the Company
         of advice by counsel that all applicable legal requirements have been
         complied with.



                                       3
<PAGE>   23

                  10. Dispute Resolution. Any dispute or controversy arising
         under or in connection with this Agreement shall be settled by binding
         arbitration, which shall be the sole and exclusive method of resolving
         any questions, claims or other matters arising under this Agreement.
         Such proceeding shall be conducted by final and binding arbitration
         before a panel of one or more arbitrators under the administration of
         the American Arbitration Association, and in a location mutually agreed
         to by the Employee and the Company. The Federal and State courts
         located in the United States of America are hereby given jurisdiction
         to render judgment upon, and to enforce, each arbitration award, and
         the parties hereby expressly consent and submit to the jurisdiction of
         such courts.

                  11. Miscellaneous.

                           (a) This Agreement shall be governed by and construed
         in accordance with the laws of the State of Florida, without reference
         to principles of conflict of laws. The captions of this Agreement are
         not part of the provisions hereof and shall have no force or effect.
         This Agreement may not be amended or modified otherwise than by a
         written agreement executed by the parties hereto or their respective
         successors and legal representatives.

                           (b) This Agreement and Section 12 of the Employment
         Agreement constitute the entire agreement between the parties with
         respect to the subject matter hereof. In the event of any inconsistency
         between the provisions of this Agreement and the provisions of the
         Plan, the provisions of this Agreement shall govern.

                           (c) All notices and other communications hereunder
         shall be in writing and shall be given by hand delivery to the other
         party or by registered or certified mail, return receipt requested,
         postage prepaid, or by telecopier, or by courier, addressed as follows:



                                       4
<PAGE>   24

              If to the Employee to:        If to the Company to:

              Robert W. Anestis             Florida East Coast Industries, Inc.
              23 White Oak Lane             One Malaga Street
              Weston, CT  06883             St. Augustine, FL 32084
              Facsimile:  203/222-9072      Attention:  Treasurer
                                            Facsimile:  904/396-4042

         or to such other address as either party shall have furnished to the
         other in writing in accordance herewith. Notice and communications
         shall be effective when actually received by the addressee.

                           (d) In the event of a dispute arising out of this
         Agreement, any party receiving any monetary or injunctive remedy,
         whether at law or in equity, which is final and not subject to appeal
         shall be entitled to its reasonable attorneys' fees and costs incurred
         with respect to obtaining such remedy from the other party.

                           (e) The invalidity or unenforceability of any
         provision of this Agreement shall not affect the validity or
         enforceability of any other provision of this Agreement.

                           (f) The Employee's or the Company's failure to insist
         upon strict compliance with any provision hereof or any other provision
         of this Agreement or the failure to assert any right the Employee or
         the Company may have hereunder, shall not be deemed to be a waiver of
         such provision or right or any other provision or right of this
         Agreement.

                                     FLORIDA EAST COAST INDUSTRIES, INC.




                                       5
<PAGE>   25

                                     By  /s/ C. F. Zellers, Jr.
                                         -------------------------------------
                                         Chairman and Chief Executive Officer

Agreed and Accepted:

/s/ Robert W. Anestis
--------------------------------
ROBERT W. ANESTIS


                                       6
<PAGE>   26


                           RESTRICTED STOCK AGREEMENT

                                     Between

                       FLORIDA EAST COAST INDUSTRIES, INC.

                                       and

                                ROBERT W. ANESTIS







                                                                October 30, 1998


<PAGE>   27

         THIS AGREEMENT, dated October 30, 1998 between Florida East Coast
Industries, Inc. (the "Company"), and Robert W. Anestis (the "Employee") is made
pursuant to the provisions of Section 2(b)(iii) of that certain Employment
Agreement of even date herewith between the Company and the Employee (the
"Employment Agreement").

         In fulfillment of the aforesaid provisions of the Employment Agreement,
the parties agree as follows:

         1. Grant of Restricted Stock. Under the Company's 1998 Stock Incentive
         Plan, as amended (the "Plan"), the Company hereby grants to the
         Employee, subject to the terms and conditions herein set forth, forty
         thousand (40,000) shares of the Company's Common Stock (the "Restricted
         Stock").

         2. Terms and Conditions. The Restricted Stock is subject to the
         following terms and conditions:

                  (a) Limited Nontransferability. This Restricted Stock shall be
         nontransferable during the term of the Restrictions (as hereinafter set
         forth) except by will or by the laws of descent and distribution.

                  (b) Restrictions and Lapse of Restrictions. The Restricted
         Stock shall be subject to the Employee's continued employment by the
         Company or a parent or subsidiary corporation (the "Restrictions"),
         which shall lapse according to the following schedule as of the stated
         yearly anniversaries of the date hereof (each an "Anniversary Date"):

                     Anniversary          Unrestricted
                         Date              Percentage
                    ---------------      ---------------

                    First                        20%

                    Second                       40%

                    Third                        60%



                                       1
<PAGE>   28

                     Anniversary          Unrestricted
                         Date              Percentage
                    ---------------      ---------------

                    Fourth                       80%

                    Fifth                       100%

         Notwithstanding the foregoing, upon the occurrence of an Accelerating
         Event (as defined in Section 4(a) of the Employment Agreement), all
         Restrictions shall lapse upon the date of such Accelerating Event.

         3. Forfeiture of Restricted Stock Upon Termination of Employment. The
         rights of the Employee and his successors in interest in Restricted
         Stock on which the Restrictions have not lapsed pursuant to paragraph
         2(b) shall terminate in full when the Employee's employment with the
         Company or a parent or subsidiary corporation is terminated by the
         Company for Cause (as defined in Section 3(b) of the Employment
         Agreement) or by the Employee without Good Reason (as defined in
         Section 3(c) of the Employment Agreement).

         4. Dividends/Distributions. The Company shall pay to the Employee any
         dividends or other distributions payable with respect to the Restricted
         Stock, notwithstanding the Restrictions, beginning on the date hereof
         but not beyond the date of any forfeiture thereof pursuant to the
         provisions of paragraph 3.

         5. Withholding. The Employee agrees to make arrangements satisfactory
         to the Company to comply with any income tax withholding requirements
         that may apply upon the lapse of the Restrictions on the Restricted
         Stock. The Employee will be entitled to elect to satisfy his tax
         withholding obligation by the withholding by the Company, at the
         appropriate time, of shares of the Company's Common Stock from the
         Restricted Stock in a number sufficient, based upon the fair market
         value (as defined below) of such Common Stock on the relevant date, to
         satisfy such tax withholding requirements. For purposes of this
         Agreement, "fair market value" means, as of any given date, the closing
         price of the Company's Common Stock on such date as quoted in the NYSE
         Composite Transactions Report in the Wall Street Journal. If there were
         no sales reported as of a 



                                       2
<PAGE>   29

         particular date, fair market value will be computed as of the last date
         preceding such date on which a sale was reported.

         6. Delivery of Certificates. The Company may delay delivery of the
         certificate for shares granted hereunder until (i) the admission of
         such shares to listing on any stock exchange on which the Company's
         Common Stock may then be listed, (ii) completion of any registration or
         other qualification of such shares under any state or federal law
         regulation that the Company's counsel shall determine as necessary or
         advisable, and (iii) receipt by the Company of advice by counsel that
         all applicable legal requirements have been complied with.

         7. Dispute Resolution. Any dispute or controversy arising under or in
         connection with this Agreement shall be settled by binding arbitration,
         which shall be the sole and exclusive method of resolving any
         questions, claims or other matters arising under this Agreement. Such
         proceeding shall be conducted by final and binding arbitration before a
         panel of one or more arbitrators under the administration of the
         American Arbitration Association, and in a location mutually agreed to
         by the Employee and the Company. The Federal and State courts located
         in the United States of America are hereby given jurisdiction to render
         judgment upon, and to enforce, each arbitration award, and the parties
         hereby expressly consent and submit to the jurisdiction of such courts.

         8. Miscellaneous.

                  (a) This Agreement shall be governed by and construed in
         accordance with the laws of the State of Florida, without reference to
         principles of conflict of laws. The captions of this Agreement are not
         part of the provisions hereof and shall have no force or effect. This
         Agreement may not be amended or modified otherwise than by a written
         agreement executed by the parties hereto or their respective successors
         and legal representatives.



                                       3
<PAGE>   30

                  (b) This Agreement and Section 12 of the Employment Agreement
         constitute the entire agreement between the parties with respect to the
         subject matter hereof. In the event of any inconsistency between the
         provisions of this Agreement and the provisions of the Plan, the
         provisions of this Agreement shall govern.

                  (c) All notices and other communications hereunder shall be in
         writing and shall be given by hand delivery to the other party or by
         registered or certified mail, return receipt requested, postage
         prepaid, or by telecopier, or by courier, addressed as follows:

                  If to the Employee to:     If to the Company to:

                  Robert W. Anestis          Florida East Coast Industries, Inc.
                  23 White Oak Lane          One Malaga Street
                  Weston, CT  06883          St. Augustine, FL 32084
                  Facsimile:  203/222-9072   Attention:  Treasurer
                                             Facsimile:  904/396-4042

         or to such other address as either party shall have furnished to the
         other in writing in accordance herewith. Notice and communications
         shall be effective when actually received by the addressee.

                  (d) In the event of a dispute arising out of this Agreement,
         any party receiving any monetary or injunctive remedy, whether at law
         or in equity, which is final and not subject to appeal shall be
         entitled to its reasonable attorneys' fees and costs incurred with
         respect to obtaining such remedy from the other party.

                  (e) The invalidity or unenforceability of any provision of
         this Agreement shall not affect the validity or enforceability of any
         other provision of this Agreement.



                                       4
<PAGE>   31

                  (f) The Employee's or the Company's failure to insist upon
         strict compliance with any provision hereof or any other provision of
         this Agreement or the failure to assert any right the Employee or the
         Company may have hereunder, shall not be deemed to be a waiver of such
         provision or right or any other provision or right of this Agreement.

                                       FLORIDA EAST COAST INDUSTRIES, INC.



                                       By  /s/ C. F. Zellers, Jr.
                                           ------------------------------------
                                           Chairman and Chief Executive Officer



Agreed and Accepted:

/s/ Robert W. Anestis
--------------------------------
ROBERT W. ANESTIS



                                       5
<PAGE>   32






                       SUPPLEMENTAL STOCK OPTION AGREEMENT

                                     between

                       FLORIDA EAST COAST INDUSTRIES, INC.

                                       and

                                ROBERT W. ANESTIS













                                                                October 30, 1998





<PAGE>   33

         THIS AGREEMENT, dated October 30, 1998 between Florida East Coast
Industries, Inc. (the "Company"), and Robert W. Anestis (the "Employee") is made
pursuant to the provisions of Section 2(b)(v) of that certain Employment
Agreement of even date herewith between the Company and the Employee (the
"Employment Agreement").

         In fulfillment of the aforesaid provisions of the Employment Agreement,
the parties agree as follows:

                  1. Non-Statutory Option. Under the Company's 1998 Stock
         Incentive Plan, as amended (the "Plan"), the Company hereby grants the
         Employee a non-statutory option ("NSO") to purchase from the Company
         100,000 shares of the Company's Common Stock. The exercise price of the
         NSO is $29.9375 per share, being the fair market value of the Company's
         Common Stock on the date hereof.

                  2. Shareholder Approval. The NSO is granted subject to
         shareholder approval of the First Amendment to the Plan dated October
         1, 1998, which approval shall be sought by the Company at the next
         meeting of shareholders following grant of this NSO.

                  3. Entitlement to Exercise the NSO. The grant of the NSO is
         subject to the following terms and conditions:

                               (a) Vesting. The NSO shall vest and become
                  exercisable immediately upon the earlier of (i) the first date
                  as of which the average closing price of a share of the
                  Company's Common Stock over twenty (20) consecutive trading
                  days is not less than Fifty Dollars ($50.00); (ii) the
                  occurrence of an Accelerating Event (as defined in Section
                  4(a) of the Employment Agreement); or (iii) December 1, 2003.

                               (b) Exercise Period. Except as otherwise stated
                  in this Agreement, the vested portion of the NSO may be
                  exercised, in whole or in part, from the dates described in
                  subsections (a) above until the earliest of (i) November 1,
                  2008, (ii) two years following the effective date that the

                                       1
<PAGE>   34

                  Employee's employment terminates by reason of an Accelerating
                  Event (as defined in Section 4(a) of the Employment Agreement)
                  or normal retirement (as determined under any retirement plan
                  of the Company), (iii) the effective date that the Employee
                  terminates employment for any other reason (but in no event
                  earlier than two years following a Change in Control (as
                  defined in Section 5(a) of the Employment Agreement)).

                               (c) Exercise Following Death. If the Employee
                  dies while employed by the Company or a parent or subsidiary
                  corporation and at a time when any portion of the NSO is
                  vested and exercisable, then the person to whom the Employee's
                  rights under the NSO shall have passed by will or by the laws
                  of distribution may exercise any of the vested and exercisable
                  portion of the NSO within two years after the Employee's
                  death.

                  4. Payment Under NSO. Payment of the NSO price may be made in
         cash, in shares of the Company's Common Stock, or in any combination
         thereof. If shares of the Company's Common Stock are delivered to make
         any such payment, the shares shall be valued at the fair market value
         (as defined below) thereof on the date of exercise of the NSO. For
         purposes of this Agreement, "fair market value" means, as of any given
         date, the closing price of the Company's Common Stock on such date as
         quoted in the NYSE Composite Transactions Report in the Wall Street
         Journal. If there were no sales reported as of a particular date, fair
         market value will be computed as of the last date preceding such date
         on which a sale was reported.

                  5. Limited Transferability of NSO. The NSO is not transferable
         (other than by will or by the laws of descent and distribution) and,
         except as otherwise stated in this Agreement, may be exercised during
         the Employee's lifetime only by the Employee.

                  6. Adjustments. The NSO shall be equitably adjusted with
         respect to the exercise price to reflect any extraordinary distribution
         made with respect to the Company's Common Stock during the term of the
         options. In the event of a capital adjustment resulting from a stock
         dividend, stock split, reorganization, merger, consolidation, spinoff,
         a combination or exchange of shares or other transaction having a


                                       2
<PAGE>   35

         similar substantive effect, the number of shares of stock subject to
         the NSO and the exercise price shall be equitably adjusted.

                  7. Exercise. The vested portion of the NSO may be exercised in
         whole or in part, but only with respect to whole shares of the
         Company's Common Stock and may be exercised more than once until all
         shares which are subject to the NSO have been purchased. An NSO may be
         exercised by delivery to the Company of written notice stating the
         number of shares elected to be purchased, and by payment to the Company
         as described in paragraph 4.

                  8. Withholding. By signing this Agreement, the Employee agrees
         to make arrangements satisfactory to the Company to comply with any
         income tax withholding requirements that may apply upon the exercise of
         the NSO or the disposition of the Company's Common Stock received upon
         the exercise of the NSO. The Employee will be entitled to elect to
         satisfy his tax withholding obligation by the withholding by the
         Company, at the appropriate time, of shares of the Company's Common
         Stock otherwise issuable to the Employee under this Agreement in a
         number sufficient, based upon the fair market value (as defined above)
         of such Common Stock on the relevant date, to satisfy such tax
         withholding requirements.

                  9. Delivery of Certificates. The Company may delay delivery of
         the certificate for shares purchased pursuant to the exercise of an NSO
         until (i) the admission of such shares to listing on any stock exchange
         on which the Company's Common Stock may then be listed, (ii) completion
         of any registration or other qualification of such shares under any
         state or federal law regulation that the Company's counsel shall
         determine as necessary or advisable, and (iii) receipt by the Company
         of advice by counsel that all applicable legal requirements have been
         complied with.

                  10. Dispute Resolution. Any dispute or controversy arising
         under or in connection with this Agreement shall be settled by binding
         arbitration, which shall be the sole and exclusive method of resolving
         any questions, claims or other matters arising under this Agreement.
         Such proceeding shall be conducted by final and binding arbitration
         before a panel of one or more arbitrators under the administration of
         the



                                       3
<PAGE>   36

         American Arbitration Association, and in a location mutually agreed to
         by the Employee and the Company. The Federal and State courts located
         in the United States of America are hereby given jurisdiction to render
         judgment upon, and to enforce, each arbitration award, and the parties
         hereby expressly consent and submit to the jurisdiction of such courts.

                  11. Miscellaneous.

                           (a) This Agreement shall be governed by and construed
         in accordance with the laws of the State of Florida, without reference
         to principles of conflict of laws. The captions of this Agreement are
         not part of the provisions hereof and shall have no force or effect.
         This Agreement may not be amended or modified otherwise than by a
         written agreement executed by the parties hereto or their respective
         successors and legal representatives.

                           (b) This Agreement and Section 12 of the Employment
         Agreement constitute the entire agreement between the parties with
         respect to the subject matter hereof. In the event of any inconsistency
         between the provisions of this Agreement and the provisions of the
         Plan, the provisions of this Agreement shall govern.

                           (c) All notices and other communications hereunder
         shall be in writing and shall be given by hand delivery to the other
         party or by registered or certified mail, return receipt requested,
         postage prepaid, or by telecopier, or by courier, addressed as follows:

                 If to the Employee to:      If to the Company to:

                 Robert W. Anestis           Florida East Coast Industries, Inc.
                 23 White Oak Lane           One Malaga Street
                 Weston, CT  06883           St. Augustine, FL 32084
                 Facsimile:  203/222-9072    Attention:  Treasurer
                                             Facsimile:  904/396-4042



                                       4
<PAGE>   37

         or to such other address as either party shall have furnished to the
         other in writing in accordance herewith. Notice and communications
         shall be effective when actually received by the addressee.

                           (d) In the event of a dispute arising out of this
         Agreement, any party receiving any monetary or injunctive remedy,
         whether at law or in equity, which is final and not subject to appeal
         shall be entitled to its reasonable attorneys' fees and costs incurred
         with respect to obtaining such remedy from the other party.

                           (e) The invalidity or unenforceability of any
         provision of this Agreement shall not affect the validity or
         enforceability of any other provision of this Agreement.

                           (f) The Employee's or the Company's failure to insist
         upon strict compliance with any provision hereof or any other provision
         of this Agreement or the failure to assert any right the Employee or
         the Company may have hereunder, shall not be deemed to be a waiver of
         such provision or right or any other provision or right of this
         Agreement.


                                       FLORIDA EAST COAST INDUSTRIES, INC.



                                       By  /s/ C. F. Zellers, Jr.
                                           -------------------------------------
                                           Chairman and Chief Executive Officer

Agreed and Accepted:


                                       5
<PAGE>   38

/s/ Robert W. Anestis
--------------------------------
ROBERT W. ANESTIS


                                       6