Document:

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                                                                    EXHIBIT 10.1

                                RAILAMERICA, INC.

                             1992 STOCK OPTION PLAN

         1.       Purpose. This 1992 Stock Option Plan (the Plan") is intended
to provide incentives: (a) to certain officers and other employees of
RAILAMERICA, INC. (the "Company"), and any present or future subsidiaries of the
Company (collectively, "Related Corporations") by providing them with
opportunities to purchase Common Stock, par value $.001 per share ("Common
Stock"), of the Company pursuant to options granted hereunder which qualify as
"incentive stock options" under Section 422(b) of the Internal Revenue Code of
1986, as amended (the "Code") ("ISO" or "ISOs") ; and (b) to outside directors,
officers, employees and consultants of the Company and Related Corporations by
providing them with opportunities to purchase stock in the Company pursuant to
options granted hereunder which do not qualify as ISOs ("Non-Qualified Option"
or "Non-Qualified Options"). Both ISOs and Non-Qualified Options are referred to
hereafter individually as an "Option" and collectively as "Options." As used
herein, the terms "parent" and `subsidiary" mean "parent corporation" and
"subsidiary corporation", respectively, as those terms are defined in Section
425 of the Code.

         2.       Administration of the Plan.

                  A.       Board or Committee Administration. The Plan shall be
         administered by the Board of Directors of the Company (the "Board") or
         by a committee appointed by the Board (the "Committee"); provided, that
         to the extent required by Rule 16b-3 of the Securities and Exchange
         Commission ("Rule 16b-3") under the Securities Exchange Act of 1934, as
         amended (the "Exchange Act"), with respect to specific grants of
         Options, the Plan shall be administered by a disinterested
         administrator or administrators within the meaning of Rule 16b-3
         Hereinafter, all references in this Plan to the "Committee" shall mean
         the Board if no Committee has been appointed. Subject to ratification
         of the grant by the Board (if so required by applicable state law), and
         subject to the terms of the Plan, the Committee shall have the
         authority to (1) determine the employees of the Company and Related
         Corporations (from among the class of employees eligible under
         paragraph 3 to receive ISOs) to whom ISOs may be granted, and to
         determine (from among the class of individuals eligible under paragraph
         3 to receive Non-Qualified Options) to whom Non-Qualified Options may
         be granted; (ii) determine the time or times at which Options may be
         granted; (iii) determine the option price of shares subject to each
         Option, which price shall not be less than the minimum price specified
         in paragraph 6; (iv) determine whether each Option granted shall be an
         ISO or a Non-Qualified Option; (v) determine (subject to paragraph 7)
         the time or times when each Option shall become exercisable and the
         duration of the exercise period, (vi) determine whether restrictions
         such as repurchase options are to be imposed on shares subject to
         Options, the nature of such restrictions, if any; and (vii) interpret
         the Plan and prescribe and rescind rules and regulations relating to
         it. If the Committee determines to issue a Non-Qualified Option, it
         shall take whatever actions it deems necessary, under Section 422 of
         the Code and the regulations promulgated thereunder, to ensure that
         such Option is not treated as an ISO. The interpretation and
         construction by the Committee of any provisions of the Plan or of any
         Option granted under it shall be final unless otherwise determined by
         the Board. The Committee may from time to time adopt such rules and
         regulations for carrying out the Plan. as it may deem necessary or
         desirable. No member of the Board or the Committee shall be liable for
         any action or determination made in goad faith with respect to the Plan
         or any Option granted under it.

                  B.       Committee Actions. The Committee, if appointed, shall
         consist of at least two persons. The Committee may select one of its
         members as its chairman, and shall hold meetings at such time and
         places as it may determine. Acts by a majority of the Committee, or
         acts reduced to or approved in writing by a majority of the members of
         the Committee, shall be the valid acts of the Committee. From time to
         time the Board may increase the size of the Committee and appoint
         additional members thereof, remove members (with or without cause) and
         appoint new members in substitution therefor, fill vacancies however
         caused, or remove all members of the Committee and thereafter directly
         administer the Plan.

         3.       Eligible Employees and Others. ISOs may be granted only to
employees of the Company or any Related Corporation that are not directors of
the Company or beneficial owners of 5% or more of the Company's

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issued and outstanding Common Stock. Those officers and directors of the Company
who are not employees may not be granted ISOs under the Plan. Non-Qualified
Options may be granted only to an employee, officer or consultant of the Company
or any Related Corporation that is not a director of the Company or a beneficial
owner of 5% or more of the Company's issued and outstanding Common Stock or a
director of the Company or any Related Corporation that is not an officer or
employee of the Company or a beneficial owner of 5% or more of the Company's
issued and outstanding Common Stock. Granting of any Option to any individual
shall neither entitle that individual to, nor disqualify him from, participation
in any other grant of Options.

         4.       Common Stock. The Common Stock subject to Options shall be
authorized but unissued shares of Common Stock of the Company, or shares of
Common Stock reacquired by the Company in any manner. The aggregate number of
shares which may be issued pursuant to the Plan is 250,000, subject to
adjustment as provided in paragraph 13. Any such shares may be issued as ISOs or
Non-Qualified Options, so long as the number of shares so issued does not exceed
such number, as adjusted. If any Option granted under the Plan shall expire or
terminate for any reason without having been exercised in. full or shall cease
for any reason to be exercisable in whole or in part the unpurchased shares
subject to such Options shall again be available for grants of Stock Rights
under the Plan.

         5.       Granting of Options. Options may be granted under the Plan at
any time after the effective date of an initial public offering of the Company's
securities (the "Initial Public Offering"), and prior to August 31, 2002. The
date of grant of an. Option under the Plan will be the date specified by the
Committee at the time it grants the Option; provided, however, that such date
shall not be prior to the date on which the Committee acts to approve the grant.
The Committee shall have the right, with the consent of the options, to convert
an ISO granted under the Plan to a Non-Qualified Option pursuant to paragraph
16.

         6.       Minimum Option Price; ISO Limitations; Options Granted to
Directors.

                  A.       Price for Options. The exercise price per share
         specified in the agreement relating to each Option granted under the
         Plan shall in no event be less than the greater of (i) the price per
         share attributable to Common Stock publicly offered in the Initial
         Public Offering, or (ii) the fair market value per share of Common
         Stock on the date of such grant.

                  B.       $100,000 Annual Limitation on ISOs. Each eligible
         employee may be granted. ISOs only to the extent that, in the aggregate
         under this Plan and all incentive stock option plans of the Company and
         any Related Corporation, such ISOs do not become exercisable for the
         first time by such employee during any calendar year in a manner which
         would entitle the employee to purchase more than $100,000 in fair
         market value (determined at the time the ISOs were granted) of Common
         Stock in that year. Any Options granted to an employee in. excess of
         such amount will be granted as Non-Qualified Options.

                  C.       Determination of Fair Market Value If, at the time an
         Option is granted under the Plan, the Company's Common Stock is
         publicly traded, "fair market value" shall be determined as of the last
         business day for which the prices or quotes discussed in this sentence
         are available prior to the date such Option is granted. and shall mean
         (i) the average (on that date) of the high and low prices of the Common
         Stock on the principal national securities exchange on which the Common
         stock is traded, if the Common Stock is then traded on a national
         securities exchange; or (ii) the last reported sale price (on that
         date) of the Common Stock on the NASDAQ National Market List, if the
         Common Stock is not then traded on a national securities exchange; or
         (iii) the closing bid price (or average of bid prices) last quoted (on
         that date) by an established quotation service for over-the-counter
         securities, if the Common Stock is not reported on the NASDAQ National
         Market List. However, if the Common Stack is not publicly traded at the
         time an Option is granted under the Plan, "fair market value" shall be
         deemed to be the fair value of the Common Stock as determined by the
         Committee after taking into consideration all factors which it deems
         appropriate, including, without limitation, recent sale and offer
         prices of the Common Stock in private transactions negotiated at arm's
         length.

         7.       Option Duration. Subject to earlier termination as provided
in. paragraphs 9 and 10, each Option shall expire on the date specified by the
Committee, but not more than ten years from the date of grant. Subject to
earlier termination as provided in paragraphs 9 and 10, the term of each ISO
shall be the term set forth in the original

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instrument granting such ISO, except with respect to any part of such ISO that
is converted into a Non-Qualified Option pursuant to paragraph 16.

         8.       Exercise of Option Subject to the provisions of paragraphs 9
through 12, each Option granted under the Plan shall be exercisable as follows:

                  A.       Vesting, The Option shall either be fully exercisable
         on the date of grant or shall become exercisable thereafter in such
         installments as the Committee may specify.

                  B.       Full Vesting of Installments. Once an installment
         becomes exercisable it shall remain exercisable until expiration or
         termination of the Option, unless otherwise specified by the Committee.

                  C.       Partial Exercise. Each Option or installment may be
         exercised at any time or from time to time, in whole or in part, for up
         to the total number of shares with respect to which it is then
         exercisable.

                  D.       Acceleration of Vesting. The Committee shall have the
         right to accelerate the date of exercise of any installment of any
         Option; provided that the Committee shall not, without the consent of
         an optionee, accelerate the exercise date of any installment of any
         Option granted to any employee as an ISO (and not previously converted
         into a Non-Qualified Option pursuant to paragraph 16) if such
         acceleration would violate the annual vesting limitation contained in
         Section 422(d) of the Code, as described in paragraph 6(B).

         9.       Termination of Employment. If an ISO optionee ceases to be
employed by the Company and all Related Corporations other than by reason of
death or disability as defined in paragraph 10, no further installments of his
ISOs shall become exercisable, and his ISOs shall terminate after the passage of
ninety (90) days from the date of termination of his employment, but in no event
later than on their specified expiration dates, except to the extent that such
ISOs (or unexercised installments thereof) have been converted into
Non-Qualified Options pursuant to paragraph 16. Employment shall be considered
as continuing uninterrupted during any bona fide leave of absence (such as those
attributable to illness, military obligations or governmental service) provided
that the period of such leave does not exceed 90 days or, if longer, any period
during which such optionee's right to reemployment is guaranteed by statute. A
bona fide leave of absence with the written approval of the Committee shall not
be considered an interruption of employment under the Plan, provided that such
written approval contractually obligates the Company or any Related Corporation
to continue the employment of the optionee after the approved period of absence.
ISOs granted under the Plan shall not be affected by any change of employment
within or among the Company and Related Corporations, so long as the optionee
continues to be an employee of the Company or any Related Corporation. Nothing
in the Plan shall be deemed to give any grantee of any Option the right to be
retained in employment or other service by the Company or any Related
Corporation for any period of time.

         10.      Death; Disability.

                  A.       Death. If an ISO optionee ceases to be employed by
         the Company and all Related Corporations by reason of his death, any
         ISO of his may be exercised, to the extent of the number of shares with
         respect to which he could have exercised it on the date of his death,
         by his estate, personal representative or beneficiary who has acquired
         the ISO by will or by the laws of descent and distribution, at any time
         prior to the earlier of the specified expiration date of the ISO or 180
         days from the date of the optionee's death.

                  B.       Disability. If an ISO optionee ceases to be employed
         by the Company and all Related Corporations by reason of his
         disability, he shall have the right to exercise any ISO held by him on
         the date of termination of employment, to the extent of the number of
         shares with respect to which he could have exercised it on that date,
         at any time prior to the earlier of the specified expiration date of
         the ISO or 180 days from the date of the termination of the optionee's
         employment. For the purposes of the Plan, the term "disability" shall
         mean "permanent and total disability" as defined in Section 22(e)(3) of
         the Code or successor statute.

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         11.      Assignability. No Option shall be assignable or transferable
by the optionee except (a) by will or by the laws of descent and distribution,
(b) pursuant to a qualified domestic relations order as defined by the Code or
rules promulgated thereunder, or (c) pursuant to Title I of the Employment
Retirement Income Security Act of 1974, as amended or rules promulgated
thereunder. During the lifetime of the optionee, each Option shall be
exercisable only by him or by his permitted assignee.

         12.      Terms and Conditions of Options. Options shall be evidenced
by instruments (which need not be identical) in. such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in. paragraphs 6 through 13. hereof and may contain such
other provisions as the Committee deems advisable which are not inconsistent
with the Plan, including restrictions applicable to shares of Common Stock
issuable upon exercise of Options. In granting any Non-Qualified Option, the
Committee may specify that such Non-Qualified Option shall be subject to the
restrictions set forth herein with respect to ISOs, or to such other termination
and cancellation provisions as the Committee may determine. The Committee may
from time to time confer authority and responsibility on one or more of its own
members and/or one or more officers of the Company to execute and deliver such
instruments. The proper officers of the Company are authorized and directed to
take any and all, action necessary or advisable from time to time to carry out
the terms of such instruments.

         13.      Adjustments. Upon the occurrence of any of the following
events, an optionee's rights with respect to Options granted to him hereunder
shall be adjusted as hereinafter provided, unless otherwise specifically
provided in the written agreement between the optionee and the Company relating
to such Option:

                  A.       Stock Dividends and Stock. If the shares of Common
         Stock shall be subdivided or combined into a greater or smaller number
         of shares or if the Company shall issue any shares of Common Stock as a
         stock dividend on its outstanding Common Stock, the number of shares of
         Common. Stock deliverable upon the exercise of Options shall be
         appropriately increased or decreased proportionately, and appropriate
         adjustments shall be made in the purchase price per share to reflect
         such subdivision, combination or stock dividend.

                  B.       Consolidations or Mergers. If the Company is to be
         consolidated with or acquired by another entity, in a merger, sale of
         all or substantially all of the Company's assets or otherwise (an
         "Acquisition"), the Committee or the board of directors of any entity
         assuming the obligations of the Company hereunder (the "Successor
         Board") shall, with respect to outstanding Options, take one or more of
         the following actions: (i) make appropriate provision for the
         continuation of such Options by substituting on an equitable basis for
         the shares then subject to such Options the consideration payable with
         respect to the outstanding shares of Common Stock in connection with
         the Acquisition; (ii) accelerate the date of exercise of such Options
         or of any installment of any such Options; (iii) upon written notice to
         the optionees, provide that all Options must be exercised, to the
         extent then exercisable, within a specified number of days of the date
         of such notice, at the end of which period the Options shall terminate;
         or (iv) terminate all Options in exchange for a cash payment equal to
         the excess of the fair market value of the shares subject to such
         Options (to the extent then exercisable) over the exercise price
         thereof.

                  C.       Recapitalization or Reorganization. In the event of a
         recapitalization or reorganization of the Company (other than a
         transaction described in subparagraph B above) pursuant to which
         securities of the Company or of another corporation are issued with
         respect to the outstanding shares of Common Stock, an optionee upon
         exercising an Option shall be entitled to receive for the purchase
         price paid upon such exercise the securities he would have received if
         he had exercised his Option prior to such recapitalization or
         reorganization.

                  D.       Modification of ISOs. Notwithstanding the foregoing.
         any adjustments made pursuant to subparagraphs A, B or C with respect
         to ISOs shall be made only after the Committee, after consulting with
         counsel for the Company, determines whether such adjustments would
         constitute a "modification" of such ISOs (as that term is defined in
         Section 424 of the Code) or would cause any adverse tax consequences
         for the holders of such ISOs. If the Committee determines that such
         adjustments made with respect to ISOs would constitute a modification
         of such ISOs, it may refrain from making such adjustments.

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                  E.       Dissolution or Liquidation. In the event of the
         proposed dissolution or liquidation of the Company each Option will
         terminate immediately prior to the consummation of such proposed action
         or at such other time and subject to such other conditions as shall be
         determined by the Committee.

                  F.       Issuance of Securities. Except as expressly provided
         herein, no issuance by the Company of shares of stock of any class, or
         securities convertible into shares of stock of any class, shall affect,
         and no adjustment by reason thereof shall be made with respect to, the
         number or price of shares subject to Options. No adjustments shall be
         made for dividends paid in Cash or in property other than securities of
         the Company.

                  G.       Fractional Shares. No fractional shares shall be
         issued under the Plan and the optionee shall receive from the Company
         cash in lieu of such fractional shares.

                  H.       Adjustment. Upon the happening of any of the
         foregoing events described in subparagraphs A, B or C above, the class
         and aggregate number of shares set forth in paragraph 4 hereof that are
         subject to Options which previously have been or subsequently may be
         granted under the Plan shall also be appropriately adjusted to reflect
         the events described in such subparagraphs. The Committee or the
         Successor Board shall determine the specific adjustments to be made
         under this paragraph 13 and, subject to paragraph 2, its determination
         shall be conclusive,

         If any person or entity owning restricted Common Stock obtained by
exercise of an Option made hereunder receives shares or securities or cash in.
connection with a corporate transaction described in subparagraphs A B or C
above as a result of owning such restricted Common Stock, such shares or
securities or cash shall be subject to all of the conditions and restrictions
applicable to the restricted Common Stock with respect to which such shares or
securities or cash were issued, unless otherwise determined by the Committee or
the Successor Board.

         14.      Means of Exercising Options. An Option (or any part or
installment thereof) shall be exercised by giving written notice to the Company
at its principal office address. Such notice shall identify the Option being
exercised and specify the number of shares as to which such Option is being
exercised, accompanied by full payment of the purchase price therefor either (a)
in. United States dollars in cash or by check, or (b) at the discretion of the
Committee, through delivery of shares of Common Stock having a fair market value
equal. as of the date of the exercise to the cash exercise price of the Option,
or (c) at the discretion of the Committee, by any combination of (a) and (b)
above. If the Committee exercises its discretion to permit payment of the
exercise price of an ISO by means of the methods set forth in clauses (b) or (c)
of the preceding sentence, such discretion shall be exercised in writing' at the
time of the grant of the ISO in question. The holder of an Option shall not have
the tights of a shareholder with respect to the shares covered by his Option
until the date of issuance of a stock certificate to him for such shares. Except
as expressly provided above paragraph 13 with respect to changes in
capitalization and stock dividends, no adjustment shall be made for dividends or
similar rights for which the record date is before the date such stock
certificate is issued.

         15.      Term and Amendment of Plan. This Plan was adopted by the Board
and stockholders of the Company as of July 1 1992. The Plan shall expire on
August 31, 2002 (except as to Options outstanding on that date). The Board may
terminate or amend the Plan in any respect at any time, except that, without the
approval of the stockholders obtained within 12 months before or after the Board
adopts a resolution authorizing any of the following actions: (a) the total
number of shares that may be issued under the Plan may not be increased (except
by adjustment pursuant to paragraph 13); (b) the provisions of paragraph 3
regarding eligibility for grants of Options may not be modified; and (c) the
expiration date of the Plan may not be extended. Except as otherwise provided in
this paragraph 15, in no event may action of the Board or stockholders alter or
impair the rights of a grantee. without his consent. under any Option previously
granted to him.

         16.      Conversion of ISOs into Non-Qualified Options; Termination of
ISOs. The Committee, at the written request of any optionee may in its
discretion take such actions as may be necessary to convert such optionee's ISOs
(or any installments or portions of installments thereof) that have not been
exercised on the date of conversion into Non-Qualified Options at any time prior
to the expiration of such ISOs, regardless of whether the optionee is an
employee of the Company or a Related Corporation at the time of such conversion.
Such actions may include, but not be limited to, extending the exercise period
of such Options, but may not reduce the exercise price

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of the appropriate installments of such Options. At the time of such conversion,
the Committee (with the consent of the Optionee) may impose such conditions on
the exercise of the resulting Non-Qualified Options as the Committee in its
discretion may determine, provided that such conditions shall not be
inconsistent with this Plan. Nothing in the Plan shall be deemed to give any
optionee the right to have such optionee's ISOs converted into Non-Qualified
Options, and no such conversion shall occur until and unless the Committee takes
appropriate action. The Committee, with the consent of the optionee, may also
terminate any portion of any ISO that has not been exercised at the time of such
termination.

         17.      Application of Funds. The proceeds received by the Company
from the sale of shares pursuant to Options granted and Purchases authorized
under the Plan shall be used for general corporate purposes.

         18.      Governmental Regulation The Company's obligation to sell and.
deliver shares of the Common Stock under this Plan is subject to the approval of
any governmental authority required in connection with the authorization,
issuance or sale of such shares.

         19.      Withholding of Additional Income Taxes. Upon the exercise of a
Non-Qualified Option, the making of a Disqualifying Disposition (as defined in
paragraph 20) or the vesting of restricted Common Stock acquired on the exercise
of an Option hereunder, the Company, in accordance with Section 3402(a) of the
Code, may require the optionee to pay additional withholding taxes in respect of
the amount, that is considered compensation includable in such person's gross
income. The Committee in its discretion may condition (1) the exercise of an
Option, or (ii) the vesting of restricted Common Stock, acquired by exercising
an Option, on the grantee's payment of such additional withholding taxes,

         20.      Notice to Company of Disqualifying Disposition. Each employee
who receives an ISO must agree to notify the Company in writing immediately
after the employee makes a Disqualifying Disposition of any Common Stock
acquired pursuant to the exercise of an ISO. A Disqualifying Disposition is any
disposition (including any sale) of such Common Stock before the later of (a)
two years after the date the employee was granted the ISO, or (b) one year after
the date the employee' acquired Common Stock by exercising the ISO. If the
employee has died before such stock is sold, these holding period requirements
do not apply and no Disqualifying Disposition can occur thereafter.

         21.      Governing Law; Construction The validity and construction of
the Plan and the instruments evidencing Stock Rights shall be governed by the
laws of the state of Delaware. In construing this Plan, the singular shall
include the plural and the masculine gender shall include the feminine and
neuter, unless the context otherwise requires.

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                                                                    EXHIBIT 10.2

                                RAILAMERICA, INC.

                            1995 STOCK INCENTIVE PLAN

         1.       Purpose. The purpose of the 1995 Stock Incentive Plan ("Plan")
of RailAmerica, Inc. ("Company") is to provide a means through which the Company
and its Subsidiaries may attract able persons to enter and remain in the employ
of the Company and its Subsidiaries, and to provide a means whereby those key
persons upon whom the responsibilities of the successful administration and
management of the Company rest, and whose present and potential contributions to
the welfare of the Company are of importance, can acquire and maintain stock
ownership, thereby strengthening their commitment to the welfare of the Company
and promoting an identity of interest between stockholders and these key
persons.

         A further purpose of the Plan is to provide such key persons with
additional incentive and reward opportunities designed to enhance the profitable
growth of the Company. The Plan provides for granting Incentive Stock Options,
Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock Awards,
Phantom Stock Unit Awards and Performance Share Units, or any combination of the
foregoing.

         2.       Definitions. The following definitions shall be applicable
throughout the Plan.

                  (a)      "Appreciation Date" shall mean the date designated by
a Holder of Stock Appreciation Rights for measurement of the appreciation in the
value of rights awarded to him, which date shall be the date notice of such
designation is received by the Committee, or its designee.

                  (b)      "Award" shall mean, individually or collectively, any
Incentive Stock Option, Nonqualified Stock Option, Stock Appreciation Right,
Restricted Stock Award, Phantom Stock Unit Award or Performance Share Unit
Award.

                  (c)      "Award Period" shall mean a period of time within
which performance is measured for the purpose of determining whether an award of
Performance Share Units has been earned.

                  (d)      "Board" shall mean the Board of Directors of the
Company.

                  (e)      "Cause" shall mean the Company or a Subsidiary having
cause to terminate a Participant's employment under any existing employment
agreement between the Participant and the Company or a Subsidiary or, in the
absence of such an employment agreement, upon (i) the determination by the
Committee that the Participant has ceased to perform his duties to the Company
or a Subsidiary (other than as a result of his incapacity due to physical or
mental illness or injury), which failure amounts to an intentional and extended
neglect of his duties to such party, (ii) the Committee's determination that the
Participant has engaged or is about to engage in conduct materially injurious to
the Company or a Subsidiary, or (iii) the Participant having been convicted of a
felony.

                  (f)      "Change in Control" shall, unless the Board otherwise
directs by resolution adopted prior thereto, be deemed to occur if (i) any
"person" (as that term is used in Sections 13 and 14(d)(2) of the Securities and
Exchange Act of 1934 ("Exchange Act")) is or becomes the beneficial owner (as
that. term is used in Section 13(d) of the Exchange Act), directly or
indirectly, of 25% or more of the voting stock; or (ii) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board cease for any reason to constitute at least a majority thereof, unless
the election or the nomination for election by the Company's shareholders of
each new director was approved by a vote of at least three quarters of the
directors then still in office who were directors at the beginning of the
period. Any merger, consolidation or corporate reorganization in which the
owners of the Company's capital stock entitled to vote in the election of
directors ("Voting Stock") prior to said combination, own 50% or more of the
resulting entity's voting stock shall not, by itself, be considered a Change in
Control.

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                  (g)      "Code" shall mean the Internal Revenue Code of 1986,
as amended. Reference in the Plan to any section of the Code shall be deemed to
include any amendments or successor provisions to such section and any
regulations under such section.

                  (h)      "Committee" shall mean the Compensation Committee of
the Board, or such other committee as may be appointed by the Board, each member
of which shall be a "disinterested person" within the meaning of Rule 16b-3,
which shall be the administrative committee for the Plan.

                  (i)      "Common Stock" shall mean the Common Stock of the
Company, $0.001 par value per share.

                  (j)      "Company" shall mean RailAmerica, Inc., a Delaware
corporation.

                  (k)      "Date of Grant" shall mean the date on which the
granting of an Award is authorized or such other date as may be specified in
such authorization.

                  (l)      "Disability" shall mean the complete and permanent
inability by reason of illness or accident to perform the duties of the
occupation at which a Participant was employed when such disability commenced
or, if the Participant was retired when such disability commenced, the inability
to engage in any substantial gainful activity, as determined by the Committee
based upon medical evidence acceptable to it.

                  (m)      "Disinterested Person" shall mean a person who is a
"disinterested person" within the meaning of Rule 16b-3 of the Exchange Act, or
any successor rule or regulation.

                  (n)      "Eligible Employee" shall mean any person regularly
employed by the Company or a Subsidiary on a full-time salaried basis who
satisfies all of the requirements of Section 6.

                  (o)      "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.

                  (p)      "Fair Market Value" shall mean (i) the average (on
that date) of the high and low prices of the Common Stock on the principal
national securities exchange on which the Common Stock is traded, if the Common
Stock is then traded on a national securities exchange; or (ii) the last
reported sale price (on that date) of the Common Stock on the NASDAQ National
Market List, if the Common Stock is not then traded on a national securities
exchange; or (iii) the closing bid price (or average of bid prices) last quoted
(on that date) by an established quotation service for over-the-counter
securities, if the Common Stock is not reported on the NASDAQ National Market
List. However, if the Common Stock is not publicly-traded at the time an option
is granted under the Plan, "Fair Market Value" shall be deemed to be the fair
value of the Common Stock as determined by the Compensation Committee of the
Board of the Company (the "Committee") after taking into consideration all
factors which it deems appropriate, including, without limitation, recent sale
and offer prices of the Common Stock in private transactions negotiated at arm's
length.

                  (q)      "Holder" shall mean a Participant who has been
granted an Option, a Stock Appreciation Right, a Restricted Stock Award, Phantom
Stock Unit Award or a Performance Share Unit Award.

                  (r)      "Incentive Stock Option" shall mean an Option granted
by the Committee to a Participant under the Plan which is designated by the
Committee as an Incentive Stock Option pursuant to Section 422 of the Code.

                  (s)      "Nonqualified Stock Option" shall mean an Option
granted by the Committee to a Participant under the Plan which is not designated
by the Committee as an Incentive Stock Option.

                  (t)      "Normal Termination" shall mean termination:

                  (i)      With respect to the Company or a Subsidiary, at
retirement (excluding early retirement) pursuant to the Company retirement plan
then in effect;

                                       2
<PAGE>   3

                           (ii)     On account of Disability;

                           (iii)    With the written approval of the Committee;
or

                           (iv)     By the Company or a Subsidiary without
cause.

                  (u)      "Option" shall mean an Award granted under Section 7
of the Plan

                  (v)      "Option Period" shall mean the period described in
Section 7(c).

                  (w)      "Participant" shall mean an Eligible Employee who has
been selected to participate in the Plan and to receive an Award pursuant to
Section 6.

                  (x)      "Performance Goals" shall mean the performance
objectives of the Company during an Award Period or Restricted Period
established for the purpose of determining whether, and to what extent, Awards
will be earned for an Award Period or Restricted Period.

                  (y)      "Performance Share Unit" shall mean a hypothetical
investment equivalent equal to one share of Stock granted in connection with an
Award made under Section 9 of the Plan.

                  (z)      "Phantom Stock Unit" shall mean a hypothetical
investment equivalent equal to one Share of Stock granted in connection with an
Award made under Section 10 of the Plan, or credited with respect to Awards of
Performance Share Units which have been deferred under Section 9.

                  (aa)     "Plan" shall mean the 1995 Stock Incentive Plan of
RailAmerica, Inc.

                  (bb)     "Restricted Period" shall mean, with respect to any
share of Restricted Stock, the period of time determined by the Committee during
which such share of Restricted Stock is subject to the restrictions set forth in
Section 10.

                  (cc)     "Restricted Stock" shall mean shares of Common Stock
issued or transferred to a Participant subject to the restrictions set forth in
Section 10 and any new, additional or different securities a Participant may
become entitled to receive as a result of adjustments made pursuant to Section
12.

                  (dd)     "Restricted Stock Award" shall mean an Award granted
under Section 10 of the Plan.

                  (ee)     "Securities Act" shall mean the Securities Act of
1933, as amended

                  (ff)     "Stock" shall mean the Common Stock or such other
authorized shares of stock the Company as the Committee may from time to time
authorize for use under the Plan.

                  (gg)     "Stock Appreciation Right" or "SAR" shall mean an
Award granted under Section 8 of the Plan.

                  (hh)     "Subsidiary" shall mean any corporation which is a
"subsidiary corporation" of the Company within the meaning of Section 424(f) of
the Code.

                  (ii)     "Valuation Date" shall mean the last day of an Award
Period or the date of death of a Participant, as applicable.

         3.       Effective Date, Duration and Shareholder Approval. Subject to
the approval of this Plan by the shareholders of the Company at a duly convened
meeting of shareholders, or by a written consent of shareholders effective under
applicable state law, the Plan shall become effective on January 1, 1995, and no
further Awards may be made after the expiration of ten years therefrom.

                                       3
<PAGE>   4

         The Plan shall continue in effect until all matters relating to the
payment of Awards and administration of the Plan have been settled.

         4.       Administration. The Committee shall administer the Plan. Each
member of the Committee shall, at the time he takes any action with respect to
an Award under the Plan, be a Disinterested Person. Two members of the Committee
shall constitute a quorum. The acts of a majority of the members present at any
meeting at which a quorum is present or acts approved in writing by a majority
of the Committee shall be deemed the acts of the Committee.

         No member of the Committee, while serving as such, shall be eligible to
receive an Award under the Plan. Subject to the provisions of the Plan, the
Committee shall have exclusive power to:

                  (a)      Select the Eligible Employees to participate in the
Plan;

                  (b)      Determine the nature and extent of the Awards to be
made to each Participant;

                  (c)      Determine the time or times when Awards will be made;

                  (d)      Determine the duration of each Award Period;

                  (e)      Determine the conditions to which the payment of
Awards may be subject;

                  (f)      Establish the Performance Goals for each Award
Period;

                  (g)      Prescribe the form or forms evidencing Awards; and

                  (h)      Cause records to be established in which there shall
be entered, from time to time as Awards are made to Participants, the date of
each Award, the number of Incentive Stock Options, Nonqualified Stock Options,
SARs, Phantom Stock Units, Performance Share Units and Shares of Restricted
Stock awarded by the Committee to each Participant, the expiration date, the
Award Period and the duration of any applicable Restricted Period.

         The Committee shall have the authority, subject to the provisions of
the Plan, to establish, adopt, or revise such rules and regulations and to make
all such determinations relating to the Plan as it may deem necessary or
advisable for the administration of the Plan. The Committee's interpretation of
the Plan or any Awards granted pursuant thereto and all decisions and
determinations by the Committee with respect to the Plan shall be final,
binding, and conclusive on all parties unless otherwise determined by the Board.

         5.       Grant of Options. Stock Appreciation Rights. Restricted Stock
Awards, Phantom Stock Awards and Performance Share Units: Shares Subject to the
Plan. The Committee may, from time to time, grant Awards of Options, Stock
Appreciation Rights, Restricted Stock, Phantom Stock Units and/or Performance
Share Units to one or more Participants; provided, however, that:

                  (a)      Subject to Section 12, the aggregate number of shares
of Stock made subject to Awards may not exceed 1,000,000;

                  (b)      Such shares shall be deemed to have been used in
payment of Awards whether they are actually delivered or the Fair Market Value
equivalent of such shares is paid in cash. In the event any Option, SAR not
attached to an Option, Restricted Stock, Phantom Stock Unit or Performance Share
Unit shall be surrendered, terminate, expire, or be forfeited, the number of
shares of Stock no longer subject thereto shall thereupon be released and shall
thereafter be available for new Awards under the Plan to the fullest extent
permitted by Rule 16b-3 under the Exchange Act (if applicable at the time); and

                                       4
<PAGE>   5

                  (c)      Stock delivered by the Company in settlement of
Awards under the Plan may be authorized and unissued Stock or Stock held in the
treasury of the Company or may be purchased on the open market or by private
purchase at prices no higher than the Fair Market Value at the time of purchase.

         6.       Eligibility. Participants shall be limited to officers and
employees of the Company and its Subsidiaries who have received written
notification from the Committee or from a person designated by the Committee,
that they have been selected to participate in the Plan.

         7.       Stock Options. One or more Incentive Stock Options or
Nonqualified Stock Options can be granted to any Participant; provided, however,
that Incentive Stock Options may be granted only to employees of the Company or
a Subsidiary. Each Option so granted shall be subject to the following
conditions.

                  (a)      Option Price. The option price ("Option Price") per
share of Stock shall be set by the Committee at the time of grant but shall not
be less than (i) in the case of an Incentive Stock Option, the Fair Market Value
of a share of Stock at the Date of Grant, and (ii) in the case of a Nonqualified
Stock Option, the par value per share of Stock.

                  (b)      Manner of Exercise and Form of Payment. Options which
have become exercisable may be exercised by delivery of written notice of
exercise to the Committee accompanied by payment of the Option Price. The Option
Price shall be payable in cash and/or shares of Stock valued at the Fair Market
Value at the time the Option is exercised, or, in the discretion of the
Committee, either (i) in other property having a Fair Market Value on the date
of exercise equal to the Option Price, or (ii) by delivering to the Company a
copy of irrevocable instructions to a stockbroker to deliver promptly to the
Company an amount of sale or loan proceeds sufficient to pay the Option Price.

                  (c)      Other Terms and Conditions. If the Holder has not
died or his relationship as an officer or employee with the Company or a
Subsidiary has not terminated, the Option shall become exercisable in such
manner and within such period or periods ("Option Period"), not to exceed 10
years from its Date of Grant, as set forth in the Stock Option Agreement to be
entered into in connection therewith.

                           (v)      Each Option shall lapse in the following
situations:

                                    [ ]      Ten years after it is granted;

                                    [ ]      Three months after Normal
                                             Termination, except as otherwise
                                             provided by the Committee, or

                                    [ ]      Any earlier time set forth in the
                                             Stock Option Agreement.

                           (vi)     If the Holder terminates his relationship as
an officer or employee with the Company or a Subsidiary otherwise than by Normal
Termination or death, the Option shall lapse at the time of termination.

                           (vii)    If the Holder dies within the Option Period
or within 3 months after Normal Termination (or such other period as may have
been established by the Committee), the Option shall lapse unless it is
exercised within the Option Period and in no event later than 12 months after
the date of Holder's death by the Holder's legal representative or
representatives or by the person or persons entitled to do so under the Holder's
last will and testament or, if the Holder shall fail to make testamentary
disposition of such Option or shall die intestate, by the person entitled to
receive said Option under the applicable laws of descent: and distribution.

                  (d)      Stock Option Agreement. Each Option granted under the
Plan shall be evidenced by a "Stock Option Agreement" between the Company and
the Holder of the Option containing such provisions as may be determined by the
Committee, but shall be subject to the following terms and conditions.

                           (viii)   Each Option or portion thereof that is
exercisable shall be exercisable for the full amount or for any part thereof,
except as otherwise determined by the terms of the Stock Option Agreement.

                                       5
<PAGE>   6

                           (ix)     Each share of Stock purchased through the
exercise of an Option shall be paid for in full at the time of the exercise.
Each Option shall cease to be exercisable, as to any share of Stock, when the
Holder purchases the share or exercises a related SAR or when the Option lapses.

                           (x)      Options shall not be transferable by the
Holder except by will or the laws of descent and distribution and shall be
exercisable during the Holder's lifetime only by him or her.

                           (xi)     Each Option shall become exercisable by the
Holder in accordance with the vesting schedule established by the Committee for
the Award.

                           (xii)    Each Stock Option Agreement may contain an
agreement that, upon demand by the Committee for such a representation, the
Holder shall deliver to the Committee at the time of any exercise of an Option a
written representation that the shares to be acquired upon such exercise are to
be acquired for investment and not for resale or with a view to the distribution
thereof. Upon such demand, delivery of such representation prior to the delivery
of any shares issued upon exercise of an Option shall be a condition precedent
to the right of the Holder or such other person to purchase any shares. In the
event certificates for Stock are delivered under the Plan with respect to which
such investment representation has been obtained, the Committee may cause a
legend or legends to be placed on such certificates to make appropriate
reference to such representation and to restrict transfer in the absence of
compliance with applicable federal or state securities laws.

                  (e)      Grants to 10% Holders of Company Voting Stock.
Notwithstanding Section 7(a), if an Incentive Stock Option is granted to a
Holder who owns stock representing more than ten percent of the voting power of
all classes of stock of the Company or of the Company and its Subsidiaries, the
period specified in the Stock Option Agreement for which the Option thereunder
is granted and at the end of which such Option shall expire shall not exceed
five years from the Date of Grant of such Option and the Option Price shall be
at least 110 percent of the Fair Market Value (on the Date of Grant) of the
Stock subject to the Option.

                  (f)      Limitation. To the extent the aggregate Fair Market
Value (as determined as of the Date of Grant) of Stock for which Incentive Stock
Options are exercisable for the first time by any Participant during any
calendar year (under all plans of the Company and its Subsidiaries) exceeds
$100,000, such excess Incentive Stock Options shall be treated as Nonqualified
Stock Options.

                  (g)      Voluntary Surrender. The Committee may permit the
voluntary surrender of all or any portion of any Nonqualified Stock Option and
its corresponding SAR, if any, granted under the Plan to be conditioned upon the
granting to the Holder of a new Option for the same or a different number of
shares as the Option surrendered or require such voluntary surrender as a
condition precedent to a grant of a new Option to such Participant. Such new
Option shall be exercisable at the Option Price, during the exercise period, and
in accordance with any other terms or conditions specified by the Committee at
the time the new Option is granted, all determined in accordance with the
provisions of the Plan without regard to the Option Price, exercise period, or
any other terms and conditions of the Nonqualified Stock Option surrendered.

                  (h)      Order of Exercise. Options granted under the Plan may
be exercised in any order, regardless of the Date of Grant or the existence of
any other outstanding Option.

                  (i)      Notice of Disposition. Participants shall give prompt
notice to the Company of any disposition of Stock acquired upon exercise of an
Incentive Stock Option if such disposition occurs within either two years after
the Date of Grant of such Option and/or one year after the receipt of such Stock
by the Holder.

         8.       Stock Appreciation Rights. Any Option granted under the Plan
may include an SAR, either at the time of grant or by amendment except that in
the case of an Incentive Stock Option, such SAR shall be granted only at the
time of grant of the related Option. The Committee may also award to
Participants SARs independent of any Option. An SAR shall be subject to such
terms and conditions not inconsistent with the Plan as the Committee shall
impose, including, but not limited to, the following:

                                       6
<PAGE>   7

                  (a)      Vesting. An SAR granted in connection with an Option
shall become exercisable, be transferable and shall lapse according to the same
vesting schedule, transferability and lapse rules that are established for the
Option. An SAR granted independent of an Option shall become exercisable, be
transferable and shall lapse in accordance with a vesting schedule,
transferability and lapse rules established by the Committee. Notwithstanding
the above, an SAR shall not be exercisable by a person subject to Section 16(b)
of the Exchange Act for at least six months following the Date of Grant.

                  (b)      Failure to Exercise. If on the last day of the Option
Period (or in the case of an SAR independent of an Option, the SAR period
established by the Committee), the Fair Market value of the Stock exceeds the
Option Price, the Holder has not exercised the Option or SAR, and neither the
Option nor the SAR has lapsed, such SAR shall be deemed to have been exercised
by the Holder on such last day and the Company shall make the appropriate
payment therefor.

                  (c)      Payment. The amount of additional compensation which
may be received pursuant to the award of one SAR is the excess, if any, of the
Fair Market Value of one share of Stock on the Appreciation Date over the Option
Price, in the case of an SAR granted in connection with an Option, or the Fair
Market Value of one share of Stock on the Date of Grant, in the case of an SAR
granted independent of an Option. The Company shall pay such excess in cash, in
shares of Stock valued at Fair Market Value, or any combination thereof, as
determined by the Committee. Fractional shares shall be settled in cash.

                  (d)      Designation of Appreciation Date. A Participant may
designate an Appreciation Date at such time or times as may be determined by the
Committee at the time of grant by filing an irrevocable written notice with the
Committee or its designee, specifying the number of SARs to which the
Appreciation Date relates, and the date on which such SARs were awarded. Such
time or times determined by the Committee may take into account any applicable
"window periods" required by Rule 16b-3 under the Exchange Act.

                  (e)      Expiration. Except as otherwise provided in the case
of SARs granted in connection with Options, the SARs shall expire on a date
designated by the Committee which is not later than ten years after the date on
which the SAR was awarded.

         9.       Performance Shares.

                  (a)      Award Grants. The Committee is authorized to
establish Performance Share programs to be effective over designated Award
Periods of not less than three years nor more than five years. At the beginning
of each Award Period, the Committee will establish in writing Performance Goals
based upon financial objectives for the Company for such Award Period and a
schedule relating the accomplishment of the Performance Goals to the Awards to
be earned by Participants. Performance Goals may include absolute or relative
growth in earnings per share or rate of return on stockholders' equity or other
measurement of corporate performance and may be determined on an individual
basis or by categories of Participants. The Committee may adjust Performance
Goals or performance measurement standards as it deems equitable in recognition
of extraordinary or non-recurring events experienced during an Award Period by
the Company or by any other corporation whose performance is relevant to the
determination of whether Performance Goals have been attained. The Committee
shall determine the number of Performance Share Units to be awarded, if any, to
each Participant who is selected to receive an Award. The Committee may add new
Participants to a Performance Share program after its commencement by making pro
rata grants.

                  (b)      Determination of Award. At the completion of a
Performance Share program, or at other times as specified by the Committee, the
Committee shall calculate the amount earned with respect to each Participant's
award by multiplying the Fair Market Value on the Valuation Date by the number
of Performance Share Units granted to the Participant and multiplying the amount
so determined by a performance factor representing the degree of attainment of
the Performance Goals.

                  (c)      Partial Awards. A Participant for less than a full
Award Period, whether by reason of commencement or termination of employment or
otherwise, shall receive such portion of an Award, if any, for that Award Period
as the Committee shall determine.

                                       7
<PAGE>   8

                  (d)      Payment of Non-Deferred Awards. The amount earned
with respect to an Award shall be payable 100% in shares of Stock based on the
Fair Market Value on the Valuation Date; provided, however, that, at its
discretion, the Committee may vary such form of payment as to any Participant
upon the specific request: of such Participant. The amount of any payment made
in cash shall be based upon the Fair Market Value on the seventh business day
prior to payment. Except as provided in subparagraph 9(e), payments of Awards
shall be made as soon as practicable after the completion of an Award Period.

                  (e)      Deferral of Payment. A Participant may file a written
election with the Committee to defer the payment of any amount otherwise payable
pursuant to subparagraph 9(d) on account of an Award to a period commencing at
such future date as specified in the election. Such election must be filed with
the Committee no later than the last day of the month which is two-thirds of the
way through the Award Period during which the Award is earned, unless the
Committee specifies an earlier filing date.

                  (f)      Separate Accounts. At the conclusion of each Award
Period, the Committee shall cause a separate account to be maintained in the
name of each Participant with respect to whom all or a portion of an Award of
Performance Share Units earned under the Plan has been deferred. All amounts
credited to such account shall be fully vested at all times.

                  (g)      Election of Form of Investment. Within 60 days from
the end of each Award Period, and at such time or times, if any, as the
Committee may permit, a Participant may file a written election with the
Committee of the percentage of the deferred portion of any Award of Performance
Share Units which is to be expressed in the form of dollars and credited with
interest, the percentage of such Award which is to be expressed in the form of
Phantom Stock Units and the percentage of such Award which is to be deemed
invested in any other hypothetical investment equivalent from time to time made
available under the Plan by the Committee. In the event a Participant fails to
file an election within the time prescribed, one hundred percent (100%) of the
deferred portion of such Participant's Award shall be expressed in the form of
Phantom Stock Units.

                  (h)      Interest Portion. The amount of interest credited
with respect to the portion of an Award credited to the Participant's account
which is deferred and credited with interest (the "Interest Portion") shall be
equal to the amount such portion would have earned had it been credited with
interest from the last day of the Award Period with respect to which the Award
was made until the seventh business day preceding the date as of which payment
is made, compounded annually, at the Company's rate of return on stockholders'
equity for each fiscal year that payment is deferred, or at such other rate as
the Committee may from time to time determine. The Committee may, in its sole
discretion, credit interest on amounts payable prior to the date on which the
Company's rate of return on stockholders' equity becomes ascertainable at the
rate applicable to deferred amounts during the year immediately preceding the
year of payment.

                  (i)      Phantom Stock Unit Portion. With respect to the
portion of an Award credited to the Participant's account which is deferred and
expressed in the form of Phantom Stock Units (the "Phantom Stock Unit Portion"),
the number of Phantom Stock Units so credited shall be equal to the result of
dividing (i) the Phantom Stock Unit Portion by (ii) the Fair Market Value on the
date the Award Period ended.

                  (j)      Dividend Equivalents. Within thirty (30) days from
the payment of a dividend by the Company on its Stock, the Phantom Stock Unit
Portion of each Participant's account shall be credited with additional Phantom
Stock Units the number of which shall be determined by (i) multiplying the
dividend per share paid on the Company's Stock by the number of Phantom Stock
Units credited to his account at the time such dividend was declared, then (ii)
dividing such amount by the Fair Market Value on the payment date for such
dividend.

                  (k)      Payment Of Deferred Awards. Payment with respect to
amounts credited to the account of a Participant shall be made in a series of
annual installments over a period of ten (10) years, or such other period as the
Committee may direct, or as the Committee may allow the Participant to elect, in
either case at the time of the original deferral election. Except as otherwise
provided by the Committee, each installment shall be withdrawn proportionately
from the Interest Portion and from the Phantom Stock Unit Portion of a
Participant's account based on the percentage of the Participant's account which
he originally elected to be credited with interest and with Phantom Stock Units,
or, if a later election has been permitted by the Committee and is then in
effect, based an the

                                       8
<PAGE>   9

percentage specified in such later election. Payments shall commence on the date
specified by the Participant in his deferral election, unless the Committee in
its sole discretion determines that payment shall be made over a shorter period
or in more frequent installments, or commence on an earlier date, or any or all
of the above. If a Participant dies prior to the date on which payment with
respect to all amounts credited to his account shall have been completed,
payment with respect to such amounts shall be made to the Participant's
beneficiary in a series of annual installments over a period of five (5) years,
unless the Committee in its sole discretion determines that payment shall be
made over a shorter period or in more frequent installments, or both. To the
extent practicable, each installment payable hereunder shall approximate that
part of the amount then credited to the Participant's or beneficiary's account
which, if multiplied by the number of installments remaining to be paid would be
equal to the entire amount then credited to the Participant 's account.

                  (l)      Composition of Payment. The Committee shall cause all
payments with respect to deferred Awards to be made in a manner such that not
more than one-half of the value of each installment shall consist of Stock. To
that end, payment with respect to the Interest Portion and the Phantom Stock
Unit Portion of a Participant's account shall be paid in cash and Stock as the
Committee shall determine in its sole discretion. The determination of any
amount to be paid in cash for Phantom Stock Units shall be made by multiplying
(i) the Fair Market Value of one share of Stock on the seventh business day
prior to the date as of which payment is made, by (ii) the number of Phantom
Stock Units for which payment is being made. The determination of the number of
shares of Stock, if any, to be distributed with respect to the Interest Portion
of a Participant's account shall be made by dividing (i) one-half of the value
of such portion on the seventh business day prior to the date as of which
payment is made, by (ii) the Fair Market Value of one share of Stock on such
date. Fractional shares shall be paid in cash.

                  (m)      Alternative Investment Equivalents. If the Committee
shall have permitted Participants to elect to have deferred Awards of
Performance Share Units invested in one or more hypothetical investment
equivalents other than interest or Phantom Stock Units, such deferred Awards
shall be credited with hypothetical investment earnings at such rate, manner and
time as the Committee shall determine. At the end of the deferral period,
payment shall be made in respect of such hypothetical investment equivalents in
such manner and at such time as the Committee shall determine.

                  (n)      Adjustment of Performance Goals. The Committee may,
during the Award Period, make such adjustments to Performance Goals as it may
deem appropriate, to compensate for, or reflect, any significant changes that
may have occurred during such Award Period in (i) applicable accounting rules or
principles or changes in the Company's method of accounting or in that of any
other corporation whose performance is relevant to the determination of whether
an Award has been earned or (ii) tax laws or other laws or regulations that
alter or affect the computation of the measures of Performance Goals used for
the calculation of Awards.

         10.      Restricted Stock Awards and Phantom Stock Units.

                  (a)      Award of Restricted Stock and Phantom Stock Units.

                           (i)      The Committee shall have the authority (1)
to grant Restricted Stock and Phantom Stock Unit Awards, (2) to issue or
transfer Restricted Stock to Participants, and (3) to establish terms,
conditions and restrictions applicable to such Restricted Stock and Phantom
Stock Units, including the Restricted Period, which may differ with respect to
each grantee, the time or times at which Restricted Stock or Phantom Stock Units
shall be granted or become vested and the number of shares or units to be
covered by each grant.

                           (ii)     The Holder of a Restricted Stock Award shall
execute and deliver to the Secretary of the Company an agreement with respect to
Restricted Stock and escrow agreement satisfactory to the Committee and the
appropriate blank stock powers with respect to the Restricted Stock covered by
such agreements and shall pay to the Company, as the purchase price of the
shares of Stock subject to such Award, the aggregate par value of such shares of
Stock within 60 days following the making of such Award. If a Participant shall
fail to execute the agreement, escrow agreement and stock powers or shall fail
to pay such purchase price within such period, the Award shall be null and void.
Subject to the restrictions set forth in Section 10(b), the Holder shall
generally have the rights and privileges of a stockholder as to such Restricted
Stock, including the right to vote such Restricted Stock. At the discretion of
the Committee, cash and stock dividends with respect to the Restricted Stock may
be

                                       9
<PAGE>   10

either currently paid or withheld by the Company for the Holder's account, and
interest may be paid on the amount of cash dividends withheld at a rate and
subject to such terms as determined by the Committee. Cash or stock dividends so
withheld by the Committee shall not be subject to forfeiture.

                           (iii)    In the case of a Restricted Stock Award, the
Committee shall then cause stock certificates registered in the name of the
Holder to be issued and deposited together with the stock powers with an escrow
agent to be designated by the Committee. The Committee shall cause the escrow
agent to issue to the Holder a receipt evidencing any stock certificate held by
it registered in the name of the Holder.

                           (iv)     In the case of a Phantom Stock Units Award,
no shares of Common Stock shall be issued at the time the Award is made, and the
Company will not be required to set aside a fund for the payment of any such
Award. The Committee shall, in its sole discretion, determine whether to credit
to the account of, or to currently pay to, each Holder of an Award of Phantom
Stock Units an amount equal to the cash dividends paid by the Company upon one
share of Stock for each Phantom Stock Unit then credited to such Holder's
account ("Dividend Equivalents"). Dividend Equivalents credited to Holder's
account shall be subject to forfeiture and may bear interest at a rate and
subject to such terms as determined by the Committee.

                  (b)      Restrictions.

                           (i)      Restricted Stock awarded to a Participant
shall be subject to the following restrictions until the expiration of the
Restricted Period: (1) the Holder shall not be entitled to delivery of the stock
certificate; (2) the shares shall be subject to the restrictions on
transferability set forth in the grant; (3) the shares shall be subject to
forfeiture to the extent provided in subparagraph (d) and, to the extent such
shares are forfeited, the stock certificates shall be returned to the Company,
and all rights of the Holder to such shares and as a shareholder shall terminate
without further obligation on the part of the Company.

                           (ii)     Phantom Stock Units awarded to any
Participant shall be subject to the following restrictions until the expiration
of the Restricted Period: (1) the units shall be subject to forfeiture to the
extent provided in subparagraph (d), and to the extent such units are forfeited,
all rights of the Holder to such units shall terminate without further
obligation on the part of the Company and (2) any other restrictions which the
Committee may determine in advance are necessary or appropriate.

                           (iii)    The Committee shall have the authority to
remove any or all of the restrictions on the Restricted Stock and Phantom Stock
Units whenever it may determine that, by reason of changes in applicable laws or
other changes in circumstances arising after the date of the Restricted Stock
Award or Phantom Stock Award, such action is appropriate.

                  (c)      Restricted Period. The Restricted Period of
Restricted Stock and Phantom Stock Units shall commence on the Date of Grant and
shall expire from time to time as to that part of the Restricted Stock and
Phantom Stock Units indicated in a schedule established by the Committee with
respect to the Award.

                  (d)      Forfeiture Provisions. In the event a Holder
terminates employment during a Restricted Period, that portion of the Award with
respect to which restrictions have not expired ("Non-Vested Portion") shall be
treated as follows.

                           (i)      Resignation or discharge:

                                    [ ]      The Non-Vested Portion of the Award
                                             shall be completely forfeited.

                           (ii)     Normal Termination:

                                    [ ]      The Non-Vested Portion of the Award
                                             shall be prorated for service
                                             during the Restricted Period and
                                             shall be received as soon as
                                             practicable following termination.

                                       10
<PAGE>   11

                           (iii)    Death:

                                    [ ]      The Non-Vested Portion of the Award
                                             shall be prorated for service
                                             during the Restricted Period and
                                             paid to the Participant's
                                             beneficiary as soon as practicable
                                             following death.

                  (e)      Delivery of Restricted Stock and Settlement of
Phantom Stock Units. Upon the expiration of the Restricted Period with respect
to any shares of Stock covered by a Restricted Stock Award, a stock certificate
evidencing the shares of Restricted Stock which have not then been forfeited and
with respect to which the Restricted Period has expired (to the nearest full
share) shall be delivered without charge to the Holder, or his beneficiary, free
of all restrictions under the Plan.

         Upon the expiration of the Restricted Period with respect to any
Phantom Stock Units covered by a Phantom Stock Unit Award, the Company shall
deliver to the Holder or his beneficiary without any charge one share of Stock
for each Phantom Stock Unit which has not then been forfeited and with respect
to which the Restricted Period has expired ("vested unit") and cash equal to any
Dividend Equivalents credited with respect to each such vested unit and the
interest thereon, if any; provided, however, that the Committee may, in its sole
discretion, elect to pay cash or part cash and part Stock in lieu of delivering
only Stock for vested units. If cash payment is made in lieu of delivering
Stock, the amount of such payment shall be equal to the Fair Market Value for
the date on which the Restricted Period lapsed with respect to such vested unit.

                  (f)      Payment for Restricted Stock. Except as provided in
subparagraph 10(a)(ii), a Holder shall not be required to make any payment for
Stock received pursuant to a Restricted Stock Award.

                  (g)      SEC Restrictions. Each certificate representing
Restricted Stock awarded under the Plan shall bear the following legend:

                  "The shares of Stock represented by this certificate were
                  issued pursuant to the 1995 Stock Incentive Plan of
                  RailAmerica, Inc. Such shares have not been registered under
                  the Securities Act of 1933 and may not be sold or transferred
                  except in compliance therewith."

         Stop transfer orders shall be entered with the Company's transfer agent
and registrar against the transfer of legended securities except in compliance
with the Securities Act.

         11.      General.

                  (a)      Additional Provisions of An Award. The award of any
benefit under the Plan may also be subject to such other provisions (whether or
not applicable to the benefit awarded to any other Participant) as the Committee
determines appropriate including, without limitation, provisions to assist the
Participant in financing the purchase of Common Stock through the exercise of
Options, provisions for the forfeiture of or restrictions on resale or other
disposition of shares acquired under any form of benefit, provisions giving the
Company the right to repurchase shares acquired under any form of benefit in the
event the Participant elects to dispose of such shares, and provisions to comply
with Federal and state securities laws and Federal and state income tax
withholding requirements.

                  (b)      Privileges Of Stock Ownership. Except. as otherwise
specifically provided in the Plan, no person shall be entitled to the privileges
of stock ownership in respect of shares of stock which are subject to Options or
Restricted Stock Awards, Performance Share Unit Awards or Phantom Stock Unit
Awards hereunder until such shares have been issued to that person upon exercise
of an Option according to its terms or upon sale or grant of those shares in
accordance with a Restricted Stock Award, Performance Share Unit Award or
Phantom Stock Unit Award.

                  (c)      Government and Other Regulations. The obligation of
the Company to make payment of Awards in Stock or otherwise shall be subject to
all applicable laws, rules, and regulations, and to such approvals by

                                       11
<PAGE>   12

governmental agencies as may be required. The Company shall be under no
obligation to register under the Securities Act any of the shares of Stock
issued under the Plan. If the shares issued under the Plan may in certain
circumstances be exempt from registration under the Securities Act, the Company
may restrict the transfer of such shares in such manner as it deems advisable to
ensure the availability of any such exemption.

                  (d)      Tax Withholding. Notwithstanding any other provision
of the Plan, the Company or a Subsidiary, as appropriate, shall have the right
to deduct from all Awards, to the extent paid in cash, all federal, state or
local taxes as required by law to be withheld with respect to such Awards and,
in the case of Awards paid in Stock, the Holder or other person receiving such
Stock may be required to pay to the Company or a Subsidiary, as appropriate
prior to delivery of such Stock, the amount of any such taxes which the Company
or Subsidiary is required to withhold, if any, with respect to such Stock.
Subject in particular cases to the disapproval of the Committee, the Company may
accept shares of Stock of equivalent Fair Market Value in payment of such
withholding tax obligations if the Holder of the Award elects to make payment in
such manner at least six months prior to the date such tax obligation is
determined.

                  (e)      Claim to Awards and Employment Rights. No employee or
other person shall have any claim or right to be granted an Award under the Plan
nor, having been selected for the grant of an Award, to be selected for a grant
of any other Award. Neither this Plan nor any action taken hereunder shall be
construed as giving any Participant any right to be retained in the employ of
the Company or a Subsidiary.

                  (f)      Conditions. Each Participant to whom Awards are
granted under the Plan shall be required to enter into an Incentive Plan
Agreement in a form authorized by the Committee, including provisions that the
Participant shall not disclose any trade or secret data or any other
confidential information of the Company or any of its Subsidiaries acquired
during the course of such Participant's employment.

                  (g)      Designation and Change of Beneficiary. Each
Participant shall file with the Committee a written designation of one or more
persons as the beneficiary who shall be entitled to receive the amounts payable
with respect to an Award of Performance Share Units, Phantom Share Units or
Restricted Stock, if any, due under the Plan upon his death. A Participant may,
from time to time, revoke or change his beneficiary designation without the
consent of any prior beneficiary by filing a new designation with the Committee.
The last such designation received by the Committee shall be controlling;
provided, however, that no designation, or change or revocation thereof, shall
be effective unless received by the Committee prior to the Participant's death,
and in no event shall it be effective as of a date prior to such receipt.

                  (h)      Payments to Persons Other Than Participants. If the
Committee shall find that any person to whom any amount is payable under the
Plan is unable to care for his affairs because of illness or accident, or is a
minor, or has died, then any payment due to such person or his estate (unless a
prior claim thereof or has been made by a duly appointed legal representative),
may, if the Committee so directs the Company, be paid to his spouse, child,
relative, an institution maintaining or having custody of such person, or any
other person deemed by the Committee to be a proper recipient on behalf of such
person otherwise entitled to payment. Any such payment shall be a complete
discharge of the liability of the Committee and the Company therefor.

                  (i)      No Liability of Committee Members. No member of the
Committee shall be personally liable by reason of any contract or other
instrument executed by such member or on his behalf in his capacity as a member
of the Committee nor for any mistake of judgment made in good faith, and the
Company shall indemnify and hold harmless each member of the Committee and each
other employee, officer or director of the Company to whom any duty or power
relating to the administration or interpretation of the Plan may be allocated or
delegated, against any cost or expense (including counsel fees) or liability
(including any sum paid in settlement of a claim) arising out of any act or
omission to act in connection with the Plan unless arising out of such person's
own fraud or bad faith; provided, however, that approval of the Board shall be
required for the payment of any amount in settlement of a claim against any such
person. The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be entitled under the
Company's Articles of Incorporation or By-Laws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.

                                       12
<PAGE>   13

                  (j)      Governing Law. The Plan will be administered in
accordance with federal laws, or in the absence thereof, the laws of the State
of Florida.

                  (k)      Funding. Except as provided under Section 10, no
provision of the Plan shall require the Company, for the purpose of satisfying
any obligations under the Plan, to purchase assets or place any assets in a
trust or other entity to which contributions are made or otherwise to segregate
any assets, nor shall the Company maintain separate bank accounts, books,
records, or other evidence of the existence of a segregated or separately
maintained or administered fund for such purposes. Holders shall have no rights
under the Plan other than as unsecured general creditors of the Company, except
that insofar as they may have become entitled to payment of additional
compensation by performance of services, they shall have the same rights as
other employees under general law.

                  (l)      Nontransferability. A person's rights and interest
under the Plan, including amounts payable, may not be sold, assigned, donated or
transferred or otherwise disposed of, mortgaged, pledged or encumbered except,
in the event of a Holder's death, to a designated beneficiary to the extent
permitted by the Plan, or in the absence of such designation, by will or the
laws of descent and distribution.

                  (m)      Reliance on Reports. Each member of the Committee and
each member of the Board shall be fully justified in relying, acting or failing
to act, and shall not be liable for having so relied, acted or failed to act in
good faith, upon any report made by the independent public accountant of the
Company and its Subsidiaries and upon any other information furnished in
connection with the Plan by any person or persons other than himself.

                  (n)      Relationship to Other Benefits. No payment under the
Plan shall be taken into account in determining any benefits under any pension,
retirement, profit sharing, group insurance or other benefit plan of the Company
or any Subsidiary except as otherwise specifically provided.

                  (o)      Expenses. The expenses of administering the Plan
shall be borne by the Company and its Subsidiaries.

                  (p)      Pronouns. Masculine pronouns and other words of
masculine gender shall refer to both men and women.

                  (q)      Titles and Headings. The titles and headings of the
sections in the Plan are for convenience of reference only, and in the event of
any conflict, the text of the Plan, rather than such titles or headings shall
control.

         12.      Changes in Capital Structure.

         Options, SARs, Restricted Stock Awards, Phantom Stock Unit Awards,
Performance Share Unit Awards, and any agreements evidencing such Awards, and
Performance Goals, shall be subject to adjustment or substitution, as determined
by the Committee in its sole discretion, as to the number, price or kind of a
share of Stock or other consideration subject to such Awards or as otherwise
determined by the Committee to be equitable (i) in the event of changes in the
outstanding Stock or in the capital structure of the Company, or of any other
corporation whose performance is relevant to the attainment of Performance Goals
hereunder, by reason of stock dividends, stock splits, recapitalizations,
reorganizations, mergers, consolidations, combinations, exchanges or other
relevant changes in capitalization occurring after the Date of Grant of any such
Award or (ii) in the event of any change in applicable laws or any change in
circumstances which results in or would result in any substantial dilution or
enlargement of the rights granted to, or available for, Participants in the
Plan, or which otherwise warrants equitable adjustment because it interferes
with the intended operation of the Plan. In addition, in the event of any such
adjustments or substitution, the aggregate number of shares of Stock available
under the Plan shall be appropriately adjusted by the Committee, whose
determination shall be conclusive. Any adjustment in Incentive Stock Options
under this Section 12 shall be made only to the extent not constituting a
"modification" within the meaning of Section 424(h)(3) of the Code, and any
adjustments under this Section 12 shall be made in a manner which does not
adversely affect the exemption provided pursuant to Rule 16b-3 under the
Exchange Act. The Company shall give each Participant

                                       13
<PAGE>   14

notice of an adjustment hereunder and, upon notice, such adjustment shall be
conclusive and binding for all purposes.

         13.      Effect of Change in Control.

                  (a)      In the event of a Change in Control, notwithstanding
any vesting schedule provided for hereunder or by the Committee with respect to
an Award of Options, SARs, Phantom Stock Units or Restricted Stock, such Option
or SAR shall become immediately exercisable with respect to 100 percent of the
shares subject to such Option or SAR, and the Restricted Period shall expire
immediately with respect to 100 percent of the Phantom Stock Units or shares of
Restricted Stock subject to Restrictions; provided, however, that to the extent
that so accelerating the time an Incentive Stock Option may first be exercised
would cause the limitation provided in Section 7(f) to be exceeded, such Options
shall instead first become exercisable in so many of the next following years as
is necessary to comply with such limitation.

                  (b)      In the event of a Change in Control, all incomplete
Award Periods in effect on the date the Change in Control occurs shall end on
the date of such change, and the Committee shall, (i) determine the extent to
which Performance Goals with respect to each such Award Period have been met
based upon such audited or unaudited financial information then available as it
deems relevant, (ii) cause to be paid to each Participant partial or full Awards
with respect to Performance Goals for each such Award Period based upon the
Committee's determination of the degree of attainment of Performance Goals, and
(iii) cause all previously deferred Awards to be settled in full as soon as
possible.

                  (c)      The obligations of the Company under the Plan shall
be binding upon any successor corporation or organization resulting from the
merger, consolidation or other reorganization of the Company, or upon any
successor corporation or organization succeeding to substantially all of the
assets and business of the Company, the Company agrees that it will make
appropriate provisions for the preservation of Participant's rights under the
Plan in any agreement or plan which it may enter into or adopt to effect any
such merger, consolidation, reorganization or transfer of assets.

         14.      Nonexclusivity of the Plan.

         Neither the adoption of this Plan by the Board nor the submission of
this Plan to the stockholders of the Company for approval shall be construed as
creating any limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under this Plan, and such arrangements
may be either applicable generally or only in specific cases.

         15.      Amendments and Termination.

         The Board may at any time terminate the Plan. With the express written
consent of an individual Participant, the Board may cancel or reduce or
otherwise alter the outstanding Awards thereunder if, in its judgment, the tax,
accounting, or other effects of the Plan or potential payouts thereunder would
not be in the best interest of the Company. The Board may, at any time, or from
time to time, amend or suspend and, if suspended, reinstate, the Plan in whole
or in part, provided, however, that without further stockholder approval the
Board shall not:

                  (a)      Increase the maximum number of shares of Stock which
may be issued on exercise of Options, SARs, or pursuant to Restricted Stock
Awards, Phantom Stock Unit Awards, or Performance Share Unit Awards, except as
provided in Section 12;

                                    (i)      Change the maximum Option Price;

                                    (ii)     Extend the maximum Option Term;

                                    (iii)    Extend the termination date of the
Plan; or

                                    (iv)     Change the class of persons
eligible to receive Awards under the Plan.

                                       14

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