Document:

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                                                                   EXHIBIT 10.79

                                                                  EXECUTION COPY

                 WAIVER AND AMENDMENT NO. 3 TO CREDIT AGREEMENT

      This WAIVER AND AMENDMENT NO. 3 TO CREDIT AGREEMENT, dated as of December
27, 2001 (as amended, supplemented, amended and restated or otherwise modified
from time to time, this "Amendment"), is made by and among RAILAMERICA, INC., a
Delaware corporation ("Holdings"), PALM BEACH RAIL HOLDING, INC., a Delaware
corporation and a wholly-owned Subsidiary of Holdings ("Intermediate Holdings"),
RAILAMERICA TRANSPORTATION CORP., a Delaware corporation and a wholly-owned
Subsidiary of Intermediate Holdings (the "Company"), RAILINK, LTD., a
corporation organized and existing under the laws of the Province of Alberta,
Canada (the "Canadian Borrower"), and FREIGHT VICTORIA LIMITED, a corporation
organized and existing under the laws of Australia (the "Australian Borrower"
and, together with the Company and the Canadian Borrower, the "Borrowers"), and
the Lenders (as defined in the Credit Agreement referred to below).

                              W I T N E S S E T H:

      WHEREAS, Holdings, Intermediate Holdings, the Borrowers, the various
financial institutions and other Persons from time to time parties thereto as
lenders (collectively, the "Lenders"), Credit Suisse First Boston (as successor
in interest to DLJ Capital Funding, Inc.), as Syndication Agent, Lead Arranger
and Sole Book Running Manager, The Bank of Nova Scotia, as Administrative Agent,
and ING (U.S.) Capital LLC and Fleet National Bank, each a Documentation Agent,
have heretofore entered into a Credit Agreement, dated as of February 4, 2000
(as amended by Waiver and Amendment No. 1 to Credit Agreement dated as of August
2, 2000 and by Waiver and Amendment No. 2 to Credit Agreement dated as of
December 12, 2000, the "Credit Agreement");

      WHEREAS, the Obligors have requested that the Lenders waive and/or amend
certain provisions of the Credit Agreement, and the Lenders agree, subject to
the conditions and on the terms set forth herein, to grant the Obligors'
request;

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

                                    ARTICLE I
                                   DEFINITIONS

      Unless otherwise defined herein, capitalized terms defined in the Credit
Agreement shall have the same meanings when used in this Amendment. The
following additional terms, as used herein, shall have the following respective
meanings:

      "Acquisition Agreements" means the ParkSierra Acquisition Agreement and
the StatesRail Acquisition Agreements, collectively.

      "Amendment" has the meaning set forth in the preamble hereof.

      "Amendment No. 3 Effective Date" has the meaning set forth in Article IV.
<PAGE>
      "Australian Intercompany Notes" shall mean (i) the Promissory Notes dated
as of September 17, 2001 (but with effect from February 4, 2000) bearing
interest at 7.5% per annum and having a stated principal amount of
AUS$101,274,069 between Freight Victoria Limited and RailAmerica Australia Pty.
Ltd., between RailAmerica Australia Pty. Ltd. and RailAmerica Australia, Inc.
and between RailAmerica Australia, Inc. and the Company and (ii) the Promissory
Note dated as of September 17, 2001 (but with effect from February 4, 2000)
bearing interest at 10% per annum and having a stated principal amount of
AUS$28,655,722 between Freight Victoria Limited and RailAmerica Australia Pty.
Ltd.

      "New StatesRail" means New StatesRail Holdings, Inc., a Delaware
corporation.

      "ParkSierra" means ParkSierra Corp., a California corporation.

      "ParkSierra Acquisition" means the acquisition by merger by ParkSierra
Acquisition Corp., a California corporation and a wholly-owned direct subsidiary
of Holdings, of 100% of the outstanding Capital Stock of ParkSierra pursuant to
the ParkSierra Acquisition Agreement, for aggregate consideration not exceeding
$48,000,000 plus the amount of any adjustments to the purchase price based on
ParkSierra's working capital effected in accordance with the ParkSierra
Acquisition Agreement.

      "ParkSierra Acquisition Agreement" means the Amended and Restated
Agreement and Plan of Merger dated as November 26, 2001 among Holdings,
ParkSierra and ParkSierra Acquisition Corp., as in effect on the Amendment No. 3
Effective Date.

      "Permitted Private Placement" means the issuance of up to $60,000,000 of
Holdings Common Stock (valued at approximately $12.50 per share) pursuant to the
Subscription Agreements between Holdings and the various subscribers party
thereto.

      "StatesRail" means StatesRail, Inc., a Delaware corporation.

      "StatesRail Acquisition Agreements" means the StatesRail Merger Agreement,
the StatesRail Stock Purchase Agreement and the StatesRail Letter Agreement,
collectively.

      "StatesRail Acquisitions" means the StatesRail Merger and the StatesRail
Stock Purchase, collectively.

      "StatesRail Extension Letter" means the Extension Letter Agreement dated
as of November 9, 2001 between Holdings and Kauri, Inc., a Delaware corporation
and a stockholder of StatesRail and a member of StatesRail L.L.C., a Delaware
limited liability company, as in effect on the Amendment No. 3 Effective Date.

      "StatesRail Letter Agreement" means the Letter Agreement dated as of
October 12, 2001 among Holdings, StatesRail Acquisition Corp., West Texas and
Lubbock Railroad Company, Inc., StatesRail, New StatesRail, StatesRail L.L.C.,
the stockholders of New StatesRail and the members of StatesRail L.L.C., as in
effect on the Amendment No. 3 Effective Date.

                                      -2-
<PAGE>
      "StatesRail Merger" means the acquisition by StatesRail Acquisition Corp.,
a Delaware corporation and a wholly-owned direct subsidiary of Holdings, of 100%
of the outstanding Capital Stock of StatesRail for aggregate consideration not
exceeding $51,186,000.

      "StatesRail Merger Agreement" means the Merger Agreement dated as of
October 12, 2001 among Holdings, StatesRail Acquisition Corp., StatesRail and
all of the stockholders of StatesRail, as amended by the StatesRail Extension
Letter Agreement and the StatesRail Second Extension Letter and as otherwise in
effect on the Amendment No. 3 Effective Date.

      "StatesRail Second Extension Letter" means the Second Extension Letter
Agreement dated as of November 16, 2001 between Holdings and Kauri, Inc., as in
effect on the Amendment No. 3 Effective Date.

      "StatesRail Stock Purchase" means the acquisition by West Texas and
Lubbock Railroad Company, Inc., a Delaware corporation and a wholly-owned
subsidiary of the Company, or another wholly-owned subsidiary of the Company of
100% of the outstanding Capital Stock of New StatesRail for aggregate
consideration not exceeding $38,814,000.

      "StatesRail Stock Purchase Agreement" means the Stock Purchase Agreement
dated as of October 12, 2001 among Holdings, West Texas and Lubbock Railroad
Company, Inc., New StatesRail, StatesRail L.L.C. and the members of StatesRail
L.L.C., as amended by the StatesRail Extension Letter Agreement and the
StatesRail Second Extension Letter and as otherwise in effect on the Amendment
No. 3 Effective Date.

                                   ARTICLE II
              WAIVER OF CERTAIN PROVISIONS OF THE CREDIT AGREEMENT

      SUBPART 2.1. Waiver of Certain Provisions of Section 3.1.1(h). Effective
on (and subject to the occurrence of) the Amendment No. 3 Effective Date, and in
reliance upon the representations and warranties made herein, the provisions of
Section 3.1.1(h) of the Credit Agreement requiring the Company to prepay Term
Loans in an amount equal to 50% of the Net Equity Proceeds of the Permitted
Private Placement, are hereby waived to the extent (but only to the extent) that
on or prior to January 31, 2002, such Net Equity Proceeds, together with all Net
Equity Proceeds of the Permitted Private Placement not otherwise required to be
used to prepay Term Loans in accordance with Section 3.1.1(h) of the Credit
Agreement, are used (i) to finance, in the aggregate, not less than $18,800,000
of the purchase price for the ParkSierra Acquisition and not less than
$31,200,000 of the purchase price for the StatesRail Acquisitions or (ii) to the
extent (but only to the extent), the aggregate amount of all Net Equity Proceeds
of the Permitted Private Placement exceed $50,000,000, to fund working capital
of the Company and the Restricted Subsidiaries. It is understood and agreed that
if the ParkSierra Acquisition and the StatesRail Acquisitions, or any of them,
shall not have been consummated on or prior to January 31, 2002, all Net Equity
Proceeds of the Permitted Private Placement which have not theretofor been used
to finance all or a portion of the purchase price of such transactions and
which, in the absence of the waiver contained in the first sentence of this
Subpart 2.1, would be required to be used to prepay Term Loans in accordance
with Section 3.1.1(h) of the Credit Agreement shall be used on January 31, 2002
to prepay Term Loans in accordance with Section 3.1.1(h) of the Credit
Agreement.

                                      -3-
<PAGE>
      SUBPART 2.2. Waiver of Certain Provisions of Section 7.1.10. Effective on
(and subject to the occurrence of) the Amendment No. 3 Effective Date, and in
reliance upon the representations and warranties made herein, the provisions of
Section 7.1.10 of the Credit Agreement requiring Net Equity Proceeds to be used
by Holdings either to redeem or repay Intermediate Holdings Asset Bridge Notes
or to make a capital contribution to the common equity of the Company are hereby
waived to the extent (but only to the extent) that on or prior to January 31,
2002, such Net Equity Proceeds are used (i) to finance, in the aggregate, not
less than $18,800,000 of the purchase price for the ParkSierra Acquisition and
not less than $31,200,000 of the purchase price for the StatesRail Acquisitions
or (ii) to the extent (but only to the extent), the aggregate amount of all Net
Equity Proceeds of the Permitted Private Placement exceed $50,000,000, to fund
working capital of the Company and the Restricted Subsidiaries. It is understood
and agreed that if the ParkSierra Acquisition and the StatesRail Acquisitions,
or any of them, shall not have been consummated on or prior to January 31, 2002,
all Net Equity Proceeds of the Permitted Private Placement which have not
theretofor been used to finance all or a portion of the purchase price of such
transactions and which, in the absence of the waiver contained in the first
sentence of this Subpart 2.2, would be required to be used to redeem or repay
Intermediate Holdings Asset Bridge Notes or contributed to the common equity of
the Company shall be used on January 31, 2002 to redeem or repay Intermediate
Holdings Asset Bridge Notes or contributed to the common equity of the Company
in accordance with Section 7.1.10 of the Credit Agreement.

      SUBPART 2.3. Waiver of Certain Provisions of Section 7.2.12(b). Effective
on (and subject to the occurrence of) the Amendment No. 3 Effective Date, and in
reliance on the representations and warranties made herein, the provisions of
Section 7.2.12(b) of the Credit Agreement prohibiting amendments, supplements,
waivers or other modifications of the Transaction Documents are hereby waived to
the extent (but only to the extent) necessary to permit the Company and/or one
or more of its Restricted Subsidiaries to amend and restate the Australian
Intercompany Notes to read in full as set forth in Exhibits I through IV hereto.

                                  ARTICLE III
                         AMENDMENTS TO CREDIT AGREEMENT

      Subject to the conditions and on the terms set forth herein, and in
reliance on the representations and warranties of the Obligors contained herein,
the Credit Agreement is hereby amended, as of the Amendment No. 3 Effective Date
(or such later date as may be specified in this Article III with respect to
particular amendments), in accordance with this Article III.

      SUBPART 3.1. Amendments to Certain Definitions Set Forth in Section 1.1.

      (a) The definitions of "Agreement", "Amendment No. 1", "Commitment",
"Commitment Amount", "Commitment Termination Date", "Note", "Percentage",
"Stated Maturity Date", "Term Loans" and "Tranche" set forth in Section 1.1 of
the Credit Agreement are hereby amended and restated to read in full as follows:

                  "Agreement" means this Credit Agreement, as originally in
            effect on the Effective Date, as amended by Amendment No. 1,
            Amendment No. 2 and

                                      -4-
<PAGE>
            Amendment No. 3 and as further amended, supplemented, amended and
            restated or otherwise modified from time to time.

                  "Amendment No. 1" means that certain Waiver and Amendment No.
            1 to Credit Agreement, dated as of August 2, 2000, among the
            Borrowers and the Agents and consented to by the Lenders that
            provided their consent thereto to the Administrative Agent.

                  "Commitment" means, as the context may require, (i) a Lender's
            Term A Loan Commitment, Term B Loan Commitment, Term C Loan
            Commitment, Revolving Loan Commitment or Letter of Credit Commitment
            or (ii) the Swing Line Lender's Swing Line Loan Commitment.

                  "Commitment Amount" means, as the context may require, the
            Term A Loan Commitment Amount, the Term B Loan Commitment Amount,
            the Term C Loan Commitment Amount, the U.S. Revolving Loan
            Commitment Amount, the Canadian Revolving Loan Commitment Amount,
            the Australian Revolving Loan Commitment Amount, the Letter of
            Credit Commitment Amount or the Swing Line Loan Commitment Amount.

                  "Commitment Termination Date" means, as the context may
            require, the Term A Loan Commitment Termination Date, the Term B
            Loan Commitment Termination Date, the Term C Loan Commitment
            Termination Date or the Revolving Loan Commitment Termination Date.

                  "Note" means, as the context may require, a Revolving Note, a
            Term A Note, a Term B Note, a Term C Note, a Swingline Note or an
            Acceptance Note.

                  "Percentage" means, as the context may require, any Lender's
            U.S. Revolving Loan Percentage, Canadian Revolving Loan Percentage,
            Australian Revolving Loan Percentage, Term A Percentage, Term B
            Percentage or Term C Percentage.

                  "Stated Maturity Date" means

            (a) with respect to all Term A Loans, December 31, 2005;

            (b) with respect to all Term B Loans, December 31, 2006;

            (c) with respect to all Term C Loans, December 31, 2006; and

            (d) with respect to all Revolving Loans and Swing Line Loans,
      December 31, 2005.

                  "Term Loans" means, collectively, the Term A Loans, the Term B
            Loans and the Term C Loans.

                                      -5-
<PAGE>
                  "Tranche" means, as the context may require, the Loans
            constituting Term A Loans, Term B Loans, Term C Loans, Revolving
            Loans or Swing Line Loans.

      (b) Clause (a) of the definition of "Applicable Margin" set forth in
Section 1.1 of the Credit Agreement is hereby amended by inserting the phrase
"or Term C Loan" immediately after the phrase "Term B Loan" contained therein.

      SUBPART 3.2. Addition of Certain Definitions to Section 1.1. Section 1.1
of the Credit Agreement is hereby amended by inserting the following definitions
in such Section in the appropriate alphabetical sequence:

                  "Amendment No. 3" means that certain Waiver and Amendment No.
            3 to Credit Agreement, dated as of December 27, 2001, among
            Holdings, Intermediate Holdings, the Borrowers and the Lenders.

                  "Amendment No. 3 Effective Date" means the date on which
            Amendment No. 3 became effective in accordance with its terms.

                  "New StatesRail" means New StatesRail Holdings, Inc., a
            Delaware corporation.

                  "ParkSierra" means ParkSierra Corp., a California corporation.

                  "ParkSierra Acquisition" means the acquisition by merger by
            ParkSierra Acquisition Corp., a California corporation and a
            wholly-owned direct subsidiary of Holdings, of 100% of the
            outstanding Capital Stock of ParkSierra pursuant to the ParkSierra
            Acquisition Agreement, for aggregate consideration not exceeding
            $48,000,000 plus the amount of any adjustments to the purchase price
            based on ParkSierra's working capital effected in accordance with
            the ParkSierra Acquisition Agreement.

                  "ParkSierra Acquisition Agreement" means the Amended and
            Restated Agreement and Plan of Merger dated as November 26, 2001
            among Holdings, ParkSierra and ParkSierra Acquisition Corp., as in
            effect on the Amendment No. 3 Effective Date.

                  "Permitted Private Placement" means the issuance of up to
            $60,000,000 of Holdings Common Stock (valued at approximately $12.50
            per share) pursuant to the Subscription Agreements between Holdings
            and the various subscribers party thereto.

                  "StatesRail" means StatesRail, Inc., a Delaware corporation.

                  "StatesRail Acquisition Agreements" means the StatesRail
            Merger Agreement, the StatesRail Stock Purchase Agreement and the
            StatesRail Letter Agreement, collectively.

                                      -6-
<PAGE>
                  "StatesRail Acquisitions" means the StatesRail Merger and the
            StatesRail Stock Purchase, collectively.

                  "StatesRail Extension Letter" means the Extension Letter
            Agreement dated as of November 9, 2001 between Holdings and Kauri,
            Inc., a Delaware corporation and a stockholder of StatesRail and a
            member of StatesRail L.L.C., a Delaware limited liability company,
            as in effect on the Amendment No. 3 Effective Date.

                  "StatesRail Letter Agreement" means the Letter Agreement dated
            as of October 12, 2001 among Holdings, StatesRail Acquisition Corp.,
            West Texas and Lubbock Railroad Company, Inc., StatesRail, New
            StatesRail, StatesRail L.L.C., the stockholders of New StatesRail
            and the members of StatesRail L.L.C., as in effect on the Amendment
            No. 3 Effective Date.

                  "StatesRail Merger" means the acquisition by StatesRail
            Acquisition Corp., a Delaware corporation and a wholly-owned direct
            subsidiary of Holdings, of 100% of the outstanding Capital Stock of
            StatesRail for aggregate consideration not exceeding $51,186,000.

                  "StatesRail Merger Agreement" means the Merger Agreement dated
            as of October 12, 2001 among Holdings, StatesRail Acquisition Corp.,
            StatesRail and all of the stockholders of StatesRail, as amended by
            the StatesRail Extension Letter Agreement and the StatesRail Second
            Extension Letter and as otherwise in effect on the Amendment No. 3
            Effective Date.

                  "StatesRail Second Extension Letter" means the Second
            Extension Letter Agreement dated as of November 16, 2001 between
            Holdings and Kauri, Inc., as in effect on the Amendment No. 3
            Effective Date.

                  "StatesRail Stock Purchase" means the acquisition by West
            Texas and Lubbock Railroad Company, Inc., a Delaware corporation and
            a wholly-owned subsidiary of the Company, or another wholly-owned
            subsidiary of the Company of 100% of the outstanding Capital Stock
            of New StatesRail for aggregate consideration not exceeding
            $38,814,000.

                  "StatesRail Stock Purchase Agreement" means the Stock Purchase
            Agreement dated as of October 12, 2001 among Holdings, West Texas
            and Lubbock Railroad Company, Inc., New StatesRail, StatesRail
            L.L.C. and the members of StatesRail L.L.C., as amended by the
            StatesRail Extension Letter Agreement and the StatesRail Second
            Extension Letter and as otherwise in effect on the Amendment No. 3
            Effective Date.

                  "Term C Loan" is defined in clause (c) of Section 2.1.3.

                                      -7-
<PAGE>
                  "Term C Loan Commitment" means, relative to any Lender, such
            Lender's obligation (if any) to make Term C Loans pursuant to clause
            (c) of Section 2.1.3.

                  "Term C Loan Commitment Amount" means, on any date,
            $50,000,000.

                  "Term C Loan Commitment Termination Date" means the earliest
            of:

                  (a) January 31, 2002 (if the Term C Loans have not been made
            on or prior to such date);

                  (b) the date on which the Term C Loans are made in accordance
            with clause (c) of Section 2.1.3 (immediately after the making of
            the Term C Loans on such date); and

                  (c) the date on which any Commitment Termination Event occurs.

            Upon the occurrence of any event described in clauses (b) or (c),
            the Term C Loan Commitments shall terminate automatically and
            without any further action.

                  "Term C Note" means a promissory note of the Company payable
            to any Lender, in the form of Exhibit A-6 hereto (as such promissory
            note may be amended, endorsed or otherwise modified from time to
            time), evidencing the aggregate Indebtedness of the Company to such
            Lender resulting from outstanding Term C Loans, and also means all
            other promissory notes accepted from time to time in substitution
            therefor or renewal thereof.

                  "Term C Percentage" means, relative to any Lender, the
            applicable percentage relating to Term C Loans set forth opposite
            its name on Schedule I to Amendment No. 3 under the Term C Loan
            Commitment column or set forth in a Lender Assignment Agreement
            under the Term C Loan Commitment column, as such percentage may be
            adjusted from time to time pursuant to Lender Assignment Agreements
            executed by such Lender and its Assignee Lender and delivered
            pursuant to Section 11.11.1. A Lender shall not have any Term C Loan
            Commitment if its percentage under the Term C Loan Commitment column
            is zero or is blank.

      SUBPART 3.3. Amendment to Section 2.1.3. Section 2.1.3 of the Credit
Agreement is hereby amended by (a) replacing the phrase "or a Term B Loan
Commitment" contained therein with the phrase ", a Term B Loan Commitment or a
Term C Loan Commitment", (b) by replacing the period (".") at the end of clause
(b) thereof with a semi-colon (";") followed by the word "and" and (c) by
inserting the following as a new clause (c):

                  (c) make loans (relative to such Lender, its "Term C Loans")
            to the Company equal to such Lender's Term C Loan Percentage of the
            aggregate amount of the Borrowing of Term C Loans requested by the
            Company to be made on such day.

                                      -8-
<PAGE>
      SUBPART 3.4. Amendment to Section 2.1.4(d). Clause (d) of Section 2.1.4 of
the Credit Agreement is hereby amended by replacing the phrase "or all Term B
Loans" set forth therein with the phrase ", all Term B Loans or all Term C
Loans" and by inserting the following as new clauses (iii) and (iv):

            (iii) of all Lenders made on the date of funding of the Term C Loans
      would exceed the Term C Loan Commitment Amount; or

            (iv) of any such Lender with a Term C Loan Commitment made on the
      date of funding of the Term C Loans would exceed such Lender's Percentage
      of the Term C Loan Commitment Amount; or

      SUBPART 3.5. Amendment to Section 2.7(c). Section 2.7(c) of the Credit
Agreement is hereby amended by inserting the phrase ", a Term C Note"
immediately after the phrase "a Term B Note" in the first sentence thereof.

      SUBPART 3.6. Amendments to Section 3.1.1.

            (a) Clause (A) of Section 3.1.1(a)(i) of the Credit Agreement is
      hereby amended by replacing each occurrence of the phrase "Term A Loans
      and Term B Loans" with the phrase "Term A Loans, Term B Loans and Term C
      Loans" and by replacing the phrase "Term A Loans or Term B Loans" with the
      phrase "Term A Loans, Term B Loans or Term C Loans".

            (b) Section 3.1.1 of the Credit Agreement is hereby amended by
      inserting the following as new clauses (k) and (l):

                  (k) On the Stated Maturity Date and on each Quarterly Payment
            Date occurring during any period set forth below, the Company shall
            make a scheduled repayment of the aggregate outstanding principal
            amount, if any, of all Term C Loans in an amount equal to the amount
            set forth below opposite the Stated Maturity Date or such Quarterly
            Payment Date, as applicable:

<TABLE>
<CAPTION>
                                                    Amount of Required
                   Period                           Principal Repayment
                   ------                           -------------------
<S>                                                 <C>
            Amendment No 3 Effective Date through
            (and including) 12/31/2006              $ 125,000
                                                    $ 47,375,000 or the then
            Stated Maturity Date for                outstanding principal amount
            Term C Loans                            of all Term C Loans, if
                                                    different.
</TABLE>

                  (l) On January 31, 2002, the Company shall prepay the Term C
            Loans, and such Term C Loans shall mature and become due and payable
            in an aggregate principal amount (together with accrued and unpaid
            interest thereon) equal to (i) in the event the ParkSierra
            Acquisition shall not have been consummated on or prior to such
            date, the sum of (A) $4,200,000 plus (B) the

                                      -9-
<PAGE>
            aggregate amount of proceeds of the Term C Loans which were
            permitted to be used to finance all or a portion of the StatesRail
            Acquisitions in accordance with Section 7.1.7(a)(ii) hereof and
            which have not been so used on or prior to such date, (ii) in the
            event the StatesRail Acquisitions shall not have been consummated on
            or prior to such date, the sum of (A) $38,800,000 plus (B) the
            aggregate amount of proceeds of the Term C Loans which were
            permitted to be used to finance all or a portion of the ParkSierra
            Acquisition in accordance with Section 7.1.7(a)(ii) hereof and which
            have not been so used on or prior to such date or (iii) in the event
            neither the StatesRail Acquisitions nor the ParkSierra Acquisition
            shall have been consummated on or prior to such date, the aggregate
            principal amount of the Term C Loans then outstanding.

      SUBPART 3.7. Amendment to Section 3.1.2(b). Section 3.1.2(b) of the Credit
Agreement is hereby amended by (a) replacing the phrase "Term A Loans and Term B
Loans" with the phrase "Term A Loans, Term B Loans and Term C Loans", (b)
replacing the phrase "Term A Loans and the Term B Loans" with the phrase "Term A
Loans, the Term B Loans and the Term C Loans", (c) replacing the phrase "Term A
Loans or Term B Loans" with the phrase "Term A Loans, Term B Loans or Term C
Loans", (d) replacing each occurrence of the phrase "outstanding Term A Loans"
with the phrase "outstanding Term A Loans and Term C Loans" and (e) by inserting
the following immediately after the first occurrence of the amended phrase "Term
A Loans and Term C Loans":

                  (with the amount of such prepayment of the Term A Loans and
                  the Term C Loans being applied to the remaining Term A Loans
                  or Term C Loans, as the case may be, amortization payments,
                  pro rata in accordance with the amount of each such remaining
                  Term Loan amortization payments)

            SUBPART 3.8. Amendments to Section 7.1.7(a).

                  (a) Clause (i) of Section 7.1.7(a) is hereby amended by
            replacing the phrase "Term Loans" with the phrase "Term A Loans and
            Term B Loans".

                  (b) Section 7.1.7(a) is hereby further amended by renumbering
            clauses (ii), (iii) and (iv) thereof as clauses (iii), (iv) and (v)
            and by inserting the following as a new clause (ii):

                  (ii) in the case of the Term C Loans, (A) to finance a portion
                  of the consummation of the ParkSierra Acquisition in an amount
                  not greater than $4,200,000 plus the aggregate amount of any
                  purchase price adjustments effected in accordance with the
                  ParkSierra Acquisition Agreement; provided that at least
                  $18,800,000 of the purchase price for the ParkSierra
                  Acquisition shall have been paid in cash from Net Equity
                  Proceeds of the Permitted Private Placement and at least
                  $25,000,000 of such purchase price shall have been paid in
                  Holdings Common Stock; (B) to finance a portion of the
                  consummation of the StatesRail Acquisitions in an amount not
                  greater than $38,800,000; provided that at least $31,200,000
                  of the purchase price for the StatesRail Acquisitions shall
                  have been paid in cash from Net Equity Proceeds of the
                  Permitted Private Placement and at least $20,000,000

                                      -10-
<PAGE>
                  of such purchase price shall have been paid in Holdings Common
                  Stock; (C) to prepay Revolving Loans and Swingline Loans; (D)
                  to pay fees and expenses incurred in connection with the
                  ParkSierra Acquisition and/or the StatesRail Acquisitions;
                  provided that the aggregate amount of such fees and expenses
                  shall not exceed $2,500,000; and (E) for general corporate
                  purposes of the Company and its Subsidiaries;

      SUBPART 3.9. Amendment to Section 7.2.1.

            (a) Section 7.2.1(b) Credit Agreement is hereby amended by
      renumbering clause (iii) thereof as clause (iv), inserting a comma (",")
      immediately before the word "and" at the end of clause (ii) thereof and
      inserting the following as a new clause (iii):

            (iii) acquiring each of ParkSierra and StatesRail pursuant to the
            Acquisition Agreements; provided that immediately following each
            such acquisition, 100% of the acquired assets and/or Capital Stock
            of ParkSierra and/or StatesRail, as the case may be, shall be
            contributed by Holdings to the capital of Intermediate Holdings

            (b) Section 7.2.1(c) of the Credit Agreement is hereby amended by
      renumbering clause (iii) thereof as clause (iv), inserting a comma (",")
      immediately before the word "and" at the end of clause (ii) thereof and
      inserting the following as a new clause (iii):

            (iii) its acquisition of each of ParkSierra and StatesRail pursuant
            to the capital contribution referred to in Section 7.2.1(b)(iii)
            above; provided that immediately following each such acquisition,
            100% of the acquired assets and/or Capital Stock of ParkSierra
            and/or StatesRail, as the case may be, shall be contributed by
            Intermediate Holdings to the capital of the Company

      SUBPART 3.10. Amendment to Section 7.2.5. Section 7.2.5(g) of the Credit
Agreement is hereby amended by inserting at the beginning thereof the phrase
"the ParkSierra Acquisition, the StatesRail Acquisition (in each case effected
pursuant to the relevant Acquisition Agreement(s), without giving effect to any
material amendments, supplements, modifications or waivers thereof entered into
after the Amendment Effective Date without the prior written consent of the
Required Lenders) and other".

      SUBPART 3.11. Amendment to Section 7.2.6. Clause (b) of Section 7.2.6 of
the Credit Agreement is hereby amended by renumbering subclause (viii) as
subclause (ix) and by inserting the following immediately before the word "and"
at the end of subclause (vi) thereof:

            , (viii) so long as no Specified Default has occurred and is
            continuing or would be created thereby, up to $11,186,000 of the
            proceeds of the Term C Loans to pay a portion of the purchase price
            for the ParkSierra Acquisition and/or the StatesRail Acquisition,
            provided that such amount is so used within 30 days following the
            date of such Restricted Payment

                                      -11-
<PAGE>
      SUBPART 3.12. Amendment to Section 7.2.7.

            (a) Upon the first to occur of the ParkSierra Acquisition and the
      StatesRail Acquisitions (but in any event not prior to the Amendment No. 3
      Effective Date), Section 7.2.7(a) of the Credit Agreement shall be
      automatically amended by deleting the table contained therein and (i) if
      the ParkSierra Acquisition is the first to occur, by inserting in its
      place the following:

<TABLE>
<CAPTION>
                                                     Capital
                  Period                        Expenditure Amount
             ------------------                 ------------------
<S>                                             <C>
             1/1/01 to 12/31/01                    $54,500,000
             1/1/02 to 12/31/02                    $57,000,000
             1/1/03 to 12/31/03                    $58,000,000
             1/1/04 to 12/31/04                    $59,000,000
             1/1/05 to 12/31/05                    $60,000,000
             1/1/06 to 12/31/06                    $61,000,000
</TABLE>

      or (ii) if the StatesRail Acquisitions are the first to occur, by
      inserting in its place the following:

<TABLE>
<CAPTION>
                                                     Capital
                  Period                        Expenditure Amount
             ------------------                 ------------------
<S>                                             <C>
             1/1/01 to 12/31/01                    $54,500,000
             1/1/02 to 12/31/02                    $61,000,000
             1/1/03 to 12/31/03                    $62,000,000
             1/1/04 to 12/31/04                    $63,000,000
             1/1/05 to 12/31/05                    $64,000,000
             1/1/06 to 12/31/06                    $65,000,000
</TABLE>

            (b) Thereafter, upon (but not before) consummation of the other
      Acquisition, Section 7.2.7(a) of the Credit Agreement shall be further
      amended by deleting the table contained therein and inserting in its place
      the following:

<TABLE>
<CAPTION>
                                                     Capital
                  Period                        Expenditure Amount
             ------------------                 ------------------
<S>                                             <C>
             1/1/01 to 12/31/01                    $54,500,000
             1/1/02 to 12/31/02                    $65,000,000
             1/1/03 to 12/31/03                    $66,000,000
             1/1/04 to 12/31/04                    $67,000,000
             1/1/05 to 12/31/05                    $68,000,000
             1/1/06 to 12/31/06                    $69,000,000
</TABLE>

      SUBPART 3.13. Amendment to Schedule I. To correct the misplacement of such
item on Schedule I to the Credit Agreement, the intercompany promissory note
originally referred to as part of Item 7.2.2(b) of such Schedule I shall be
redesignated as part of Item 7.2.2(c), such that Item 7.2.2(c) shall read in
full as follows:

                                      -12-
<PAGE>
            ITEM 7.2.2(c) Indebtedness as of the Effective Date: Promissory Note
            dated as of February 4, 2000 having a stated principal amount of US
            $100,860,386.69 between Freight Victoria Limited and RailAmerica
            Transportation Corp.

      SUBPART 3.14. Amendment to Exhibits to Credit Agreement. The Credit
Agreement is hereby amended by inserting Exhibit A-6 to this Amendment as a new
Exhibit A-6 to the Credit Agreement.

                                   ARTICLE IV
                              CONDITIONS PRECEDENT

      This Amendment (and the amendments, modifications and waivers contained
herein) shall become effective on the date (the "Amendment No. 3 Effective
Date") when each of the conditions set forth in this Article IV shall have been
satisfied.

      SUBPART 4.1. Counterparts and Lender Consents. The Agents shall have
received counterparts hereof executed on behalf of the Obligors, and the
Administrative Agent shall have confirmed to the Obligors and the Syndication
Agent that it has received (i) from the Required Lenders their respective
consents hereto and (ii) from one or more new or existing Lenders their
respective agreements to provide, in the aggregate, Term C Loan Commitments in
an amount at least equal to the Term C Loan Commitment Amount.

      SUBPART 4.2. New Facility Fee. The Administrative Agent shall have
received, for the account of each Lender with a Term C Loan Commitment, a
facility fee in an amount equal to 0.125% of the product of such Lender's
Percentage of the Term C Loan Commitment Amount multiplied by the Term C Loan
Commitment Amount.

      SUBPART 4.3. Consent Fee. The Administrative Agent shall have received,
for the account of each Lender that delivers an executed signature page to this
Amendment to the Syndication Agent prior to 5:00 p.m., New York City time,
December 27, 2001, a consent fee in an amount equal to 0.125% of the sum of (i)
the outstanding principal amount of Term Loans owing to such Lender plus (ii)
such Lender's Percentage of the Commitment to make Revolving Loans multiplied by
the Revolving Loan Commitment Amount on such date.

      SUBPART 4.4. Financing Statements, Etc.. The Agents shall have received
appropriate financing statements and continuation statements (Form UCC-1, Form
UCC-3 or such other financing statements, continuation statements or similar
notices as shall be required by local law) fully authenticated and authorized
for filing under the Uniform Commercial Code (including Revised Article 9
thereof) or other applicable local law of each jurisdiction in which the filing
of a financing statement or continuation statement or giving of notice or other
similar action may be required, or reasonably requested by the Agents, to
perfect or maintain the perfection of the security interests intended to be
created by the Loan Documents.

      SUBPART 4.5. Acquisition Agreements. The Agents shall have received (with
copies for each Lender that shall have requested in writing copies thereof)
copies of fully executed versions of the Acquisition Agreements, all
subscription agreements relating to the Permitted Private Placement and all
other agreements, documents, instruments, certificates, filings,

                                      -13-
<PAGE>
consents, approvals, board of directors resolutions and opinions furnished
pursuant to or in connection with the ParkSierra Acquisition, the StatesRail
Acquisition and/or the Permitted Private Placement, in each case certified to be
true and complete copies thereof by an Authorized Officer of Holdings,
Intermediate Holdings and the Company. Each such agreement or other document
shall be in full force and effect and there shall not have been any forbearance
to exercise any material rights with respect to any of the terms or provisions
relating to the conditions to the consummation of the ParkSierra Acquisition,
the StatesRail Acquisition and/or the Permitted Private Placement set forth in
the Acquisition Agreements and/or such subscription agreements and related
agreements and other documents unless agreed to by the Required Lenders.

      SUBPART 4.6. Permitted Private Placement. The Permitted Private Placement
shall have been consummated in accordance with the subscription agreements
related thereto delivered to the Administrative Agent in accordance with Subpart
4.5 above, and such subscription agreements shall not have been amended,
supplemented, modified or waived without the consent of the Administrative
Agent. Holdings shall have received Net Equity Proceeds from the Permitted
Private Placement at least equal to $50,000,000.

      SUBPART 4.7. Amendment No. 3 Effective Date Certificate. The
Administrative Agent shall have received, with counterparts for each Lender, a
certificate, dated the Amendment No. 3 Effective Date, in form and substance
satisfactory to the Syndication Agent and duly executed and delivered by an
Authorized Officer of each of Holdings, Intermediate Holdings and the Company,
in which certificate each of Holdings, Intermediate Holdings and the Company
shall agree and acknowledge that the statements made therein shall be deemed to
be true and correct representations and warranties of each of Holdings,
Intermediate Holdings and the Company as of such date, and, at the time each
such certificate is delivered, such statements shall in fact be true and
correct. All documents and agreements required to be appended to such
certificate shall be in form and substance reasonably satisfactory to the
Syndication Agent.

      SUBPART 4.8. Other Costs and Expenses. The Agent shall have received all
fees, costs and expenses due and payable pursuant to Sections 3.3 and 11.3 of
the Credit Agreement to the extent then invoiced.

      SUBPART 4.9. Opinion of Counsel. The Agents shall have received an
opinion, dated the Amendment No. 3 Effective Date and addressed to the Agents
and all of the Lenders, from Greenberg Traurig, P.A., counsel to the Obligors,
in form and substance satisfactory to the Agents.

                                   ARTICLE V
                         REPRESENTATIONS AND WARRANTIES

      SUBPART 5.1. Representations and Warranties. In order to induce the
Lenders to consent to the amendments and waivers contained herein and to enter
into this Amendment, each Obligor, jointly and severally, represents and
warrants as set forth below:

            (a) After giving effect to this Amendment, the amendment and waiver
      of certain provisions of the Credit Agreement do not impair the validity,
      effectiveness or priority of

                                      -14-
<PAGE>
      the Liens granted pursuant to any Loan Documents relating thereto (the
      "Security Documents"), and such Liens continue unimpaired with the same
      priority to secure repayment of all Obligations, including the Term C
      Loans, whether heretofore or hereafter incurred. The amendment and waiver
      of certain provisions of the Credit Agreement effected pursuant to this
      Amendment do not require that any new filings be made or other action
      taken to perfect or to maintain the perfection of such Liens. The position
      of the Lenders with respect to such Liens, the Collateral (as defined in
      the Security Documents) in which a security interest was granted pursuant
      to the Security Documents, and the ability of the Administrative Agent to
      realize upon such Liens pursuant to the terms of the Security Documents
      have not been adversely affected in any material respect by the amendment
      and waiver of certain provisions of the Credit Agreement effected pursuant
      to this Amendment or by the execution, delivery, performance or
      effectiveness of this Amendment.

            (b) Each Obligor reaffirms as of the Amendment No. 3 Effective Date
      such Person's respective covenants and agreements contained in the Credit
      Agreement, each Security Document to which such Person is a party,
      including, in each case, as such covenants and agreements may be modified
      by this Amendment. Each such Obligor further confirms that each such Loan
      Document to which such Person is a party is and shall continue to be in
      full force and effect and the same are hereby ratified, approved and
      confirmed in all respects, except that upon the occurrence of the
      Amendment No. 3 Effective Date, all references in such Loan Documents to
      the "Credit Agreement", "Loan Documents", "thereunder", "thereof",
      "therein" or words of like or similar import shall mean and be a reference
      to the Credit Agreement and the Loan Documents as amended hereby.

            (c) Both before and immediately after giving effect to this
      Amendment, the representations and warranties set forth in Article VI of
      the Credit Agreement (excluding, however, those contained in Section 6.15
      of the Credit Agreement) and each other Loan Document are, in each case,
      true and correct (unless stated to relate solely to an earlier date, in
      which case such representations and warranties shall be true and correct
      as of such earlier date).

      SUBPART 5.2. Validity, etc. This Amendment constitutes the legal, valid
and binding obligation of the Obligors enforceable in accordance with its terms
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.

      SUBPART 5.3. No Default. Both immediately before and after giving effect
to this Amendment, no Default has occurred and is continuing.

      SUBPART 5.4. Solvency. Neither the making of the Term C Loans, the
guaranty of the Term C Loans by the Guarantors pursuant to the Guarantees nor
any other transaction contemplated to occur on the Amendment No. 3 Effective
Date will involve or result in any fraudulent transfer or fraudulent conveyance
under the provisions of Section 548 of the

                                      -15-
<PAGE>
Bankruptcy Code (11 U.S.C. Sections 101 et seq., as from time to time hereafter
amended, and any successor or similar statute) or any applicable state law
respecting fraudulent transfers or fraudulent conveyances. On the Amendment No.
3 Effective Date, after giving effect to the making of the Term C Loans,
Holdings and its Subsidiaries, Intermediate Holdings and its Subsidiaries and
the Company and the Restricted Subsidiaries, in each case taken as a whole, are
Solvent.

                                   ARTICLE VI
                            MISCELLANEOUS PROVISIONS

      SUBPART 6.1. Ratification of and References to the Credit Agreement. This
Amendment shall be deemed to be an amendment to the Credit Agreement, and the
Credit Agreement, as amended hereby, is hereby ratified, approved and confirmed
in each and every respect. All references to the Credit Agreement in any other
document, instrument, agreement or writing shall hereafter be deemed to refer to
the Credit Agreement as amended hereby. Other than as specifically provided
herein, this Amendment shall not operate as a waiver or amendment of any right,
power or privilege of any Agent or any Lender under the Credit Agreement or any
other Loan Document or of any other term or condition of the Credit Agreement or
any other Loan Document, nor shall the entering into of this Amendment preclude
any Agent and/or any Lender from refusing to enter into any further waivers or
amendments with respect thereto.

      SUBPART 6.2. Headings. The various headings of this Amendment are inserted
for convenience only and shall not affect the meaning or interpretation of this
Amendment or any provisions hereof.

      SUBPART 6.3. Execution in Counterparts. This Amendment may be executed by
the parties hereto in several counterparts, each of which shall be deemed to be
an original and all of which shall constitute together but one and the same
agreement. A counterpart hereof executed and delivered by facsimile shall be
effective as an original.

      SUBPART 6.4. Successors and Assigns. This Amendment shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.

      SUBPART 6.5. Governing Law; Entire Agreement. THIS AMENDMENT SHALL BE
DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK. This Amendment and the other Loan Documents constitute the
entire understanding among the parties hereto with respect to the subject matter
hereof and supersede any prior agreements, written or oral, with respect
thereto.

                                      -16-
<PAGE>
      IN WITNESS WHEREOF, the signatories hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized as of the day
and year first above written.

                                        RAILAMERICA, INC.

                                        By: /s/ BENNETT MARKS
                                            ------------------------------------
                                            Name: Bennett Marks
                                            Title: Senior Vice President and
                                            Chief Financial Officer
<PAGE>
                                        PALM BEACH RAIL HOLDING, INC.

                                        By: /s/ BENNETT MARKS
                                            ------------------------------------
                                            Name: Bennett Marks
                                            Title: Senior Vice President and
                                            Chief Financial Officer
<PAGE>
                                        RAILAMERICA TRANSPORTATION CORP.

                                        By: /s/ BENNETT MARKS
                                            ------------------------------------
                                            Name: Bennett Marks
                                            Title: Senior Vice President and
                                            Chief Financial Officer
<PAGE>
                                        FREIGHT VICTORIA LIMITED

                                        By: /s/ BENNETT MARKS
                                            ------------------------------------
                                            Name: Bennett Marks
                                            Title: Attorney-in-fact
<PAGE>
                                        RAILINK LTD.

                                        By: /s/ BENNETT MARKS
                                            ------------------------------------
                                            Name: Bennett Marks
                                            Title: Senior Vice President and
                                            Chief Financial Officer
<PAGE>
                                        K2H CYPRESTREE-1 LLC,
                                        as a Lender

                                        By: /s/ SUSAN LEE
                                            ------------------------------------
                                            Name: Susan Lee
                                            Title: Authorized Agent
<PAGE>
                                        K2H ING-1 LLC,
                                        as a Lender

                                        By: /s/ SUSAN LEE
                                            ------------------------------------
                                            Name: Susan Lee
                                            Title: Authorized Agent
<PAGE>
                                        K2H ING-2 LLC,
                                        as a Lender

                                        By: /s/ SUSAN LEE
                                            ------------------------------------
                                            Name: Susan Lee
                                            Title: Authorized Agent
<PAGE>
                                        K2H ING-3 LLC,
                                        as a Lender

                                        By: /s/ SUSAN LEE
                                            ------------------------------------
                                            Name: Susan Lee
                                            Title: Authorized Agent
<PAGE>
                                        K2H PONDVIEW LLC,
                                        as a Lender

                                        By: /s/ SUSAN LEE
                                            ------------------------------------
                                            Name: Susan Lee
                                            Title: Authorized Agent
<PAGE>
                                        K2H RIVERSIDE LLC,
                                        as a Lender

                                        By: /s/ SUSAN LEE
                                            ------------------------------------
                                            Name: Susan Lee
                                            Title: Authorized Agent
<PAGE>
                                        K2H STERLING LLC,
                                        as a Lender

                                        By: /s/ SUSAN LEE
                                            ------------------------------------
                                            Name: Susan Lee
                                            Title: Authorized Agent
<PAGE>
                                        K2H WATERSIDE LLC,
                                        as a Lender

                                        By: /s/ SUSAN LEE
                                            ------------------------------------
                                            Name: Susan Lee
                                            Title: Authorized Agent
<PAGE>
                                        K2H PAMCO LLC,
                                        as a Lender

                                        By: /s/ SUSAN LEE
                                            ------------------------------------
                                            Name: Susan Lee
                                            Title: Authorized Agent
<PAGE>
                                        SANKATAY ADVISORS, LLC, as Collateral
                                        Manager for Brant Point II CBO 2000-1
                                        Ltd., as Term Lender, as a Lender

                                        By: /s/ DIANE J. EXTER
                                            ------------------------------------
                                            Name: Diane J. Exter
                                            Title: Managing Director Portfolio
                                            Manger
<PAGE>
                                        ARCHIMEDES FUNDING III, Ltd.

                                        By: ING CAPITAL ADVISORS LLC, as
                                        Collateral Manager

                                        By: /s/ STEVEN GORSKI
                                            ------------------------------------
                                            Name: Steven Gorski
                                            Title: Vice President and Senior
                                            Credit Analyst
<PAGE>
                                        ARCHIMEDES FUNDING II, Ltd.

                                        By: ING CAPITAL ADVISORS LLC, as
                                        Collateral Manager

                                        By: /s/ STEVEN GORSKI
                                            ------------------------------------
                                            Name: Steven Gorski
                                            Title: Vice President and Senior
                                            Credit Analyst
<PAGE>
                                        SEQUILS-ING 1 (HBDGM), LTD.

                                        By: ING CAPITAL ADVISORS LLC, as
                                        Collateral Manager

                                        By: /s/ STEVEN GORSKI
                                            ------------------------------------
                                            Name: Steven Gorski
                                            Title: Vice President and Senior
                                            Credit Analyst
<PAGE>
                                        WELLS FARGO BANK, N.A.,
                                        as a Lender

                                        By: /s/ ANTHONY C. FRELS
                                            ------------------------------------
                                            Name: Anthony C. Frels
                                            Title: Vice President
<PAGE>
                                        HELLER FINANCIAL, INC.,
                                        as a Lender

                                        By: /s/ SCOTT ZIEMKE
                                            ------------------------------------
                                            Name: Scott Ziemke
                                            Title: Vice President
<PAGE>
                                        OCTAGON INVESTMENT PARTNERS IV, LTD

                                        By: Octagon Credit Investors LLC, as
                                        Collateral Manager
                                        as a Lender

                                        By: /s/ Michael B. Nechamkin
                                            ------------------------------------
                                            Name: Michael B. Nechamkin
                                            Title: Portfolio Manager
<PAGE>
                                        OCTAGON INVESTMENT PARTNERS III, LTD

                                        By: Octagon Credit Investors LLC, as
                                        Portfolio Manager
                                        as a Lender

                                        By: /s/ Michael B. Nechamkin
                                            ------------------------------------
                                            Name: Michael B. Nechamkin
                                            Title: Portfolio Manager
<PAGE>
                                        OCTAGON INVESTMENT PARTNERS II, LTD

                                        By: Octagon Credit Investors LLC, as sub
                                        investment manager
                                        as a Lender

                                        By: /s/ Michael B. Nechamkin
                                            ------------------------------------
                                            Name: Michael B. Nechamkin
                                            Title: Portfolio Manager
<PAGE>
                                        VAN KAMPEN PRIME RATE INCOME TRUST

                                        By: Van Kampen Investment Advisory Corp.

                                        By: /s/ Howard Tiffer
                                            ------------------------------------
                                            Name: Howard Tiffer
                                            Title: Managing Director
<PAGE>
                                        VAN KAMPEN CLO I, LIMITED

                                        By: Van Kampen Investment Advisory Corp.
                                        as collateral manager

                                        By: /s/ Howard Tiffer
                                            ------------------------------------
                                            Name: Howard Tiffer
                                            Title: Managing Director
<PAGE>
                                        VAN KAMPEN CLO II, LIMITED

                                        By: Van Kampen Investment Advisory Corp.
                                        as collateral manager

                                        By: /s/ Howard Tiffer
                                            ------------------------------------
                                            Name: Howard Tiffer
                                            Title: Managing Director
<PAGE>
                                        VAN KAMPEN CLO I, LIMITED

                                        By: Van Kampen Investment Advisory Corp.
                                        as collateral manager

                                        By: /s/ Howard Tiffer
                                            ------------------------------------
                                            Name: Howard Tiffer
                                            Title: Managing Director
<PAGE>
                                        SIMSBURY CLO, LIMITED

                                        By: David L. Babson and Company
                                        Incorporated, under delegated authority
                                        from Massachusetts Mutual Life Insurance
                                        Company, its collateral manager

                                        By: /s/ Lisa Yuerg
                                            ------------------------------------
                                            Name: Lisa Yuerg
                                            Title: Managing Director with David
                                            L. Babson and Company Incorporated
<PAGE>
                                        MASSACHUSETTS MUTUAL LIFE
                                        INSURANCE COMPANY

                                        By: David L. Babson and Company
                                        Incorporated, under delegated authority
                                        from Massachusetts Mutual Life Insurance
                                        Company, its collateral manager

                                        By: /s/ Lisa Yuerg
                                            ------------------------------------
                                            Name: Lisa Yuerg
                                            Title: Managing Director with David
                                            L. Babson and Company Incorporated
<PAGE>
                                        Maplewood CDO, Limited

                                        By: David L. Babson and Company
                                        Incorporated, under delegated authority
                                        from Massachusetts Mutual Life Insurance
                                        Company, its collateral manager

                                        By: /s/ Lisa Yuerg
                                            ------------------------------------
                                            Name: Lisa Yuerg
                                            Title: Managing Director with David
                                            L. Babson and Company Incorporated
<PAGE>
                                        NATIONAL BANK OF CANADA,
                                        As a Lender

                                        By: /s/ Jay Stein
                                            ------------------------------------
                                            Name: Jay Stein
                                            Title: V.P.

                                        By: /s/ Jean Page
                                            ------------------------------------
                                            Name: Jean Page
                                            Title: V.P.
<PAGE>
                                        NATEXIS BANQUES POPULAIRES,
                                        as a Lender

                                        By: /s/ Frank H. Madden, Jr
                                            ------------------------------------
                                            Name: Frank H. Madden, Jr.
                                            Title: Vice President and Group
                                            Manager

                                        By: /s/ Harris Frommer
                                            ------------------------------------
                                            Name: Harris Frommer
                                            Title: Assistant Vice President
<PAGE>
                                        THE CITIGROUP/EQUIPMENT
                                        FINANCING, INC.,
                                        as a Lender

                                        By: /s/ Katie J. Saunders
                                            ------------------------------------
                                            Name: Katie J. Saunders
                                            Title: Senior Credit Analyst
<PAGE>
                                        SEQUILS-Cumberland I. Ltd.,
                                        as a Lender
                                        By: Deerfield Capital Management LLC as
                                        its Collateral Manager

                                        By: /s/ Dan Hattori
                                            ------------------------------------
                                            Name: Dan Hattori
                                            Title: Vice President
<PAGE>
                                        LIBERTY-STEIN ROE ADVISOR
                                        FLOATING RATE ADVANTAGE FUND, by
                                        Stein Roe Farnham Incorporated As
                                        Advisor as a Lender

                                        By: /s/ James R. Fellows
                                            ------------------------------------
                                            Name: James R. Fellows
                                            Title: Sr. Vice President &
                                            Portfolio Manager
<PAGE>
                                        STEIN ROE FLOATING RATE LIMITED
                                        LIABILITY COMPANY
                                        as a Lender

                                        By: /s/ James R. Fellows
                                            ------------------------------------
                                            Name: James R. Fellows
                                            Title: Senior Vice President
                                                    Stein Roe & Farnham
                                                    Incorporated,As Advisor to
                                                    the Stein Roe Floating Rate
                                                    Limited Liability Company
<PAGE>
                                        Prometheus Investment Funding No. 1 Ltd,
                                        By: CPF Asset Advisory, L.L.C. as
                                        Investment Manager
                                        as a Lender

                                        By: /s/ Irv Roa
                                            ------------------------------------
                                            Name: Irv Roa
                                            Title: Associate Director

                                        By: /s/ Vicky S. Soo
                                            ------------------------------------
                                            Name: Vicky S. Soo
                                            Title: Associate Director
<PAGE>
                                        Metropolitan Property and Casualty
                                        Insurance Company,
                                        as a Lender

                                        By: /s/ James R. Dingler
                                            ------------------------------------
                                            Name: James R. Dingler
                                            Title: Director
<PAGE>
                                        General Electric Capital Corporation,
                                        as a Lender

                                        By: /s/ R.T. Sturgeon
                                            ------------------------------------
                                            Name: R.T. Sturgeon
                                            Title: Manager-Operations
<PAGE>
                                        Emerald Orchard Limited,
                                        as a Lender

                                        By: /s/ Dana Schwalle
                                            ------------------------------------
                                            Name: Dana Schwalle
                                            Title: Attorney in fact
<PAGE>
                                        Toronto Dominion (New York), Inc.,
                                        as a Lender

                                        By: /s/ Dana Schwalle
                                            ------------------------------------
                                            Name: Dana Schwalle
                                            Title: Vice President
<PAGE>
                                        Bank One, NA,
                                        as a Lender

                                        By: /s/ Christopher Caviani
                                            ------------------------------------
                                            Name: Christopher Caviani
                                            Title: Director
<PAGE>
                                        Credit Lyonnais New York Branch,
                                        as a Lender

                                        By: /s/ Attila Koc
                                            ------------------------------------
                                            Name: Attila Koc
                                            Title: Senior Vice President
<PAGE>
                                        Monument Capital Ltd., as Assignee
                                        By: Alliance Capital Management L.P., as
                                        Investment Manager
                                        By: Alliance Capital Management
                                        Corporation, as General Partner

                                        By: /s/ Nantha Suppiah
                                            ------------------------------------
                                            Name: Nantha Suppiah
                                            Title: Assistant Vice President
<PAGE>
                                        FORTIS BANK (NEDERLAND) N.V.,
                                        as a Lender

                                        By: /s/ P.R.G. Zaman
                                            ------------------------------------
                                            Name: P.R.G> Zaman
                                            Title:

                                        By: /s/ B.M. Kool
                                            ------------------------------------
                                            Name: B.M. Kool
                                            Title:
<PAGE>
                                        Sequlls - Centurion V, Ltd.
                                        American Express Asset Management Group,
                                        Inc., as Collateral Manager,
                                        as a Lender

                                        By: /s/ Steven B. Staver
                                            ------------------------------------
                                            Name: Steven B. Staver
                                            Title: Managing Director
<PAGE>
                                        Centurion CDO II, Ltd.
                                        By:American Express Asset Management
                                        Group, Inc., as Collateral Manager,
                                        as a Lender

                                        By: /s/ Steven B. Staver
                                            ------------------------------------
                                            Name: Steven B. Staver
                                            Title: Managing Director
<PAGE>
                                        GLENEAGLES TRADING LLC,
                                        as a Lender

                                        By: /s/ Ann E. Morris
                                            ------------------------------------
                                            Name: Ann E. Morris
                                            Title: Assistant Vice President
<PAGE>
                                        MUIRFIELD TRADING LLC,
                                        as a Lender

                                        By: /s/ Ann E. Morris
                                            ------------------------------------
                                            Name: Ann E. Morris
                                            Title: Assistant Vice President
<PAGE>
                                        WINGED FOOT FUNDING TRUST,
                                        as a Lender

                                        By: /s/ Ann E. Morris
                                            ------------------------------------
                                            Name: Ann E. Morris
                                            Title: Authorized Agent
<PAGE>
                                        PPM SPYGLASS FUNDING TRUST,
                                        as a Lender

                                        By: /s/ Ann E. Morris
                                            ------------------------------------
                                            Name: Ann E. Morris
                                            Title: Authorized Agent
<PAGE>
                                        OLYMPIC FUNDING TRUST, SERIES 1999-1,
                                        as a Lender

                                        By: /s/ Ann E. Morris
                                            ------------------------------------
                                            Name: Ann E. Morris
                                            Title: Authorized Agent
<PAGE>
                                        SCUDDER FLOATING RATE FUND,
                                        as a Lender

                                        By: /s/ Kelly D. Babson
                                            ------------------------------------
                                            Name: Kelly D. Babson
                                            Title: Managing Director
<PAGE>
                                        UNION BANK OF CALIFORNIA, N.A.,
                                        as a Lender

                                        By: /s/ Albert W. Kelley
                                            ------------------------------------
                                            Name: Albert W. Kelley
                                            Title: Vice President
<PAGE>
                                        National City Bank,
                                        as a Lender

                                        By: /s/ Mark J. Ringel
                                            ------------------------------------
                                            Name: Mark J. Ringel
                                            Title: Vice President
<PAGE>
                                        BANK OF TOKYO-MITSUBISHI TRUST COMPANY,
                                        as a Lender

                                        By: /s/ Joseph P. Devoe
                                            ------------------------------------
                                            Name: Joseph P. Devoe
                                            Title: Vice President & Manager
<PAGE>
                                        BANK OF MONTREAL,
                                        as a Lender

                                        By: /s/ Barry Campbell
                                            ------------------------------------
                                            Name: Barry Campbell
                                            Title: Managing Director
<PAGE>
                                        PILGRIM CLO 1999-1 Ltd.
                                        By: ING Pilgrim Investments LLC, as its
                                        investment manager,

                                        SEQUILS PILGRIM-1 Ltd.
                                        By: ING Pilgrim Investments LLC, as its
                                        investment manager

                                        ML CLO XV PILGRIM AMERICA (CAYMAN) Ltd.
                                        By: ING Pilgrim Investments LLC, as its
                                        investment manager

                                        PILGRIM PRIME RATE TRUST
                                        By: ING Pilgrim Investments LLC, as its
                                        investment manager

                                        PILGRIM SENIOR INCOME FUND
                                        By: ING Pilgrim Investments LLC, as its
                                        investment manager

                                        By: /s/ Brian S. Horton
                                            ------------------------------------
                                            Name: Brian S. Horton
                                            Title: Vice President
<PAGE>
                                        BLUE SQUARE FUNDING SERIES 3,
                                        By: Bankers Trust Company, as Trustee
                                        as a Lender

                                        By: /s/ Susan Anderson
                                            ------------------------------------
                                            Name: Susan Anderson
                                            Title: Vice President
<PAGE>
                                            CREDIT SUISSE FIRST BOSTON, as the
                                            Syndication Agent and as a Lender

                                        By: /s/ Paul J. Corona
                                            ------------------------------------
                                            Name: Paul J. Corona
                                            Title: Vice President

                                        By: /s/ William S. Lutkins
                                            ------------------------------------
                                            Name: William S. Lutkins
                                            Title: Vice President
<PAGE>
                                        THE BANK OF NOVA SCOTIA, as the
                                        Administrative Agent and as a Lender

                                        By: /s/ William J. Brown
                                            ------------------------------------
                                            Name: William J. Brown
                                            Title: Vice President
<PAGE>
                           ACKNOWLEDGMENT AND CONSENT

Each Obligor listed below hereby acknowledges that it has reviewed the foregoing
Waiver and Amendment No. 3 to Credit Agreement (the "Amendment") and hereby
consents to the execution, delivery and performance thereof by the Borrowers.
Each Obligor hereby confirms its obligation under the Subsidiary Guaranty and
each other Loan Document to which it is a party and agrees that, after giving
effect to the Amendment, neither the modification of the Credit Agreement nor
the modification of any other Loan Document effected pursuant to the Amendment,
nor the execution, delivery, performance or effectiveness of the Amendment or
any other Loan Document, nor the borrowing by the U.S. Borrower of the Term C
Loans or any use of the proceeds thereof impairs the validity or effectiveness
of the Subsidiary Guaranty or impairs the validity, effectiveness or priority of
the Liens granted pursuant to any other Loan Document to which such Obligor is a
party or by which it is otherwise bound. Each Obligor hereby further agrees that
(a) the Subsidiary Guaranty continues unimpaired to guaranty repayment of all
Obligations, including, without limitation, the Term C Loans, whether heretofore
or hereafter incurred, and (b) the Liens created pursuant to the Loan Documents
continue unimpaired with the same enforceability and priority to secure
repayment of all Obligations, including, without limitation, the Term C Loans,
whether heretofore or hereafter incurred. Each Obligor represents and warrants
that neither the modification of the Credit Agreement, nor the modification of
any other Loan Document effected pursuant to the Amendment, nor the execution,
delivery, performance or effectiveness of the Amendment nor any other Loan
Document nor the borrowing by the U.S. Borrower of the Term C Loans or any use
of the proceeds thereof requires that any new filings be made or other action be
taken to perfect or to maintain the perfection of such Liens. Under the
foregoing circumstances, the position of the Lenders with respect to such Liens,
the collateral in which a security interest was granted pursuant to the Loan
Documents, and the ability of the Administrative Agent to enforce the provisions
of the Subsidiary Guaranty and to realize upon such Liens pursuant to the terms
of the Loan Documents, have not been adversely affected in any material respect
by the modification of the Credit Agreement, the modification of any other Loan
Document effected pursuant to the Amendment, the execution, delivery,
performance or effectiveness of the Amendment or the borrowing by the U.S.
Borrower of the Term C Loans or any use of the proceeds hereof.

                                        AUSTIN & NORTHWESTERN RAILROAD
                                        COMPANY, INC.

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President
<PAGE>
                                        BOSTON CENTRAL FREIGHT
                                        RAILROAD, INC.

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        CASCADE & COLUMBIA RIVER RAILROAD
                                        COMPANY

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        CENTRAL OREGON & PACIFIC
                                        RAILROAD, INC.

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        CENTRAL RAILROAD COMPANY OF INDIANA

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        CENTRAL RAILROAD COMPANY OF INDIANAPOLIS

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President
<PAGE>
                                        CONNECTICUT SOUTHERN RAILROAD, INC.

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        DALLAS, GARLAND & NORTHEASTERN RAILROAD,
                                        INC. (TX)

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        DALLAS, GARLAND & NORTHEASTERN RAILROAD,
                                        INC. (DE)

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        DAKOTA RAIL, INC.

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        DELAWARE VALLEY RAILWAY
                                        COMPANY, INC.

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President
<PAGE>
                                        FLORIDA RAIL LINES, INC.

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        GEORGIA SOUTHWESTERN RAILROAD, INC.

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        HURON & EASTERN RAILWAY COMPANY

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        INDIANA & OHIO CENTRAL RAILROAD, INC.

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        INDIANA & OHIO RAIL CORP.

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        INDIANA & OHIO RAILWAY COMPANY

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President
<PAGE>
                                        INDIANA SOUTHERN RAILROAD, INC.

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        MARKSMAN CORP.

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        MID-MICHIGAN RAILROAD, INC.

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        MISSOURI & NORTHERN ARKANSAS
                                        RAILROAD COMPANY, INC.

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        NEW ENGLAND CENTRAL RAILROAD, INC.

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President
<PAGE>
                                        NEW ORLEANS LOWER COAST
                                        RAILROAD, INC.

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        NORTH CAROLINA & VIRGINIA RAILROAD
                                        COMPANY, INC.

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        OTTER TAIL VALLEY RAILROAD
                                        COMPANY, INC.

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        PLAINVIEW TERMINAL COMPANY

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        PRAIRIE HOLDING CORPORATION

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President
<PAGE>
                                        RAILAMERICA AUSTRALIA, INC.

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        RAILAMERICA EQUIPMENT CORP.

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        RAILAMERICA INTERMODAL
                                        SERVICES, INC.

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        RAIL AMERICA TRANSPORTATION CORP.

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        RAIL OPERATING SUPPORT GROUP, INC.

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President
<PAGE>
                                        RAILTEX ACQUISITION CORP.

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        RAILTEX DISTRIBUTION SERVICES, INC.

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        RAILTEX, INC.

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        RAILTEX INTERNATIONAL HOLDINGS, INC.

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        RAILTEX LOGISTICS, INC.

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President
<PAGE>
                                        SAGINAW VALLEY RAILWAY
                                        COMPANY, INC.

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        SAN DIEGO & IMPERIAL VALLEY RAILROAD
                                        COMPANY, INC.

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        SOUTH CAROLINA CENTRAL RAILROAD
                                        COMPANY, INC.

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        TOLEDO, PEORIA & WESTERN RAILROAD
                                        CORPORATION (NY)

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        TOLEDO, PEORIA & WESTERN RAILROAD
                                        CORPORATION (NJ)

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President
<PAGE>
                                        VENTURA COUNTY RAILROAD COMPANY

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President

                                        WEST TEXAS & LUBBOCK RAILROAD
                                        COMPANY, INC.

                                        By: /s/ Julie S. Herbort
                                            ------------------------------------
                                            Name: Julie Herbort
                                            Title: Vice President<PAGE>

                                                                   EXHIBIT 10.80

                      CHANGE IN CONTROL SEVERANCE AGREEMENT

      THIS CHANGE IN CONTROL SEVERANCE AGREEMENT ("Agreement") is made and
entered into as of the ___ day of _________, 200_ by and between RAILAMERICA,
INC., a Delaware corporation (the "Company"), and [name of officer] (the
"Officer").

                                    RECITALS:

      The Board of Directors of the Company (the "Board"), has determined that
it is in the best interests of the Company and its shareholders to assure that
the Company will have the continued dedication of the Officer, notwithstanding
the possibility, threat, or occurrence of a Change of Control (as defined below)
of the Company.

      The Board believes it is imperative to diminish the inevitable distraction
of the Officer by virtue of the personal uncertainties and risks created by a
pending or threatened Change of Control, to encourage the Officer's full
attention and dedication to the Company currently and in the event of any
threatened or pending Change of Control, and to provide the Officer with
compensation arrangements upon a Change of Control which provide the Officer
with individual financial security and which are competitive with those of other
corporations and, in order to accomplish these objectives, the Board has caused
the Company to enter into this Agreement.

                                    AGREEMENT

      NOW, THEREFORE, in consideration of the premises and mutual covenants set
forth herein, IT IS HEREBY AGREED AS FOLLOWS:

1. Certain Definitions

      (a) The "Effective Date" shall be the first date during the "Change of
Control Period" (as defined in Section 1(b)) on which a Change of Control
occurs. Anything in this Agreement to the contrary notwithstanding, if the
Officer's employment with the Company is terminated prior to the date on which a
Change of Control occurs, and it is reasonably demonstrated that such
termination (i) was at the request of a third party who has taken steps
reasonably calculated to effect a Change of Control, or (ii) otherwise arose in
connection with or anticipation of a Change of Control, then for all purposes of
this Agreement the "Effective Date" shall mean the date immediately prior to the
date of such termination; provided that if the Officer's employment with the
Company is terminated within the six months immediately preceding the date on
which a Change in Control occurs, then the termination of employment shall be
presumed to have arisen in anticipation of a Change of Control unless shown to
the contrary by clear and convincing evidence.
<PAGE>
      (b) The "Change of Control Period" is the period commencing on the date
hereof and ending on the earlier to occur of (i) the third anniversary of such
date, and (ii) the first day of the month next following the Officer's normal
retirement date at age 65 ("Normal Retirement Date"); provided, however, that
commencing on the date one year after the date hereof, and on each annual
anniversary of such date (such date and each annual anniversary thereof is
hereinafter referred to as the "Renewal Date"), the Change of Control Period
shall be automatically extended so as to terminate on the earlier of (x) three
years from such Renewal Date, or (y) the first day of the month coinciding with
or next following the Officer's Normal Retirement Date, unless at least sixty
(60) days prior to the Renewal Date the Company shall give written notice to the
Officer that the Change of Control Period shall not be so extended.

2. Change of Control

      For the purpose of this Agreement, a "Change of Control" shall mean:

            (i) The acquisition (other than from the Company), by any person,
entity or "group", within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934 (the "Exchange Act"), of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 33 1/3%
or more of either the then outstanding shares of common stock or the combined
voting power of the Company's then outstanding voting securities entitled to
vote generally in the election of directors (hereafter referred to as the
ownership of a "Controlling Interest"), excluding, for this purpose, any
acquisitions by (1) the Company or any of its subsidiaries, (2) any person,
entity or "group" that as of the date hereof owns beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of a Controlling
Interest; or (3) any employee benefit plan of the Company or any of its
subsidiaries.

            (ii) The nine (9) individuals who, as of the date hereof, constitute
the Board of Directors (as of the date hereof the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board, provided that any
person becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's stockholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board (other
than an election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of the directors of the Company) shall be, for purposes of this
Agreement, considered as though such person were a member of the Incumbent
Board; or

            (iii) Approval by the stockholders of the Company of (1) a
reorganization, merger or consolidation with respect to which persons who were
the stockholders of the Company immediately prior to such reorganization, merger
or consolidation do not, immediately thereafter, own more than 66 2/3% of the
combined voting power entitled to vote generally in the election of directors of
the reorganized, merged or consolidated company's (or entity's) then outstanding
voting securities in substantially the same proportions as their ownership
immediately prior to such reorganization, merger, or

                                       2
<PAGE>
consolidation, (2) a liquidation or dissolution of the Company, or (3) the sale
of all or substantially all of the assets of the Company, unless the approved
reorganization, merger, consolidation, liquidation, dissolution or sale is
subsequently abandoned.

3. Employment Period

      If and only in the event that the Officer is an officer, elected or
otherwise designated by the Board, of the Company or one of its subsidiaries as
of the Effective Date, the Company hereby agrees to continue the Officer in its
employ, and the Officer hereby agrees to remain in the employ of the Company,
for the period commencing on the Effective Date and ending on the earlier to
occur of (i) the third anniversary of such date, or (ii) the first day of the
month coinciding with or next following the Officer's Normal Retirement Date
(the "Employment Period"). In the event that the Officer is not an officer,
elected or otherwise designated by the Board, of the Company or one of its
subsidiaries as of the Effective Date, then this Agreement shall immediately
terminate and no longer have any force or effect. Notwithstanding anything to
the contrary herein, in the event that the Officer ceases to be an officer,
elected or otherwise designated by the Board, within the six (6) months
immediately preceding the Effective Date, then the Officer shall be deemed to be
an officer, elected or otherwise designated by the Board, of the Company or one
of its subsidiaries as of the Effective Date unless the Company demonstrates by
clear and convincing evidence that such cessation was not in connection with or
in anticipation of a Change in Control.

4. Terms of Employment

      (a) Position and Duties.

            (i) During the Employment Period, (1) the Officer's position
(including status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be at least commensurate in all material
respects with the most significant of those held, exercised and assigned at any
time during the 180-day period immediately preceding the Effective Date, and (2)
the Officer's services shall be performed at the location where the Officer was
employed immediately preceding the Effective Date or any office or location less
than 50 miles from such location.

            (ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Officer is entitled, the Officer agrees to
devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Officer hereunder, to use the Officer's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Officer to (1) serve on corporate, civic or charitable
boards or committees, (2) deliver lectures, fulfill speaking engagements or
teach at educational institutions, and (3) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Officer's responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that any
such activities have been

                                       3
<PAGE>
conducted by the Officer prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Officer's responsibilities to the Company.

      (b) Compensation.

            (i) Base Salary. During the Employment Period, the Officer shall
receive a base salary ("Base Salary") at a monthly rate at least equal to the
highest monthly base salary paid or payable to the Officer by the Company during
the twelve-month period immediately preceding the month in which the Effective
Date occurs. During the Employment Period, the Base Salary shall be reviewed at
least annually and shall be increased at any time and from time to time as shall
be substantially consistent with increases in base salary awarded in the
ordinary course of business to other key Officers of the Company and its
subsidiaries. Any increase in Base Salary shall not serve to limit or reduce any
other obligation to the Officer under this Agreement. Base Salary shall not be
reduced after any such increase.

            (ii) Annual Bonus. In addition to Base Salary, the Officer shall be
awarded, for each fiscal year during the Employment Period, an annual bonus (an
"Annual Bonus") (either pursuant to any then-established incentive compensation
plan(s) of the Company or otherwise) in cash at least equal to the greater of
(x) the average of the bonuses payable to the Officer from the Company and its
subsidiaries in the three fiscal years inmiediately preceding the fiscal year in
which the Effective Date occurs, or (y) the bonus that would be payable for the
fiscal year if such bonus was determined based upon the same formula, terms, and
conditions as was used to determine the Officer's bonus for the fiscal year
immediately preceding the fiscal year in which the Effective Date occurs.
Nothing in this Agreement shall require the payment of an Annual Bonus prior to
the Effective Date.

            (iii) Incentive, Savings and Retirement Plans. In addition to Base
Salary and Annual Bonus payable as hereinabove provided, the Officer shall be
entitled to participate during the Employment Period in all incentive, savings
and retirement plans, practices, policies and programs applicable to similar key
Officers of the Company (including its successors or assigns) and its
affiliates, in each case comparable to those in effect on the Effective Date or
as subsequently amended. Such plans, practices, policies and programs, in the
aggregate, shall provide the Officer with compensation, benefits and reward
opportunities at least as favorable as the most favorable of such compensation,
benefits and reward opportunities provided by the Company for the Officer under
such plans, practices, policies and programs as applicable to the Officer at any
time during the 180-day period immediately preceding the Effective Date or, if
more favorable to the Officer, as provided at any time thereafter.

            (iv) Welfare Benefit Plans. During the Employment Period, the
Officer and/or the Officer's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its subsidiaries
(including, without limitation, medical, prescription, dental,

                                       4
<PAGE>
disability, salary continuance, employee life, group life, accidental death and
travel accident insurance plans and programs), at least as favorable as the most
favorable benefits applicable to the Officer under such plans, practices,
policies and programs in effect at any time during the 180-day period
immediately preceding the Effective Date or, if more favorable to the Officer
and/or the Officer's family, as in effect at any time thereafter.

            (v) Expenses. During the Employment Period, the Officer shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Officer in connection with the business of the Company in accordance with
the most favorable policies, practices and procedures of the Company and its
subsidiaries in effect at any time during the 180-day period immediately
preceding the Effective Date or, if more favorable to the Officer, as in effect
at any time thereafter with respect to other key Officers.

            (vi) Fringe Benefits. During the Employment Period, the Officer
shall be entitled to fringe benefits, in accordance with the benefits applicable
to the Officer under the most favorable plans, practices, programs and policies
of the Company and its subsidiaries in effect at any time during the 180-day
period immediately preceding the Effective Date or, if more favorable to the
Officer, as in effect at any time thereafter with respect to other key Officers.

            (vii) Office and Support Staff. During the Employment Period, the
Officer shall be entitled to an office or offices of a size and with furnishings
and other appointments, and to secretarial and other assistance, at least equal
to the most favorable of the foregoing provided to the Officer by the Company
and its subsidiaries at any time during the 180-day period immediately preceding
the Effective Date or, if more favorable to the Officer, as provided at any time
thereafter with respect to other key Officers of the Company and its
subsidiaries.

            (viii) Vacation. During the Employment Period, the Officer shall be
entitled to paid vacation in accordance with the benefits applicable to the
Officer under the most favorable plans, policies, programs and practices of the
Company and its subsidiaries as in effect at any time during the 180-day period
immediately preceding the Effective Date or, if more favorable to the Officer,
as in effect at any time thereafter.

5. Termination

      (a) Death or Disability. This Agreement shall terminate automatically upon
the Officer's death. If the Company determines in good faith that the Disability
of the Officer has occurred (pursuant to the definition of "Disability" set
forth below), it may give to the Officer written notice of its intention to
terminate the Officer's employment. In such event, the Officer's employment with
the Company shall terminate effective on the later of (i) the 30th day after
receipt of such notice by the Officer (the "Disability Effective Date"),
provided that, within the 30 days after such receipt, the Officer shall not have
returned to full-time performance of the Officer's duties or (ii) the Officer is
eligible to receive disability benefits under the Company's long-term disability
plan (if any) then in effect, then the date on which the Officer begins

                                       5
<PAGE>
receiving such disability benefits (the "Disability Effective Date"). For
purposes of this Agreement, "Disability" means a mental or physical incapacity,
illness or disability which renders the Officer unable to perform his duties and
responsibilities for the Company and which, at least 26 weeks after its
commencement, is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Officer or the Officer's legal
representative (such agreement as to acceptability not to be withheld
unreasonably).

      (b) Cause. The Company may terminate the Officers employment for "Cause."
Any termination for Cause pursuant to this Section 5(b) shall be made in writing
to the Officer, which shall set forth in detail all acts or omissions upon which
the Company is relying for such termination (the "Notice"). For purposes of this
Agreement, "Cause" shall mean (i) an act or acts of personal dishonesty taken by
the Officer and intended to result in substantial personal enrichment of the
Officer at the expense of the Company, (ii) repeated violations by the Officer
of the Officer's obligations under Section 4(a) of this Agreement which are
demonstrably willful and deliberate on the Officer's part and which are
materially harmful to the Company and which are not remedied in a reasonable
period of time after receipt of written notice from the Company to the Officer,
or (iii) the conviction of the Officer of a felony crime. Nothing herein shall
limit the right of the Officer or his beneficiaries to contest the validity or
propriety of any such determination.

      (c) Good Reason. The Officer's employment may be terminated by the Officer
for "Good Reason". For purposes of this Agreement, "Good Reason" means:

            (i) the assignment to the Officer of any duties inconsistent in any
respect with the Officer's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by Section 4(a) of this Agreement, or any other action by the Company which
results in a diminution in such position, authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Officer;

            (ii) any failure by the Company to comply with any of the provisions
of Section 4(b) of this Agreement, other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Officer;

            (iii) the Company's requiring the Officer to be based at any office
or location other than that described in Section 4(a)(i)(2) hereof, except for
travel reasonably required in the performance of the Officer's responsibilities
consistent with practices in effect prior to the Effective Date;

            (iv) any purported termination by the Company of the Officer's
employment otherwise than as expressly permitted by this Agreement; or

                                       6
<PAGE>
            (v) any failure by the Company to comply with and satisfy Section
9(c) of this Agreement.

      Anything in this Agreement to the contrary notwithstanding, a termination
by the Officer for any reason during the 30-day period immediately following the
first anniversary of the Effective Date shall be deemed to be a termination for
Good Reason for all purposes of this Agreement.

      (d) Notice of Termination. Any termination by the Company for Cause or by
the Officer for Good Reason shall be communicated by Notice of Termination to
the other party hereto given in accordance with Section 10(b) of this Agreement.
For purposes of this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Officer'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). The failure by the Officer to set forth in the Notice of Termination
any fact or circumstance which contributes to a showing of Good Reason shall not
waive any right of the Officer hereunder or preclude the Officer from asserting
such fact or circumstance in enforcing his rights hereunder.

      (e) Date of Termination. "Date of Termination" means the date of receipt
of the Notice of Termination or any later date specified therein, as the case
may be; provided, however, that (i) if the Officer's employment is terminated by
the Company other than for Cause or Disability, the Date of Termination shall be
the date on which the Officer receives the Company's notice of such termination,
and (ii) if the Officer's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of the Officer or
the Disability Effective Date, as the case may be.

6. Obligations of the Company upon Termination

      (a) Death. If during the Employment Period the Officer's employment is
terminated by reason of the Officer's death, this Agreement shall terminate
without further obligation to the Officer's legal representatives under this
Agreement, other than those obligations accrued or eared and vested (if
applicable) by the Officer as of the Date of Termination, including, for this
purpose (i) the Officer's full Base Salary through the Date of Termination at
the rate in effect on the Date of Termination or, if higher, at the highest rate
in effect at any time from the 180-day period preceding the Effective Date
through the Date of Termination (the "Highest Base Salary"), (ii) the product of
the Annual Bonus paid to the Officer for the last full fiscal year and 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, and
(iii) any compensation previously deferred by the Officer (together with any
accrued interest thereon) and not yet paid by the Company and any accrued
vacation pay not yet paid by the Company (such amounts specified in clauses (i),
(ii) and (iii) are

                                       7
<PAGE>
hereinafter referred to as "Accrued Obligations"). All such Accrued Obligations
shall be paid to the Officer's estate or beneficiary, as applicable, in a lump
sum in cash within 30 days of the Date of Termination. Anything in this
Agreement to the contrary notwithstanding, the Officer's family shall be
entitled to receive benefits at least equal to the most favorable benefits
provided by the Company and any of its subsidiaries to surviving families of
similar Officers of the Company and such subsidiaries under such plans,
programs, practices and policies relating to family death benefits, if any, in
accordance with the most favorable plans, programs, practices and policies of
the Company and its subsidiaries in effect at any time during the 180-day period
immediately preceding the Effective Date or, if more favorable to the Officer
and/or the Officer's family, as in effect on the date of the Officer's death
with respect to other similar key Officers of the Company and its subsidiaries
and their families.

      (b) Disability. If during the Employment Period the Officer's employment
is terminated by reason of the Officer's Disability, this Agreement shall
terminate without further obligations to the Officer, other than those
obligations accrued or earned and vested (if applicable) by the Officer as of
the Date of Termination, including for this purpose, all Accrued Obligations.
All such Accrued Obligations shall be paid to the Officer in a lump sum in cash
within 30 days of the Date of Termination. Anything in this Agreement to the
contrary notwithstanding, the Officer shall be entitled after the Disability
Effective Date to receive disability and other benefits at least equal to the
most favorable of those provided by the Company and its subsidiaries to similar
disabled employees and/or their families in accordance with such plans,
programs, practices and policies relating to disability, if any, in accordance
with the most favorable plans, programs, practices and policies of the Company
and its subsidiaries in effect at any time during the 180-day period immediately
preceding the Effective Date or, if more favorable to the Officer and/or the
Officer's family, as in effect at any time thereafter with respect to other
similar key Officers and their families.

      (c) Cause: Other than for Good Reason. If during the Employment Period,
the Officer terminates his employment other than for Good Reason, or the
Officer's employment is terminated by the Company for Cause, this Agreement
shall terminate without further obligation to the Officer, other than those
obligations accrued or earned and vested (if applicable) by the Officer through
the Date of Termination, including for this purpose, all Accrued Obligations.
All amounts required to be paid to the Officer pursuant to this Section 6(c)
shall be paid to the Officer in a lump sum in cash within 30 days of the Date of
Termination.

      (d) Good Reason: Other Than for Cause or Disability. If, during the
Employment Period, the Company shall terminate the Officer's employment other
than for Cause, Disability or death, or if the Officer shall terminate his
employment for Good Reason, then:

            (i) the Company shall pay to the Officer in a lump sum in cash
within 30 days after the Date of Termination the aggregate of the following
amounts:

                  1 to the extent not theretofore paid, the Officer's Highest
Base Salary through the Date of Termination; and

                                       8
<PAGE>
                  2 the product of (x) the Annual Bonus paid to the Officer for
the last full fiscal year (if any) ending during the Employment Period or, if
higher, the Annual Bonus paid to the Officer for the last full fiscal year prior
to the Effective Date (as applicable, the "Recent 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; and

                  3 the product of (x) _____ (_), and (y) the sum of (i) the
Highest Base Salary and (ii) the Recent Bonus; and

                  4 in the case of compensation previously deferred by the
Officer, all amounts previously deferred (together with any accrued interest
thereon) and not yet paid by the Company, and any accrued vacation pay not yet
paid by the Company; and

                  5 all other amounts accrued or earned by the Officer through
the Date of Termination and amounts otherwise owing under the then existing
plans and policies at the Company; and

            (ii) for the remainder of the Employment Period, or such longer
period as any plan, program, practice or policy may provide, the Company shall
continue benefits to the Officer and/or the Officer's family at least equal to
those which would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 4(b)(iv) of this Agreement
if the Officer's employment had not been terminated, including health, dental,
disability insurance and life insurance, in accordance with the most favorable
plans, practices, programs or policies of the Company and its subsidiaries
during the 180-day period immediately preceding the Effective Date or, if more
favorable to the Officer, as in effect at any time thereafter with respect to
similar Officers and their families and, for purposes of eligibility for retiree
benefits pursuant to such plans, practices, programs and policies, the Officer
shall be considered to have remained employed until the end of the Employment
Period and to have retired on the last day of such period.

      (e) Termination Before or After Employment Period. If the Officer's
employment with the Company terminates or is terminated either before or after
the Employment Period, then the provisions of paragraphs (a) through (d) of this
Agreement shall not apply, and the rights and obligations of the Officer and the
Company relating to such termination of employment shall be determined without
regard thereto.

      (f) Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Officer's continuing or future participation in any benefit, bonus,
incentive or other plans, programs, policies or practices provided by the
Company or any of its subsidiaries and for which the Officer may qualify, nor
shall anything herein limit or otherwise affect such rights as the Officer may
have under any stock option or other agreements with the Company or any of its
subsidiaries. Amounts which are vested benefits or which the Officer is
otherwise entitled to receive under any plan, policy, practice or program of the
Company or any of its subsidiaries at

                                       9
<PAGE>
or subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program.

      (g) No Set-off or Mitigation; Payment of Legal Fees and Expenses. The
Company's obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action which
the Company may have against the Officer or others. In no event shall the
Officer be obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Officer under any of the provisions of
this Agreement. The Company agrees to pay, to the full extent permitted by law,
all legal fees and expenses which the Officer may reasonably incur as a result
of any contest (regardless of the outcome thereof) by the Company (including its
successors, assigns or affiliates) or others of the validity or enforceability
of, or liability under, any provision of this Agreement or any guarantee of
performance thereof (including as a result of any contest by the Officer about
the amount of any payment pursuant to Section 7 of this Agreement), plus in each
case interest at the applicable Federal rate provided for in Section 7872(f)(2)
of the Code.

7. Certain Additional Payments by the Company.

      (a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment, distribution or other action by
the Company to or for the benefit of the Officer (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, (including any additional payments required under this Section 7) (a
"Payment") would be subject to an excise tax imposed by Section 4999 (or its
successor or other provision which imposes a similar excise tax) of the Internal
Revenue Code of 1986, as amended (the "Code"), any excise tax that may be
imposed by a state and/or local law, or any interest or penalties incurred by
the Officer with respect to any such excise taxes (such excise taxes, together
with any such interest and penalties, are hereinafter collectively referred to
as the "Excise Tax"), the Company shall make a payment to the Officer (a
"Gross-Up Payment") in an amount such that after payment by the Officer of all
taxes (including any Excise Tax) imposed upon the Gross-Up Payment, the Officer
retains (or has had paid to the Internal Revenue Service on his behalf) an
amount of the Gross-Up Payment equal to the sum of (x) the Excise Tax imposed
upon the Payments and (y) the product of any deductions disallowed because of
the inclusion of the Gross-Up Payment in the Officer's adjusted gross income and
the highest applicable marginal rate of federal income taxation for the calendar
year in which the Gross-Up Payment is to be made. For purposes of determining
the amount of the Gross-Up Payment, the Officer shall be deemed to (i) pay
federal income taxes at the highest marginal rates of federal income taxation
for the calendar year in which the Gross-Up Payment is to be made, and (ii) pay
applicable state and local income taxes at the highest marginal rate of taxation
for the calendar year in which the Gross-Up Payment is to be made, net of the
maximum reduction in federal income taxes which could be obtained from deduction
of such state and local taxes.

      (b) Subject to the provisions of paragraph (c) of this Section 7, all
determinations required to be made under this Section 7, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in

                                       10
<PAGE>
arriving at such determination, shall be made by Price Waterhouse Coopers LLP
(the "Accounting Firm") which shall provide detailed supporting calculations
both to the Company and the Officer within 15 business days of the receipt of
notice from the Officer that there has been a Payment, or such earlier time as
is requested by the Company. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting the Change
of Control, the Officer shall appoint another nationally recognized accounting
firm to make the determinations required hereunder (which accounting firm shall
then be referred to as the Accounting Firm hereunder). All fees and expenses of
the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment,
as determined pursuant to this Section 7, shall be paid by the Company to the
Officer within five days of the receipt of the Accounting Firm's determination.
If the Accounting Firm determines that no Excise Tax is payable by the Officer,
it shall furnish the Officer with a written opinion that failure to report the
Excise Tax on the Officer's applicable federal income tax return would not
result in the imposition of a negligence or similar penalty. Any determination
by the Accounting Firm shall be binding upon the Company and the Officer. As a
result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its
remedies pursuant to Section 7 and the Officer thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid
by the Company to or for the benefit of the Officer.

      (c) The Officer shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Officer is informed in
writing of such claim and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid. The Officer shall not
pay such claim prior to the expiration of the 30-day period following the date
on which it gives such notice to the Company (or such shorter period ending on
the date that any payment of taxes with respect to such claim is due). If the
Company notifies the Officer in writing prior to the expiration of such period
that it desires to contest such claim, the Officer shall:

            (i) give the Company any information reasonably requested by the
Company relating to such claim,

            (ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,

            (iii) cooperate with the Company in good faith in order effectively
to contest such claim, and

                                       11
<PAGE>
            (iv) permit the Company to participate in any proceedings relating
to such claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Officer harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 7(c), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Officer to pay the tax claimed and sue for a refund or contest the claim in
any permissible manner, and the Officer agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Officer to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Officer, on an interest-free basis, and shall indemnify and hold
the Officer harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Officer with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Officer shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.

      (d) If, after the receipt by the Officer of an amount advanced by the
Company pursuant to Section 7(c), the Officer becomes entitled to receive any
refund with respect to such claim, the Officer shall (subject to the Company's
complying with the requirements of Section 7(c)) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the Officer of an amount
advanced by the Company pursuant to Section 7(e), a determination is made that
the Officer shall not be entitled to any refund with respect to such claim and
the Company does not notify the Officer in writing of its intent to contest such
denial of refund prior to the expiration of 30 days after such determination,
then such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.

8. Confidential Information

      The Officer shall hold in a fiduciary capacity for the benefit of the
Company all secret or confidential information, knowledge or data relating to
the Company or any of its subsidiaries, and their respective businesses, which
shall have been obtained by the Officer

                                       12
<PAGE>
during the Officer's employment by the Company or any of its subsidiaries and
which shall not be or become public knowledge (other than by acts by the Officer
or his representatives in violation of this Agreement). After termination of the
Officer's employment with the Company, the Officer shall not, without the prior
written consent of the Company, communicate or divulge any such information,
knowledge or data to anyone other than the Company and those designated by it.
In no event shall an asserted violation of the provisions of this Section 8
constitute a basis for deferring or withholding any amounts otherwise payable to
the Officer under this Agreement.

9. Successors

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

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

      (c) The Company 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 the Company to assume expressly and; agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company 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.

10. Miscellaneous

      (a) This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware, 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, addressed as follows:

If to the Officer:

[name of officer]
RailAmerica, Inc.
5300 Broken Sound Boulevard, NW
2nd Floor
Boca Raton, Florida 33487

                                       13
<PAGE>
If to the Company:

RailAmerica, Inc.
5300 Broken Sound Boulevard, NW
2nd Floor
Boca Raton, Florida 33487
Att: President

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

      (d) The Company 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.

      (e) The Officer's failure to insist upon strict compliance with any
provision hereof shall not be deemed to be a waiver of such provision or any
other provision thereof.

      (f) This Agreement contains the entire understanding of the Company and
the Officer with respect to the subject matter hereof.

      (g) The Officer and the Company acknowledge that, except as set forth in
any written employment agreement between the Officer and the Company and
effective from and after the date hereof, the employment of the Officer by the
Company is "at will," and, prior to the Effective Date, may be terminated by
either the Officer or the Company at any time. Upon a termination of the
Officer's employment prior to the Effective Date, there shall be no further
rights of the Officer under this Agreement.

                                       14
<PAGE>
IN WITNESS WHEREOF, the Officer has hereunto set his hand and, pursuant to the
authorization from its Board of Directors, the Company has caused this agreement
to be executed in its name on its behalf, all as of the day and year first above
written.

                                      ________________________________________
                                      [name of officer]

                                      RAILAMERICA, INC., a Delaware corporation,

                                      By: ____________________________________

<TABLE>
<CAPTION>
Executive:                 Section 6(d)(i)(iii)
----------                 --------------------
<S>                        <C>
Gary O. Marino                     three
Donald D. Redfearn                 three
Bennett Marks                      two
Gary M. Spiegel                    two
</TABLE>

                                       15

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