Document:

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                                                                   EXHIBIT 4.2

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                       NOTES REGISTRATION RIGHTS AGREEMENT

                           Dated as of August 14, 2000

                                  by and among

                        RAILAMERICA TRANSPORTATION CORP.

                           THE GUARANTORS NAMED HEREIN

                                       and

                          DONALDSON, LUFKIN & JENRETTE
                             SECURITIES CORPORATION

                                       and

                                BARCLAYS BANK PLC

                                       and

                            SCOTIA CAPITAL (USA) INC.

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                  This Notes Registration Rights Agreement (this "AGREEMENT") is
made and entered into as of August 14, 2000, by and among RailAmerica
Transportation Corp., a Delaware corporation (the "COMPANY"), the Guarantors set
forth on the signature page hereof (the "GUARANTORS"), and Donaldson, Lufkin and
Jenrette Securities Corporation, Barclays Bank PLC and Scotia Capital (USA) Inc.
(the "INITIAL PURCHASERS"). The Initial Purchasers have agreed to purchase the
Company's 12 7/8% Senior Subordinated Notes due 2010 (the "SERIES A NOTES")
pursuant to the Purchase Agreement (as defined below).

                  This Agreement is made pursuant to the Purchase Agreement,
dated as of August 9, 2000 (the "PURCHASE AGREEMENT"), by and among the Company,
the Guarantors and the Initial Purchasers. In order to induce the Initial
Purchasers to purchase the Series A Notes, the Company has agreed to provide the
registration rights set forth in this Agreement. The execution and delivery of
this Agreement is a condition to the obligations of the Initial Purchasers set
forth in Section 2 of the Purchase Agreement. Capitalized terms used herein and
not otherwise defined shall have the meaning assigned to them in the Indenture,
dated the date hereof, between the Company and Wells Fargo Bank Minnesota, N.A.
as Trustee, relating to the Series A Notes and the Series B Notes (the
"INDENTURE").

                  The parties hereby agree as follows:

SECTION 1. DEFINITIONS

                  As used in this Agreement, the following capitalized terms
shall have the following meanings:

                  ACT:  The Securities Act of 1933, as amended.

                  ADVICE:  As defined in Section 6(d) hereof.

                  AFFILIATE:  As defined in Rule 144 of the Act.

                  BOARD OF DIRECTORS: The Board of Directors of the Company, or
any authorized committee of the Board of Directors of the Company.

                  BROKER-DEALER: Any broker or dealer registered under the
Exchange Act.

                  BROKER-DEALER TRANSFER RESTRICTED SECURITIES: Series B Notes
that are acquired by a Broker-Dealer in the Exchange Offer in exchange for
Series A Notes that such Broker-Dealer acquired for its own account as a result
of market making activities or other trading activities (other than Series A
Notes acquired directly from the Company or any of its Affiliates).

                  BUSINESS DAY: Any day except a Saturday, Sunday or other day
in the City of New York, or in the city of the corporate trust office of the
Trustee, on which banks are authorized to close.

                  CERTIFICATED SECURITIES: Definitive Notes, as defined in the
Indenture.

                  CLOSING DATE:  The date hereof.

                  COMMISSION:  The Securities and Exchange Commission.

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                  CONSUMMATE: An Exchange Offer shall be deemed "Consummated"
for purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Series B Notes to be issued in the Exchange Offer, (b) the
maintenance of such Exchange Offer Registration Statement continuously effective
and the keeping of the Exchange Offer open for a period not less than the
minimum period required pursuant to Section 3(b) hereof and (c) the delivery by
the Company to the Registrar of Series B Notes in the same aggregate principal
amount as the aggregate principal amount of Series A Notes tendered by Holders
thereof pursuant to the Exchange Offer.

                  CONSUMMATION DEADLINE:  As defined in Section 3(b) hereof.

                  DAMAGES PAYMENT DATE: With respect to the Series A Notes, each
Interest Payment Date.

                  EFFECTIVENESS DEADLINE: As defined in Sections 3(a) and 4(a)
hereof.

                  EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.

                  EXCHANGE OFFER: The exchange and issuance by the Company of a
principal amount of Series B Notes (which shall be registered pursuant to the
Exchange Offer Registration Statement) equal to the outstanding principal amount
of Series A Notes that are tendered by Holders in connection with such exchange
and issuance.

                  EXCHANGE OFFER REGISTRATION STATEMENT: The Registration
Statement relating to the Exchange Offer.

                  EXEMPT RESALES: The transactions in which the Initial
Purchasers propose to sell the Series A Notes (i) to certain "qualified
institutional buyers," as such term is defined in Rule 144A under the Act, and
(ii) to persons permitted to purchase the Series A Notes in offshore
transactions in reliance on Regulation S under the Act.

                  FILING DEADLINE: As defined in Sections 3(a) and 4(a) hereof.

                  GLOBAL SECURITIES: As defined in the Indenture.

                  HOLDERS: As defined in Section 2 hereof.

                  INDEMNIFIED HOLDER: As defined in Section 8(a) hereof.

                  INDENTURE: The Indenture, dated the Closing Date, among the
Company, the Guarantors and Wells Fargo Bank Minnesota, N.A., as trustee (the
"TRUSTEE"), pursuant to which the Notes are to be issued, as such Indenture is
amended or supplemented from time to time in accordance with the terms thereof.

                  INTEREST PAYMENT DATE: As defined in the Indenture and the
Notes.

                  LIQUIDATED DAMAGES: As defined in Section 5 hereof.

                  NASD: National Association of Securities Dealers, Inc.

                  NOTES: The Series A Notes and the Series B Notes.

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                  PERSON: An individual, partnership, corporation, trust,
unincorporated organization, or a government or agency or political subdivision
thereof.

                  PROSPECTUS: The prospectus included in a Registration
Statement at the time such Registration Statement is declared effective, as
amended or supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all material incorporated by
reference into such Prospectus.

                  RECORD HOLDER: With respect to any Damages Payment Date, each
Person who is a Holder of Notes on the record date with respect to the Interest
Payment Date on which such Damages Payment Date shall occur.

                  REGISTRAR: As defined in the Indenture.

                  REGISTRATION DEFAULT: As defined in Section 5 hereof.

                  REGISTRATION STATEMENT: Any registration statement of the
Company and the Guarantors relating to (a) an offering of Series B Notes
pursuant to an Exchange Offer or (b) the registration for resale of Transfer
Restricted Securities pursuant to the Shelf Registration Statement, in each
case, (i) that is filed pursuant to the provisions of this Agreement and (ii)
including the Prospectus included therein, all amendments and supplements
thereto (including post-effective amendments) and all exhibits and material
incorporated by reference therein.

                  REGULATION S: Regulation S promulgated under the Act.

                  RESTRICTED BROKER-DEALER: Any Broker-Dealer that holds
Broker-Dealer Transfer Restricted Securities.

                  RULE 144: Rule 144 promulgated under the Act.

                  SERIES B NOTES: The Company's 12 7/8% Senior Subordinated
Notes due 2010 to be issued pursuant to the Indenture (i) in the Exchange Offer
or (ii) as contemplated by Section 4 hereof.

                  SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof.

                  SUSPENSION NOTICE: As defined in Section 6(d) hereof.

                  TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section
77aaa-77bbbb) as in effect on the date of the Indenture.

                  TRANSFER RESTRICTED SECURITIES: Each Note, until the earliest
to occur of (a) the date on which such Note is exchanged in the Exchange Offer
and entitled to be resold to the public by the Holder thereof without complying
with the prospectus delivery requirements of the Act, (b) the date on which such
Note has been disposed of in accordance with a Shelf Registration Statement, (c)
the date on which such Note is disposed of by a Broker-Dealer pursuant to the
"Plan of Distribution" contemplated by the Exchange Offer Registration Statement
(including delivery of the Prospectus contained therein) and (d) the date on
which such Note is distributed to the public pursuant to Rule 144 under the Act.

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                  UNDERWRITTEN REGISTRATION or UNDERWRITTEN OFFERING: A
registration in which securities of the Company are sold to an underwriter for
reoffering to the public.

SECTION 2. HOLDERS

                  A Person is deemed to be a holder of Transfer Restricted
Securities (each, a "HOLDER") whenever such Person owns Transfer Restricted
Securities.

SECTION 3. REGISTERED EXCHANGE OFFER

                  (a) Unless the Exchange Offer shall not be permitted by
applicable federal law or applicable interpretation of the staff of the
Commission (after the procedures set forth in Section 6(a)(i) below have been
complied with), the Company and the Guarantors shall (i) cause to be filed with
the Commission as soon as practicable after the Closing Date, but in no event
later than 90 days after the Closing Date (such 90th day being a "FILING
DEADLINE"), the Exchange Offer Registration Statement, (ii) use their best
efforts to cause such Exchange Offer Registration Statement to become effective
at the earliest practicable time, but in no event later than 180 days after the
Closing Date (such 180th day being the "EFFECTIVENESS DEADLINE"), (iii) in
connection with the foregoing, (A) file all pre-effective amendments to such
Exchange Offer Registration Statement as may be necessary in order to cause such
Exchange Offer Registration Statement to become effective, (B) file, if
applicable, a post-effective amendment to such Exchange Offer Registration
Statement pursuant to Rule 430A under the Act and (C) cause all necessary
filings, if any, in connection with the registration and qualification of the
Series B Notes to be made under the state Blue Sky or securities laws of such
jurisdictions as are necessary to permit Consummation of the Exchange Offer,
PROVIDED, HOWEVER, that the Company shall not be required in connection
therewith to register or qualify as a foreign corporation in any jurisdiction
where such registration would result in any adverse effect to the Company, and
(iv) upon the effectiveness of such Exchange Offer Registration Statement,
commence and use their best efforts to Consummate the Exchange Offer. The
Exchange Offer shall be on the appropriate form permitting registration of the
Series B Notes to be offered in exchange for the Series A Notes that are
Transfer Restricted Securities and to permit sales of Broker-Dealer Transfer
Restricted Securities by Restricted Broker-Dealers as contemplated by Section
3(c) below.

                  (b) The Company and the Guarantors shall use their respective
best efforts to cause the Exchange Offer Registration Statement to be effective
continuously, and shall keep the Exchange Offer open for a period of not less
than the minimum period required under applicable federal and state securities
laws to Consummate the Exchange Offer; PROVIDED, HOWEVER, that in no event shall
such period be less than 20 Business Days. The Company and the Guarantors shall
cause the Exchange Offer to comply with all applicable federal and state
securities laws. No securities other than the Series B Notes (and the subsidiary
guarantees thereof) shall be included in the Exchange Offer Registration
Statement. The Company and the Guarantors shall use their respective best
efforts to cause the Exchange Offer to be Consummated on the earliest
practicable date after the Exchange Offer Registration Statement has become
effective, but in no event later than 30 Business Days thereafter (such 30th day
being the "CONSUMMATION DEADLINE").

                  (c) The Company shall include a "Plan of Distribution" section
in the Prospectus contained in the Exchange Offer Registration Statement and
indicate therein that any Restricted Broker-Dealer who holds Series A Notes that
are Transfer Restricted Securities and that were acquired for the account of
such Broker-Dealer as a result of market-making activities or other trading
activities, may

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exchange such Series A Notes (other than Transfer Restricted Securities acquired
directly from the Company or any Affiliate of the Company) pursuant to the
Exchange Offer; however, such Broker-Dealer may be deemed to be an "underwriter"
within the meaning of the Act and must, therefore, deliver a prospectus meeting
the requirements of the Act in connection with its initial sale of each Series B
Note received by such Broker-Dealer in the Exchange Offer, which prospectus
delivery requirement may be satisfied by the delivery by such Broker-Dealer of
the Prospectus contained in the Exchange Offer Registration Statement. Such
"Plan of Distribution" section shall also contain all other information with
respect to such sales of Broker-Dealer Transfer Restricted Securities by
Restricted Broker-Dealers that the Commission may require in order to permit
such sales pursuant thereto, but such "Plan of Distribution" shall not name any
such Broker-Dealer or disclose the amount of Notes held by any such
Broker-Dealer, except to the extent required by the Commission as a result of a
change in policy, rules or regulations after the date of this Agreement.

                  To the extent necessary to ensure that the prospectus
contained in the Exchange Offer Registration Statement is available for sales of
Series B Notes by Broker-Dealers, the Company and the Guarantors shall use their
respective best efforts to keep the Exchange Offer Registration Statement
continuously effective, supplemented and amended as required by and subject to
the provisions of Sections 6(a) and 6(c) hereof and in conformity with the
requirements of this Agreement, the Act and the policies, rules and regulations
of the Commission as announced from time to time, for a period of 180 days from
the Consummation Deadline or such shorter period as will terminate when all
Transfer Restricted Securities covered by such Registration Statement have been
sold pursuant thereto.

                  The Company and the Guarantors shall promptly provide
sufficient copies of the latest version of such Prospectus to such
Broker-Dealers promptly upon request at any time in order to facilitate such
sales.

SECTION 4. SHELF REGISTRATION

                  (a) SHELF REGISTRATION. If (i) the Company and the Guarantors
are not required to file an Exchange Offer Registration Statement with respect
to the Series B Notes or not permitted to Consummate the Exchange Offer because
the Exchange Offer is not permitted by applicable law or the applicable
interpretations of the staff of the Commission (after the procedures set forth
in Section 6(a)(i) below have been complied with) or (ii) if any Holder of
Transfer Restricted Securities shall notify the Company within 20 Business Days
following the Consummation of the Exchange Offer that (A) such Holder was
prohibited by law or Commission policy from participating in the Exchange Offer
or (B) such Holder may not resell the Series B Notes acquired by it in the
Exchange Offer to the public without delivering a prospectus and the Prospectus
contained in the Exchange Offer Registration Statement is not appropriate or
available for such resales by such Holder or (C) such Holder is a Broker-Dealer
and holds Series A Notes acquired directly from the Company or any of its
Affiliates, then the Company and the Guarantors shall: (x) cause to be filed on
or prior to 30 days after the earlier of (i) the date on which the Company
determines that it is not required to file the Exchange Offer Registration
Statement or not permitted to Consummate the Exchange Offer pursuant to clause
(a)(i) above and (ii) the date on which the Company receives the notice
specified in clause (a)(ii) above (such 30th day after such earlier date, a
"FILING DEADLINE"), a shelf registration statement pursuant to Rule 415 under
the Act (which may be an amendment to the Exchange Offer Registration Statement
(in either event, the "SHELF REGISTRATION STATEMENT")), relating to all Transfer
Restricted Securities and (y) shall use their respective best efforts to cause
such Shelf Registration Statement to become effective on or prior to 90 days
after the Filing Deadline for the Shelf Registration Statement (such 90th day
the "EFFECTIVENESS DEADLINE"). If, after the Company has filed an Exchange

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Offer Registration Statement that satisfies the requirements of Section 3(a)
above, the Company is required to file and make effective a Shelf Registration
Statement solely because the Exchange Offer shall not be permitted under
applicable federal law, then the filing of the Exchange Offer Registration
Statement shall be deemed to satisfy the requirements of clause (x) above. Such
an event shall have no effect on the requirements of clause (y) above. The
Company and the Guarantors shall use their respective best efforts to keep the
Shelf Registration Statement discussed in this Section 4(a) continuously
effective, supplemented and amended as required by and subject to the provisions
of Sections 6(b) and (c) hereof to the extent necessary to ensure that it is
available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a) and to ensure that it conforms with
the requirements of this Agreement, the Act and the policies, rules and
regulations of the Commission as announced from time to time for a period of at
least two years (as extended pursuant to Section 6(d)) following the Closing
Date, or such shorter period as will terminate when all Transfer Restricted
Securities covered by such Shelf Registration Statement have been sold pursuant
thereto.

                  (b) PROVISION BY HOLDERS OF CERTAIN INFORMATION IN CONNECTION
WITH THE SHELF REGISTRATION STATEMENT. No Holder of Transfer Restricted
Securities may include any of its Transfer Restricted Securities in any Shelf
Registration Statement pursuant to this Agreement unless and until such Holder
furnishes to the Company in writing, within 20 days after receipt of a request
therefor, such information specified in item 507 or 508 of Regulation S-K, as
applicable, or such other information as the Company may reasonably request
under the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein or in any application to
the NASD. No Holder of Transfer Restricted Securities shall be entitled to
Liquidated Damages pursuant to Section 5 hereof unless and until such Holder
shall have provided all such information. Each selling Holder as to which any
Shelf Registration Statement is being effected agrees to furnish promptly
additional information required to be disclosed in order to make the information
previously furnished to the Company by such Holder not materially misleading.

SECTION 5. LIQUIDATED DAMAGES

                  If (i) any Registration Statement required by this Agreement
is not filed with the Commission on or prior to the applicable Filing Deadline,
(ii) any such Registration Statement has not been declared effective by the
Commission on or prior to the applicable Effectiveness Deadline, (iii) the
Exchange Offer has not been Consummated on or before the 30th day after the
Exchange Offer Registration Statement is first declared effective by the
Commission or (iv) any Registration Statement required by this Agreement is
filed and declared effective but shall thereafter during the period such
Registration Statement is required to be maintained effective pursuant hereto
cease to be effective or fail to be usable for its intended purpose without
being succeeded promptly by a post-effective amendment to such Registration
Statement that cures such failure and that is itself declared effective
immediately (each such event referred to in clauses (i) through (iv), a
"REGISTRATION DEFAULT"), then the Company and the Guarantors hereby jointly and
severally agree to pay liquidated damages (the "LIQUIDATED DAMAGES") to each
Holder of Transfer Restricted Securities with respect to the first 90-day period
immediately following the occurrence of such Registration Default, in an amount
equal to $.05 per week per $1,000 in principal amount of Transfer Restricted

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Securities held by such Holder for each week or portion thereof that a
Registration Default continues (whether or not more than one Registration
Default shall exist at such time). The amount of the Liquidated Damages shall
increase by an additional $.05 per week (whether or not more than one
Registration Default shall exist at such time ) per $1,000 in principal amount
of Transfer Restricted Securities with respect to each subsequent 90-day period
until all Registration Defaults have been cured, up to a maximum amount of
Liquidated Damages of $.50 per week per $1,000 in principal amount of Transfer
Restricted Securities. Notwithstanding anything to the contrary set forth
herein, (1) upon filing of the Exchange Offer Registration Statement (and/or, if
applicable, the Shelf Registration Statement), in the case of (i) above, (2)
upon the effectiveness of the Exchange Offer Registration Statement (and/or, if
applicable, the Shelf Registration Statement), in the case of (ii) above, (3)
upon Consummation of the Exchange Offer, in the case of (iii) above, or (4) upon
the filing of a post-effective amendment to the Registration Statement or an
additional Registration Statement that causes the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement) to again be
declared effective or made usable in the case of (iv) above, the Liquidated
Damages payable with respect to the Transfer Restricted Securities as a result
of such clause (i), (ii), (iii) or (iv), as applicable, shall cease to accrue.

                  All accrued Liquidated Damages shall be paid to Holders of
Transfer Restricted Securities that are in the form of Global Securities by wire
transfer of immediately available funds or by federal funds check and to Holders
of Transfer Restricted Securities that are in the form of Certificated
Securities by wire transfer to the account specified by them or by mailing
checks to their registered addresses on each Damages Payment Date. All
obligations of the Company and the Guarantors set forth in the preceding
paragraph that are outstanding with respect to any Transfer Restricted Security
at the time such security ceases to be a Transfer Restricted Security shall
survive until such time as all such obligations with respect to such security
shall have been satisfied in full.

SECTION 6. REGISTRATION PROCEDURES

                  (a) EXCHANGE OFFER REGISTRATION STATEMENT. In connection with
the Exchange Offer, the Company and the Guarantors shall (x) comply with all
applicable provisions of Section 6(c) below, (y) use their respective best
efforts to effect such exchange and to permit the resale of Series B Notes by
Broker-Dealers that tendered in the Exchange Offer Series A Notes that such
Broker-Dealer acquired for its own account as a result of its market making
activities or other trading activities (other than Series A Notes acquired
directly from the Company or any of its Affiliates) being sold in accordance
with the intended method or methods of distribution thereof, and (z) comply with
all of the following provisions:

                           (i) If, following the date hereof there has been
         announced a change in Commission policy with respect to exchange offers
         such as the Exchange Offer, such that in the reasonable opinion of
         counsel to the Company there is a substantial question as to whether
         the Exchange Offer is permitted by applicable federal law, the Company
         and the Guarantors hereby agree to seek a no-action letter or other
         favorable decision from the Commission allowing the Company and the
         Guarantors to Consummate an Exchange Offer for such Transfer Restricted
         Securities. The Company and the Guarantors hereby agree to pursue the
         issuance of such a decision to the Commission staff level. In
         connection with the foregoing, the Company and the Guarantors hereby
         agree to take all such other actions as are requested by the Commission
         or otherwise reasonably required in connection with the issuance of
         such decision, including without limitation (A) participating in
         telephonic conferences with the Commission, (B) delivering to the
         Commission staff an analysis prepared by counsel to the Company setting
         forth the legal bases, if any, upon which such counsel has concluded
         that such an Exchange Offer should be permitted and (C) diligently
         pursuing a resolution (which need not be favorable) by the Commission
         staff of such submission.

                           (ii) As a condition to its participation in the
         Exchange Offer pursuant to the terms of this Agreement, each Holder of
         Transfer Restricted Securities (including, without

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         limitation, any Holder who is a Broker-Dealer) shall furnish, upon the
         request of the Company, prior to the Consummation of the Exchange
         Offer, a written representation to the Company and the Guarantors
         (which may be contained in the letter of transmittal contemplated by
         the Exchange Offer Registration Statement) to the effect that (A) it is
         not an Affiliate of the Company, (B) it is not engaged in, and does not
         intend to engage in, and has no arrangement or understanding with any
         Person to participate in, a distribution of the Series B Notes to be
         issued in the Exchange Offer and (C) it is acquiring the Series B Notes
         in its ordinary course of business. As a condition to its participation
         in the Exchange Offer each Holder shall acknowledge and agree that any
         Broker-Dealer and any such Holder using the Exchange Offer to
         participate in a distribution of the Series B Notes shall acknowledge
         and agree that, if the resales are of Series B Notes obtained by such
         Holder in exchange for Series A Notes acquired directly by such Holder
         directly from the Company or an Affiliate thereof, it (1) could not
         under Commission policy as in effect on the date of this Agreement rely
         on the position of the Commission enunciated in MORGAN STANLEY AND CO.,
         INC. (available June 5, 1991) and EXXON CAPITAL HOLDINGS CORPORATION
         (available May 13, 1988), as interpreted in the Commission's letter to
         SHEARMAN & STERLING dated July 2, 1993, and similar no-action letters
         (including, if applicable, any no-action letter obtained pursuant to
         clause (i) above), and (2) must comply with the registration and
         prospectus delivery requirements of the Act in connection with a
         secondary resale transaction and that such a secondary resale
         transaction must be covered by an effective registration statement
         containing the selling security holder information required by Item 507
         or 508, as applicable, of Regulation S-K.

                           (iii) To the extent required by the Commission, prior
         to effectiveness of the Exchange Offer Registration Statement, the
         Company and the Guarantors shall provide a supplemental letter to the
         Commission (A) stating that the Company and the Guarantors are
         registering the Exchange Offer in reliance on the position of the
         Commission enunciated in EXXON CAPITAL HOLDINGS CORPORATION (available
         May 13, 1988), MORGAN STANLEY AND CO., INC. (available June 5, 1991),
         as interpreted in the Commission's letter to SHEARMAN & STERLING dated
         July 2, 1993, and, if applicable, any no-action letter obtained
         pursuant to clause (i) above, (B) including a representation that
         neither the Company nor the Guarantors has entered into any arrangement
         or understanding with any Person to distribute the Series B Notes to be
         received in the Exchange Offer and that, to the best of the Company's
         and the Guarantors' information and belief, each Holder participating
         in the Exchange Offer is acquiring the Series B Notes in its ordinary
         course of business and has no arrangement or understanding with any
         Person to participate in the distribution of the Series B Notes
         received in the Exchange Offer and (C) any other undertaking or
         representation required by the Commission as set forth in any no-action
         letter obtained pursuant to clause (i) above, if applicable.

                  (b) SHELF REGISTRATION STATEMENT. In connection with the Shelf
Registration Statement, the Company and the Guarantors shall

                           (i) comply with all the provisions of Section 6(c)
         below and shall use their respective best efforts to effect such
         registration to permit the sale of the Transfer Restricted Securities
         being sold in accordance with the intended method or methods of
         distribution thereof (as indicated in the information furnished to the
         Company pursuant to Section 4(b) hereof), and pursuant thereto the
         Company and the Guarantors will prepare and file with the Commission a
         Registration Statement relating to the registration on any appropriate
         form under the Act, which form shall be available for the sale of the
         Transfer Restricted Securities

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         in accordance with the intended method or methods of distribution
         thereof within the time periods and otherwise in accordance with the
         provisions hereof.

                           (ii) issue, upon the request of any Holder or
         purchaser of Series A Notes covered by any Shelf Registration Statement
         contemplated by this Agreement, Series B Notes having an aggregate
         principal amount equal to the aggregate principal amount of Series A
         Notes sold pursuant to the Shelf Registration Statement and surrendered
         to the Company for cancellation; the Company shall register Series B
         Notes on the shelf Registration for this purpose and issue the Series B
         Notes to the purchaser(s) of securities subject to the Shelf
         Registration Statement in the names as such purchaser(s) shall
         designate.

                  (c) GENERAL PROVISIONS. In connection with any Registration
Statement required by this Agreement to permit the sale or resale of Transfer
Restricted Securities (including, without limitation, any Exchange Offer
Registration Statement, to the extent that the same are required to be available
to permit sales of Broker-Dealer Transfer Restricted Securities by Restricted
Broker-Dealers), the Company and the Guarantors shall:

                           (i) use their respective best efforts to keep such
         Registration Statement continuously effective and provide all requisite
         financial statements for the period specified in Section 3 or 4 of this
         Agreement, as applicable. Upon the occurrence of any event that would
         cause any such Registration Statement (including the Prospectus
         contained therein) (A) to contain an untrue statement of material fact
         or omit to state any material fact necessary to make the statements
         therein not misleading or (B) not to be effective and usable for resale
         of Transfer Restricted Securities during the period required by this
         Agreement, the Company and the Guarantors shall file promptly an
         appropriate amendment to such Registration Statement, (1) in the case
         of clause (A), correcting any such misstatement or omission, and (2) in
         the case of clauses (A) and (B), use their respective best efforts to
         cause such amendment to be declared effective and such Registration
         Statement and the related Prospectus to become usable for their
         intended purpose(s) as soon as practicable thereafter;

                           (ii) prepare and file with the Commission such
         amendments and post-effective amendments to the Registration Statement
         as may be necessary to keep the Registration Statement effective for
         the applicable period set forth in Section 3 or 4 hereof, or such
         shorter period as will terminate when all Transfer Restricted
         Securities covered by such Registration Statement have been sold; cause
         the Prospectus to be supplemented by any required Prospectus
         supplement, and as so supplemented to be filed pursuant to Rule 424
         under the Act, and to comply fully with Rules 424, 430A and 462, as
         applicable, under the Act in a timely manner; and comply with the
         provisions of the Act with respect to the disposition of all securities
         covered by such Registration Statement during the applicable period in
         accordance with the intended method or methods of distribution by the
         sellers thereof set forth in such Registration Statement or supplement
         to the Prospectus;

                           (iii) advise each Holder promptly and, if requested
         by such Holder, confirm such advice in writing, (A) when the Prospectus
         or any Prospectus supplement or post-effective amendment has been
         filed, and, with respect to any applicable Registration Statement or
         any post-effective amendment thereto, when the same has become
         effective, (B) of any request by the Commission for amendments to the
         Registration Statement or amendments or supplements to the Prospectus
         or for additional information relating thereto, (C) of

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         the issuance by the Commission of any stop order suspending the
         effectiveness of the Registration Statement under the Act or of the
         suspension by any state securities commission of the qualification of
         the Transfer Restricted Securities for offering or sale in any
         jurisdiction, or the initiation of any proceeding for any of the
         preceding purposes, (D) of the existence of any fact or the happening
         of any event that makes any statement of a material fact made in the
         Registration Statement, the Prospectus, any amendment or supplement
         thereto or any document incorporated by reference therein untrue, or
         that requires the making of any additions to or changes in the
         Registration Statement in order to make the statements therein not
         misleading, or that requires the making of any additions to or changes
         in the Prospectus in order to make the statements therein, in the light
         of the circumstances under which they were made, not misleading. If at
         any time the Commission shall issue any stop order suspending the
         effectiveness of the Registration Statement, or any state securities
         commission or other regulatory authority shall issue an order
         suspending the qualification or exemption from qualification of the
         Transfer Restricted Securities under state securities or Blue Sky laws,
         the Company and the Guarantors shall use their respective best efforts
         to obtain the withdrawal or lifting of such order at the earliest
         possible time;

                           (iv) subject to Section 6(c)(i), if any fact or event
         contemplated by Section 6(c)(iii)(D) above shall exist or have
         occurred, prepare a supplement or post-effective amendment to the
         Registration Statement or related Prospectus or any document
         incorporated therein by reference or file any other required document
         so that, as thereafter delivered to the purchasers of Transfer
         Restricted Securities, the Prospectus will not contain an untrue
         statement of a material fact or omit to state any material fact
         necessary to make the statements therein, in the light of the
         circumstances under which they were made, not misleading;

                           (v) furnish to the Initial Purchasers and each
         selling Holder named in any Registration Statement or Prospectus in
         connection with such exchange or sale, if any, before filing with the
         Commission, copies of any Registration Statement or any Prospectus
         included therein or any amendments or supplements to any such
         Registration Statement or Prospectus (including all documents
         incorporated by reference after the initial filing of such Registration
         Statement), which documents will be subject to the review and comment
         of such Holders in connection with such sale, if any, for a period of
         at least five Business Days, and the Company will not file any such
         Registration Statement or Prospectus or any amendment or supplement to
         any such Registration Statement or Prospectus (including all such
         documents incorporated by reference) to which such Holders shall
         reasonably object within five Business Days after the receipt thereof.
         A Holder shall be deemed to have reasonably objected to such filing if
         such Registration Statement, amendment, Prospectus or supplement, as
         applicable, as proposed to be filed, contains a material misstatement
         or omission or fails to comply with the applicable requirements of the
         Act;

                           (vi) promptly after the filing of any document that
         is to be incorporated by reference into a Registration Statement or
         Prospectus, make available copies of such document to each Holder in
         connection with such exchange or sale, if any, make the Company's and
         the Guarantors' representatives available for discussion of such
         document and other customary due diligence matters;

                           (vii) make available, at reasonable times, for
         inspection by each Holder participating in any disposition pursuant to
         such Registration Statement and any attorney or

                                       10
<PAGE>   12

         accountant retained by such Holders, all financial and other records
         and pertinent corporate documents and properties of the Company and the
         Guarantors and cause the Company's and the Guarantors' officers,
         directors and employees to supply all information reasonably requested
         by any such Holder, attorney or accountant in connection with such
         Registration Statement or any post-effective amendment thereto
         subsequent to the filing thereof and prior to its effectiveness;
         PROVIDED that any information that is reasonably and in good faith
         designated by the Company in writing as confidential at the time of
         delivery of such information shall be kept confidential by such
         Persons, unless (i) disclosure of such information is required by court
         or administrative order or is necessary to respond to inquiries of
         regulatory authorities, (ii) disclosure of such information is required
         by law (including any disclosure requirements pursuant to federal
         securities laws in connection with the filing of such Registration
         Statement or the use of any Prospectus, except if the Company obtains
         "confidential treatment" for any document or information in accordance
         with the rules of the Commission), (iii) such information becomes
         generally available to the public other than as a result of a
         disclosure or failure to safeguard such information by such Person or
         (iv) such information becomes available to such Person from a source
         other than the Company and its subsidiaries and such source is not
         known, after due inquiry, by such Person to be bound by a
         confidentiality agreement;

                           (viii) if requested by any Holders in connection with
         such exchange or sale, promptly include in any Registration Statement
         or Prospectus, pursuant to a supplement or post-effective amendment if
         necessary, such information as such Holders may reasonably request to
         have included therein, including, without limitation, information
         relating to the "Plan of Distribution" of the Transfer Restricted
         Securities and the use of the Registration Statement or Prospectus for
         market-making activities; and make all required filings of such
         Prospectus supplement or post-effective amendment as soon as
         practicable after the Company is notified of the matters to be included
         in such Prospectus supplement or post-effective amendment;

                           (ix) furnish to each Holder in connection with such
         exchange or sale, without charge, at least one copy of the Registration
         Statement, as first filed with the Commission, and of each amendment
         thereto, including all documents incorporated by reference therein and
         all exhibits (including exhibits incorporated therein by reference);

                           (x) deliver to each Holder without charge, as many
         copies of the Prospectus (including each preliminary Prospectus) and
         any amendment or supplement thereto as such Persons reasonably may
         request; the Company and the Guarantors hereby consent to the use (in
         accordance with law) of the Prospectus and any amendment or supplement
         thereto by each of the Holders in connection with the offering and the
         sale of the Transfer Restricted Securities covered by the Prospectus or
         any amendment or supplement thereto and all market-making activities of
         the Initial Purchasers, as the case may be;

                           (xi) upon the request of any Holder, enter into such
         agreements (including an underwriting agreement) and make such
         representations and warranties and take all such other actions in
         connection therewith in order to expedite or facilitate the disposition
         of the Transfer Restricted Securities pursuant to any applicable
         Registration Statement contemplated by this Agreement as may be
         reasonably requested by any Holder of Transfer Restricted Securities in
         connection with any sale or resale pursuant to any applicable

                                       11
<PAGE>   13

         Registration Statement contemplated by this Agreement. In such
         connection and also in connection with any market-making activities by
         the Initial Purchasers, whether or not an underwriting agreement is
         entered into and whether or not the registration is an Underwritten
         Registration, the Company and the Guarantors shall:

                                    (A) upon the request of any Holder, furnish
                  (or in the case of paragraphs (2) and (3), use their best
                  efforts to furnish) to each Holder upon the effectiveness of
                  the Shelf Registration Statement and to each Restricted
                  Broker-Dealer upon Consummation of the Exchange Offer:

                                             (1) a certificate, dated the date
                           of Consummation of the Exchange Offer or the date of
                           effectiveness of the Shelf Registration Statement, as
                           the case may be, signed on behalf of the Company and
                           the Guarantors by (x) the President or any Vice
                           President and (y) a principal financial or accounting
                           officer of the Company and such Guarantor,
                           confirming, as of the date thereof, the matters set
                           forth in paragraphs (a), (b) and (c) of Section 9 of
                           the Purchase Agreement and such other similar matters
                           as such Holders and/or Restricted Broker Dealers may
                           reasonably request;

                                             (2) an opinion, dated the date of
                           Consummation of the Exchange Offer or the date of
                           effectiveness of the Shelf Registration Statement, as
                           the case may be, of counsel for the Company and the
                           Guarantors covering matters similar to those set
                           forth in paragraph (e) of Section 9 of the Purchase
                           Agreement and such other matter as the Holders and/or
                           Restricted Broker Dealers may reasonably request, and
                           in any event including a statement to the effect that
                           such counsel has participated in conferences with
                           officers and other representatives of the Company and
                           the Guarantors and representatives of the independent
                           public accountants for the Company and the Guarantors
                           and has considered the matters required to be stated
                           therein and the statements contained therein,
                           although such counsel has not independently verified
                           the accuracy, completeness or fairness of such
                           statements; and that such counsel advises that, on
                           the basis of the foregoing (relying as to materiality
                           to a large extent upon facts provided to such counsel
                           by officers and other representatives of the Company
                           and the Guarantors and without independent check or
                           verifications), no facts came to such counsel's
                           attention that caused such counsel to believe that
                           the applicable Registration Statement, at the time
                           such Registration Statement or any post-effective
                           amendment thereto became effective and, in the case
                           of the Exchange Offer Registration Statement, as of
                           the date of Consummation of the Exchange Offer,
                           contained an untrue statement of a material fact or
                           omitted to state a material fact required to be
                           stated therein or necessary to make the statements
                           therein not misleading, or that the Prospectus
                           contained in such Registration Statement as of its
                           date and, in the case of the opinion dated the date
                           of Consummation of the Exchange Offer, as of the date
                           of Consummation, contained an untrue statement of a
                           material fact or omitted to state a material fact
                           necessary in order to make the statements therein, in
                           the light of the circumstances under which they were
                           made, not misleading. Without limiting the foregoing,
                           such counsel may state further that such counsel
                           assumes no responsibility for, does not opine as to,
                           and has not independently verified, the accuracy,
                           completeness or fairness of the financial statements,
                           notes and schedules and other financial data included
                           in any Registration Statement contemplated by this
                           Agreement or the related Prospectus; and

                                       12
<PAGE>   14

                                             (3) a customary comfort letter,
                           dated as of the date of effectiveness of the Shelf
                           Registration Statement or the date of Consummation of
                           the Exchange Offer, as the case may be, from the
                           Company's independent accountants, in the customary
                           form and covering matters of the type customarily
                           covered in comfort letters to underwriters in
                           connection with underwritten offerings, and affirming
                           the matters set forth in the comfort letters
                           delivered pursuant to paragraph (g) of Section 9 of
                           the Purchase Agreement, without exception;

                                    (B) set forth in full or incorporate by
                  reference in the underwriting agreement, if any, in connection
                  with any sale or resale pursuant to any Shelf Registration
                  Statement the indemnification provisions and procedures of
                  Section 8 hereof with respect to all parties to be indemnified
                  pursuant to said Section; and

                                    (C) deliver such other documents and
                  certificates as may be reasonably requested by the selling
                  Holders, and Restricted Broker Dealers, if any, to evidence
                  compliance with clause (A) above and with any customary
                  conditions contained in the underwriting agreement or other
                  agreement entered into by the Company and the Guarantors
                  pursuant to this clause (xi).

                  If at any time the representations and warranties of the
         Company and the Guarantors contemplated in (A)(1) above cease to be
         true and correct in all material respects, the Company and the
         Guarantors shall so advise the selling Holders and each Restricted
         Broker-Dealer promptly and if requested by such Persons, shall confirm
         such advice in writing;

                           (xii) prior to any public offering of Transfer
         Restricted Securities, cooperate with the selling Holders and their
         counsel in connection with the registration and qualification of the
         Transfer Restricted Securities under the state Blue Sky or securities
         laws of such jurisdictions as the selling Holders may request and do
         any and all other acts or things necessary or advisable to enable the
         disposition in such jurisdictions of the Transfer Restricted Securities
         covered by the applicable Registration Statement; PROVIDED, HOWEVER,
         that neither the Company nor any Guarantors shall be required to
         register or qualify as a foreign corporation where it is not now so
         qualified or to take any action that would subject it to the service of
         process in suits or to taxation, other than as to matters and
         transactions relating to the Registration Statement, in any
         jurisdiction where it is not now so subject;

                           (xiii) in connection with any sale of Transfer
         Restricted Securities that will result in such securities no longer
         being Transfer Restricted Securities, cooperate with the Holders to
         facilitate the timely preparation and delivery of certificates
         representing Transfer Restricted Securities to be sold and not bearing
         any restrictive legends; and to register such Transfer Restricted
         Securities in such denominations and such names as the Holders or the
         underwriter(s), if any, may request at least two Business Days prior to
         such sale of Transfer Restricted Securities;

                           (xiv) use their respective best efforts to cause the
         disposition of the Transfer Restricted Securities covered by the
         Registration Statement to be registered with or approved by such other
         governmental agencies or authorities as may be necessary to enable the
         seller or sellers thereof or the underwriter(s), if any, to consummate
         the disposition of such Transfer Restricted Securities, subject to the
         proviso contained in clause (xii) above;

                                       13
<PAGE>   15

                           (xv) provide a CUSIP number for all Transfer
         Restricted Securities not later than the effective date of a
         Registration Statement covering such Transfer Restricted Securities and
         provide the Trustee under the Indenture with printed certificates for
         the Transfer Restricted Securities which are in a form eligible for
         deposit with the Depository Trust Company;

                           (xvi) cooperate and assist in any filings required to
         be made with the NASD and in the performance of any due diligence
         investigation by any underwriter (including any "qualified independent
         underwriter") that is required to be retained in accordance with the
         rules and regulations of the NASD, and use their respective best
         efforts to cause such Registration Statement to become effective and
         approved by such governmental agencies or authorities as may be
         necessary to enable the Holders selling Transfer Restricted Securities
         to consummate the disposition of such Transfer Restricted Securities;
         PROVIDED, HOWEVER, that the Company shall not take any position during
         review by the NASD that would, in any manner, create the implication
         that the offering of the Series A Notes on the Closing Date by the
         Company should be or is subject to the rules and regulations of the
         NASD;

                           (xvii) otherwise use their respective best efforts to
         comply with all applicable rules and regulations of the Commission, and
         make generally available to its security holders with regard to any
         applicable Registration Statement, as soon as practicable, a
         consolidated earnings statement meeting the requirements of Rule 158
         (which need not be audited) covering a twelve-month period beginning
         after the effective date of the Registration Statement (as such term is
         defined in paragraph (c) of Rule 158 under the Act);

                           (xviii) cause the Indenture to be qualified under the
         TIA not later than the effective date of the first Registration
         Statement required by this Agreement and, in connection therewith,
         cooperate with the Trustee and the Holders of Notes to effect such
         changes to the Indenture as may be required for such Indenture to be so
         qualified in accordance with the terms of the TIA; and execute and use
         their best efforts to cause the Trustee to execute, all documents that
         may be required to effect such changes and all other forms and
         documents required to be filed with the Commission to enable such
         Indenture to be so qualified in a timely manner; and

                           (xix) provide promptly to each Holder and the Initial
         Purchasers upon request each document filed with the Commission
         pursuant to the requirements of Section 13 or Section 15(d) of the
         Exchange Act.

                  (d) RESTRICTIONS ON HOLDERS. Each Holder agrees by acquisition
of a Transfer Restricted Security that, upon receipt of the notice referred to
in Section 6(c)(iii)(C) or any notice from the Company of the existence of any
fact of the kind described in Section 6(c)(iii)(D) hereof (in each case, a
"SUSPENSION NOTICE"), such Holder will forthwith discontinue disposition of
Transfer Restricted Securities pursuant to the applicable Registration Statement
until (i) such Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such Holder is
advised in writing by the Company that the use of the Prospectus may be resumed,
and has received copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus (the "ADVICE"). If so directed by
the Company, each Holder will either (i) destroy any Prospectuses, other than
permanent file copies, then in such Holder's possession which have been replaced
by the Company with more recently dated Prospectuses or (ii) deliver to the
Company (at the Company's expense) all copies, other than

                                       14
<PAGE>   16

permanent file copies then in such Holder's possession, of the Prospectus
covering such Transfer Restricted Securities that was current at the time of
receipt of either such notice. In the event the Company shall give any such
notice, the time period regarding the effectiveness of such Registration
Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended
by the number of days during the period from and including the date of the
giving of such notice pursuant to Section 6(c)(i) or Section 6(c)(iii)(D) hereof
to and including the date when each selling Holder covered by such Registration
Statement shall have received the copies of the supplemented or amended
Prospectus contemplated by Section 6(c)(iv) hereof or shall have received the
Advice.

SECTION 7. REGISTRATION EXPENSES

                  (a) All expenses incident to the Company's and the Guarantors'
performance of or compliance with this Agreement will be borne by the Company,
regardless of whether a Registration Statement becomes effective, including
without limitation: (i) all registration and filing fees and expenses (including
filings made by any Purchaser or Holder with the NASD and its counsel that may
be required by the rules and regulations of the NASD); (ii) all fees and
expenses of compliance with federal securities and state Blue Sky or securities
laws; (iii) all expenses of printing (including printing certificates for the
Series B Notes to be issued in the Exchange Offer and printing of Prospectuses,
whether for exchanges, sales or otherwise), messenger and delivery services and
telephone; (iv) all fees and disbursements of counsel for the Company, the
Guarantors and the Holders of Transfer Restricted Securities (subject to the
provisions of Section 7(b) hereof); (v) all application and filing fees in
connection with listing the Series B Notes on a national securities exchange or
automated quotation system pursuant to the requirements hereof; and (vi) all
fees and disbursements of independent certified public accountants of the
Company and the Guarantors (including the expenses of any special audit and
comfort letters required by or incident to such performance).

                  Notwithstanding the foregoing, the Holders will be responsible
for any underwriting discounts and commissions, brokers fees and any transfer
taxes relating to such Notes disposed of by the Holders. The Company will, in
any event, bear its and the Guarantors' internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expenses of any annual audit and the fees and
expenses of any Person, including special experts, retained by the Company or
the Guarantors.

                  (b) In connection with any Registration Statement required by
this Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company and the Guarantors
will reimburse the Initial Purchasers and the Holders of Transfer Restricted
Securities being tendered in the Exchange Offer and/or resold pursuant to the
"Plan of Distribution" contained in the Exchange Offer Registration Statement or
registered pursuant to the Shelf Registration Statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel, who shall be
Cahill Gordon & Reindel, unless another firm shall be chosen by the Holders of a
majority in principal amount of the Transfer Restricted Securities for whose
benefit such Registration Statement is being prepared.

                                       15
<PAGE>   17

SECTION 8. INDEMNIFICATION

                  (a) The Company and the Guarantors, jointly and severally,
agree to indemnify and hold harmless (i) each Holder and (ii) each person, if
any, who controls (within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act) any Holder (any of the persons referred to in this clause (ii)
being hereinafter referred to as a "CONTROLLING PERSON") and (iii) the
respective officers, directors, partners, employees, representatives and agents
of any Holder or any controlling person (any person referred to in clause (i),
(ii) or (iii) may hereinafter be referred to as an "INDEMNIFIED HOLDER"), to the
fullest extent lawful, from and against any and all losses, claims, damages,
liabilities, judgments, actions and expenses (including without limitation and
as incurred, reimbursement of all reasonable costs of investigating, preparing,
pursuing or defending any claim or action, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, including the
reasonable fees and expenses of counsel to any Indemnified Holder) directly or
indirectly caused by, related to, based upon, arising out of or in connection
with any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement, preliminary prospectus or Prospectus
(or any amendment or supplement thereto), or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as such losses, claims,
damages, liabilities, judgments, actions or expenses are caused by an untrue
statement or omission or alleged untrue statement or omission that is made in
reliance upon and in conformity with information relating to any of the Holders
furnished in writing to the Company by any of the Holders expressly for use
therein.

                  (b) Each Holder of Transfer Restricted Securities agrees,
severally and not jointly, to indemnify and hold harmless the Company and the
Guarantors, and their respective directors, officers, and any person controlling
(within the meaning of Section 15 of the Act or Section 20 of the Exchange Act)
the Company or the Guarantors, and the respective officers, directors, partners,
employees, representatives and agents of each such person, to the same extent as
the foregoing indemnity from the Company and the Guarantors to each of the
Indemnified Holders, but only with respect to claims and actions based on
information relating to such Holder furnished in writing by such Holder
expressly for use in any Registration Statement. In case any action or
proceeding shall be brought against the Company, the Guarantors or any of their
directors or officers or any such controlling person in respect of which
indemnity may be sought against a Holder of Transfer Restricted Securities, such
Holder shall have the rights and duties given the Company and the Guarantors,
and the Company, the Guarantors, such directors or officers or such controlling
person shall have the rights and duties given to each Holder by the preceding
paragraph. In no event shall any Holder be liable or responsible for any amount
in excess of the amount by which the total received by such Holder with respect
to its sale of Transfer Restricted Securities pursuant to a Registration
Statement exceeds (i) the amount paid by such Holder for such Transfer
Restricted Securities and (ii) the amount of any damages which such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.

                  (c) In case any action shall be commenced involving any person
in respect of which indemnity may be sought pursuant to Section 8(a) or 8(b)
(the "INDEMNIFIED PARTY"), the indemnified party shall promptly notify the
person against whom such indemnity may be sought (the "INDEMNIFYING PERSON") in
writing and the indemnifying party shall assume the defense of such action,
including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of all fees and expenses of such counsel, as incurred
(except that in the case of any action in respect of which indemnity may be
sought pursuant to both Sections 8(a) and 8(b), a Holder shall not be required
to assume the defense of such action pursuant to this Section 8(c), but may
employ separate counsel and participate in the defense thereof, but the fees and
expenses of such counsel, except as provided below, shall be at the expense of
the

                                       16
<PAGE>   18

Holder). Any indemnified party shall have the right to employ separate counsel
in any such action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of the indemnified party unless
(i) the employment of such counsel shall have been specifically authorized in
writing by the indemnifying party, (ii) the indemnifying party shall have failed
to assume the defense of such action or employ counsel reasonably satisfactory
to the indemnified party or (iii) the named parties to any such action
(including any impleaded parties) include both the indemnified party and the
indemnifying party, and the indemnified party shall have been advised by counsel
that there may be one or more legal defenses available to it which are different
from or additional to those available to the indemnifying party (in which case
the indemnifying party shall not have the right to assume the defense of such
action on behalf of the indemnified party). In any such case, the indemnifying
party shall not, in connection with any one action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all indemnified parties and all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by a majority of the
Holders, in the case of the parties indemnified pursuant to Section 8(a), and by
the Company and Guarantors, in the case of parties indemnified pursuant to
Section 8(b). The indemnifying party shall indemnify and hold harmless the
indemnified party from and against any and all losses, claims, damages,
liabilities and judgments by reason of any settlement of any action (i) effected
with its written consent or (ii) effected without its written consent if the
settlement is entered into more than twenty business days after the indemnifying
party shall have received a request from the indemnified party for reimbursement
for the fees and expenses of counsel (in any case where such fees and expenses
are at the expense of the indemnifying party) and, prior to the date of such
settlement, the indemnifying party shall have failed to comply with such
reimbursement request. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement or compromise of, or
consent to the entry of judgment with respect to, any pending or threatened
action in respect of which the indemnified party is or could have been a party
and indemnity or contribution may or could have been sought hereunder by the
indemnified party, unless such settlement, compromise or judgment (i) includes
an unconditional release of the indemnified party from all liability on claims
that are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.

                  (d) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party under Section 8(a) or Section 8(b) hereof
(other than by reason of exceptions provided in those Sections) in respect of
any losses, claims, damages, liabilities or expenses referred to therein, then
each applicable indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the Company and
the Guarantors, on the one hand, and of the Indemnified Holder, on the other
hand, in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or expenses. The relative fault of the
Company and the Guarantors, on the one hand, and of the Indemnified Holder, on
the other hand, shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or the Guarantors or by the Indemnified Holder and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount paid or payable by a party as a result of
the losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in the last sentence of
Section 8(b), any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim.

                                       17
<PAGE>   19

                  The Company, the Guarantors and each Holder of Transfer
Restricted Securities agree that it would not be just and equitable if
contribution pursuant to this Section 8(d) were determined by pro rata
allocation (even if the Holders were treated as one entity for such purpose) or
by any other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities or expenses referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8, no Holder or its related
Indemnified Holders shall be required to contribute, in the aggregate, any
amount in excess of the amount by which the total received by such Holder with
respect to the sale of its Transfer Restricted Securities pursuant to a
Registration Statement exceeds the sum of (A) the amount paid by such Holder for
such Transfer Restricted Securities PLUS (B) the amount of any damages which
such Holder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Holders' obligations to contribute pursuant to
this Section 8(d) are several in proportion to the respective principal amount
of Series A Notes held by each of the Holders hereunder and not joint.

SECTION 9. RULE 144A

                  The Company and the Guarantors hereby agree with each Holder,
for so long as any Transfer Restricted Securities remain outstanding and, in the
event the Company subsequently becomes subject to Section 13 or 15(d) of the
Exchange Act, during any period in which the Company or the Guarantors (i) are
not subject to Section 13 or 15(d) of the Exchange Act, to make available, upon
request of any Holder of Transfer Restricted Securities, to any Holder of
Transfer Restricted Securities in connection with any sale thereof and any
prospective purchaser of such Transfer Restricted Securities designated by such
Holder, the information required by Rule 144A(d)(4) under the Act in order to
permit resales of such Transfer Restricted Securities pursuant to Rule 144A, and
(ii) are subject to Section 13 or 15(d) of the Exchange Act, to make all filings
required thereby in a timely manner in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144.

SECTION 10. UNDERWRITTEN REGISTRATIONS

                  No Holder may participate in any Underwritten Registration
hereunder unless such Holder (a) agrees to sell such Holder's Transfer
Restricted Securities on the basis provided in customary underwriting
arrangements entered into in connection therewith and (b) completes and executes
all reasonable questionnaires, powers of attorney, and other documents required
under the terms of such underwriting arrangements.

SECTION 11. SELECTION OF UNDERWRITERS

                  For any Underwritten Offering, the investment banker or
investment bankers and manager or managers for any Underwritten Offering that
will administer such offering will be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering. Such investment bankers and managers are referred to herein as
the "underwriters."

                                       18
<PAGE>   20

SECTION 12. MISCELLANEOUS

                  (a) REMEDIES. Each Holder and the Initial Purchasers, in
addition to being entitled to exercise all rights provided herein, in the
Indenture, the Purchase Agreement or granted by law, including recovery of
Liquidated Damages (the payment of which is the sole monetary remedy available
to the Holders of Transfer Restricted Series A Notes in the event that the
Company does not comply with the deadlines set forth in this Agreement with
respect to the conduct of the Exchange Offer or the registration of the Series A
Notes for resale under a Shelf Registration Statement) or other damages, will in
addition be entitled to specific performance of its rights under this Agreement.
The Company and the Guarantors agree that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by them of the
provisions of this Agreement and hereby agree to waive the defense in any action
for specific performance that a remedy at law would be adequate.

                  (b) NO INCONSISTENT AGREEMENTS. Neither the Company nor the
Guarantors will, on or after the date of this Agreement, enter into any
agreement with respect to their respective securities that is inconsistent with
the rights granted to the Holders in this Agreement or otherwise conflicts with
the provisions hereof. Neither the Company nor the Guarantors has previously
entered into any agreement granting any registration rights with respect to
their respective securities to any Person. The rights granted to the Holders
hereunder do not in any way conflict with and are not inconsistent with the
rights granted to the holders of the Company's and the Guarantors' securities
under any agreement in effect on the date hereof.

                  (c) ADJUSTMENTS AFFECTING THE NOTES. Neither the Company nor
the Guarantors will take any action, or voluntarily permit any change to occur,
with respect to the Notes that would materially and adversely affect the ability
of the Holders to Consummate any Exchange Offer.

                  (d) AMENDMENTS AND WAIVERS. This Agreement may not be amended,
modified or supplemented, and waivers or consents to or departures from the
provisions hereof may not be given unless (i) in the case of Section 5 hereof
and this Section 12(d)(i), the Company has obtained the written consent of
Holders of all outstanding Transfer Restricted Securities (except with respect
to a waiver or departure entered into by a Holder with the Company that is
binding only with respect to the Notes held by such Holder) and (ii) in the case
of all other provisions hereof, the Company has obtained the written consent of
Holders of a majority of the outstanding principal amount of Transfer Restricted
Securities (excluding Transfer Restricted Securities held by the Company or its
Affiliates). Notwithstanding the foregoing, a waiver or consent to departure
from the provisions hereof that relates exclusively to the rights of Holders
whose securities are being tendered pursuant to the Exchange Offer and that does
not affect directly or indirectly the rights of other Holders whose securities
are not being tendered pursuant to such Exchange Offer may be given by the
Holders of a majority of the outstanding principal amount of Transfer Restricted
Securities subject to such Exchange Offer.

                  (e) THIRD PARTY BENEFICIARY. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchasers, on the other hand, and shall have the right to
enforce such agreements directly to the extent they may deem such enforcement
necessary or advisable to protect their rights or the rights of Holders
hereunder.

                  (f) NOTICES. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail (registered or certified, return receipt requested), telex, telecopier, or
air courier guaranteeing overnight delivery:

                                       19
<PAGE>   21

                           (i) if to a Holder, at the address set forth on the
         records of the Registrar under the Indenture, with a copy to the
         Registrar under the Indenture; and

                           (ii) if to the Company or the Guarantors:

                                RailAmerica Transportation Corp.
                                5300 Broken Sound Boulevard, N.W.
                                Boca Raton, Florida 33487
                                Facsimile No.: (561) 994-3929
                                Attention:  General Counsel

                                With a copy to:

                                Greenberg Traurig, P.A.
                                1221 Brickell Avenue
                                Miami, Florida 33131
                                Facsimile No.: (305) 579-0500
                                Attention:  Fern Watts

                  All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if mailed;
when receipt acknowledged, if telecopied; and on the next Business Day, if
timely delivered to an air courier guaranteeing overnight delivery.

                  Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee at
the address specified in the Indenture.

                  (g) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities; PROVIDED,
HOWEVER, that this Agreement shall not inure to the benefit of or be binding
upon a successor or assign of a Holder unless and to the extent such successor
or assign acquired Transfer Restricted Securities directly from such Holder.

                  (h) COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

                  (i) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

                  (j) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICT OF LAW RULES THEREOF.

                  (k) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity,

                                       20
<PAGE>   22

legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be affected or impaired
thereby.

                  (l) ENTIRE AGREEMENT. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted with respect to the
Transfer Restricted Securities. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.

                                       21
<PAGE>   23

                  IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.

                           RAILAMERICA TRANSPORTATION CORP.

                           By: /s/ Bennett Marks
                               -------------------------------------------------
                               Name:  Bennett Marks
                               Title: Senior Vice President and Chief Financial
                                      Officer

                           RAILAMERICA, INC.,
                           as Guarantor

                           By: /s/ Mark Phariss
                               -------------------------------------------------
                               Name:  Mark Phariss
                               Title: Vice President, General Counsel and
                                      Assistant Secretary

                                      S-1
<PAGE>   24
                           AUSTIN & NORTHWESTERN RAILROAD COMPANY, INC.
                           BOSTON CENTRAL FREIGHT RAILROADS, INC.
                           CASCADE AND COLUMBIA RIVER RAILROAD COMPANY, INC.
                           CENTRAL OREGON & PACIFIC RAILROAD, INC.
                           CENTRAL RAILROAD COMPANY OF INDIANA
                           CENTRAL RAILROAD COMPANY OF INDIANAPOLIS
                           CONNECTICUT SOUTHERN RAILROAD, INC.
                           DAKOTA RAIL, INC.
                           DALLAS, GARLAND & NORTHEASTERN RAILROAD, INC.
                           DALLAS, GARLAND & NORTHEASTERN RAILROAD, INC.
                           DELAWARE VALLEY RAILWAY COMPANY, INC.
                           FLORIDA RAIL LINES, INC.
                           GEORGIA SOUTHWESTERN RAILROAD, INC.
                           HURON AND EASTERN RAILWAY COMPANY, INC.
                           INDIANA & OHIO CENTRAL RAILROAD, INC.
                           INDIANA & OHIO RAIL CORP.
                           INDIANA & OHIO RAILWAY COMPANY
                           INDIANA SOUTHERN RAILROAD, INC.
                           MARKSMAN CORP.
                           MID-MICHIGAN RAILROAD, INC.
                           MINNESOTA NORTHERN RAILROAD, INC.
                           MISSOURI & NORTHERN ARKANSAS RAILROAD COMPANY, INC.
                           NEW ENGLAND CENTRAL RAILROAD, INC.
                           NEW ORLEANS LOWER COAST RAILROAD COMPANY, INC.
                           NORTH CAROLINA AND VIRGINIA RAILROAD COMPANY, INC.
                           OTTER TAIL VALLEY RAILROAD COMPANY, INC.
                           PALM BEACH RAIL HOLDING, INC.
                           PITTSBURG INDUSTRIAL RAILROAD, INC.
                           PLAINVIEW TERMINAL COMPANY
                           PRAIRIE HOLDINGS CORPORATION
                           RAIL OPERATING SUPPORT GROUP, INC.
                           RAILAMERICA AUSTRALIA, INC.
                           RAILAMERICA EQUIPMENT CORPORATION
                           RAILAMERICA INTERMODAL SERVICES, INC.
                           RAILINK ACQUISITION, INC.
                           RAILTEX ACQUISITION CORP.
                           RAILTEX DISTRIBUTION SERVICES, INC.
                           RAILTEX, INC.
                           RAILTEX INTERNATIONAL HOLDINGS, INC.
                           RAILTEX LOGISITICS, INC.
                           RAILTEX SERVICES CO., INC.
                           SAGINAW VALLEY RAILWAY COMPANY, INC.
                           SAN DIEGO & IMPERIAL VALLEY RAILROAD COMPANY, INC.

                                      S-2
<PAGE>   25

                           SOUTH CAROLINA CENTRAL RAILROAD COMPANY, INC.
                           SOUTH CENTRAL TENNESSEE RAILROAD CORP., INC.
                           ST. CROIX VALLEY RAILROAD COMPANY
                           THE TOLEDO, PEORIA & WESTERN RAILROAD CORPORATION
                           TOLEDO, PEORIA & WESTERN RAILWAY CORPORATION
                           VENTURA COUNTY RAILROAD CO., INC.
                           WEST TEXAS AND LUBBOCK RAILROAD COMPANY, INC.,
                             as Guarantors

                           By: /s/ Bennett Marks
                               ------------------------------------------------
                               Name:  Bennett Marks
                               Title: Senior Vice President and Chief Financial
                                      Officer,
                                           On behalf of each of the above-
                                            named entities.

                                      S-3
<PAGE>   26
Donaldson, Lufkin & Jenrette Securities Corporation
Barclays Bank PLC
Scotia Capital (USA) Inc.

By:  DONALDSON, LUFKIN & JENRETTE
     SECURITIES CORPORATION

By: /s/ Steven D. Smith
    -------------------------------------
    Name:  Steven D. Smith
    Title: Senior Vice President

                                      S-4<PAGE>   1

                                                                     EXHIBIT 4.1

================================================================================

                                WARRANT AGREEMENT

                                     Between

                                RAILAMERICA, INC.

                                       and

                        WELLS FARGO BANK MINNESOTA, N.A.,
                                       as
                                  Warrant Agent

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

                           Dated as of August 14, 2000

================================================================================

<PAGE>   2

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                        Page
                                                                                                                        ----
<S>                                                                                                                      <C>
SECTION 1. Appointment of Warrant Agent ..........................................................................       4

SECTION 2. Warrant Certificates ..................................................................................       4

SECTION 3. Execution of Warrant Certificates .....................................................................       5

SECTION 4. Registration and Countersignature .....................................................................       5

SECTION 5. Transfer and Exchange of Warrants .....................................................................       6

SECTION 6. Registration of Transfers and Exchanges ...............................................................       6

                    (a) Transfer and Exchange of Warrants ........................................................       6
                    (b) Restrictions on Transfer of a Definitive Warrant for a Beneficial Interest in a Global
                             Warrant .............................................................................       8
                    (c) Transfer or Exchange of Global Warrants ..................................................       9
                    (d) Transfer or Exchange of a Beneficial Interest in a Global Warrant for a Definitive
                             Warrant .............................................................................       9
                    (e) Restrictions on Transfer or Exchange of Global Warrants ..................................      10
                    (f) Countersignature of Definitive Warrants in Absence of Depositary .........................      11
                    (g) Cancellation or Adjustment of a Global Warrant ...........................................      11
                    (h) Legends ..................................................................................      11
                    (i) Obligations with Respect to Transfers and Exchanges of Definitive and Global Warrants ....      12

SECTION 7.  Terms of Warrants; Exercise of Warrants ..............................................................      12

SECTION 8. Payment of Taxes ......................................................................................      16

SECTION 9. Rules 144 and 144A ....................................................................................      16

SECTION 10. Mutilated or Missing Warrant Certificates ............................................................      16

SECTION 11. Reservation of Warrant Shares ........................................................................      16

SECTION 12. Obtaining Stock Exchange Listings ....................................................................      17

SECTION 13. Adjustment of Number of Warrant Shares Issuable ......................................................      17

                    (a) Adjustment for Change in Capital Stock ...................................................      17

</TABLE>

                                       -i-
<PAGE>   3

<TABLE>
<S>                                                                                                                      <C>

                    (b) Adjustment for Certain Sales of Common Stock Below Current Market Value ..................      18
                    (c) Adjustment upon Certain Distributions ....................................................      20
                    (d) Notice of Adjustment .....................................................................      22
                    (e) Reorganization of Company; Fundamental Transaction .......................................      22
                    (f) Other Events .............................................................................      23
                    (g) Company Determination Final ..............................................................      23
                    (h) Warrant Agent's Adjustment Disclaimer ....................................................      23
                    (i) Specificity of Adjustment ................................................................      24
                    (j) Voluntary Adjustment .....................................................................      24
                    (k) Multiple Adjustments .....................................................................      24
                    (l) When De Minimis Adjustment May Be Deferred ...............................................      24
                    (m) Amendments of the Certificate of Incorporation ...........................................      24

SECTION 14. Fractional Interests .................................................................................      24

SECTION 15. Notice of Certain Distributions; Certain Rights ......................................................      25

SECTION 16. Notices to the Company and Warrant Agent .............................................................      25

SECTION 17. Supplements and Amendments ...........................................................................      26

SECTION 18. Concerning the Warrant Agent .........................................................................      27

SECTION 19. Change of Warrant Agent ..............................................................................      29

SECTION 20. Identity of Transfer Agent ...........................................................................      30

SECTION 21. SEC Reports and Other Information ....................................................................      30

SECTION 22. Successors ...........................................................................................      31

SECTION 23. Termination ..........................................................................................      31

SECTION 24. Governing Law ........................................................................................      31

SECTION 25. Benefits of This Agreement ...........................................................................      31

SECTION 26. Counterparts .........................................................................................      31

</TABLE>

                                      -ii-

<PAGE>   4

Exhibit A         Common Stock Purchase Warrant of RailAmerica, Inc.
Exhibit B(1)      Global Warrant Legend
Exhibit B(2)      Unit Legend
Exhibit C         Certificate to be Delivered upon Exchange or Registration of
                    Transfer of Warrants
Exhibit D         Form of Transferee Letter of Representation in Connection with
                    Transfers to Institutional Accredited Investors
Exhibit E         Form of Transferee Letter of Representation in Connection with
                    Transfers Pursuant to Regulation S

                                     -iii-

<PAGE>   5

         WARRANT AGREEMENT (the "AGREEMENT"), dated as of August 14, 2000,
between RAILAMERICA, INC., a Delaware corporation (together with any successors
and assigns, the "COMPANY"), and Wells Fargo Bank Minnesota, N.A., as warrant
agent (with any successor warrant agent, the "WARRANT AGENT").

         A. Pursuant to a purchase agreement (the "PURCHASE AGREEMENT") dated
August 9, 2000 among the Company, RailAmerica Transportation Corp. ("RAILAMERICA
TRANSPORTATION," and together with the Company, the "UNIT ISSUERS"), the
Guarantors named therein (the "GUARANTORS"), and Donaldson, Lufkin & Jenrette
Securities Corporation, Barclays Bank PLC and Scotia Capital (USA) Inc. (the
"INITIAL PURCHASERS"), the Unit Issuers have agreed to sell to the Initial
Purchasers 130,000 units (the "UNITS"), each consisting of (i) $1,000 principal
amount of 12 7/8% Senior Subordinated Notes due 2010 (the "NOTES") of
RailAmerica Transportation and (ii) one warrant (collectively, the "WARRANTS"),
each Warrant initially entitling the holder thereof to purchase 10.8570307
shares of Common Stock (as defined herein) of the Company.

         B. The Notes and the Warrants comprising the Units shall not be
separately transferable until the Separability Date (as defined herein).

         C. The holders of the Warrants are entitled to the benefits of a
Warrant Registration Rights Agreement dated as of August 14, 2000 by and between
the Company and the Initial Purchasers (the "WARRANT REGISTRATION RIGHTS
AGREEMENT").

         D. The Company desires the Warrant Agent as warrant agent to assist the
Company in connection with the issuance, exchange, cancellation, replacement and
exercise of the Warrants, and in this Agreement wishes to set forth, among other
things, the terms and conditions on which the Warrants may be issued, exchanged,
canceled, replaced and exercised.

         NOW, THEREFORE, in consideration of the premises and mutual agreements
herein, the Company and the Warrant Agent hereby agree as follows:

         Defined terms used in this Agreement shall, unless the context
otherwise requires, have the meanings specified below. Certain additional terms
are set forth elsewhere in this Agreement. Any reference to any section of
applicable law shall be deemed to include successor provisions thereto.

         "AFFILIATE" has the meaning given to it in the Indenture.

         "BUSINESS DAY" means any day that is not a Saturday, Sunday or a day on
which banking institutions in New York are authorized or required by law to be
closed.

<PAGE>   6
                                      -2-

         "CAPITAL STOCK" means, with respect to any Person, any and all shares,
interests, participations, rights in or other equivalents (however designated
and whether voting or non-voting) of such Person's capital stock, whether
outstanding on the Issue Date or issued after the Issue Date, and any and all
rights (other than any evidence of indebtedness), warrants or options
exchangeable for or convertible into such capital stock.

         "CLASS" means, when referring to any Capital Stock, any class or series
of such Capital Stock.

         "CLEARSTREAM" means Clearstream Banking, Societe Anonyme, Luxembourg.

         "COMMON STOCK" means the Common Stock of the Company, par value $0.001
per share.

         "CONVERTIBLE SECURITY" shall mean any securities convertible or
exercisable or exchangeable into Common Stock of the Company of the same class
as Warrant Shares, whether outstanding on the Issue Date or thereafter issued.

         "DIRECT PARTICIPANT" means, with respect to the Depositary, Euroclear
or Clearstream, a Person who has an account with the Depositary, Euroclear or
Clearstream, respectively (and, with respect to The Depository Trust Company,
shall include Euroclear and Clearstream).

         "EUROCLEAR" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear System.

         "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

         "EXCHANGE OFFER REGISTRATION STATEMENT" means the registration
statement to be filed by RailAmerica Transportation and the Guarantors under the
Securities Act with respect to the exchange of the Notes for Series B Notes (as
defined in the Notes Registration Rights Agreement).

         "GUARANTORS" means the Company, Palm Beach Rail Holding, Inc., each
Restricted Subsidiary of RailAmerica Transportation as of the date of the
Indenture that is a Domestic Subsidiary and any other Subsidiary that executes a
guarantee in accordance with the provisions of the Indenture.

         "INDENTURE" means the indenture dated as of August 14, 2000, among
RailAmerica Transportation, the Guarantors and Wells Fargo Bank Minnesota, N.A.,
as trustee, relating to the Notes.

<PAGE>   7
                                      -3-

         "INDEPENDENT FINANCIAL EXPERT" means a nationally recognized
independent investment banking, appraisal or accounting firm.

         "INDIRECT PARTICIPANT" means a person who holds a beneficial interest
in a Global Warrant through a Direct Participant.

         "ISSUE DATE" means August 14, 2000, the date of the Indenture.

         "NOTES REGISTRATION RIGHTS AGREEMENT" means the Notes Registration
Rights Agreement dated as of August 14, 2000 among RailAmerica Transportation,
the Guarantors and the Initial Purchasers relating to the registration of the
Notes.

         "ONE YEAR RESTRICTED PERIOD" means the one year "distribution
compliance period" as defined in rule 902(f) of Regulation S.

         "PERSON" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.

         "SEC" means the Securities and Exchange Commission.

         "SECURITIES ACT" means the Securities Act of 1933, as amended.

         "SEPARABILITY DATE" means the earliest to occur of: (1) 180 days after
the date of this Agreement; (2) the date on which a registration statement for a
registered exchange offer with respect to the Notes is declared effective under
the Securities Act; (3) the date a shelf registration statement with respect to
the Notes or the Warrants is declared effective under the Securities Act; (4)
such date as Donaldson, Lufkin & Jenrette Securities Corporation in its sole
discretion shall determine; and (5) the date on which an Event of Default has
occurred or, in the event of a Change of Control (each as such term is defined
in the Indenture), the date the Company mails the requisite notice to the
holders.

         "TIME OF DETERMINATION" means (i) in the case of any distribution of
securities or other property to existing shareholders to which Section 13(b) or
13(c) applies, the time and date of the determination of shareholders entitled
to receive such securities or property or (ii) in the case of any other issuance
and sale to which Section 13(b) or 13(c) applies, the time and date of such
issuance or sale.

         "WARRANT SHARES" means the shares of Common Stock issuable upon
exercise of Warrants from time to time.

<PAGE>   8
                                      -4-

         SECTION 1. APPOINTMENT OF WARRANT AGENT. The Company hereby appoints
the Warrant Agent to act as agent for the Company in accordance with the
instructions hereinafter set forth in this Agreement, and the Warrant Agent
hereby accepts such appointment.

         SECTION 2. WARRANT CERTIFICATES. (a) The certificates representing the
Warrants ("WARRANT CERTIFICATES") will initially be issued in the form of one or
more registered global warrants (the "GLOBAL WARRANTS") substantially in the
form of EXHIBIT A attached hereto, which shall be deposited with the Warrant
Agent, as custodian for the Depositary (as defined below), and registered in the
name of DTC (as defined below) or the nominee of DTC for credit to the accounts
of DTC's Direct and Indirect Participants. Any Global Warrants to be delivered
pursuant to this Agreement shall bear the legend set forth in EXHIBIT B(1)
attached hereto. The Global Warrants shall represent such of the outstanding
Warrants as shall be specified therein, and each Global Warrant shall provide
that it shall represent the aggregate amount of outstanding Warrants from time
to time endorsed thereon and that the aggregate amount of outstanding Warrants
represented thereby may from time to time be reduced or increased, as
appropriate. Any endorsement of a Global Warrant to reflect the amount of any
increase or decrease in the amount of outstanding Warrants represented thereby
shall be made by the Warrant Agent and the Depositary in accordance with
instructions given by the holder thereof. The Depository Trust Company ("DTC")
shall act as the "DEPOSITARY" with respect to the Global Warrants until a
successor shall be appointed by the Company and the Warrant Agent. Upon written
request, a holder of Warrants may receive from the Warrant Agent or the
Depositary definitive Warrant Certificates ("DEFINITIVE WARRANTS") as set forth
in Section 6 hereof.

         (b) Warrants sold in offshore transactions in reliance on Regulation S
will initially be represented by one or more temporary, registered, global
book-entry Warrants (each a "REGULATION S TEMPORARY GLOBAL WARRANT") and shall
bear a legend substantially to the effect set forth in EXHIBIT A, which shall be
deposited with the Warrant Agent, as custodian for the Depositary, and
registered in the name of a nominee of DTC for credit to the accounts of
Indirect Participants participating in DTC through Euroclear and Clearstream.
During the One Year Restricted Period commencing on the day after the later of
the offering date and the original Issue Date of the Units in the case of
transfers by an owner of a beneficial interest in a Regulation S Temporary
Global Warrants, beneficial interests in the Regulation S Temporary Global
Warrant may be held only through Euroclear or Clearstream, and, pursuant to
DTC's procedures, Indirect Participants that hold a beneficial interest in the
Regulation S Temporary Global Warrant will not be able to transfer such interest
to a person that takes delivery thereof in the form of a beneficial interest in
the Global Warrant. Within a reasonable time after the expiration of the One
Year Restricted Period, the Regulation S Temporary Global Warrants will be
exchanged for one or more permanent global securities (the "REGULATION S
PERMANENT GLOBAL WARRANTS", upon delivery to DTC of certification of compliance
with the transfer restrictions

<PAGE>   9
                                      -5-

applicable to the Warrants and pursuant to Regulation S as provided in this
Agreement. After the One Year Restricted Period, (i) beneficial interests in the
Regulation S Permanent Global Warrants may be transferred to a person that takes
delivery in the form of an interest in the Global Warrants and (ii) beneficial
interests in the Global Warrants may be transferred to a person that takes
delivery in the form of an interest in the Regulation S Permanent Global
Warrants, PROVIDED, in each case, that the certification requirements described
in Section 6 hereof are complied with.

         SECTION 3. EXECUTION OF WARRANT CERTIFICATES. Warrant Certificates
shall be signed on behalf of the Company by its Chairman of the Board,
President, Chief Executive Officer, a Vice President, Treasurer, an Assistant
Treasurer or Chief Financial Officer and by a Vice President its Secretary or an
Assistant Secretary. Each such signature upon the Warrant Certificates may be in
the form of a facsimile signature of any such present or future officer and may
be imprinted or otherwise reproduced on the Warrant Certificates.

         In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been countersigned by the Warrant Agent, or
disposed of by the Company, such Warrant Certificates nevertheless may be
countersigned and delivered or disposed of as though such person had not ceased
to be such officer of the Company; and any Warrant Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Warrant Certificate, shall be a proper officer of the Company to sign such
Warrant Certificate, although at the date of the execution of this Warrant
Agreement any such person was not such officer.

         Warrant Certificates shall be dated the date of countersignature by the
Warrant Agent.

         SECTION 4. REGISTRATION AND COUNTERSIGNATURE. The Warrants shall be
numbered and shall be registered on the books of the Company maintained at the
principal office of the Warrant Agent in the Borough of Manhattan, City of New
York (the "WARRANT REGISTER") as they are issued.

         Warrant Certificates shall be manually countersigned by the Warrant
Agent and shall not be valid for any purpose unless so countersigned. The
Warrant Agent shall, upon written instructions of the Chairman of the Board, the
President, Chief Executive Officer, a Vice President, the Treasurer, an
Assistant Treasurer, Chief Financial Officer, Secretary or an Assistant
Secretary of the Company, initially countersign and deliver Warrants entitling
the holders thereof to purchase not more than the number of Warrant Shares
referred to above in the first recital hereof and shall thereafter countersign
and deliver Warrants as otherwise provided in this Agreement.

<PAGE>   10
                                      -6-

         The Company and the Warrant Agent may deem and treat the registered
holders (the "HOLDERS" or "WARRANTHOLDERS") of the Warrant Certificates as the
absolute owners thereof (notwithstanding any notation of ownership or other
writing thereon made by anyone) for all purposes, and neither the Company nor
the Warrant Agent shall be affected by any notice to the contrary.

         SECTION 5. TRANSFER AND EXCHANGE OF WARRANTS. The Warrant Agent shall
from time to time, subject to the limitations of Section 6, register the
transfer of any outstanding Warrants upon the records to be maintained by it for
that purpose, upon surrender thereof duly endorsed or accompanied (if so
required by it) by a written instrument or instruments of transfer in form
satisfactory to the Warrant Agent, duly executed by the registered Holder or
Holders thereof or by the duly appointed legal representative thereof or by a
duly authorized attorney. Subject to the terms of this Agreement, each Warrant
Certificate may be exchanged for another certificate or certificates entitling
the Holder thereof to purchase a like aggregate number of Warrant Shares as the
certificate or certificates surrendered then entitle each Holder to purchase.
Any Holder desiring to exchange a Warrant Certificate or Certificates shall make
such request in writing delivered to the Warrant Agent, and shall surrender,
duly endorsed or accompanied (if so required by the Warrant Agent) by a written
instrument or instruments of transfer in form satisfactory to the Warrant Agent,
the Warrant Certificate or Certificates to be so exchanged.

         Upon registration of transfer, the Company shall execute and the
Warrant Agent shall countersign and deliver by certified mail a new Warrant
Certificate or Certificates to the persons entitled thereto. The Warrant
Certificates may be exchanged at the option of the Holder thereof, when
surrendered at the office or agency of the Company maintained for such purpose,
which initially will be the corporate trust office of the Warrant Agent in New
York, New York for another Warrant Certificate, or other Warrant Certificates of
different denominations, of like tenor and representing in the aggregate the
right to purchase a like number of Warrant Shares.

         No service charge shall be made for any exchange or registration of
transfer of Warrant Certificates, but the Company may require payment of a sum
sufficient to cover any stamp or other tax or other governmental charge that is
imposed in connection with any such exchange or registration of transfer.

         SECTION 6. REGISTRATION OF TRANSFERS AND EXCHANGES.

         (a) TRANSFER AND EXCHANGE OF WARRANTS. When Warrants are presented to
the Warrant Agent with a request:

                  (i)      to register the transfer of the Warrants; or

<PAGE>   11
                                      -7-

                  (ii)     to exchange such Definitive Warrants for an equal
                           number of Warrants of other authorized denominations,

the Warrant Agent shall register the transfer or make the exchange as requested
if (and may refuse to register any transfer or exchange unless) the requirements
under this Agreement as set forth in this Section 6 for such transactions are
met; PROVIDED, HOWEVER, that the Warrants presented or surrendered for
registration of transfer or exchange:

         (x)      shall be duly endorsed or accompanied by a written instruction
                  of transfer in form satisfactory to the Company and the
                  Warrant Agent, duly executed by the holder thereof or by his
                  or her attorney, duly authorized in writing; and

         (y)      in the case of Warrants the offer and sale of which have not
                  been registered under the Securities Act, such Warrants shall
                  be accompanied, in the sole discretion of the Company, by the
                  following additional information and documents, as applicable,
                  it being understood, HOWEVER, that the Warrant Agent need not
                  determine which clause (A) through (F) below is applicable:

                  (A)      if such Warrant is being delivered to the Warrant
                           Agent by a holder for registration in the name of
                           such holder, without transfer, a certification from
                           such holder to that effect (in substantially the form
                           of EXHIBIT C HERETO); or

                  (B)      if such Warrant is being transferred to a qualified
                           institutional buyer (as defined in Rule 144A under
                           the Securities Act ("RULE 144A")) (a "QIB") in
                           accordance with Rule 144A or pursuant to an exemption
                           from registration in accordance with Rule 144 or
                           Regulation S under the Securities Act, a
                           certification to that effect (in substantially the
                           form of EXHIBIT C HERETO); or

                  (C)      if such Warrant is being transferred to an
                           institutional accredited investor within the meaning
                           of subparagraph (a)(1), (a)(2), (a)(3) or (a)(7) of
                           Rule 501 under the Securities Act (an "INSTITUTIONAL
                           ACCREDITED INVESTOR"), delivery by the transferor of
                           a certification to that effect (in substantially the
                           form of EXHIBIT C hereto), and delivery of a
                           Transferee Letter of Representation in connection
                           with Transfers to Institutional Accredited Investors
                           (in substantially the form of EXHIBIT D HERETO) and
                           an opinion of counsel and/or other information
                           reasonably acceptable to the Company to the effect
                           that such transfer is in compliance with the
                           Securities Act; or

<PAGE>   12
                                      -8-

                  (D)      if such Warrant is being transferred in reliance on
                           Regulation S under the Securities Act, delivery by
                           the transferor of a certification to that effect (in
                           substantially the form of EXHIBIT C hereto), and a
                           Transferee Letter of Representation in connection
                           with Transfers pursuant to Regulation S in the form
                           of EXHIBIT E hereto; or

                  (E)      if such Warrant is being transferred in reliance on
                           Rule 144 under the Securities Act, delivery by the
                           transferor of (i) a certification from the transferor
                           to that effect (in substantially the form of EXHIBIT
                           C hereto), and (ii) an opinion of counsel reasonably
                           satisfactory to the Company to the effect that such
                           transfer is in compliance with the Securities Act; or

                  (F)      if such Warrant is being transferred in reliance on
                           another exemption from the registration requirements
                           of the Securities Act, a certification to that effect
                           from the transferee or transferor (in substantially
                           the form of EXHIBIT C HERETO), and an opinion of
                           counsel from the transferee or transferor reasonably
                           acceptable to the Company to the effect that such
                           transfer is in compliance with the Securities Act.

         (b) RESTRICTIONS ON TRANSFER OF A DEFINITIVE WARRANT FOR A BENEFICIAL
INTEREST IN A GLOBAL WARRANT. A Definitive Warrant may not be transferred by a
holder for a beneficial interest in a Global Warrant except upon satisfaction of
the requirements set forth below. Upon receipt by the Warrant Agent of a
Definitive Warrant, duly endorsed or accompanied by appropriate instruments of
transfer, in form satisfactory to the Warrant Agent, together with:

                  (i)      certification from such holder (in substantially the
                           form of EXHIBIT C HERETO) that such Definitive
                           Warrant is being transferred to a QIB in accordance
                           with Rule 144A under the Securities Act; and

                 (ii)      written instructions directing the Warrant Agent to
                           make, or to direct the Depositary to make, an
                           endorsement on the Global Warrant to reflect an
                           increase in the aggregate amount of the Warrants
                           represented by the Global Warrant,

then the Warrant Agent shall cancel such Definitive Warrant and cause, or direct
the Depositary to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Warrant Agent, the number of
Warrant Shares represented by the Global Warrant to be increased accordingly. If
no Global Warrant is then outstanding, the

<PAGE>   13
                                      -9-

Company shall issue and the Warrant Agent shall upon written instructions from
the Company authenticate a new Global Warrant in the appropriate amount.

         (c) TRANSFER OR EXCHANGE OF GLOBAL WARRANTS. The transfer or exchange
of Global Warrants or beneficial interests therein shall be effected through the
Depositary, in accordance with this Section 6, the Private Placement Legend set
forth in EXHIBIT A, the other provisions of this Agreement (including the
restrictions on transfer set forth herein) and the procedures of the Depositary
therefor.

         (d) TRANSFER OR EXCHANGE OF A BENEFICIAL INTEREST IN A GLOBAL WARRANT
FOR A DEFINITIVE WARRANT.

                  (i)      Any Person having a beneficial interest in a Global
                           Warrant may transfer or exchange such beneficial
                           interest for a Definitive Warrant upon receipt by the
                           Warrant Agent of written instructions or such other
                           form of instructions as is customary for the
                           Depositary from the Depositary or its nominee on
                           behalf of any Person having a beneficial interest in
                           a Global Warrant, including a written order
                           containing registration instructions and the
                           following additional information and documents:

                  (A)      if such beneficial interest is being transferred to
                           the Person designated by the Depositary as being the
                           beneficial owner, a certification from such Person to
                           that effect (in substantially the form of EXHIBIT C);
                           or

                  (B)      if such beneficial interest is being transferred to a
                           QIB in accordance with Rule 144A under the Securities
                           Act, a certification from the transferor to that
                           effect (in substantially the form of EXHIBIT C); or

                  (C)      if such beneficial interest is being transferred to
                           an Institutional Accredited Investor, delivery by the
                           transferor of a certification to that effect (in
                           substantially the form of EXHIBIT C hereto), and
                           delivery of a Transferee Letter of Representation in
                           connection with Transfers to Institutional Accredited
                           Investors to that effect (in substantially the form
                           of EXHIBIT D) and an opinion of counsel and/or other
                           information reasonably acceptable to the Company to
                           the effect that such transfer is in compliance with
                           the Securities Act; or

                  (D)      if such beneficial interest is being transferred in
                           reliance on Regulation S under the Securities Act,
                           delivery of (i) a certification to that effect (in
                           substantially the form of EXHIBIT C hereto) and (ii)
                           a Transferee

<PAGE>   14
                                      -10-

                           Letter of Representation in connection with Transfers
                           pursuant to Regulation S in the form of EXHIBIT E
                           hereto; or

                  (E)      if such beneficial interest is being transferred in
                           reliance on Rule 144 under the Securities Act,
                           delivery by the transferor of (i) a certification to
                           that effect (in substantially the form of EXHIBIT C
                           hereto) and (ii) an opinion of counsel reasonably
                           satisfactory to the Company to the effect that such
                           transfer is in compliance with the Securities Act; or

                  (F)      if such beneficial interest is being transferred in
                           reliance on another exemption from the registration
                           requirements of the Securities Act, a certification
                           to that effect from the transferee or transferor (in
                           substantially in the form of EXHIBIT C) and an
                           opinion of counsel and/or other information
                           reasonably acceptable to the Company to the effect
                           that such transfer is in compliance with the
                           Securities Act (if such transfer is made specifically
                           pursuant to Regulation S, the transferor must also
                           deliver a Letter of Representation in connection with
                           Transfers pursuant to Regulation S in substantially
                           the form of EXHIBIT E),

then the Warrant Agent will cause, in accordance with the standing instructions
and procedures existing between the Depositary and the Warrant Agent, the
aggregate amount of the Global Warrant to be reduced and, following such
reduction, the Company will execute and, upon receipt of an countersignature
order in the form of an officers' certificate (a certificate signed by two
officers of the Company, one of whom must be the principal executive officer,
principal financial officer or principal accounting officer) (an "OFFICERS'
CERTIFICATE"), the Warrant Agent will countersign and deliver to the transferee
a Definitive Warrant.

                 (ii)      Definitive Warrants issued in exchange for a
                           beneficial interest in a Global Warrant pursuant to
                           this Section 6 shall be registered in such names and
                           in such authorized denominations as the Depositary,
                           pursuant to instructions from its Direct or Indirect
                           Participants or otherwise, shall instruct the Warrant
                           Agent in writing. The Warrant Agent shall deliver
                           such Definitive Warrants to the Persons in whose
                           names such Warrants are so registered and adjust the
                           Global Warrant pursuant to paragraph (g) of this
                           Section 6.

         (e) RESTRICTIONS ON TRANSFER OR EXCHANGE OF GLOBAL WARRANTS.
Notwithstanding any other provisions of this Agreement (other than the
provisions set forth in subsection (f) of this Section 6), a Global Warrant may
not be transferred or exchanged as a whole except by the Depositary to a nominee
of the Depositary or by a nominee of the Depositary to

<PAGE>   15
                                      -11-

the Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary.

                  (f)      COUNTERSIGNATURE OF DEFINITIVE WARRANTS IN ABSENCE OF
                           DEPOSITARY. If at any time:

                  (i)      the Depositary for the Global Warrants notifies the
                           Company that the Depositary is unwilling or unable to
                           continue as Depositary for the Global Warrants and a
                           successor Depositary for the Global Warrant is not
                           appointed by the Company within 90 days after
                           delivery of such notice; or

                 (ii)      the Company, at its sole discretion, notifies the
                           Warrant Agent in writing that it elects to cause the
                           issuance of Definitive Warrants for all Global
                           Warrants under this Agreement,

then the Company will execute, and the Warrant Agent will, upon receipt of an
Officers' Certificate requesting the countersignature and delivery of Definitive
Warrants, countersign and deliver Definitive Warrants, in an aggregate number
equal to the aggregate number of Warrants represented by the Global Warrant, in
exchange for such Global Warrant.

         (g) CANCELLATION OR ADJUSTMENT OF A GLOBAL WARRANT. At such time as all
beneficial interests in a Global Warrant have either been exchanged for
Definitive Warrants, redeemed, repurchased or canceled, such Global Warrant
shall be returned to the Company or, upon written order to the Warrant Agent in
the form of an Officers' Certificate from the Company, retained and canceled by
the Warrant Agent. At any time prior to such cancellation, if any beneficial
interest in a Global Warrant is exchanged for Definitive Warrants, redeemed,
repurchased or canceled, the number of Warrants represented by such Global
Warrant shall be reduced and an endorsement shall be made on such Global Warrant
by the Warrant Agent to reflect such reduction.

         (h) LEGENDS.

                  (i)      PRIVATE PLACEMENT LEGEND. Except as permitted by the
                           following sentence, each Warrant Certificate
                           evidencing the Warrants (and all Warrants issued in
                           exchange therefor or substitution thereof and, if the
                           Company deems appropriate, Warrant Shares issuable
                           upon exercise of the Warrants) shall bear a legend
                           substantially to the effect set forth in EXHIBIT A.
                           Upon any sale or transfer of a Warrant or Warrant
                           Share pursuant to Rule 144 under the Securities Act
                           in accordance with this Section 6 or under an
                           effective registration statement under the Securities

                                      -12-
<PAGE>   16

                           Act, the Warrant Agent shall permit the holder of a
                           Warrant to exchange such Warrant for a Definitive
                           Warrant and the Company shall permit the holder of a
                           Warrant Share to exchange such Warrant Share for a
                           share of Common Stock, in each case, that does not
                           bear the legend set forth in EXHIBIT A.

                 (ii)      UNIT LEGEND. Each Warrant issued prior to the
                           Separability Date shall bear a legend substantially
                           to the effect set forth in EXHIBIT B(2).

         (i) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF DEFINITIVE
AND GLOBAL WARRANTS.

                  (i)      To permit registrations of transfers and exchanges,
                           the Company shall execute, at the Warrant Agent's
                           request, and the Warrant Agent shall authenticate
                           Definitive and Global Warrants.

                 (ii)      All Definitive and Global Warrants issued upon any
                           registration, transfer or exchange of Definitive and
                           Global Warrants shall be the valid obligations of the
                           Company, entitled to the same benefits under this
                           Agreement as the Definitive and Global Warrants
                           surrendered upon the registration of transfer or
                           exchange.

                (iii)      Prior to due presentment for registration of transfer
                           of any Warrant, the Warrant Agent and the Company may
                           deem and treat the Person in whose name any Warrant
                           is registered as the absolute owner of such Warrant,
                           and neither the Warrant Agent nor the Company shall
                           be affected by notice to the contrary.

         SECTION 7. TERMS OF WARRANTS; EXERCISE OF WARRANTS. Subject to the
terms of this Agreement, each Warrantholder shall have the right, which may be
exercised commencing on or after the earlier of February 15, 2001 and the
Separability Date and until 5:00 p.m., New York City time, on August 15, 2010
(the "EXPIRATION DATE"), to receive from the Company upon the exercise of each
Warrant the number of fully paid and nonassessable Warrant Shares which the
holder may at the time be entitled to receive on exercise of such Warrants and
payment of the Exercise Price (as defined) for such Warrant Shares. Each Warrant
not exercised prior to the Expiration Date shall become void and all rights
thereunder and all rights in respect thereof under this Agreement shall cease as
of such time. No adjustments as to dividends will be made upon exercise of the
Warrants.

         The price per share at which Warrant Shares shall be purchasable upon
exercise of Warrants (the "EXERCISE PRICE") shall be equal to $6.60. The
Exercise Price shall

<PAGE>   17
                                      -13-

(except as set forth in Section 13(a)) not be affected by the Exercise Rate (as
defined) then in effect. A Warrant may be exercised upon surrender at the office
or agency of the Company maintained for such purpose, which initially will be at
the principal office of the Company, of the Warrant Certificate or Certificates
evidencing the Warrants to be exercised with the form of election to purchase on
the reverse thereof (the "ELECTION TO EXERCISE") duly filled in and signed,
which signature shall be guaranteed by a participant in a recognized Signature
Guarantee Medallion Program.

         The "EXERCISE DATE" for a Warrant shall be the date when all of the
items referred to in the immediately preceding sentence and the next paragraph
are received by the Warrant Agent at or prior to 11:00 a.m., New York City time,
on a Business Day and the exercise of the Warrants will be effective as of such
Exercise Date. If any items referred to in such sentence are received after
11:00 a.m., New York City time, on a Business Day, the exercise of the Warrants
to which such item relates will be effective on the next succeeding Business
Day. Notwithstanding the foregoing, in the case of an exercise of Warrants on
the Expiration Date, if all of the items referred to in such sentence are
received by the Warrant Agent at or prior to 5:00 p.m., New York City time, on
the Expiration Date, the exercise of the Warrants to which such items relate
will be effective on the Expiration Date.

         The Warrants may be exercised by surrendering to the Company the
Warrants to be exercised with the accompanying form of election to purchase
properly completed and executed, together with payment of the Exercise Price.
Payment of the Exercise Price may be made at the Holder's election (i) in cash
in United States dollars by wire transfer or by certified or official bank check
to the order of the Company or (ii) by the surrender of one or more Warrant
Certificates (and without the payment of the Exercise Price in cash) in exchange
for a number of shares of the Company's Common Stock equal to the product of (a)
the number of shares of the Company's Common Stock for which such Warrant is
exercisable as of the Exercise Date (if the Exercise Price were being paid in
cash), and (b) the Cashless Exercise Ratio (the "CASHLESS EXERCISE"). The
"CASHLESS EXERCISE RATIO" shall equal a fraction, the numerator of which is the
excess of the Current Market Value per share of the Company's Common Stock on
the Exercise Date over the Exercise Price per share as of the Exercise Date and
the denominator of which is the Current Market Value per share of the Company's
Common Stock on the Exercise Date. Upon surrender of a Warrant Certificate
representing more than one Warrant, the number of shares of the Company's Common
Stock deliverable upon a Cashless Exercise shall be equal to the product of the
number of shares of the Company's Common Stock issuable in respect of those
Warrants that the Holder specifies are to be exercised pursuant to a Cashless
Exercise multiplied by the Cashless Exercise Ratio. All provisions of this
Agreement shall be applicable with respect to an exercise of a Warrant
Certificate pursuant to a Cashless Exercise for less than the full number of
Warrants represented thereby.

<PAGE>   18
                                      -14-

         "CURRENT MARKET VALUE" per share of any class of Common Stock of the
Company at any date shall mean:

                  (1) if no class of Common Stock is then registered under the
         Exchange Act and traded on a national securities exchange or on the
         Nasdaq National Market System,

                           (a) the value of such class of Common Stock,
                  determined in good faith by the board of directors of the
                  Company and certified in a board resolution, taking into
                  account the most recently completed arms-length transaction
                  between the Company and a Person other than an Affiliate of
                  the Company and the closing of which occurs on such date or
                  shall have occurred within the six-month period preceding such
                  date, or

                           (b) if no such transaction shall have occurred on
                  such date or within such six-month period, the fair market
                  value of the security as determined by a nationally recognized
                  Independent Financial Expert; PROVIDED, HOWEVER, that, in the
                  case of the calculation of Current Market Value for
                  determining the cash value of fractional shares, any such
                  determination within six months that is, in the good faith
                  judgment of the board of directors, a reasonable determination
                  of value may be utilized, or

                  (2) (a) if any class of Common Stock is then registered under
         the Exchange Act and traded on a national securities exchange or on the
         Nasdaq National Market System, the average of the daily closing sales
         prices of such class of Common Stock for the 20 consecutive trading
         days immediately preceding such date, or

                           (b) if such class of Common Stock has been registered
                  under the Exchange Act and traded on a national securities
                  exchange or on the Nasdaq National Market System for less than
                  20 consecutive trading days before such date, then the average
                  of the daily closing sales prices for all of the trading days
                  before such date for which closing sales prices are available,
                  in the case of each of (2)(a) and (2)(b), as certified to the
                  Warrant Agent by the Chief Executive Officer, the President,
                  any Executive Vice President or the Chief Financial Officer or
                  Treasurer of the Company. The closing sales price of each such
                  trading day shall be the closing sales price, regular way, on
                  such day or, if no sale takes place on such day, the average
                  of the closing bid and asked prices on such day.

                  Subject to the provisions of Section 6 hereof, upon such
surrender of Warrants, the Company shall issue and cause to be delivered with
all reasonable dispatch to or upon the

<PAGE>   19
                                      -15-

written order of the Holder and in such name or names as the Warrantholder may
designate a certificate or certificates for the number of Warrant Shares
issuable upon the exercise of such Warrants. Such certificate or certificates
shall be deemed to have been issued and any Person so designated to be named
therein shall be deemed to have become a holder of record of such Warrant Shares
as of the Exercise Date. At the election of the Company with the consent of the
holder of record of the relevant Warrant Shares, Warrant Shares may initially be
issued in global form (the "GLOBAL SHARES"). Such Global Shares shall represent
such of the outstanding Warrant Shares as shall be specified therein and each
Global Share shall provide that it represents the aggregate amount of
outstanding Warrant Shares from time to time endorsed thereon and that the
aggregate amount of outstanding Warrant Shares represented thereby may from time
to time be reduced or increased, as appropriate. Any endorsement of a Global
Share to reflect any increase or decrease in the amount of outstanding Warrant
Shares represented thereby shall be made by the registrar for the Warrant Shares
and the Depositary (referred to below) in accordance with instructions given by
the holder thereof. DTC shall (if possible) act as the Depositary with respect
to the Global Shares until a successor shall be appointed by the Company and the
registrar for the Warrant Shares.

         The Warrants shall be exercisable only in whole. In the event that a
certificate evidencing Warrants is exercised in respect of fewer than all of the
Warrants evidenced thereby at any time prior to the date of expiration of the
Warrants, a new certificate evidencing the remaining Warrant or Warrants will be
issued, and the Warrant Agent is irrevocably authorized to countersign and to
deliver the required new Warrant Certificate or Certificates pursuant to this
Agreement, and the Company, whenever required by the Warrant Agent, will
promptly supply the Warrant Agent with Warrant Certificates duly executed on
behalf of the Company for such purpose. Holders of Warrants will be able to
exercise their Warrants only if a registration statement relating to the Warrant
Shares underlying the Warrants is then in effect, or the exercise of such
Warrants is exempt from the registration requirements of the Securities Act, and
such securities are qualified for sale or exempt from qualification under the
applicable securities laws of the states in which the various holders of
Warrants or other persons to whom it is proposed that Warrant Shares be issued
on exercise of the Warrants reside.

         All Warrant Certificates surrendered upon exercise of Warrants shall be
canceled by the Warrant Agent. Such canceled Warrant Certificates shall then be
disposed of by the Warrant Agent in a manner consistent with the Warrant Agent's
customary procedure for such disposal and in a manner reasonably satisfactory to
the Company. The Warrant Agent shall account promptly to the Company with
respect to Warrants exercised.

         The Warrant Agent shall keep copies of this Agreement and any notices
given or received hereunder available for inspection by the Holders during
normal business hours at

<PAGE>   20
                                      -16-

its office. The Company shall supply the Warrant Agent from time to time with
such numbers of copies of this Agreement as the Warrant Agent may request.

         SECTION 8. PAYMENT OF TAXES. The Company will pay all documentary stamp
taxes attributable to the initial issuance of Warrant Shares upon the exercise
of Warrants; PROVIDED, HOWEVER, that the Company shall not be required to pay
any tax or taxes which may be payable in respect of any transfer involved in the
issue of any Warrant Certificates or any certificates for Warrant Shares in a
name other than that of the registered holder of a Warrant Certificate
surrendered upon the exercise of a Warrant, and the Company shall not be
required to issue or deliver such Warrant Certificates unless or until the
Person or Persons requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.

         SECTION 9. RULES 144 AND 144A. The Company covenants that it will file
the reports required to be filed by it under the Securities Act and the Exchange
Act and the rules and regulations adopted by the SEC thereunder in a timely
manner in accordance with the requirements of the Securities Act and the
Exchange Act and, if at any time the Company is not required to file such
reports, it will, upon the request of any holder or beneficial owner of
warrants, make available such information necessary to permit sales pursuant to
Rule 144A under the Securities Act.

         SECTION 10. MUTILATED OR MISSING WARRANT CERTIFICATES. In case any of
the Warrant Certificates shall be mutilated, lost, stolen or destroyed, the
Company may at its discretion issue and the Warrant Agent may countersign, in
exchange and substitution for and upon cancellation of the mutilated Warrant
Certificate, or in lieu of and substitution for the Warrant Certificate lost,
stolen or destroyed, a new Warrant Certificate of like tenor and representing an
equivalent number of Warrants, but only upon receipt of evidence satisfactory to
the Company and the Warrant Agent of such loss, theft or destruction of such
Warrant Certificate and indemnity also satisfactory to them.

         SECTION 11. RESERVATION OF WARRANT SHARES. The Company will at all
times authorize and reserve and keep available, free from preemptive rights and
free from all taxes, liens, charges and security interests, out of the aggregate
of its authorized but unissued Common Stock or its authorized and issued Common
Stock held in its treasury, for the purpose of enabling it to satisfy its
obligation to issue Warrant Shares upon exercise of Warrants, the maximum number
of shares of Common Stock which may then be deliverable upon the exercise of all
outstanding Warrants.

         The Company or, if appointed, the transfer agent for the Common Stock
(the "TRANSFER AGENT") and every subsequent transfer agent for any shares of the
Company's Capital Stock issuable upon the exercise of any of the rights of
purchase aforesaid will be irrevocably

<PAGE>   21
                                      -17-

authorized and directed at all times to reserve such number of authorized shares
as shall be required for such purpose. The Company will keep a copy of this
Agreement on file with the Transfer Agent and with every subsequent transfer
agent for any shares of the Company's Capital Stock issuable upon the exercise
of the rights of purchase represented by the Warrants. The Warrant Agent is
hereby irrevocably authorized to requisition from time to time from such
Transfer Agent the stock certificates required to honor outstanding Warrants
upon exercise thereof in accordance with the terms of this Agreement. The
Company will supply such Transfer Agent with duly executed certificates for such
purposes and will provide or otherwise make available any cash which may be
payable as provided in Section 14. The Company will furnish such Transfer Agent
a copy of all notices of adjustments and certificates related thereto
transmitted to each holder pursuant to Section 15 hereof.

         The Company covenants that all Warrant Shares which may be issued upon
exercise of Warrants made in accordance with the terms of this Agreement will,
upon issuance, be duly and validly authorized and issued, fully paid,
nonassessable, free of preemptive rights and free from all taxes, liens, charges
and security interests with respect to the issuance thereof. The Company will
take no action to increase the par value of the Common Stock to an amount in
excess of the Exercise Price, and the Company will not enter into any agreements
inconsistent with the rights of Holders hereunder. The Company will use its
reasonable best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
necessary to enable the Company to perform its obligations under this Agreement.

         SECTION 12. OBTAINING STOCK EXCHANGE LISTINGS. The Company will from
time to time take all action which may be necessary so that the Warrant Shares,
immediately upon their issuance upon the exercise of Warrants, will be listed on
the principal securities exchanges and markets within the United States of
America (including the Nasdaq National Market System), if any, on which the
Company's Common Stock is then listed. In the event that, at any time during the
period in which the Warrants are exercisable, the Common Stock is not listed on
any principal securities exchanges or markets within the United States of
America, the Company will use its best efforts to permit the Warrant Shares to
be designated Portal securities in accordance with the rules and regulations
adopted by the National Association of Securities Dealers, Inc. relating to
trading in The Portal Market.

         SECTION 13. ADJUSTMENT OF NUMBER OF WARRANT SHARES ISSUABLE. The number
of Warrant Shares purchasable upon the exercise of each Warrant (the "EXERCISE
RATE") and the Exercise Price is subject to adjustment from time to time upon

<PAGE>   22
                                      -18-

the occurrence of the events enumerated in this Section 13. The Exercise Rate
shall initially be 10.8570307 to 1.

         (a) ADJUSTMENT FOR CHANGE IN CAPITAL STOCK. If, after the Issue Date,
the Company:

                  (i) pays a dividend or makes a distribution on shares of any
         class of its Common Stock payable in shares of its Common Stock or
         other Capital Stock of the Company (except to the extent any such
         dividend results in the grant, issuance, sale or making of Distribution
         Rights or Distributions to holders of Warrants pursuant to Section
         13(c));

                 (ii) subdivides or splits any of its outstanding shares of any
         class of Common Stock into a greater number of shares;

                  (iii) combines any of its outstanding shares of Common Stock
         into a smaller number of shares; and

                  (iv) issues by reclassification of any class of its Common
         Stock any shares of any of its Capital Stock.

then the Exercise Rate in effect immediately prior to such action for each
Warrant then outstanding shall be adjusted by multiplying the Exercise Rate in
effect immediately prior to such action by a fraction (A) the numerator of which
shall be the number of shares of Common Stock outstanding immediately after such
action and (B) the denominator of which shall be the number of shares of Common
Stock outstanding immediately prior to such action or the record date applicable
to such action, if any (regardless of whether the Warrants then outstanding are
then exercisable); and the Exercise Price for each Warrant shall be adjusted to
a number determined by dividing the Exercise Price immediately prior to such
event by such fraction. The adjustment shall become effective immediately after
the record date in the case of a dividend or distribution and immediately after
the effective date in the case of a subdivision, combination or
reclassification. In the event that such dividend or distribution is not so paid
or made or such subdivision, combination or reclassification is not effected,
the Exercise Rate shall again be adjusted to be the Exercise Rate which would
then be in effect if such record date or effective date had not been so fixed.

         If after an adjustment a holder of a Warrant upon exercise of such
Warrant may receive shares of two or more classes of Capital Stock of the
Company, the Exercise Rate shall thereafter be subject to adjustment upon the
occurrence of an action taken with respect to any such class of Capital Stock as
is contemplated by this Section 13 with respect to the Common Stock, on terms
comparable to those applicable to Common Stock in this Section 13.

         (b) ADJUSTMENT FOR CERTAIN SALES OF COMMON STOCK BELOW CURRENT MARKET
VALUE. If, after the Issue Date, the Company (i) grants or sells to any
Affiliate of the Company (other than a subsidiary of the Company) or (ii)
grants, sells or offers to grant or sell to all holders of Common Stock, any
shares of Common Stock or any securities convertible into

<PAGE>   23
                                      -19-

or exchangeable or exercisable for Common Stock or of rights, options or
warrants entitling them to subscribe for the Company's Common Stock or
securities convertible into, or exchangeable or exercisable for, the Company's
Common Stock (other than (1) pursuant to the exercise of the Warrants, (2)
pursuant to any security convertible into, or exchangeable or exercisable for,
shares of Common Stock outstanding as of the Issue Date, (3) upon the
conversion, exchange or exercise of any convertible, exchangeable or exercisable
security as to which upon the issuance thereof an adjustment pursuant to this
Section 13 has been made or (4) upon the conversion, exchange or exercise of
convertible, exchangeable or exercisable securities of the Company outstanding
on the Issue Date (to the extent in accordance with the terms of such securities
as in effect on such date), at a price below the then Current Market Value, the
Exercise Rate for each Warrant then outstanding shall be adjusted in accordance
with the formula:

                           E(1)     =           E X (O+N)
                                            ---------------
                                            (O + (N x P/M))

where:

E(1)   =       the adjusted Exercise Rate for each Warrant then outstanding;

E      =       the then current Exercise Rate for each Warrant then outstanding;

O      =       the number of shares of Common Stock outstanding immediately
               prior to the sale of such Common Stock or issuance of securities
               convertible, exchangeable or exercisable for Common Stock;

N      =       the number of shares of Common Stock so sold or the maximum
               stated number of shares of Common Stock issuable upon the
               conversion, exchange or exercise of any such convertible,
               exchangeable or exercisable securities, as the case may be;

P      =       the proceeds per share of Common Stock received by the Company,
               which (i) in the case of shares of Common Stock is the amount
               received by the Company in consideration for the sale and
               issuance of such shares; and (ii) in the case of securities
               convertible into or exchangeable or exercisable for shares of
               Common Stock is the amount received by the Company in
               consideration for the sale and issuance of such convertible or
               exchangeable or exercisable securities, plus the minimum
               aggregate amount of additional consideration, other than the
               surrender of such convertible or exchangeable securities, payable
               to the Company upon exercise, conversion or exchange thereof; and

<PAGE>   24
                                      -20-

M      =       the Current Market Value as of the Time of Determination or at
               the time of sale, as the case may be, of a share of Common Stock.

         The adjustment shall become effective immediately after the record date
for the determination of shareholders entitled to receive the rights, warrants
or options to which this paragraph (b) applies or upon consummation of the sale
of Common Stock, as the case may be. To the extent that shares of Common Stock
are not delivered after the expiration of such rights, warrants or options, the
Exercise Rate for each Warrant then outstanding shall be readjusted to the
Exercise Rate which would otherwise be in effect had the adjustment made upon
the issuance of such rights, warrants or options been made on the basis of
delivery of only the number of shares of Common Stock actually delivered. In the
event that such rights, warrants or options are not so issued, the Exercise Rate
for each Warrant then outstanding shall again be adjusted to be the Exercise
Rate which would then be in effect if such date fixed for determination of
shareholders entitled to receive such rights, warrants or options had not been
so fixed.

         No adjustment shall be made under this paragraph (b) if the application
of the formula stated above in this paragraph (a) would result in a value of E1
that is lower than the value of E.

         No adjustment shall be made under this paragraph (b) for any adjustment
which is the subject of paragraphs (a) and (d) of this Section 13.

         Notwithstanding the foregoing, no adjustment in the Exercise Rate will
be required in respect of: (a) the grant of any stock option or other stock
incentive award pursuant to any stock option or stock incentive plan or
arrangement as disclosed in the Offering Memorandum dated August 9, 2000
relating to the Units, (b) the grant of any stock option or stock incentive
award at an exercise price at least equal to the then Current Market Value, (c)
the grant of any other stock option or stock incentive award to any officer,
director or employee of the Company or any of its Subsidiaries pursuant to any
compensatory plan or arrangement that has been approved by the Company's board
of directors, or (d) the exercise of any such option or award.

         (c) ADJUSTMENT UPON CERTAIN DISTRIBUTIONS.

         (i) If at any time after the Issue Date the Company grants, issues or
sells options, any Convertible Security, or rights to purchase Capital Stock or
other securities (other than Common Stock) PRO RATA to the record holders or
series of Common Stock ("DISTRIBUTION RIGHTS") or, without duplication, makes
any distribution (other than a distribution pursuant to a plan of liquidation)
(a "DISTRIBUTION") on shares of Common Stock (whether in

<PAGE>   25
                                      -21-

cash, property, evidences of indebtedness, or otherwise), then the Exercise Rate
shall be adjusted in accordance with the formula:

                      E1      =        E x (M/(M-F))

where:

E1    =        the adjusted Exercise Rate;

E              the current Exercise Rate for each Warrant;

M     =        the Current Market Value per Warrant Share at the Time of
               Determination;

F     =        the fair market value at the Time of Determination of such
               portion of the options, Convertible Securities, Capital Stock or
               other securities, cash, property or assets distributable pursuant
               to such Distribution Rights or Distribution per share of
               outstanding Common Stock.

         The adjustment shall become effective immediately after the Time of
Determination with respect to the shareholders entitled to receive the options,
Convertible Securities, warrants, cash, property, evidences of indebtedness or
other securities or assets to which this paragraph (c)(i) applies. No adjustment
shall be made under this paragraph (c) if the application of the formula stated
above in this paragraph (c)(i) would result in a value of E1 that is lower than
the value of E. This paragraph (c)(i) does not apply to any securities or
distributions which result in an adjustment pursuant to paragraphs (a) or (b) of
this Section 13.

         (ii) Notwithstanding the provisions of paragraph (c)(i) of this Section
13, an event which would otherwise give rise to an adjustment pursuant to
Section 13(c)(i) shall not give rise to such adjustment if the Company grants,
issues or sells Distribution Rights to the Holders of Warrants or includes the
holders of the Warrants in such Distribution, in each case on a PRO RATA basis,
assuming for the purpose of this Section 13(c)(ii) that (x) all outstanding
shares of Common Stock are of one class and (y) the Warrants had been exercised.

         (iii) Notwithstanding anything to the contrary set forth in this
Section 13(c), if, at any time, the Company makes any distribution pursuant to
any plan of liquidation (a "LIQUIDATING DISTRIBUTION") on shares of Common Stock
(whether in cash, property, evidences of indebtedness or otherwise), then,
subject to applicable law, the Company shall make to each Holder of Warrants the
aggregate Liquidating Distribution which such Holder would have acquired if such
Holder had held the maximum number of shares of Common Stock acquirable upon the
complete exercise of each Holder's Warrants (regardless of whether the

<PAGE>   26
                                      -22-

Warrants are then exercisable) immediately before the Time of Determination of
shareholders entitled to receive Liquidating Distributions.

         (d) NOTICE OF ADJUSTMENT. Whenever the Exercise Rate is adjusted, the
Company shall promptly mail to holders of Warrants then outstanding at the
addresses appearing on the Warrant Register a notice of the adjustment. The
Company shall file with the Warrant Agent and any other Registrar such notice
and a certificate from the Company's independent public accountants briefly
stating the facts requiring the adjustment and the manner of computing it. The
certificate shall be conclusive evidence that the adjustment is correct, absent
manifest error. Neither the Warrant Agent nor any such Registrar shall be under
any duty or responsibility with respect to any such certificate except to
exhibit the same during normal business hours to any holder desiring inspection
thereof.

         (e) REORGANIZATION OF COMPANY; FUNDAMENTAL TRANSACTION.

                  (i) If the Company, in a single transaction or through a
series of related transactions, consolidates with or merges with or into any
other person or sells, assigns, transfers, leases, conveys or otherwise disposes
of all or substantially all of its properties and assets to another person or
group of affiliated persons or is a party to a merger or binding share exchange
which reclassifies or changes its outstanding Common Stock (a "FUNDAMENTAL
TRANSACTION"), as a condition to consummating any such transaction the person
formed by or surviving any such consolidation or merger if other than the
Company or the person to whom such transfer has been made (the "SURVIVING
PERSON") shall enter into a supplemental warrant agreement. The supplemental
warrant agreement shall provide (a) that the holder of a Warrant then
outstanding may exercise the Warrant for the kind and amount of securities, cash
or other assets which such holder would have received immediately after the
Fundamental Transaction if such holder had exercised the Warrant immediately
before the effective date of the transaction (regardless of whether the Warrants
are then exercisable and without giving effect to the Cashless Exercise option),
assuming (to the extent applicable) that such holder (i) was not a constituent
person or an affiliate of a constituent person to such transaction, (ii) made no
election with respect thereto, and (iii) was treated alike with the plurality of
non-electing holders, and (b) that the Surviving Person shall succeed to and be
substituted to every right and obligation of the Company in respect of this
Agreement and the Warrants. The supplemental warrant agreement shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 13. The Surviving Person shall mail to
holders of Warrants at the addresses appearing on the Warrant Register a notice
briefly describing the supplemental warrant agreement. If the issuer of
securities deliverable upon exercise of Warrants is an affiliate of the
Surviving Person, that issuer shall join in the supplemental warrant agreement.

<PAGE>   27
                                      -23-

                 (ii) Notwithstanding the foregoing, if the Company enters into
a Fundamental Transaction with another Person (other than a subsidiary of the
Company) and consideration is payable to holders of shares of Capital Stock (or
other securities or property) issuable or deliverable upon exercise of the
Warrants that are exercisable in exchange for such shares in connection with
such Fundamental Transaction which consideration consists solely of cash
assuming (to the extent applicable) that each such holder (i) was not a
constituent person or an affiliate of a constituent person to such transaction,
(ii) made no election with respect thereto, and (iii) was treated alike with the
plurality of non-electing holders), then the holders of Warrants shall be
entitled to receive distributions on the date of such event on an equal basis
with holders of such shares (or other securities issuable upon exercise of the
Warrants) as if the Warrants had been exercised immediately prior to such event,
less the aggregate Exercise Price therefor. Upon receipt of such payment, if
any, the rights of a holder of such Warrant shall terminate and cease and such
holder's Warrants shall expire.

                (iii) If this paragraph (e) applies, it shall supersede the
application of paragraph (a) of this Section 13.

         (f) OTHER EVENTS. If any event occurs as to which the provisions of
this Section 13 are not strictly applicable or, if strictly applicable, would
not, in the good faith judgment of the board of directors of the Company, fairly
and adequately protect the rights of the Warrantholders in accordance with the
essential intent and principles of such provisions, then such board of directors
shall make such adjustments in the application of such provisions, in accordance
with such essential intent and principles, as shall be reasonably necessary, in
the good faith opinion of such board of directors, to protect such rights as
aforesaid, but in no event shall any such adjustment have the effect of
decreasing the Exercise Rate or decreasing the number of Warrant Shares issuable
upon exercise of the Warrants. In addition, in the event that the Company has
redeemed its outstanding 6% junior convertible subordinated debentures due 2004
in whole prior to the conversion of any such debentures, the Exercise Rate then
in effect shall be adjusted downward to reflect 5.0% of the outstanding common
stock of the Company on a fully diluted basis after giving effect to such
redemption.

         (g) COMPANY DETERMINATION FINAL. Any determination that the Company or
the board of directors of the Company must make pursuant to this Section 13
shall be conclusive, absent manifest error.

         (h) WARRANT AGENT'S ADJUSTMENT DISCLAIMER. The Warrant Agent shall have
no duty to determine when an adjustment under this Section 13 should be made,
how it should be made or what it should be. The Warrant Agent shall have no duty
to determine whether a supplemental warrant agreement under paragraph (e) need
be entered into or whether any provisions of any supplemental warrant agreement
are correct. The Warrant Agent shall not be accountable for and makes no
representation as to the validity or value

<PAGE>   28
                                      -24-

of any securities or assets issued upon exercise of Warrants. The Warrant Agent
shall not be responsible for the Company's failure to comply with this
Section 13.

         (i) SPECIFICITY OF ADJUSTMENT. Regardless of any adjustment in the
number or kind of shares purchasable upon the exercise of the Warrants, Warrant
Certificates theretofore or thereafter issued may continue to express the same
number and kind of Warrant Shares per Warrant as are stated on the Warrant
Certificates initially issuable pursuant to this Agreement.

         (j) VOLUNTARY ADJUSTMENT. The Company from time to time may increase
the Exercise Rate by any number and for any period of time; PROVIDED, HOWEVER,
that such period is not less than 20 Business Days. Whenever the Exercise Rate
is so increased, the Company shall mail to holders at the addresses appearing on
the Warrant Register and file with the Warrant Agent a notice of the increase.
The Company shall give the notice at least 15 days before the date the increased
Exercise Rate takes effect. The notice shall state the increased Exercise Rate
and the period it will be in effect. A voluntary increase in the Exercise Rate
shall not change or adjust the Exercise Rate otherwise in effect as determined
by this Section 13.

         (k) MULTIPLE ADJUSTMENTS. After an adjustment to the Exercise Rate for
outstanding Warrants under this Section 13, any subsequent event requiring an
adjustment under this Section 13 shall cause an adjustment to the Exercise Rate
for outstanding Warrants as so adjusted.

         (l) WHEN DE MINIMIS ADJUSTMENT MAY BE DEFERRED. No adjustment in the
Exercise Rate shall be required unless such adjustment would require an increase
or decrease of at least 1% in such rate; PROVIDED, HOWEVER, that any adjustments
which by reason of the foregoing are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
shall be made by the Company and shall be rounded to the sixth decimal place. No
adjustment need be made for a change in the par value of the Common Stock and no
adjustment shall be deferred beyond the date on which a Warrant is exercised.

         (m) AMENDMENTS OF THE CERTIFICATE OF INCORPORATION. The Company shall
not amend its Certificate of Incorporation in a manner that adversely affects
the holders of Warrants, without the prior consent of the holders of a majority
of the Warrants outstanding (excluding Warrants held by the Company or any of
its Affiliates), as determined in good faith by the Company's board of
directors.

         SECTION 14. FRACTIONAL INTERESTS. The Company shall not be required to
issue fractional Warrant Shares on the exercise of Warrants. If more than one
Warrant shall be

<PAGE>   29
                                      -25-

presented for exercise in full at the same time by the same holder, the number
of full Warrant Shares which shall be issuable upon the exercise thereof shall
be computed on the basis of the aggregate number of Warrant Shares purchasable
on exercise of the Warrants so presented. If any fraction of a Warrant Share
would, except for the provisions of this Section 14, be issuable on the exercise
of any Warrants (or specified portion thereof), the Company shall pay an amount
in cash equal to the Current Market Value per Warrant Share on the day
immediately preceding the date the Warrant is presented for exercise, multiplied
by such fraction.

         SECTION 15. NOTICE OF CERTAIN DISTRIBUTIONS; CERTAIN RIGHTS. The
Company shall give prompt written notice to the Warrant Agent and shall cause
the Warrant Agent, on behalf of and at the expense of the Company to give to
each Holder written notice of any determination to make a distribution to the
holders of its Common Stock of any cash dividends, assets, debt securities,
preferred stock, or any rights or warrants to purchase debt securities,
preferred stock, assets or other securities (other than Common Stock, or rights,
options, or warrants to purchase Common Stock) of the Company, which notice
shall state the nature and amount of such planned dividend or distribution and
the record date therefor, and shall be received by the Holders at least 20 days
prior to such record date therefor.

         Except as expressly provided in this Agreement or in any Warrant
Certificate, the holders of unexercised Warrants shall have no right to vote, to
consent, to exercise any preemptive rights or to receive notice as shareholders
of the Company in respect of the meetings of shareholders or the election of
directors of the Company or any other matter, or to exercise any rights
whatsoever as shareholders of the Company.

                  SECTION 16. NOTICES TO THE COMPANY AND WARRANT AGENT. Any
notice or demand authorized by this Agreement to be given or made by the Warrant
Agent or by any Holder to or on the Company shall be sufficiently given or made
when received at the office of the Company expressly designated by the Company
as its office for purposes of this Agreement (until the Warrant Agent is
otherwise notified in accordance with this Section 16 by the Company), as
follows:

          RailAmerica, Inc.                        copies to:
          5300 Broken Sound Boulevard, N.W.        Greenberg Traurig, P.A.
          Boca Raton, Florida 33487                1221 Brickell Avenue
          Attn:  General Counsel                   Miami, Florida 33131
                                                   Attn:  Fern S. Watts

         Any notice pursuant to this Agreement to be given by the Company or by
any Holder(s) to the Warrant Agent shall be sufficiently given when received by
the Warrant Agent at the address appearing below (until the Company is otherwise
notified in accordance with this Section by the Warrant Agent).

<PAGE>   30
                                      -26-

                  Wells Fargo Bank Minnesota, N.A.
                  Sixth & Marquette
                  MAC N9303-120
                  Minneapolis, MN 55479
                  Attn:  Corporate Trust Services

         Any notice or communication to a holder shall be mailed by first class
mail, postage prepaid, to its address shown on the register kept by Warrant
Agent.

         SECTION 17. SUPPLEMENTS AND AMENDMENTS. (a) From time to time, the
Company and the Warrant Agent, without the consent of the Holders of the
Warrants, may amend or supplement this Agreement for certain purposes, including
curing ambiguities, defects or inconsistencies or making any change that does
not adversely affect the legal rights of any Holder. Any amendment or supplement
to this Agreement that adversely affects the legal rights of the Holder of the
Warrants will require the written consent of the Holders of a majority of the
then outstanding Warrants (excluding Warrants held by the Company or any of its
Affiliates). The consent of each Holder of the Warrants affected will be
required for any amendment pursuant to which the Exercise Price would be
increased or the number of Warrant Shares purchasable upon exercise of Warrants
would be decreased (other than pursuant to adjustments provided in this
Agreement) or any of the adjustment provisions in this Agreement would be
changed in a manner that would have any such effect.

         (b) After an amendment or modification under this Section 17 becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing such amendment or modification. Any failure of the Company to
mail such notice, or any defect therein, shall not, however, in any way impair
or affect the validity of any such amendment or modification.

         In connection with any amendment or modification under this Section 17,
the Company may offer, but shall not be obligated to offer, to any Holder who
consents to such amendment or modification, consideration for such Holder's
consent, so long as such consideration is offered to all Holders.

         (c) Executed or true and correct copies of any amendment or
modification effected pursuant to the provisions of this Section 17 shall be
delivered by the Company to each Holder of outstanding Warrants or Warrant
Shares forthwith following the date on which the same shall have been executed
and delivered by the Holder or Holders of the requisite percentage of
outstanding Warrant Shares (but only to the extent the Company has been provided
with the addresses for the Holders).

<PAGE>   31
                                      -27-

         SECTION 18. CONCERNING THE WARRANT AGENT. The Warrant Agent undertakes
the duties and obligations imposed by this Agreement upon the following terms
and conditions, by all of which the Company and the Holders, by their acceptance
of Warrants, shall be bound:

                  (a) The statements contained herein and in the Warrant
         Certificate shall be taken as statements of the Company, and the
         Warrant Agent assumes no responsibility for the correctness of any of
         the same except such as describe the Warrant Agent or any action taken
         by it. The Warrant Agent assumes no responsibility with respect to the
         distribution of the Warrants except as herein otherwise provided.

                  (b) The Warrant Agent shall be protected and shall not be
         responsible for and shall incur no liability to the Company or any
         Holder for any failure of the Company to comply with the covenants
         contained in this Agreement or in the Warrants to be complied with by
         the Company.

                  (c) The Warrant Agent may execute and exercise any of the
         rights or powers hereby vested in it or perform any duty hereunder
         either itself (through its employees) or by or through its attorneys or
         agents (which shall not include its employees) and shall not be
         responsible for the misconduct of any attorney or agent appointed with
         due care.

                  (d) The Warrant Agent may consult at any time with legal
         counsel satisfactory to it (who may be counsel for the Company), and
         the Warrant Agent shall incur no liability or responsibility to the
         Company or to any Holder in respect of any action taken, suffered or
         omitted by it hereunder in good faith and in accordance with the
         opinion or the advice of such counsel.

                  (e) Whenever in the performance of its duties under this
         Agreement the Warrant Agent shall deem it necessary or desirable that
         any fact or matter be proved or established by the Company prior to
         taking or suffering any action hereunder, such fact or matter (unless
         such evidence in respect thereof be herein specifically prescribed) may
         be deemed conclusively to be proved and established by a certificate
         signed by the Chairman of the Board, the President, one of the Vice
         Presidents, the Treasurer or the Secretary of the Company and delivered
         to the Warrant Agent; and such certificate shall be full authorization
         to the Warrant Agent for any action taken or suffered in good faith by
         it under the provisions of this Agreement in reliance upon such
         certificate.

                  (f) The Company agrees to pay the Warrant Agent such
         compensation for all services rendered by the Warrant Agent in the
         performance of its duties under this

<PAGE>   32
                                      -28-

         Agreement as may be separately agreed in writing, to reimburse the
         Warrant Agent for all expenses, taxes and governmental charges and
         other charges of any kind and nature incurred by the Warrant Agent in
         the performance of its duties under this Agreement (including, without
         limitation, reasonable fees and expenses of counsel), and to indemnify
         the Warrant Agent and its agents, employees, directors, officers and
         affiliates and save it and them harmless against any and all
         liabilities, losses and expenses, including, without limitation,
         judgments, costs and counsel fees, for anything done or omitted by the
         Warrant Agent in the acceptance and performance of its duties under
         this Agreement, except as a result of the Warrant Agent's gross
         negligence or bad faith, including, without limitation, the costs and
         expenses of defending against any claim (whether asserted by the
         Company, a Holder or any other Person) of liability in the premises
         including reasonable attorneys' fees and expenses. The provisions of
         this paragraph shall survive the resignation or removal of the Warrant
         Agent and the termination of this Agreement.

                  (g) The Warrant Agent shall be under no obligation to
         institute any action, suit or legal proceeding or to take any other
         action likely to involve expense unless the Company or one or more
         holders shall furnish the Warrant Agent with reasonable security and
         indemnity for any costs and expenses which may be incurred, but this
         provision shall not affect the power of the Warrant Agent to take such
         action as the Warrant Agent may consider proper, whether with or
         without any such security or indemnity. All rights of action under this
         Agreement or under any of the Warrants may be enforced by the Warrant
         Agent without the possession of any of the Warrants or the production
         thereof at any trial or other proceeding relative thereto, and any such
         action, suit or proceeding instituted by the Warrant Agent shall be
         brought in its name as Warrant Agent, and any recovery of judgment
         shall be for the ratable benefit of the holders, as their respective
         rights or interests may appear.

                  (h) The Warrant Agent and any stockholder, director, officer
         or employee ("RELATED PARTIES") of the Warrant Agent may buy, sell or
         deal in any of the Warrants or other securities of the Company or
         become pecuniarily interested in any transactions in which the Company
         may be interested, or contract with or lend money to the Company or
         otherwise act as fully and freely as though it were not Warrant Agent
         under this Agreement or such director, officer or employee. Nothing
         herein shall preclude the Warrant Agent or any Related Party from
         acting in any other capacity for the Company or for any other legal
         entity including, without limitation, acting as Transfer Agent or as a
         lender to the Company or an affiliate thereof.

                  (i) The Warrant Agent shall act hereunder solely as agent, and
         its duties shall be determined solely by the provisions thereof. The
         Warrant Agent shall not be liable for anything which it may do or
         refrain from doing in connection with this

<PAGE>   33
                                      -29-

         Agreement except for its own negligence or bad faith. No implied duties
         or obligations shall be read into this Agreement against the Warrant
         Agent.

                  (j) The Warrant Agent will be protected and will not incur any
         liability or responsibility to the Company or to any holder for any
         action taken, suffered or omitted by it in reliance on any notice,
         resolution, waiver, consent, order, certificate, or other paper,
         document or instrument reasonably believed by it to be genuine and to
         have been signed, sent or presented by the proper party or parties.

                  (k) The Warrant Agent is hereby authorized and directed to
         accept instructions with respect to the performance of its duties
         hereunder from the Chairman of the Board, the President, Chief
         Financial Officer, Treasurer, any Vice President or the Secretary of
         the Company, and to apply to such officers for advice or instructions
         in connection with its duties, and shall not be liable for any action
         taken or suffered to be taken by it in good faith and without
         negligence in accordance with instructions of any such officer or
         officers.

                  (l) By countersigning Warrant Certificates or by any other act
         hereunder the Warrant Agent shall not be deemed to make any
         representations as to validity or authorization of the Warrants or the
         Warrant Certificates (except as to its countersignature thereon) or of
         any securities or other property delivered upon exercise or tender of
         any Warrant, or as to the accuracy of the computation of the Exercise
         Price or the number or kind or amount of stock or other securities or
         other property deliverable upon exercise of any Warrant or the
         correctness of the representations of the Company made in any
         certifications that the Warrant Agent receives. The Warrant Agent shall
         not have any duty to calculate or determine any adjustments with
         respect either to the Exercise Price or the kind and amount of shares
         or other securities or any property receivable by holders of Warrants
         upon the exercise or tender of Warrants required from time to time, and
         the Warrant Agent shall have no duty or responsibility in determining
         the accuracy or correctness of any such calculation.

                  (m) No provision of this Agreement shall require the Warrant
         Agent to expend or risk its own funds or otherwise incur any financial
         liability in the performance of any of its duties hereunder or in the
         exercise of its rights if there shall be reasonable grounds for
         believing that repayment of such funds or adequate indemnification
         against such risk or liability is not reasonably assured to it.

         SECTION 19. CHANGE OF WARRANT AGENT. The Warrant Agent may resign and
be discharged from its duties under this Agreement by giving to the Company 30
days' notice in writing. The Warrant Agent may be removed by like notice to the
Warrant Agent from the Company. If the Warrant Agent shall resign or be removed
or shall otherwise become incapable

<PAGE>   34
                                      -30-

of acting, the Company shall appoint a successor to the Warrant Agent. If the
Company shall fail to make such appointment within a period of 30 days after
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Warrant Agent or by any holder (who
shall with such notice submit his Warrant for inspection by the Company), then
any holder or the resigning or removed Warrant Agent may apply to any court of
competent jurisdiction for the appointment of a successor to the Warrant Agent.
Pending appointment of a successor to the Warrant Agent, either by the Company
or by such court, the duties of the Warrant Agent shall be carried out by the
Company. Any successor warrant agent, whether appointed by the Company or such a
court, shall be a bank or trust company in good standing, incorporated under the
laws of the United States of America or any State thereof or the District of
Columbia and having at the time of its appointment as warrant agent a combined
capital and surplus of at least $50,000,000. After appointment, the successor
warrant agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Warrant Agent without
further act or deed; but the former Warrant Agent shall deliver and transfer to
the successor warrant agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
such purpose. Failure to file any notice provided for in this Section 19,
however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Warrant Agent or the appointment of the successor
warrant agent, as the case may be. In the event of such resignation or removal,
the Company or the successor warrant agent shall mail by first class mail,
postage prepaid, to each Holder, written notice of such removal or resignation
and the name and address of such successor warrant agent.

         SECTION 20. IDENTITY OF TRANSFER AGENT. Forthwith, the Transfer Agent
for the Common Stock, or any other shares of the Company's Capital Stock
issuable upon the exercise of the Warrants shall be American Stock Transfer and
Trust Company.

         SECTION 21. SEC REPORTS AND OTHER INFORMATION. The Company shall at all
times make available to the Warrant Agent and Holders of Warrants such annual
reports and such information, documents and other reports as are specified in
Sections 13 and 15(d) of the Exchange Act of documents and other reports to be
so provided at the times specified for the filing of such information, documents
and reports under such Sections of the Exchange Act. In addition, for so long as
any Warrants remain outstanding, the Company will make available to the Holders
and to securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act, and, to beneficial holders of Warrants, if not obtainable from
the SEC, information of the type that would be filed with the SEC pursuant to
the foregoing provisions, upon the request of any such holder. Availability of
such reports, information and documents to the Warrant Agent is for
informational purposes only and the Warrant Agent's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information

<PAGE>   35
                                      -31-

contained therein, including the Company's compliance with any of its covenants
hereunder (as to which the Warrant Agent is entitled to rely exclusively on
Officers' Certificates).

         SECTION 22. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company, the Warrant Agent or any holder
of Warrants shall bind and inure to the benefit of their respective successors
and assigns hereunder.

         SECTION 23. TERMINATION. This Agreement shall terminate on the
Expiration Date. Notwithstanding the foregoing, this Agreement will terminate on
any earlier date if all Warrants have been exercised or redeemed pursuant to
this Agreement or the Company's Certificate of Incorporation.

         SECTION 24. GOVERNING LAW. This Agreement and each Warrant Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of New York and shall be governed by and construed in accordance with the
laws of said State, without regard to the conflict of law rules thereof.

         SECTION 25. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Company, the
Warrant Agent and the registered holders of the Warrant Certificates from time
to time any legal or equitable right, remedy or claim under this Agreement; but
this Agreement shall be for the sole and exclusive benefit of the Company, the
Warrant Agent and the registered holders of the Warrant Certificates.

         SECTION 26. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.

<PAGE>   36
                                      -32-

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, 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

                                  WELLS FARGO BANK MINNESOTA, N.A.,
                                    as Warrant Agent

                                  By: /s/ Timothy P. Mowdy
                                      -----------------------------------
                                      Name: Timothy P. Mowdy
                                      Title: Corporate Trust Officer

<PAGE>   37

                                                                       Exhibit A

         THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN
THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT
AS SET FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL
INTEREST HEREIN, THE HOLDER:

                  (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
         BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"),
         (B) IT HAS ACQUIRED THIS SECURITY IN AN OFFSHORE TRANSACTION IN
         COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS AN
         INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2),
         (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT (AN "IAI")),

                  (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS
         SECURITY EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A
         PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS
         OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE
         REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE
         REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES
         ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER
         THE SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER,
         FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
         REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THE
         SECURITIES (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND IF
         SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES
         LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY
         THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT (AND BASED
         UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY), (F) IN
         ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
         THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO
         THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
         AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS

                                      A-1
<PAGE>   38

         OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION,
         AND

                  (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
         SECURITY OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
         THE EFFECT OF THIS LEGEND.

         AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES"
HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES
ACT.

                                      A-2
<PAGE>   39

No. [  ]                                                    CUSIP # [        ]

                          COMMON STOCK PURCHASE WARRANT
                                       OF
                                RAILAMERICA, INC.

         THIS CERTIFIES THAT [ ], or its registered assigns, is the registered
holder of ______________ Warrants (the "WARRANTS"). Each Warrant entitles the
holder thereof (the "HOLDER"), at its option at any time on or after the
Separability Date and subject to the provisions contained herein and in the
Warrant Agreement referred to below, to purchase from RailAmerica, Inc., a
Delaware corporation (the "COMPANY"), 10.8570307 shares of Common Stock, par
value $0.001 per share, of the Company at an exercise price per share equal to
$6.60 (the "EXERCISE PRICE").

         This Warrant Certificate shall terminate and become void as of the
close of business on August 15, 2010 (the "EXPIRATION DATE") or, if earlier,
upon the exercise hereof as to all the shares of Common Stock subject hereto.
The number of shares issuable upon exercise of the Warrants shall be subject to
adjustment from time to time as set forth in the Warrant Agreement (as defined).

         This Warrant Certificate is issued under and in accordance with a
Warrant Agreement dated as of August 14, 2000 (the "WARRANT AGREEMENT"), between
the Company and Wells Fargo Bank Minnesota, N.A., as Warrant Agent, and is
subject to the terms and provisions contained in the Warrant Agreement, to all
of which terms and provisions the Holder of this Warrant Certificate consents by
acceptance hereof. The Warrant Agreement is hereby incorporated herein by
reference and made a part hereof. Reference is hereby made to the Warrant
Agreement for a full statement of the respective rights, limitations of rights,
duties and obligations of the Company and the Warrantholders. Capitalized terms
used but not defined herein shall have the meanings ascribed thereto in the
Warrant Agreement. A copy of the Warrant Agreement may be obtained for
inspection by the Holder hereof upon written request to the Company at 5300
Broken Sound Boulevard, N.W., Boca Raton, Florida 33487, Attn: General Counsel.

         Subject to the terms of the Warrant Agreement, the Warrants may be
exercised upon surrender at the office or agency of the Company maintained for
such purpose, which initially will be the corporate trust office of the Warrant
Agent in New York, New York, of the certificate or certificates evidencing the
Warrants to be exercised with the form of election to purchase on the reverse
thereof duly filled in and signed, and upon payment to the Warrant Agent for the
account of the Company of the Exercise Price for the number of Warrant Shares in
respect of which such Warrants are then exercised. The Exercise Price may be
paid at the

                                      A-3
<PAGE>   40

holder's election (i) in cash in United States dollars by wire transfer or by
certified or official bank check to the order of the Company or (ii) by the
surrender of one or more Warrant Certificates (and without the payment of the
Exercise Price in cash) in exchange for a number of shares of the Company's
Common Stock equal to the product of (a) the number of shares of the Company's
Common Stock for which such Warrant is exercisable as of the Exercise Date (if
the Exercise Price were being paid in cash), and (b) the Cashless Exercise
Ratio. The "Cashless Exercise Ratio" shall equal a fraction, the numerator of
which is the excess of the Current Market Value per share of the Company's
Common Stock on the Exercise Date over the Exercise Price per share as of the
Exercise Date and the denominator of which is the Current Market Value per share
of the Company's Common Stock on the Exercise Date. Upon surrender of a Warrant
Certificate representing more than one Warrant, the number of shares of the
Company's Common Stock deliverable upon a Cashless Exercise shall be equal to
the product of the number of shares of the Company's Common Stock issuable in
respect of those Warrants that the holder specifies are to be exercised pursuant
to a Cashless Exercise multiplied by the Cashless Exercise Ratio. All provisions
of the Warrant Agreement shall be applicable with respect to an exercise of a
Warrant Certificate pursuant to a Cashless Exercise for less than the full
number of Warrants represented thereby.

         The Warrants shall be exercisable only in whole. In the event that a
certificate evidencing Warrants is exercised in respect of fewer than all of the
Warrants evidenced thereby at any time prior to the date of expiration of the
Warrants, a new certificate evidencing the remaining Warrant or Warrants will be
issued, and the Warrant Agent is irrevocably authorized to countersign and to
deliver the required new Warrant Certificate or Certificates pursuant to the
Warrant Agreement, and the Company, whenever required by the Warrant Agent, will
promptly supply the Warrant Agent with Warrant Certificates duly executed on
behalf of the Company for such purpose.

         This Warrant Certificate shall not be valid unless countersigned by the
Warrant Agent as such term is used in the Warrant Agreement.

         As provided in the Warrant Agreement, the Exercise Rate and the
Exercise Price are subject to adjustment upon the happening of certain events.

         The Company will pay all documentary stamp taxes attributable to the
initial issuance of Warrant Shares upon the exercise of Warrants; PROVIDED,
HOWEVER, that the Company shall not be required to pay any tax or taxes which
may be payable in respect of any transfer involved in the issue of any Warrant
Certificates or any certificates for Warrant Shares in a name other than that of
the registered holder of a Warrant Certificate surrendered upon the exercise of
a Warrant, and the Company shall not be required to issue or deliver such
Warrant Certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.

                                      A-4
<PAGE>   41

         The Company shall not be required to issue fractional Warrant Shares on
the exercise of Warrants. If more than one Warrant shall be presented for
exercise in full at the same time by the same holder, the number of full Warrant
Shares which shall be issuable upon the exercise thereof shall be computed on
the basis of the aggregate number of Warrant Shares purchasable on exercise of
the Warrants so presented. If any fraction of a Warrant Share would be issuable
on the exercise of any Warrants (or specified portion thereof), the Company
shall pay an amount in cash equal to the Current Market Value per Warrant Share
on the day immediately preceding the date the Warrant is presented for exercise,
multiplied by such fraction.

         All Warrant Shares issuable by the Company upon the exercise of the
Warrants shall, upon such issue, be duly and validly issued and fully paid and
non-assessable.

         The Company and the Warrant Agent may deem and treat Holders of the
Warrant Certificates as the absolute owners thereof (notwithstanding any
notation of ownership or other writing thereon made by anyone) for all purposes,
and neither the Company nor the Warrant Agent shall be affected by any notice to
the contrary.

                                      A-5
<PAGE>   42

         The Warrants do not entitle any Holder hereof to any of the rights of a
stockholder of the Company.

                                        RAILAMERICA, INC.

                                        By:
                                           ----------------------------------
                                           Name:
                                           Title:

                                        By:
                                           ----------------------------------
                                           Name:
                                           Title:

DATED:

COUNTERSIGNED:

WELLS FARGO BANK MINNESOTA, N.A.,
as Warrant Agent

By:
   ----------------------------------
   Authorized Signature

                                      A-6
<PAGE>   43

                   FORM OF ELECTION TO PURCHASE WARRANT SHARES
                 (to be executed only upon exercise of Warrants)

                                RAILAMERICA, INC.

         The undersigned hereby irrevocably elects to exercise
__________________ Warrants on the terms and conditions specified in the Warrant
Certificate and the Warrant Agreement, surrenders this Warrant Certificate and
all right, title and interest therein to RailAmerica, Inc. and directs that the
Warrant Shares deliverable upon the exercise of such Warrants be registered or
placed in the name and at the address specified below and delivered thereto.

Date:    ____________, ____

Your Signature.
               ----------------------------------------------------------------
               (Sign exactly as your name appears on the face of this Warrant
               Certificate)

--------------------------------------------------------------------------------
                                (Street Address)

--------------------------------------------------------------------------------
(City)                   (State)                                     (Zip Code)

Signature Guaranteed by:

-----------------------------------------
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements
of the Registrar, which requirements include
membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as
may be determined by the Registrar in addition
to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.

<PAGE>   44

Securities and/or check to be issued to:

Please insert social security or identifying number:

Name:

Street Address:

City, State and Zip Code:

                                      -2-
<PAGE>   45

                                 ASSIGNMENT FORM

To assign this Warrant, fill in the form below:

I or we assign and transfer this Warrant to

(Print or type assignee's name, address and zip code)

(Insert assignee's soc. sec. or tax I.D. No.)

and irrevocably appoint             agent to transfer this Warrant on the books
of the Company. The agent may substitute another to act for him.

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

Date:  _____________________

Your Signature:
               -----------------------------------------------------------------
               (Sign exactly as your name appears on the face of this
               Warrant Certificate)

Signature Guaranteed by:

-----------------------------------------
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements
of the Registrar, which requirements include
membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be
determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.

<PAGE>   46

                                                                    Exhibit B(1)

                             [GLOBAL WARRANT LEGEND]

                  Any Global Warrant countersigned and delivered hereunder shall
bear a legend in substantially the following form:

         THIS SECURITY IS A GLOBAL WARRANT WITHIN THE MEANING OF THE WARRANT
         AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
         DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS SECURITY IS NOT EXCHANGEABLE
         FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
         DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED
         IN THE WARRANT AGREEMENT, AND NO TRANSFER OF THIS SECURITY (OTHER THAN
         A TRANSFER OF THIS SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE
         OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY
         OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE
         LIMITED CIRCUMSTANCES DESCRIBED IN THE WARRANT AGREEMENT. UNLESS THIS
         CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
         DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
         OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND
         ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
         SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
         (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
         REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE
         OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
         WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
         INTEREST HEREIN.

                                      B-1
<PAGE>   47

                                                                    Exhibit B(2)

                                  [UNIT LEGEND]

                  Any Warrant issued on or after the Issue Date and prior to the
Separability Date shall bear the legend set forth in the following paragraph:

                  THE WARRANTS EVIDENCED BY THIS CERTIFICATE ARE INITIALLY
ISSUED AS PART OF AN ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF $1,000
PRINCIPAL AMOUNT OF THE 12 7/8% SENIOR SUBORDINATED NOTES DUE 2010 OF
RAILAMERICA TRANSPORTATION CORP. (THE "NOTES") AND ONE WARRANT (EACH, A
"WARRANT" AND COLLECTIVELY, THE "WARRANTS"), EACH WARRANT INITIALLY ENTITLING
THE HOLDER THEREOF TO PURCHASE 10.8570307 SHARES OF COMMON STOCK, $0.001 PAR
VALUE, OF RAILAMERICA, INC. (THE "COMMON STOCK"). PRIOR TO THE SEPARABILITY
DATE, THE WARRANTS EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED OR
EXCHANGED SEPARATELY FROM, AND MAY BE TRANSFERRED OR EXCHANGED ONLY TOGETHER
WITH, THE NOTES.

                                      B-2
<PAGE>   48

                                                                       Exhibit C

                    CERTIFICATE TO BE DELIVERED UPON EXCHANGE
                     OR REGISTRATION OF TRANSFER OF WARRANTS

Re:      Warrants to Purchase Common Stock (the "WARRANTS")
         of RailAmerica, Inc.

         This Certificate relates to __________ Warrants held by
________________ (the "TRANSFEROR").

         The Transferor has requested the Warrant Agent by written order to
exchange or register the transfer of a Warrant or Warrants.

         In connection with such request and in respect of each such Warrant,
the Transferor hereby certifies that the Transferor is familiar with the Warrant
Agreement dated as of August 14, 2000, between RailAmerica, Inc., a Delaware
corporation, and Wells Fargo Bank Minnesota, N.A., as warrant agent (the
"WARRANT AGREEMENT"), relating to the above captioned Warrants and the
restrictions on transfers thereof as provided in Section 6 of such Warrant
Agreement, and that the transfer of this Warrant does not require registration
under the Securities Act of 1933, as amended (the "ACT"), because*:

         [ ] Such Warrant is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 6(a)(y)(A) of the Warrant
Agreement).

         [ ] Such Warrant is being transferred to a qualified institutional
buyer (as defined in Rule 144A under the Act) in reliance on Rule 144A or is
being transferred in accordance with Regulation S under the Act.

         [ ] Such Warrant is being transferred in accordance with Rule 144 under
the Act.

         [ ] Such Warrant is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Act, other than Rule
144A or Rule 144 or Regulation S under the Act. An opinion of counsel to the
effect that such transfer does not require registration under the Act
accompanies this Certificate.

                                      C-1
<PAGE>   49

                                               -------------------------------
                                               [INSERT NAME OF TRANSFEROR]

                                               By:
                                                  ----------------------------
Date:
     -------------------------------
         *Check applicable box.

                                      C-2
<PAGE>   50

                                                                       Exhibit D

                  [Form of Transferee Letter of Representation
       in Connection with Transfers to Institutional Accredited Investors]

Wells Fargo Bank Minnesota, N.A.
Sixth & Marquette
MAC N9303-120
Minneapolis, Minnesota 55479

Ladies and Gentlemen:

         In connection with our proposed purchase of warrants to purchase Common
Stock, par value $0.001 per share (the "SECURITIES"), RailAmerica, Inc. (the
"COMPANY"), we confirm that:

                  1. We understand that the Securities have not been registered
         under the Securities Act of 1933, as amended (the "SECURITIES ACT"),
         and, unless so registered, may not be offered, sold or otherwise
         transferred except as permitted in the following sentence. We agree on
         our own behalf and on behalf of any investor account for which we are
         purchasing Securities to offer, sell or otherwise transfer such
         Securities prior to the date which is two years after the later of the
         date of original issue and the last date on which the Company or any
         affiliate of the Company was the owner of such Securities (or any
         predecessor Securities) (the "RESALE RESTRICTION TERMINATION DATE")
         only (a) to the Company, (b) pursuant to a registration statement which
         has been declared effective under the Securities Act, (c) for so long
         as the Securities are eligible for resale pursuant to Rule 144A under
         the Securities Act, to a person we reasonably believe is a qualified
         institutional buyer as defined in Rule 144A (a "QIB") that purchases
         for its own account or for the account of a QIB and to whom notice is
         given that the transfer is being made in reliance on Rule 144A, (d)
         pursuant to offers and sales that occur outside the United States
         within the meaning of Regulation S under the Securities Act, (e) to an
         institutional "accredited investor" within the meaning of subparagraph
         (a)(1), (a)(2), (a)(3) or (a)(7) of Rule 501 under the Securities Act
         that is acquiring the Securities for its own account or for the account
         of such an institutional "accredited investor", for investment purposes
         and not with a view to, or for offer or sale in connection with, any
         distribution in violation of the Securities Act, or (f) pursuant to
         another available exemption from the registration requirements of the
         Securities Act, subject in each of the foregoing cases to any
         requirement of law that the disposition of our property or the property
         of such investor account or accounts be at all times within our or

                                      D-1
<PAGE>   51

         their control and to compliance with any applicable state securities
         laws. The foregoing restrictions on resale will not apply subsequent to
         the Resale Restriction Termination Date. If any resale or other
         transfer of the Securities is proposed to be made pursuant to clause
         (e) above prior to the Resale Restriction Termination Date, the
         transferor shall deliver a letter from the transferee substantially in
         the form of this letter to the warrant agent under the Warrant
         Agreement pursuant to which the Securities were issued (the "WARRANT
         AGENT") which shall provide, among other things, that the transferee is
         an institutional "accredited investor" within the meaning of
         subparagraph (a)(1), (a)(2), (a)(3) or (a)(7) of Rule 501 under the
         Securities Act and that it is acquiring such Securities for investment
         purposes and not for distribution in violation of the Securities Act.
         The Warrant Agent and the Company reserve the right prior to any offer,
         sale or other transfer prior to the Resale Restriction Termination Date
         of the Securities pursuant to clause (c), (d), (e) or (f) above to
         require the delivery of a written opinion of counsel, certifications,
         and or other information satisfactory to the Company and the Warrant
         Agent.

                  2. We are an institutional "accredited investor" (as defined
         in Rule 501(a)(1), (a)(2), (a)(3) or (a)(7) of Regulation D under the
         Securities Act) purchasing for our own account or for the account of
         such an institutional "accredited investor", and we are acquiring the
         Securities for investment purposes and not with a view to, or for offer
         or sale in connection with, any distribution in violation of the
         Securities Act and we have such knowledge and experience in financial
         and business matters as to be capable of evaluating the merits and
         risks of our investment in the Securities, and we and any accounts for
         which we are acting are each able to bear the economic risk of our or
         its investment for an indefinite period.

                  3. We are acquiring the Securities purchased by us for our own
         account or for one or more accounts as to each of which we exercise
         sole investment discretion.

                                      D-2
<PAGE>   52

                  4. You and your counsel are entitled to rely upon this letter
         and you are irrevocably authorized to produce this letter or a copy
         hereof to any interested party in any administrative or legal
         proceeding or official inquiry with respect to the matters covered
         hereby.

                                               Very truly yours,

                                               -------------------------------
                                               (Name of Purchaser)

                                               By:
                                                  ----------------------------

                                               Date:
                                                    --------------------------

                  Upon transfer the Securities would be registered in the name
of the new beneficial owner as follows:

Name:
     ----------------------------

Address:
        -------------------------

Taxpayer ID Number:
                   --------------

                                      D-3
<PAGE>   53

                                                                       Exhibit E

                  [Form of Transferee Letter of Representation
             in Connection with Transfers Pursuant to Regulation S]

Wells Fargo Bank Minnesota, N.A.
Sixth & Marquette
MAC N9303-120
Minneapolis, Minnesota 55479

Ladies and Gentlemen:

         In connection with our proposed purchase of warrants (the "SECURITIES")
to purchase Common Stock, par value $0.001 per share, of RailAmerica, Inc. (the
"COMPANY"), we confirm that such sale has been effected pursuant to and in
accordance with Regulation S under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), and, accordingly, we represent that:

         (1)      The undersigned certifies that it is not a U.S. person and is
                  not acquiring the Securities for the account or benefit of any
                  U.S. person.

         (2)      The undersigned agrees to resell the Securities only in
                  accordance with the provisions of Regulation S, pursuant to
                  registration under the Securities Act of 1933 or pursuant to
                  an available exemption from registration.

         (3)      The undersigned agrees not to engage in hedging transactions
                  with regard to the Securities unless in compliance with the
                  Securities Act.

         You and your counsel are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Defined terms used herein without
definition have the respective meanings provided in Regulation S under the
Securities Act.

                                              Very truly yours,

                                              (Name of Purchaser)

                                              By:
                                                 ----------------------------

                                      E-1
<PAGE>   54

         Upon transfer the Securities would be registered in the name of the new
beneficial owner as follows:

Name:
     ----------------------------

Address:
        -------------------------

Taxpayer ID Number:
                   --------------

                                      E-2

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