Railamerica Inc/DE – ‘10KSB’ for 12/31/96 – EX-10.57

As of:  Monday, 3/31/97   ·   For:  12/31/96   ·   Accession #:  950144-97-3453   ·   File #:  0-20618

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Annual Report — Small Business   —   Form 10-KSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10KSB       Railamerica 10KSB 12/31/96                            75    359K 
 2: EX-10.57    Committment Letter                                    63    228K 
 3: EX-10.58    Agreement for Sale of Assets                          45     83K 
 4: EX-27       Financial Data Schedule                                1      6K 

EX-10.57   —   Committment Letter
Exhibit Table of Contents

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[NATIONAL BANK OF CANADA LETTERHEAD]    

March 3, 1997   

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

ATTN: GARY O. MARINO, CEO and President                                         

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

Dear Gary:                                                                      

       NATIONAL BANK OF CANADA, a Canadian Chartered Bank ("NBC"), as agent,
and as sixty-two and one-half (62.5%) percent pro-rata lender, and COMERICA     
BANK, a Michigan banking corporation ("Comerica"), as thirty-seven and one-half 
(37.5%) percent pro-rata lender, are pleased to offer a credit facility in the  
form of a revolving line of credit/term loan facility in the amount of Forty    
Million and 00/100 Dollars ($40,000,000.00) (the "Loan") to RAILAMERICA, INC.,  
a Delaware corporation, KALYN/SIEBERT, INCORPORATED, a Texas corporation,       
RAILAMERICA INTERMODAL SERVICES, INC., a Delaware corporation, RAILAMERICA      
CARRIERS, INC., a corporation organized under the laws of the Province of       
Ontario, STEEL CITY CARRIERS INC., a corporation organized under the laws of    
the Province of Ontario, SAGINAW VALLEY RAILWAY COMPANY, INC., a Delaware       
corporation, HURON AND EASTERN RAILWAY COMPANY, INC., a Michigan corporation,   
WEST TEXAS AND LUBBOCK RAILROAD COMPANY, INC., a Texas corporation, PLAINVIEW   
TERMINAL COMPANY, a Texas corporation, CASCADE AND COLUMBIA RIVER RAILROAD      
COMPANY, a Delaware corporation, OTTER TAIL VALLEY RAILROAD COMPANY, INC., a    
Minnesota corporation, MINNESOTA NORTHERN RAILROAD, INC., a Delaware            
corporation, and, DELAWARE VALLEY RAILWAY COMPANY, INC., a Delaware corporation 
(sometimes hereinafter collectively referred to as "Borrower" or "Borrowers").  
NBC and Comerica are sometimes hereinafter collectively referred to as "Lender" 
or "Lenders".  In connection with the administration of the Loan, it is         

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March 3, 1997                                                                   
Page 2                                                                          

acknowledged that NBC shall act as agent on behalf of the Lenders, such that    
all requests and information required to be provided to Lenders in connection   
with the funding and administration of the Loan shall be provided to NBC, on    
behalf of the Lenders, at the local office of NBC in Boca Raton, Florida.  It   
is further acknowledged that in connection with all decisions to be made by the 
Lenders in connection with the administration of the Loan, all monetary matters 
shall require the consent of all of the Lenders, and all non-monetary matters   
shall require the consent of Lenders holding sixty-six and two-thirds (66 2/3%) 
percent or greater percentage participation interests in the Loan in the        
aggregate.  A more detailed description of the funding, administration and      
enforcement actions to be taken in connection with the Loan by the Lenders      
shall be set forth in the Loan Agreement to be entered into by and between the  
Borrowers and the Lenders at the time of the closing of the Loan.  The Loan is  
more particularly described below, which Loan shall be subject to all of the    
following terms and conditions.                                                 

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

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

      For purposes of this letter, "Eligible Receivables" shall be defined
as accounts receivable of Borrowers which are accounts receivable arising out   
of sales of tangible personal property made by Borrowers or services provided   
by Borrowers in the ordinary course of their                                    

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March 3, 1997                                                                   
Page 3                                                                          

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

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

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

 For purposes of this letter, "Machinery and Equipment" shall be
defined as all machinery, equipment, furniture, fixtures, computer hardware and 
software, hand and power tools, trucks, forklifts, automobiles, heavy           
equipment, railroad equipment and other equipment, rolling stock (exclusive of  
locomotives financed by other lenders) and other motor vehicles,                

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March 3, 1997                                                                   
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trucks, machinery and equipment of all classes, together with parts thereof and 
accessions thereto, wherever located, now owned or hereafter acquired by any of 
the Borrowers excluding (i) locomotives and other Machinery and Equipment       
financed by other Lenders or with purchase money financing and (ii) new assets  
acquired by any of the Borrowers for cash or through financing sources other    
than Lender, except for any new assets acquired by any Borrower which are       
replacements of any existing Machinery and Equipment.                           

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

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

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

    The aggregate amounts advanced under the Loans shall not exceed an
amount equal to (i) the Eligible Receivables, less such reserves as Lender, in  
its reasonable discretion elects to establish, provided further that a          
receivable may be devalued in such amount as shall be determined by Lender in   
its reasonable discretion due to "Dilution" which is defined as and is          

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March 3, 1997                                                                   
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the result of non-cash credits posted against the Receivable which results in   
payment or other satisfaction of all or any portion of the Receivable for       
reasons other than full payment of the Receivable in cash, together with an     
amount equal to (ii) the Eligible Inventory, together with an amount equal to   
(iii) the appraised aggregate fair market value of the Real Estate as           
determined by that certain Real Property "Market Value" Appraisal dated May 9,  
1994, as updated by Appraisal Update dated August 19, 1996, both the appraisal  
and the update prepared by M.B. Valuation Services, Inc. in connection with the 
Texas Real Property, that certain Appraisal of Corridors, Land and Buildings,   
HURON & EASTERN RAILWAY COMPANY, INC., SAGINAW VALLEY RAILWAY COMPANY, INC.,    
State of Michigan, dated February 28, 1994 prepared by Oetzel Hanton Williams   
in connection with the Michigan Real Property, said appraisals updated by two   
(2) appraisal updates prepared by Main Line Management Services, Inc., both     
updates dated August 30, 1996, that certain Appraisal of Commercial Property    
located at 710 Second Line West, Sault Ste. Marie, Ontario, prepared by Area    
Real Estate Appraisals, Inc. dated August 1994 in connection with the Ontario   
Real Property, that certain Development of Net Liquidation Value Appraisal      
prepared by Main Line Management Services, Inc., dated October 17, 1995, as     
updated by update appraisal prepared by Main Line Management Services, Inc.,    
dated August 16, 1996, in connection with the West Texas and Lubbock Real       
Property, that certain Fair Market Value of Real Property prepared by Main Line 
Management Services, Inc., dated August 13, 1996, in connection with the        
Washington Real Property, and, that certain Fair Market Value Appraisal of the  
Real Property and the Railroad Trackage prepared by Main Line Management        
Services, Inc., dated December 12, 1996 in connection with the Minnesota Real   
Property and an appraisal of the Gettysburg Real Property to be provided by     
Borrower to Lender, which appraisal must be in form and content satisfactory to 
Lender, in its sole and absolute discretion, in order for the Gettysburg Real   
Property to be eligible for financing under the Loan (it being acknowledged     
that no valuation attributed to any of the Railroad Trackage as set forth in    
the above set forth Real Estate Appraisals shall be included within the         
valuation attributable to the Real Estate), which (aggregate) fair market       
values as determined by the above set forth appraisals are subject to           
adjustment by the Lender, as set forth below, together with an amount equal to  
(iv) the forced liquidation value of the Machinery and Equipment as determined  
by a Machinery and Equipment Appraisal prepared by Truck Locators, Inc., dated  
January 20, 1995 (related to STEEL CITY CARRIERS, INC.) which (aggregate)       
forced liquidation value is subject to adjustment by the Lender as set forth    
below, together with an amount equal to (v) the net liquidation value of the    
Railroad Trackage as determined by the Railroad Trackage Appraisal (as defined  
in that certain Loan Agreement entered into by and between NBC and certain of   
the Borrowers dated as of the 21st day of October, 1996) as further determined  
by the Real Estate/Railroad Trackage Appraisal (as defined in that certain Loan 
Agreement entered into by and between Comerica and Minnesota dated as of the    
27th day of December, 1996), and as determined by an appraisal (the "Gettysburg 
Railroad Trackage Appraisal") of the Railroad Trackage owned by DELAWARE VALLEY 
RAILWAY COMPANY, INC. located in Gettysburg, Pennsylvania (the "Gettysburg      
Railroad Trackage") to be provided by Borrower to Lender, which must result in  
findings satisfactory to                                                        

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March 3, 1997                                                                   
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Lender, in its sole and absolute discretion, in order for the Gettysburg        
Railroad Trackage to be eligible for financing under the Loan (it being         
acknowledged that no value attributed to the Real Estate as set forth in the    
Railroad Trackage Appraisal, the Real Estate/Railroad Trackage Appraisal or the 
Gettysburg Railroad Trackage Appraisal shall be included in the valuation       
attributable to the Railroad Trackage), which net liquidation value is subject  
to adjustment by the Lender as set forth below, such that all of the above set  
forth appraisals and values shall be subject to adjustment by Lender, such that 
the final amounts of the fair market values, the forced liquidation values and  
the net liquidation values, shall be determined by Lender in their sole and     
absolute discretion (the "Borrowing Base"); or, the aggregate sum of Forty      
Million and 00/100 Dollars ($40,000,000.00), whichever is less, provided that   
in connection with the Loan that up to Five Million and 00/100 Dollars          
($5,000,000.00) of the Loan may be used for the issuance of Trade Letters of    
Credit and Standby Letters of Credit (collectively the "Letters of Credit")     
provided, however, that collateral for the Letters of Credit will be one        
hundred (100%) percent reserved and will reduce availability for direct         
borrowings under the Loan on a dollar-for-dollar basis in an amount equal to    
the face amount of the Letters of Credit outstanding, and provided further that 
the outstanding amount of the Loan shall in no event exceed the maximum sum of  
Forty Million and 00/100 Dollars ($40,000,000.00), and provided further, that   
at no time shall the Minimum Asset Ratio be less than 1.4 to 1, which "Minimum  
Asset Ratio" is defined as the Borrowing Base divided by the total outstanding  
principal amount of the Loan ("Minimum Asset Ratio"), and in the event that the 
Minimum Asset Ratio is less than 1.4 to 1, then the outstanding principal       
balance of the Loan must be reduced by the amount necessary to achieve a        
Minimum Asset Ratio of equal to or greater than 1.4 to 1.  The principal        
payment necessary to effectuate such reduction shall be due and payable in full 
on DEMAND.                                                                      

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

  In connection with any requests for an Acquisition Advance, said
request shall be subject to Lender's approval, which approval will not be       
unreasonably withheld.  ADDITIONALLY, ALL ACQUISITIONS BY ONE OR MORE OF THE    
BORROWERS OR BY AN AFFILIATE OF TRANSPORTATION RELATED BUSINESSES OR ANY OTHER  
BUSINESSES MUST BE APPROVED BY LENDER, WHICH APPROVAL WILL NOT BE UNREASONABLY  
WITHHELD.  In connection with the same, Borrower shall provide to NBC at the    
time of the request for an Acquisition Advance or at the time Borrower seeks    
approval from Lender in connection with a proposed acquisition by Borrower, as  
applicable, certified copies of the Contract for Purchase and Sale and all      
associated documentation associated with the applicable                         

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March 3, 1997                                                                   
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Borrower's acquisition of a transportation related business, including, without 
limitation, all contracts, breakout of purchase price, cash flow analysis,      
projected income from the acquisition, historical performance of the business   
being acquired, and all appraisals and environmental audits related to the      
property being acquired by a Borrower or an Affiliate.  Based upon Lender's     
review of all of the above, Lender may effectuate or not effectuate the         
Acquisition Advance or approve or not approve the acquisition, as applicable,   
in Lender's reasonable discretion.  Lender shall approve or not approve each    
request for an Acquisition Advance, or approve or not approve an acquisition,   
as applicable, no later than five (5) business days after the time that NBC has 
received the last item required to be reviewed by Lender in connection with the 
applied for Acquisition Advance or approval of an acquisition, as applicable.   
Lender shall approve or not approve each request for a Collateralized           
Acquisition Advance no later ten (10) business days after the time that NBC has 
received the last item required to be reviewed by Lender in connection with the 
applied for Collateralized Acquisition Advance.  Borrower shall additionally    
provide to NBC copies of all closing documentation associated with the          
acquisition and sale at the time of the closing of said acquisition and shall   
execute all documentation required by Lender, in order to evidence and perfect  
Lender's security interest in the newly acquired assets.                        

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

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March 3, 1997                                                                   
Page 8                                                                          

(the "Outstanding Principal Balance") will convert into a term loan such that   
the Outstanding Principal Balance shall amortize over a ten (10) year period    
with monthly payments of principal (based upon a ten (10) year amortization of  
the Outstanding Principal Balance) plus accrued interest (all of said payments  
to be debited from Borrower's depository account held with NBC), due and        
payable on a monthly basis on the first day of each month, through and until    
the Maturity Date (as defined and set forth below) with additional monthly      
payments of interest only due and payable on the remaining revolving portion of 
the Note on the first day of each month (all of said payments to be debited     
from Borrower's depository account held with NBC) through and until the         
Maturity Date with the entire principal balance and all accrued and unpaid      
interest under the Note together with all other applicable charges to be        
payable in full three (3) years from the date of the execution of the Note (the 
"Maturity Date").                                                               

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

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

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

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

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

        4.      LATE CHARGE:  A late charge equal to three (3%) percent of the
amount of any payment shall be due and payable with the payment then due and    
owing in the event such payment is not made within ten (10) days after the date 
such payment is due under the Loan.                                             

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March 3, 1997                                                                   
Page 9                                                                          

     5.      PREPAYMENT:  If during the term of the Loan (i) the Loan is
paid down to a zero (0) balance or (ii) the Lender's obligation to make         
advances under the Loan ceases for reasons other than the fact that there is no 
availability under the Borrowing Base for the effectuation of an advance, the   
Borrower shall pay to the Lender a prepayment fee in an amount equal to (i)     
three-quarters of one (.75%) percent of the face amount of the Note during the  
first year; (ii) one-half of one (.50%) percent of the face amount of the Note  
during the second year, and (iii) one-quarter of one (.25%) percent of the face 
amount of the Note during the third year.                                       

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

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

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

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

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

     UNUSED LINE FEE:  An unused line fee shall be charged in connection
with the Loans, such that the unused portion of the Loans shall be subject to an
annual fee of one-quarter of one (.25%) percent per annum, to be calculated and 
payable upon a quarterly basis.                                                 

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ADMINISTRATIVE FEE - COLLATERALIZED ACQUISITION ADVANCES:  An 
administrative fee in the  sum of Five Thousand and 00/100 Dollars ($5,000.00)  
shall be due and payable at the time of the effectuation of a Collateralized    
Acquisition Advance, for each Collateralized Acquisition Advance effectuated    
under the Loan.  No administrative fee shall be due and owing in connection     
with the effectuation of an Acquisition Advance which is not collateralized.    

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(iv)     Good Standing of Borrower:           

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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March 3, 1997                                                                   
Page 32                                                                         

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

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

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

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

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

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

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March 3, 1997                                                                   
Page 33                                                                         

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

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

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

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

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

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

INTENTIONALLY LEFT BLANK    

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March 3, 1997                                                                   
Page 34                                                                         

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

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

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

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

                                       Very truly yours,

                                             NATIONAL BANK OF CANADA

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

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

                                   COMERICA BANK

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

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March 3, 1997                                                                   
Page 35                                                                         

ACCEPTED this ____ day of March, 1997.                                          

   RAILAMERICA, INC., a Delaware
corporation               

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

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

                        (Corporate Seal)

    KALYN/SIEBERT, INCORPORATED, a
Texas corporation         

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

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

                        (Corporate Seal)

RAILAMERICA INTERMODAL    
SERVICES, INC., a Delaware
corporation               

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

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

                        (Corporate Seal)

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March 3, 1997                                                                   
Page 36                                                                         

          RAILAMERICA CARRIERS, INC., an
Ontario corporation 

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

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

                              (Corporate Seal)

                STEEL CITY CARRIERS INC., an Ontario
corporation         

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

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

                              (Corporate Seal)

  SAGINAW VALLEY RAILWAY
     COMPANY, INC., a Delaware
corporation         

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

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

                              (Corporate Seal)

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March 3, 1997                                                                   
Page 37                                                                         

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

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

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

                                  (Corporate Seal)

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

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

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

                                  (Corporate Seal)

             PLAINVIEW TERMINAL COMPANY, a
 Texas corporation

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

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

                          (Corporate Seal)

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March 3, 1997                                                                   
Page 38                                                                         

CASCADE AND COLUMBIA RIVER
  RAILROAD COMPANY, a Delaware
corporation               

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

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

                        (Corporate Seal)

 OTTER TAIL VALLEY RAILROAD,
   INC., a Minnesota corporation

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

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

                        (Corporate Seal)

  MINNESOTA NORTHERN RAILROAD,
  INC., a Delaware corporation

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

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

                        (Corporate Seal)

DELAWARE VALLEY RAILWAY   
COMPANY, INC., a Delaware 
corporation               

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

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

                        (Corporate Seal)

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RAILAMERICA, INC. NONQUALIFIED DEFERRED COMPENSATION TRUST

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

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

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

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

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

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

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

1.       ESTABLISHMENT OF TRUST.                                                

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

(b)     The Trust hereby established is irrevocable.          

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

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

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

2.               PAYMENTS TO PLAN PARTICIPANTS AND THEIR BENEFICIARIES.         

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

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

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

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

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

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

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

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

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

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

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

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

4.               PAYMENTS TO COMPANY.                                           

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

5.       INVESTMENT AUTHORITY.                                                  

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

6.      DISPOSITION OF INCOME.                                

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

7.      ACCOUNTING BY TRUSTEE.                                

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

8.      RESPONSIBILITY OF TRUSTEE.                            

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

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

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

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

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

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

9.      COMPENSATION AND EXPENSES OF TRUSTEE.                 

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

10.     RESIGNATION AND REMOVAL OF TRUSTEE.                   

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

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

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

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

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

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

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11.     APPOINTMENT OF SUCCESSOR.                             

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

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

12.     AMENDMENT AND TERMINATION.                            

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

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

13.     MISCELLANEOUS.                                        

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

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

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

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

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

14.     EFFECTIVE DATE.                                       

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

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

                       RAILAMERICA, INC.

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

(CORPORATE SEAL)                                                                

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

              TRUSTEE:

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

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APPENDIX ONE
TO
RAILAMERICA, INC. NONQUALIFIED DEFERRED COMPENSATION TRUST

  Plans Currently in Place Reflecting Agreements with the Following Employees:

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

2.      Nonqualified Deferred Compensation Agreement with John Marino.    

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APPENDIX TWO
TO
RAILAMERICA, INC. NONQUALIFIED DEFERRED COMPENSATION TRUST

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

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NONQUALIFIED DEFERRED COMPENSATION AGREEMENT

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

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

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

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

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

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

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

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

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

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

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

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

5.      EMPLOYEE'S DEFERRAL ACCOUNT.                          

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

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

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

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

7.      DEATH BENEFIT.                                        

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

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

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

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

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

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

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

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

12.     DETERMINATION OF BENEFITS, CLAIMS                     
PROCEDURE AND ADMINISTRATION.                 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                 RAILAMERICA, INC.

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

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

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NONQUALIFIED DEFERRED COMPENSATION AGREEMENT

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

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

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

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

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

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

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

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

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

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

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

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

5.      EMPLOYEE'S DEFERRAL ACCOUNT.                          

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

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

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

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

7.      DEATH BENEFIT.                                        

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

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

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

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

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

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

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

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

12.     DETERMINATION OF BENEFITS, CLAIMS                     
PROCEDURE AND ADMINISTRATION.                 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                 RAILAMERICA, INC.

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

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

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Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10KSB’ Filing		Date		First		Last			Other Filings
		4/25/97		32		34
Filed on:		3/31/97							10-Q,  10-Q/A,  NT 10-Q
		3/10/97		34
		3/3/97		1		38
		2/21/97		14
		1/31/97		34
		1/16/97		14
		1/3/97		47
For Period End:		12/31/96							10KSB/A
		12/27/96		14
		12/12/96		5
		9/30/96		13					10-C,  10QSB,  8-K
		8/30/96		5
		8/19/96		5
		8/16/96		5
		8/13/96		5					10QSB
		10/17/95		5
		1/20/95		5
		5/9/94		5
		2/28/94		5
									List all Filings