DRAFT PURCHASE AND SALE AGREEMENT

The Columbus & Ohio River Rail Company (“C&OR”) presently operates a railroad line located in the State of Ohio known as the Panhandle Line pursuant to an agreement with the Ohio Rail Development Commission ( “ORDC”), successor in interest to the State of Ohio Department of Transportation (“ODOT”). The Panhandle line is owned by CAPRAIL I, INC. (“CAPRAIL”), an Ohio corporation, and is leased by CAPRAIL I, INC. to the ORDC. Certificates of Participation were issued to finance the acquisition of the Panhandle Line by CAPRAIL I, INC. and the ODOT. The ORDC and Caprail now desire to sell the Panhandle Line to the C&OR on the terms set forth in this offer.

Therefore, the undersigned, the ORDC and Caprail do hereby offer to sell to the C&OR, hereinafter referred as the “Purchaser,” the following described property upon the terms and conditions set forth below:

1. Property. CAPRAIL and ORDC agree to sell and convey and Purchaser agrees to purchase and pay for on the terms and conditions set forth in this offer the personal property located in the State of Ohio, Counties of Jefferson, Harrison, Tuscarawas, Coshocton, Muskingum, Licking and Franklin, and known as the Panhandle Railroad Line together with the rail and all other improvements thereon as follows: track, fixtures, ballast, bridges, active and passive warning devices, and structures including Gould Tunnel, station building in Coshocton, and any and all overhead highway bridges which have been determined to be, or will in the future be determined to be, the responsibility of the previous railroad owners of the Panhandle Line to maintain. The property described herein is referred to as the “Panhandle Line.”

2. Purchase Price. The total purchase price to be paid by Purchaser for acquisition of the Panhandle Line shall be $10 (ten) million and shall be comprised of the following:

(a) Purchaser shall provide funds necessary to complete defeasance of the Series 1992 Certificates of Participation (Panhandle Rail Line Project) in compliance with all applicable documents, including a trust agreement between CAPRAIL I, INC. and the Central Trust Company N.A. dated April 15, 1992 and the Lease Agreement between CAPRAIL I, INC. and the State of Ohio Department of Transportation dated April 15, 1992. The funds needed are currently estimated to be ______ million ______ hundred ______ thousand dollars ($_______) less any escrowed funds applied toward defeasance.

(b) In addition, Purchaser shall pay ORDC the sum of ______ million dollars ($ ).

3. Bill of Sale. At the closing, CAPRAIL shall, amongst other documents, execute and deliver to the ORDC a bill of sale transferring to ORDC any and all personal property used in connection with the Panhandle Line in which CAPRAIL may have an interest. ORDC in turn shall execute and deliver to Purchaser a bill of sale transferring to Purchaser all of that property transferred to ORDC by CAPRAIL by bill of sale and any other personal properties or interests held by the ORDC.

4. Resolutions. At the closing, CAPRAIL shall deliver to Purchaser and to the ORDC certified copies of resolutions adopted by the shareholders and directors of CAPRAIL approving the sale of the Panhandle Line and authorizing officers of CAPRAIL to execute and deliver all documents necessary to complete the sale.

5. Contingencies and Conditions. Purchaser’s obligations are contingent upon the following:

CONTINGENCIES

(a) Approval of this offer by the ORDC and the shareholders and directors of CAPRAIL and receipt by Purchaser of an acceptance of this offer executed by the C&OR.

(b) Purchaser having obtained financing acceptable to ORDC in the amount of the purchase price prior to or at the time of the acceptance of this offer by C&OR.

(c) Proper defeasnace of the Series 1992 Certificates of Participation (Panhandle Rail Line Project) in compliance with all applicable documents, including without limitation the trust agreement between CAPRAIL I, INC. And the Central Trust Company, NA dated as of April 15, 1992 and the lease agreement between CAPRAIL I, INC. and the ODOT dated as of April 15, 1992.

(d) Receipt by Purchaser of an opinion issued by the law firm of Peck Shaffer & Williams, LLP in accordance with the provisions of Section 7.03 of the Trust Agreement between CAPRAIL and The Central Trust Company, N.A., dated April 15, 1992.

(e) The release of all mortgages and other security interests covering the Panhandle Line which exist as of the date of closing.

(f) The release and cancellation of the lease between CAPRAIL and ORDC and the termination of the trust arrangement created by the trust agreement between CAPRAIL and The Central Trust Company dated April 15, 1992.

CONDITIONS

(a) In the event of the formal abandonment before the Surface Transportation Board or its successors of all, or any portion of, the Panhandle Line, the ownership of any and all track, fixtures, and appurtenances as described herein above on the abandoned portion shall revert to ORDC if ORDC is willing to take ownership.

(b) In the event that the Purchaser plans to sell all, or any part of, the Panhandle Line track, fixtures, and appurtenances as described herein above, the Purchaser shall first offer to sell these track, fixtures, and appurtenances to ORDC for the same price being offered to another party. ORDC will have one year from the time it is notified of a proposed sale of track, fixtures, and appurtenances to consummate a purchase.

6. Closing. The closing of this transaction shall take place on or before _______________, 2005 at a place mutually agreed upon by ORDC and Purchase unless the closing date is extended by mutual agreement of ORDC and Purchaser.

7. Fees and Expenses. The fees and expenses of sale shall be paid as follows:

(a) Applicable documentary fees, transfer taxes and other conveyance fees shall be paid by Purchaser.

(b) Recording fees shall be paid by Purchaser.

(c) Except as otherwise expressly provided, CAPRAIL and ORDC and Purchaser shall pay their own fees and expenses incurred in the preparation, execution and performance of this agreement.

8. Damage. CAPRAIL, ORDC and Purchaser shall bear the risk of loss or damage to the Panhandle Line until such time as the transaction contemplated by this agreement is closed in accordance with the provisions of the Operating Agreement in effect between Purchaser and the ORDC.

9. Representations and Warranties. CAPRAIL and ORDC represent and warrant to Purchaser as follows:

(a) There are no actions, suits or proceedings pending or threatened against either of them with respect to the Panhandle Line or affecting any of their rights in relation to the Panhandle Line.

(b) There are no valid contracts or agreements entitling any party to any interest whatsoever in the Panhandle Line other than the parties to this agreement.

(c) There are no agreements, commitments or representations between CAPRAIL and/or ORDC and any governmental, public or quasi-public agency which would impose any obligations or requirements upon Purchaser with regard to Purchaser’s acquisition and operation of the Panhandle Line that have not been fully disclosed to Purchaser.

The representation and warranties of CAPRAIL and ORDC contained in this agreement are true as of the date hereof and shall be true as of the closing date as if those representations and warranties were made as of the closing date.

10. Operation. Up to the time of closing Purchaser shall continue to operate the Panhandle Line in accordance with the terms of the Operating Agreement in effect between Purchaser and ORDC.

11. Governing Law. This agreement is being executed in the State of Ohio, being the state where the Panhandle Line is located, and shall be governed, construed and enforced in accordance with the laws of Ohio.

12. Entire Contract. This agreement, including any exhibits attached hereto and referred to herein, constitutes the entire contract between the parties. It supercedes all previous agreements, if any, entered into between the parties and no oral or implied representations or understandings shall vary its terms. It may not be amended except by an instrument in writing executed by the parties hereto.

13. Survival. The terms, conditions, covenants, representations and warranties in this agreement shall survive the closing of the purchase of the Panhandle Line and the delivery and recording of the deed and other instruments.

14. Successors. This agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns.

15. Assignment. Purchaser may not assign all or any portion of its rights under this agreement without the prior written approval of ORDC.

16. Notices. Notices required or permitted to be given under this agreement or by law shall be in writing and shall be sent by registered or certified United States mail, postage prepaid, or delivered in person to the addresses set forth below.

The Columbus & Ohio River Rail Road Company
47849 Papermill Road Coshoton, Ohio 4r3812

ATTN: William A. Strawn, II

CAPRAIL I, INC.

____________________________

Ohio Rail Development Commission

50 West Broad Street, Suite 1510

Columbus, Ohio 43215

17. Acceptance of Offer. This offer shall be open for acceptance until ______________, 2005. If not accepted by that time, this offer shall be deemed to be cancelled. This date may be extended at the sole option of the ORDC. The “date of this agreement” as used herein means the date upon which this agreement is finally accepted by all parties.

In Witness Whereof, these ORDC and CAPRAIL have executed this offer to sell this ______ day of ___________, 2005.

CAPRAIL

By__________________________

Print Name__________________________

Ohio Rail Development Commission

By________________________________

Print Name________________________________

ACCEPTANCE

The undersigned The Columbus & Ohio River Rail Company hereby approves and accepts the following offer and agrees to purchase the Panhandle Line to Purchaser in accordance with the terms and conditions set forth herein.

Dated this ______ day of _______________, 2005.

The Columbus & Ohio River Rail Company

By________________________________

Print Name________________________________