EXHIBIT 10.23


                                 LOAN AGREEMENT

                                 BY AND BETWEEN

                            NATIONSBANK, N.A. (SOUTH)

                                       AND

                             THE DURANGO & SILVERTON
                          NARROW GAUGE RAILROAD COMPANY







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                                TABLE OF CONTENTS


<S>                                                                                               <C>
ARTICLE 1 DEFINITIONS AND REFERENCE TERMS..........................................................1

ARTICLE 2 LOANS....................................................................................7
                  2.01     LOAN....................................................................7
                  2.02     TERM FACILITY...........................................................8
                  2.03     CONDITIONS PRECEDENT....................................................8

ARTICLE 3 REPRESENTATIONS AND WARRANTIES..........................................................10
                  3.01     GOOD STANDING..........................................................10
                  3.02     AUTHORITY AND COMPLIANCE...............................................10
                  3.03     BINDING AGREEMENT......................................................10
                  3.04     LITIGATION.............................................................10
                  3.05     NO CONFLICTING AGREEMENTS..............................................10
                  3.06     OWNERSHIP OF ASSETS....................................................10
                  3.07     TAXES..................................................................10
                  3.08     FINANCIAL STATEMENTS...................................................11
                  3.09     PLACE OF BUSINESS......................................................11
                  3.10     ENVIRONMENTAL MATTERS..................................................11
                  3.11     RECEIVABLES............................................................11
                  3.12     INVENTORY..............................................................13
                  3.13     FEDERAL RESERVE REGULATIONS............................................13
                  3.14     CONSENTS, ETC..........................................................13
                  3.15     GOVERNMENTAL AUTHORIZATIONS............................................14
                  3.16     TITLE TO PROPERTIES....................................................14
                  3.17     SOLVENT................................................................14
                  3.18     SUBSIDIARIES...........................................................14
                  3.19     SHAREHOLDERS...........................................................14
                  3.20     INDEBTEDNESS...........................................................14
                  3.21     CONTINGENT LIABILITIES.................................................15
                  3.22     MATERIAL CONTRACTS.....................................................15
                  3.23     USE OF PROCEEDS........................................................15
                  3.24     PENSION AND WELFARE PLANS..............................................15
                  3.25     TAX RETURNS AND PAYMENT................................................15
                  3.26     LABOR MATTERS..........................................................16
                  3.27     MULTI-EMPLOYER PENSION PLAN AMENDMENTS ACT OF 1980.....................16
                  3.28     INVESTMENT COMPANY ACT OF 1940; PUBLIC UTILITY HOLDING 
                           COMPANY ACT OF 1935....................................................16
                  3.29     EMPLOYMENT AND OTHER AGREEMENTS........................................16
                  3.30     CONTINUATION OF REPRESENTATION AND WARRANTIES..........................16




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ARTICLE 4 AFFIRMATIVE COVENANTS...................................................................16
                  4.01     FINANCIAL CONDITION....................................................17
                  4.02     FINANCIAL STATEMENTS AND OTHER INFORMATION.............................17
                  4.03     INSURANCE..............................................................19
                  4.04     EXISTENCE AND COMPLIANCE...............................................19
                  4.05     ADVERSE CONDITIONS OR EVENTS...........................................19
                  4.06     TAXES AND OTHER OBLIGATIONS............................................20
                  4.07     MAINTENANCE............................................................20
                  4.08     NOTIFICATION...........................................................20
                  4.09     POTENTIAL CONTINGENT LIABILITIES.......................................20
                  4.10     SUBSIDIARIES...........................................................20
                  4.11     COMPLIANCE WITH LAWS...................................................21
                  4.12     VISITATION RIGHTS......................................................21
                  4.13     ERISA..................................................................21
                  4.14     PAYMENT OF INDEBTEDNESS................................................22

ARTICLE 5 NEGATIVE COVENANTS......................................................................22
                  5.01     LIENS..................................................................22
                  5.02     BORROWINGS.............................................................22
                  5.03     CHARACTER OF BUSINESS..................................................22
                  5.04     ADDITIONAL NEGATIVE COVENANTS..........................................22

ARTICLE 6 DEFAULT.................................................................................24
                  6.01     .......................................................................24
                  6.02     .......................................................................24
                  6.03     .......................................................................24
                  6.04     .......................................................................24
                  6.05     .......................................................................24
                  6.06     .......................................................................24
                  6.07     .......................................................................25
                  6.08     .......................................................................25
                  6.09     .......................................................................25
                  6.10     .......................................................................25
                  6.11     .......................................................................25
                  6.12     .......................................................................25
                  6.13     .......................................................................25
                  6.14     .......................................................................25
                  6.15     .......................................................................25
                  6.16     .......................................................................26
                  6.17     .......................................................................26

ARTICLE 7 REMEDIES UPON DEFAULT...................................................................26



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ARTICLE 8 NOTICES................................................................................27

ARTICLE 9 COSTS, EXPENSES AND ATTORNEY'S FEES....................................................28

ARTICLE 10 MISCELLANEOUS.........................................................................28
                 10.01    CUMULATIVE RIGHTS AND NO WAIVER........................................28
                 10.02    APPLICABLE LAW.........................................................29
                 10.03    AMENDMENT..............................................................29
                 10.04    DOCUMENTS..............................................................29
                 10.05    PARTIAL INVALIDITY.....................................................29
                 10.06    INDEMNIFICATION........................................................29
                 10.07    SURVIVABILITY..........................................................29
                 10.08    FIELD AUDIT............................................................30
                 10.09    JURISDICTION, SERVICE OF PROCESS.......................................30
                 10.10    COURSE OF DEALING......................................................30
                 10.11    SUCCESSORS AND ASSIGNS.................................................30
                 10.12    NET PAYMENTS...........................................................30
                 10.13    FURTHER ASSURANCES.....................................................31
                 10.14    COUNTERPARTS...........................................................31
                 10.15    RESURRECTION OF BORROWER'S OBLIGATIONS.................................31
                 10.16    EQUITABLE RELIEF.......................................................31

ARTICLE 11 AMBIGUITY  OR CONFLICT................................................................32

ARTICLE 12 ARBITRATION...........................................................................32
                 12.01    SPECIAL RULES..........................................................32
                 12.02    RESERVATION OF RIGHTS..................................................33

ARTICLE 13 NO ORAL AGREEMENT.....................................................................33

ARTICLE 14 CROSS-DEFAULT/CROSS-COLLATERAL........................................................33

EXHIBIT 2.03(d)..................................................................................35

EXHIBIT 2.03(f)..................................................................................38

EXHIBIT 3.06.....................................................................................39

EXHIBIT 3.06-A...................................................................................41

EXHIBIT 3.08.....................................................................................42

EXHIBIT 3.18.....................................................................................43


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EXHIBIT 3.19.....................................................................................44

EXHIBIT 3.20.....................................................................................45

EXHIBIT 3.21.....................................................................................46

EXHIBIT 3.29.....................................................................................47

AFFIDAVIT FOR EXECUTION OF LOAN AGREEMENT WITHOUT THE STATE OF
          FLORIDA ...............................................................................48

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                            NATIONSBANK, N.A. (SOUTH)
                                 LOAN AGREEMENT


         This Loan Agreement (the "Agreement") dated as of the day of , 1997, by
and between NATIONSBANK, N.A. (SOUTH), a national banking association, and the
Borrower described below:

         In consideration of the Loan or Loans described below and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, Bank and Borrower agree as follows:


                                     ARTICLE 1
                         DEFINITIONS AND REFERENCE TERMS

         In addition to any other terms defined herein, the following terms
shall have the meaning set forth with respect thereto:

                  ACCOUNTING TERMS. All accounting terms not specifically
defined or specified herein shall have the meanings generally attributed to such
terms under generally accepted accounting principles ("GAAP"), as in effect from
time to time, consistently applied.

                  ACCOUNTS. Accounts shall mean all "accounts" (as defined in
the UCC) now owned or hereafter acquired by Borrower, and shall also mean and
include all accounts receivable, contract rights, book debts, notes, drafts and
other obligations or indebtedness owing to Borrower arising from the sale, lease
or exchange of goods or other property by it and/or the performance of services
by it (including any such obligation which might be characterized as an account,
contract right or general intangible under the Uniform Commercial Code in effect
in any jurisdiction) and all of Borrower's rights in, to and under all purchase
orders for goods, services or other property, and all of Borrower's rights to
any goods, services or other property represented by any of the foregoing
(including returned or repossessed goods and unpaid sellers' rights of
rescission, replevin, reclamation and rights to stoppage in transit) and all
monies due to or to become due to Borrower under all contracts for the sale,
lease or exchange of goods or other property and/or the performance of services
by it (whether or not yet earned by performance on the part of Borrower), in
each case whether now in existence or hereafter arising or acquired, including,
without limitation, the right to receive the proceeds of said purchase orders
and contracts and all collateral security and guarantees of any kind given by
any Person with respect to any of the foregoing.

                  ADVANCE. Advance means the principal amount of sums advanced
by Bank to or for the benefit of Borrower.


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                  AFFILIATE. Affiliate means any Person (other than a
Subsidiary) which directly or indirectly through one or more intermediaries
controls, or is controlled by or is under common control with, Borrower, or five
percent (5%) or more of the equity interest of which is held beneficially or of
record by, Borrower. The term "control" means the possession, directly or
indirectly, of the power to cause the direction of the management and policies
of a Person, whether through the ownership of voting securities, by contract or
otherwise.

                  AUTHORIZED SIGNATORY. Authorized Signatory means any one of
Raymond Monteleone, William T. Nanovsky or Donald P. Cumming.

                  BANK. NATIONSBANK, N.A. (SOUTH), its successors, assigns and
affiliates.

                  BORROWER. THE DURANGO & SILVERTON NARROW GAUGE RAILROAD
COMPANY, a Colorado corporation.

                  BORROWER'S ADDRESS. 3700 North 29th Avenue, Suite 202,
Hollywood, Florida 33020.

                  BORROWING DATE. Borrowing Date means the day as of which an
Advance is made.

                  BUSINESS DAY. Business Day means a day on which banks are not
authorized or required to be closed in Fort Lauderdale, Florida.

                  CAPITAL EXPENDITURE. Capital Expenditure shall mean any
expenditure by a Person which is or is required to be capitalized on its balance
sheet for financial reporting purposes in accordance with GAAP including,
without limitation, the incurring by such Person of any Capitalized Lease
Obligations.

                  CHATTEL PAPER. Chattel Paper shall have the meaning ascribed
to said term in Section 679.105 of the Florida Statutes.

                  CODE. Code shall mean the Internal Revenue Code of 1986, as
the same may be from time to time hereafter modified or amended.

                  COLLATERAL. Collateral means all present and future: Accounts,
Inventory and all Products thereof, reserves, balances, deposits, property of
Borrower and each Subsidiary coming into the possession of Bank, General
Intangibles, Instruments, Chattel Paper, Documents, Equipment, Items and Money
and all Proceeds thereof in which Borrower and each Subsidiary now has and
hereafter acquires any rights of any kind and nature whatsoever, wherever
located and regardless of in whose possession. In addition, the Collateral shall
also include the real and personal property which is the subject of the Deed of
Trust.


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                  COMMITMENT. Commitment shall mean the agreement of Bank to
make Advances hereunder during the term of the commitment pursuant to the terms
and subject to the conditions herein expressed.

                  COMMITMENT AMOUNT. Commitment Amount shall mean the aggregate
principal amount of Advances which Bank agrees to make available and are
permitted to be outstanding at any one time hereunder, up to the amount set
forth in Section .

                  CONTINGENT LIABILITY. Contingent Liability shall mean, without
duplication, as to any Person: (a) any guaranty Obligation of that Person; and
(b) any direct or indirect recourse obligation or liability, contingent or
otherwise, of that Person: (i) in respect of any letter of credit, bond or
similar instrument issued for the account of that Person or as to which that
Person is otherwise liable for reimbursement of drawings, (ii) to purchase any
materials, supplies or other property from, or to obtain the services of,
another Person if the relevant contract or other related document or obligation
requires that payment for such materials, supplies or other property, or for
such services, shall be made if delivery of such materials, supplies or other
property is not made or tendered, or such services are never performed or
tendered, or (iii) incurred pursuant to any interest rate swap or similar
agreement. The amount of any Contingent Liability shall be deemed equal to the
maximum reasonably anticipated liability in respect thereof.

                  CURRENT ASSETS. Current Assets means the aggregate amount of
all of its assets which would, in accordance with GAAP, properly be defined as
current assets, but excluding the following items: real property.

                  CURRENT LIABILITIES. Current Liabilities means the aggregate
amount of all current liabilities as determined in accordance with GAAP, but in
any event shall include all liabilities except those having a maturity date
which is more than one year from the date as of which such computation is being
made.

                  DEED OF TRUST. Deed of Trust means the Deed of Trust executed
by Borrower dated even date herewith in favor of the Bank.

                  DEFAULT. Default means any event or condition which, with the
giving of notice or the passage of time, or both, would become an Event of
Default.

                  DEFAULT RATE. Default Rate means that certain rate of interest
described in the Note as applicable upon a Default.

                  DOCUMENTS. Documents shall have the meaning ascribed to said
term in Section 679.015 of the Florida Statutes and shall include all bills of
lading, airway bills, dock warrants, dock receipts, warehouse receipts or orders
for the delivery of goods, and also any other document which in the regular
course of business or financing is treated as adequately evidencing that the
person in possession of it is entitled to receive, hold and dispose of the
document and the goods it covers.

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                  DOLLARS. Dollars and the symbol $ means lawful money of the
United States of America.

                  EQUIPMENT. Equipment shall have the meaning ascribed to said
term in Section 678.109 of the Florida Statutes and shall include all of the
Borrower's goods, machinery, equipment, fixed assets, rolling stock, fixtures,
furniture, office equipment, tools, parts and other items of personal property
of every kind and description, now owned or hereafter acquired by the Borrower,
wheresoever located, together with all additions, attachments, accessions,
parts, replacements and substitutions thereof.

                  ERISA. ERISA means the Employment Retirement Income Security
Act of 1974, as same may be amended from time to time, together with the
regulations thereunder.

                  EVENT OF DEFAULT. Event of Default shall have the meaning set
forth in Article 6 hereof.

                  GENERAL INTANGIBLES. General Intangibles shall have the
meaning ascribed to said term in Section 679.106 of the Florida Statutes and
shall include, without limitation, any personal property other than goods,
Accounts, Inventory, Equipment, Chattel Paper and Instruments, including all
franchises, licenses, leases and subleases whereby Borrower leases to another
any of Borrower's Inventory or Equipment, contracts, permits and authorizations
of governmental agencies and others, tradenames, trademarks, service marks,
patents, copyrights, intellectual property and all other intangible property of
the Borrower.

                  GUARANTORS. FIRST AMERICAN RAILWAYS, INC., a Nevada
corporation.

                  GUARANTY. Guaranty shall mean the Guaranty dated even date
herewith executed by the Guarantor in favor of the Bank.

                  HAZARDOUS MATERIALS. Hazardous Materials include all materials
defined as hazardous or biohazardous wastes or substances under any local, state
or federal environmental laws, rules or regulations, and petroleum, petroleum
products, oil and asbestos.

                  INDEBTEDNESS. Indebtedness of any Person shall mean (a) all
indebtedness for borrowed money or for the deferred purchase price of any asset
(other than accounts payable to trade creditors under customary trade credit
terms) or services for which the Person is liable as principal, (b) all
indebtedness (excluding unaccrued finance charges) secured by a lien on property
owned or being purchased by the Person, whether or not such indebtedness shall
have been assumed by the Person, (c) all capitalized lease obligations
(excluding unaccrued finance charges) of the Person, (d) any arrangement
(commonly described as a sale-and-leaseback transaction) with any financial
institution or other lender or investor providing for the leasing to the Person
of property which at the time has been or is to be sold or transferred by the
Person to the lender or investor, or which has been or is being acquired from
another Person by the lender or investor for the purpose of leasing the

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property to the Person, (e) all obligations of partnerships or joint ventures in
respect of which the Person is primarily or secondarily liable as a partner or
joint venturer (provided that in any event for purposes of determining the
amount of the Indebtedness, the full amount of such obligations, without giving
effect to the contingent liability or contributions of other participants in the
partnership or joint venture, shall be included), (f) any arrangement commonly
known as a take or pay contract, (g) all redeemable preferred stock of such
Person valued at the greater of its voluntary or involuntary liquidation
preference plus accrued and unpaid dividends, and (h) any contingent obligation
of the Borrower or a Subsidiary.

                  INSTRUMENTS. Instruments shall have the meaning ascribed to
said term in Section 679.105 of the Florida Statutes.

                  INTEREST PAYMENT DATE. Interest Payment Date means monthly on
the fifth (5th) day of each month.

                  INVENTORY. Inventory means all inventory of whatsoever name,
nature, kind or description now owned and hereafter acquired, present and
future, by Borrower and any Subsidiary, wherever located, including, without
limitation, all contract rights with respect thereto and documents representing
the same, all goods held for sale or lease or to be furnished under contracts of
service, finished goods, work in process, raw materials, materials used or
consumed by Borrower and any Subsidiary and including such inventory as is
temporarily out of the Borrower's or any Subsidiary's custody or possession,
including inventory on the premises of others and items in transit and including
any returns and repossessions upon any accounts, documents, instruments or
chattel paper relating to replacements therefor, and all additions and
accessions thereto, and all ledgers, books of account, records, computer
printouts, computer runs and other computer-prepared information relating to any
of the foregoing.

                  LOAN(S). Loan(s) means collectively any and all loans
heretofore or hereafter made by Bank to the Borrower.

                  LOAN DOCUMENTS. Loan Documents means this Loan Agreement and
any and all promissory notes executed by Borrower in favor of Bank and all other
documents, deeds of trust, security agreements, rolling stock security
agreements, financing statements, instruments, guarantees, certificates and
agreements executed and/or delivered by Borrower, any Subsidiary, any guarantor
or third party in connection with any Loan.

                  MATERIAL ADVERSE EFFECT. Material Adverse Effect means a
material adverse effect (as determined in Bank's sole but reasonable discretion)
upon: (i) the business, assets, operating ability or condition (financial or
otherwise) of Borrower and any Subsidiary taken as a whole; or (ii) the ability
of Borrower and any Subsidiary to repay the Obligation or other Indebtedness or
otherwise perform their obligations under the Loan Documents.


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                  MATURITY DATE. Maturity Date means five (5) years following
the date hereof or a sooner Default.

                  NOTE. Note means the Promissory Note executed by the Borrower
in favor of Bank dated even date herewith in the original principal amount of
Eight Million Five Hundred Thousand Dollars ($8,500,000), together with all
modifications, renewals or substitutions thereof.

                  OBLIGATION. Obligation means the aggregate of outstanding
indebtedness under the Note, and any outstanding principal indebtedness of
Borrower to Bank arising in connection with any agreement not evidenced by the
Note, however arising, including any outstanding amounts due Bank under any
security agreement executed by Borrower in connection with this Agreement, any
outstanding amount advanced or incurred by Bank to enforce, protect, preserve or
maintain its rights with respect to, or by reason of Borrower's failure to
comply with any agreement contained in the Note or this Agreement, and all of
Bank's expenses, as described in this Agreement, together with all accrued and
unpaid interest on all of the foregoing, all computed and payable in Dollars.
Obligations shall also include, without limitation, obligations of the Borrower
in favor of the Bank (or Bank's affiliate) now or hereafter existing under any
interest rate or commodity swap, cap, floor, collar, or any combination thereof,
or option with respect to these or similar transactions, for the purpose of
hedging Borrower's exposure to fluctuations in interest rates or commodity
prices.

                  PBGC. PBGC means the Pension Benefit Guaranty Corporation and
any entity succeeding to any or all of its functions under ERISA.

                  PERSON. Person means any natural person, entity, corporation,
limited liability partnership or company, unincorporated organization, trust,
joint-stock company, joint venture, association, company, partnership, or
government, or any agency or political subdivision of any government.

                  RECEIVABLES. Receivables means all Accounts and all other
obligations for the payment of money under General Intangibles, whether or not
such Receivables are specifically assigned.

                  REPORTABLE EVENT. Reportable Event shall have the meaning
given to such term in ERISA.

                  SOLVENT. Solvent means, with respect to any Person on a
particular date, that on such date (i) the fair value of the property of such
Person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person, (ii) the present fair
saleable value of the assets of such Person is not less than the amount that
will be required to pay the probable liability of such Person on its debts as
they become absolute and matured, (iii) such Person is able to realize upon its
assets and pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (iv) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such

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debts and liabilities mature, and (v) such Person is not engaged in business or
a transaction, and is not about to engage in business or a transaction, for
which such Person's property would constitute unreasonably small capital after
giving due consideration to the prevailing practice in the industry in which
such Person is engaged. In computing the amount of contingent liabilities at any
time, it is intended that such liabilities will be computed at the amount which,
in light of all the facts and circumstances existing at such time, represents
the amount that can reasonably be expected to become an actual or matured
liability.

                  SUBSIDIARY. Subsidiary means any Person in which Borrower or a
wholly-owned Subsidiary may own, directly or indirectly, an equity interest of
more than fifty percent (50%), during the term of this Agreement, as well as all
Subsidiaries and other Persons from time to time included in the consolidated
financial statements of Borrower.

                  TERM. Term shall mean the period during which the Loan is
scheduled to be outstanding hereunder, commencing on the date hereof and ending
on the Maturity Date.

                  TERMINATION EVENT. Termination Event shall have the meaning
set forth in ERISA.


                                     ARTICLE 2
                                      LOANS

              2.1 LOAN.

                  (a) Bank hereby agrees to make (or has made) a loan or loans
to Borrower in the aggregate principal amount of Eight Million Five Hundred
Thousand Dollars ($8,500,000). The obligation to repay the loan is evidenced by
the Note.

                  (b) Provided all of the conditions for Advances are met, Bank
shall make the Loan to Borrower or disburse to third parties as Borrower may
direct, commencing on the date hereof, until the Maturity Date.

                  (c) The terms of and the principal payments on the Note shall
be as follows:

                           (i) Principal and interest outstanding under each
Note shall be payable in accordance with such Note.

                           (ii) All other notes which may subsequently become a
part of the Obligation shall be paid in accordance with the terms thereof.

                           (iii) If any payment of principal of, or interest on,
the Loan shall become due on a day which is not a Business Day, such payment
shall be made on the next succeeding Business Day; provided, however, that
interest shall continue to accrue until payment is actually received.


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                           (iv) The business records of Bank shall be conclusive
as to the date and amount of any Advance hereunder and any payment or prepayment
of interest or principal thereof, absent manifest error.

                  (d) The Commitment shall end upon the close of business (5:00
p.m.) on the day prior to the Maturity Date, unless there shall have sooner
occurred an Event of Default under this Agreement, in which event, Bank may
immediately accelerate the Loan without prior notice to Borrower; provided,
however, that, notwithstanding the foregoing, this Agreement shall continue in
full force and effect until the Obligation is paid in full and the Commitment
has been terminated.

                  (e) The outstanding principal balance under the Note as of any
day shall be the outstanding principal balance as of the beginning of the day,
plus any Advances made pursuant hereto charged to the account on that day
(exclusive of interest) and less any payments of principal credited to the
account on that day. Each Advance shall therefore bear interest commencing on
the date it is made and continuing until but not including the date it is paid,
if timely paid as provided herein.

                  (f) Any payment of principal or interest or both not made when
due shall itself bear interest on the principal and interest amount of the
payment at the Default Rate, commencing on the due date, until payment,
maturity, or the occurrence of an Event of Default. After maturity of a Note or
the occurrence of an Event of Default hereunder or thereunder, interest shall
accrue on the entire outstanding balance of principal and interest at the
Default Rate.

              2.2 TERM FACILITY. Notwithstanding any provision of this Agreement
to the contrary, Borrower acknowledges that the Loan is a term facility and is
not the subject of being readvanced.

              2.3 CONDITIONS PRECEDENT. The obligation of Bank to make the
Advances under Loan is subject to the following additional conditions precedent:

                  (a) NO DEFAULT. On the effective date of this Agreement, and
at the date of the Advance after giving effect to the Advance hereunder,
Borrower shall have observed and performed all the terms, conditions, agreements
and provisions set forth herein, on its part to be observed or performed, the
warranties of Borrower contained herein or in any instrument or certificate
executed by Borrower and delivered in connection herewith shall be true and
correct in all material respects, and no Default or Event of Default shall have
occurred and be continuing.

                  (b) OPINIONS OF COUNSEL. On the date of the Closing, Bank
shall have received from counsel for the Borrower, a favorable opinion (in form
and substance satisfactory to Bank), dated the closing date.

                  (c) LOAN DOCUMENTS. On the date of Closing, all of the Loan
Documents shall have been executed by the Borrower and the Guarantor and
delivered to Bank.


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                  (d) SUPPORTING DOCUMENTS AND OTHER CONDITIONS. Bank shall have
received a certificate from Borrower in the form attached hereto as EXHIBIT 
2.03(d) as of the date of each Advance.

                  (e) LITIGATION. There shall be no order, injunction, decree,
judgment or verdict prohibiting or restraining Bank from making the Loan, or
Borrower or any Subsidiary from performing its obligations hereunder as of the
date of each Advance.

                  (f) REQUEST FOR ADVANCE. At the time of the requested Advance
hereunder, Borrower shall have timely delivered to Bank prior to the Borrowing
Date the Request for Advance in the form attached as EXHIBIT 2.03(f), signed by 
an Authorized Signatory of Borrower. There shall be no exceptions for material
litigation reflected therein in connection with the Advance.

                  (g) CLOSING. Closing, execution and delivery of the Loan
Documents shall have been held no later than March 31, 1997.

                  (h) DOCUMENTS. This Agreement, all exhibits hereto, and the
other Loan Documents must be simultaneously executed and delivered to Bank at
Closing together with the Collateral.

                  (i) COMMITMENT LETTER. On the date of Closing, all the
conditions set forth in the commitment letter from Bank to Borrower dated
February 13, 1997, shall have been satisfied or waived in writing by the Bank.

                  (j) GUARANTY. The Guarantor(s) shall execute and deliver to
Bank the Guaranty, a stock pledge agreement, a stock power, a proxy and all
stock certificates, all with respect to the issued and outstanding shares of
Borrower.

                  (k) FEE. Borrower shall have paid to Bank the non-refundable
structuring fee in the amount of One Hundred Thousand Dollars ($100,000), for
which Borrower shall receive a credit for the existing deposit. In addition,
Bank shall receive Twenty Thousand Dollars ($20,000) worth of stock in the
Guarantor based upon the fair market value at the time of closing ("Commitment
Fee Stock"). Borrower and Guarantor warrant and represent that the Commitment
Fee Stock shall be freely tradable by the Bank within six (6) months of issuance
and that, so long as the Bank holds the Commitment Fee Stock, the Guarantor
shall maintain a registration statement in place whereby the Commitment Fee
Stock shall be freely tradable by the Bank.

                  (l) INSURANCE. Borrower shall have delivered to Bank evidence
of the insurance required pursuant to this Agreement.



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                                    ARTICLE 3
                         REPRESENTATIONS AND WARRANTIES

         Borrower and Guarantor hereby represent and warrant to Bank as follows:

              3.1 GOOD STANDING. Borrower, each Guarantor and each Subsidiary
are corporations, duly organized, validly existing and in good standing under
the laws of their respective states of incorporation and have the power and
authority to own their respective property and to carry on their respective
business in each jurisdiction in which each does business.

              3.2 AUTHORITY AND COMPLIANCE. Borrower, each Guarantor and each
Subsidiary have full power and authority to execute and deliver the Loan
Documents and to incur and perform the obligations provided for therein, all of
which have been duly authorized by all proper and necessary action of the
appropriate governing body of Borrower, each Guarantor and each Subsidiary. No
consent or approval of any public authority or other third party is required as
a condition to the validity of any Loan Document, and Borrower and each
Subsidiary are in compliance with all laws and regulatory requirements to which
they are subject.

              3.3 BINDING AGREEMENT. This Agreement and the other Loan Documents
executed by Borrower, each Guarantor and each Subsidiary constitute valid and
legally binding obligations of Borrower, each Guarantor and each Subsidiary,
enforceable in accordance with their terms.

              3.4 LITIGATION. There is no proceeding involving Borrower, any
Guarantor or any Subsidiary pending or, to the knowledge of Borrower, threatened
before any court or governmental authority, agency or arbitration authority,
except as disclosed to Bank in writing and acknowledged by Bank prior to the
date of this Agreement.

              3.5 NO CONFLICTING AGREEMENTS. There is no charter, bylaw, stock
provision, shareholder agreement or other document pertaining to the
organization, power or authority of Borrower, any Guarantor or any Subsidiary
and no provision of any existing agreement, mortgage, indenture or contract
binding on Borrower, any Guarantor or any Subsidiary or affecting any of their
respective properties, which would conflict with or in any way prevent the
execution, delivery or carrying out of the terms of this Agreement and the other
Loan Documents.

              3.6 OWNERSHIP OF ASSETS. Borrower, each Guarantor and each
Subsidiary have good title to their assets, and their assets are free and clear
of liens, except those granted to Bank and except as set forth on EXHIBIT 3.06
attached hereto.

              3.7 TAXES. All taxes and assessments due and payable by Borrower,
each Guarantor and each Subsidiary have been paid or are being contested in good
faith by appropriate proceedings and the Borrower, each Guarantor and each
Subsidiary have filed all tax returns which it is required to file.



                                       10
<PAGE>



              3.8 FINANCIAL STATEMENTS. Except as set forth on EXHIBIT 3.08 
attached hereto, the financial statements of Borrower, each Guarantor and each
Subsidiary heretofore delivered to Bank have been prepared in accordance with
GAAP applied on a consistent basis throughout the period involved and fairly
present Borrower's, each Guarantor's and each Subsidiary's financial condition
as of the date or dates thereof, and there has been no material adverse change
in Borrower's, any Guarantor's or any Subsidiary's financial condition or
operations since the most recent financial statement of the Borrower, each
Guarantor and each Subsidiary furnished to Bank. To the best of Borrower's
knowledge, all factual information furnished by Borrower, each Guarantor and
each Subsidiary to Bank in connection with this Agreement and the other Loan
Documents is and will be accurate and complete on the date as of which such
information is delivered to Bank and is not and will not be incomplete by the
omission of any material fact necessary to make such information not misleading.
All financial projections represent the Borrower's best estimate of Borrower's
future financial performance and such assumptions are reasonable and believed by
Borrower to be fair in light of current business conditions.

              3.9 PLACE OF BUSINESS. Borrower's chief executive office is
located at: 479 Main Avenue, Durango, Colorado 81301.

              3.10 ENVIRONMENTAL MATTERS. The conduct of Borrower's, each
Guarantor's and each Subsidiary's business operations do not and will not
violate any federal laws, rules or ordinances for environmental protection,
regulations of the Environmental Protection Agency and any applicable local or
state law, rule, regulation or rule of common law and any judicial
interpretation thereof relating primarily to the environment or Hazardous
Materials and Borrower will not use or permit any other party to use any
Hazardous Materials at any of Borrower's, any Guarantor's and/or any
Subsidiary's places of business or at any other property owned by Borrower, any
Guarantor and/or any Subsidiary except such materials as are incidental to
Borrower's, any Guarantor's or any Subsidiary's normal course of business,
maintenance and repairs and which are handled in compliance with all applicable
environmental laws. Borrower agrees to permit Bank, its agents, contractors and
employees to enter and inspect any of Borrower's and each Subsidiary's places of
business or any other property of Borrower and/or each Subsidiary at any
reasonable times upon three (3) days prior notice for the purposes of conducting
an environmental investigation and audit (including taking physical samples) to
insure that Borrower and each Subsidiary is complying with this covenant and
Borrower shall reimburse Bank on demand for the costs of any such environmental
investigation and audit (not to exceed one [1] in each twelve [12] month period
unless Bank has reason to believe that an adverse environmental condition exists
or a Default exists). Borrower shall provide Bank, its agents, contractors,
employees and representatives with access to and copies of any and all data and
documents relating to or dealing with any Hazardous Materials used, generated,
manufactured, stored or disposed of by Borrower's and each Subsidiary's business
operations within five (5) days of the request therefore.

              3.11 RECEIVABLES. Borrower and each Subsidiary shall take any and
all steps as Bank may request to create and maintain in Bank's favor a valid and
first security interest in and pledge of, all


                                       11
<PAGE>



Receivables, whether now existing or created from time to time hereafter. With
respect to all Receivables:

                  (a) Borrower and each Subsidiary shall, at Bank's request,
execute and deliver to Bank an assignment or assignments of any or all of
Borrower's and each Subsidiary's Receivables accompanied by copies of invoices
and evidences of shipment or delivery and any other documents in Borrower's
possession concerning same as Bank may reasonably require for purposes of
assisting Bank in the realization upon such Receivables;

                  (b) Borrower shall, at Bank's request, deliver to Bank all
copies of invoices and evidences of shipment or delivery and any other documents
in Borrower's and each Subsidiary's possession concerning accounts receivable
that are reflected upon any schedule or borrowing base certificate or the like,
furnished to the Bank, as Bank may reasonably request for purposes of assisting
Bank in the conduct of any audit of accounts receivable;

                  (c) Except as set forth on EXHIBIT 3.06 attached hereto, 
absolute title to the Collateral, free and clear of all liens, encumbrances and
security interests shall be vested in Borrower and each Subsidiary;

                  (d) Neither Borrower nor any Subsidiary shall enter into or
allow any other agreements, notices, financing statements, or other matters
which will in any way impair or affect Bank's first lien upon, security interest
in and pledge of such Collateral; and

                  (e) each Receivable represented to Bank:

                           (i) shall represent a valid and legally enforceable
indebtedness, according to its terms and as represented by the assigned invoice;

                           (ii) to the best of Borrower's knowledge, shall be a
Receivable as to what the account debtor shall be liable for and shall make
payment of the amount expressed in such invoice and according to its terms;

                           (iii) to the best of Borrower's knowledge, shall be
subject to no dispute or claim by the account debtor as to price, terms,
quality, quantity, delay in shipment, offsets, counterclaims, contra-accounts or
any other defense of any other kind and character;

                           (iv) to the best of Borrower's knowledge, shall not
be subject to discounts, deductions, allowances, offsets, returns, or special
terms of payment, except such as are shown on the face of the invoice;

                           (v) shall not represent a delivery of goods upon
"consignment", "guaranteed sale", "sale or return", "payment on reorder" or
similar terms;


                                       12
<PAGE>



                           (vi) shall not be subject to any prohibition or
limitation upon assignment; and

                           (vii) except as set forth on EXHIBIT 3.06 attached 
hereto, shall be free and clear of all claims, demands, liens and encumbrances
of any kind whatsoever.

              3.12 INVENTORY. With respect to Inventory, Borrower warrants and
represents:

                  (a) except as set forth on EXHIBIT 3.06 attached hereto, the 
same shall be free and clear of all liens and encumbrances and Borrower and each
Subsidiary shall be the absolute owner thereof;

                  (b) such Inventory shall be kept at the Borrower's Address or
at an address where the Bank maintains a perfected security interest in such
Inventory (or with respect to a Subsidiary, the address of the Subsidiary
disclosed in writing to the Bank), and Borrower shall promptly notify Bank of
any change thereof;

                  (c) Borrower shall defend Bank's security interest in the
Inventory against any claims or demands of third parties and will promptly pay,
when due, all taxes or assessments levied on account of the Inventory; and

                  (d) Bank shall have a perfected security interest at times
during the Term.

              3.13 FEDERAL RESERVE REGULATIONS.

                  (a) Neither Borrower nor any Subsidiary is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System
of the United States);

                  (b) no part of the Advances shall be used to purchase or carry
any such margin stock or to extend credit to others for the purpose of
purchasing or carrying any such margin stock; and

                  (c) no part of the Advances shall be used for any purpose that
violates, or which is inconsistent with, the provisions of Regulation T, G, U or
X of said Board of Governors.

              3.14 CONSENTS, ETC. Other than filing the Rolling Stock Security
Agreement with the Surface Transportation Board, no consent, approval,
authorization of, or registration (other than the filing of a UCC-1 with the
Secretary of State), declaration or filing with any governmental authority
(federal, state or local, domestic or foreign) is required in connection with
the execution or delivery by Borrower, any Guarantor or any Subsidiary of the
Loan Documents or the performance of or


                                       13
<PAGE>



compliance with the terms, provisions and conditions hereof or thereof or the
perfection of the Bank's security interest in the Collateral.

              3.15 GOVERNMENTAL AUTHORIZATIONS. All authorizations, consents,
approvals, licenses, and permits required under applicable law or regulation for
the ownership or operation of the property owned or operated by Borrower and the
Subsidiaries or for the conduct of the business in which Borrower and the
Subsidiaries are engaged have been duly issued (or if not issued, the failure to
have obtained same are of an immaterial nature and would not have a material
adverse effect on Borrower or the Subsidiaries) and are in full force and effect
and neither Borrower nor any of the Subsidiaries is in default under any order,
decree, rule and regulation, closing agreement or other decision or instrument
of any Governmental Authority, which default could reasonably be expected to
have a Material Adverse Effect.

              3.16 TITLE TO PROPERTIES. Except as set forth on EXHIBIT 3.06 
attached hereto, Borrower, each Guarantor and each Subsidiary have good and
marketable fee title to all real property, and good and marketable title to all
other property (including leases) and assets reflected in the financial
statements delivered to the Bank or purported to have been acquired by Borrower,
each Guarantor and each Subsidiary subsequent to such date, except the property
or assets sold or otherwise disposed of by Borrower subsequent to such date in
the ordinary course of business. All of the property and assets of any kind of
Borrower, each Guarantor and each Subsidiary are free from any liens, except as
otherwise set forth on EXHIBIT 3.06 attached hereto. Borrower, each Guarantor
and each Subsidiary enjoy peaceful and undisturbed possession under all of the
leases under which it is operating, none of which contains any unusual or
burdensome provisions that could reasonably be expected to have a Material
Adverse Effect. All of such leases are valid, subsisting and in full force and
effect and none of such leases is in default and no event has occurred which
with the passage of time or the giving of notice or both would constitute a
default under any thereof. Borrower, each Guarantor and each Subsidiary possess
all material patents, patent rights, licenses, trademarks, trademark rights,
trade name, trade name rights, and copyrights that may be required to conduct
its business as now conducted, all without known conflict with the rights of
others.

              3.17 SOLVENT. Borrower is, on a consolidated basis, and after the
consummation of the loans contemplated in this Agreement, and after having given
effect to all indebtedness incurred and liens created by Borrower and each
Subsidiary in connection herewith, will be Solvent.

              3.18 SUBSIDIARIES. The Subsidiaries of Borrower are all as
reflected on EXHIBIT 3.18 hereto.

              3.19 SHAREHOLDERS. All classes of shareholders of the Borrower and
each Subsidiary are reflected on EXHIBIT 3.19 hereto.

              3.20 INDEBTEDNESS. All Indebtedness of the Borrower and each
Subsidiary (other than trade payables in the ordinary course of business) are
reflected on EXHIBIT 3.20 hereto.


                                       14
<PAGE>



              3.21 CONTINGENT LIABILITIES. All contingent liabilities of the
Borrower and each Subsidiary are reflected on EXHIBIT 3.21 hereto.

              3.22 MATERIAL CONTRACTS. Neither the execution and delivery of the
Loan Documents nor the consummation of the transaction contemplated by the
Indebtedness identified on EXHIBIT 3.20 shall constitute a default or right of
termination under any agreement to which the Borrower, any Guarantor or any
Subsidiary is a party.

              3.23 USE OF PROCEEDS. The proceeds of the Loan shall be used
solely to acquire The Durango & Silverton Narrow Gauge Railroad Company.

              3.24 PENSION AND WELFARE PLANS. Each Pension Plan and Welfare Plan
complies with ERISA and all other applicable statutes and governmental rules and
regulations; no Reportable Event has occurred and is continuing with respect to
any Pension Plan; neither Borrower nor any Subsidiary of Borrower nor any ERISA
Affiliate has withdrawn from any Multi-Employer Plan in a "complete withdrawal"
or a "partial withdrawal" as defined in Sections 4203 or 4205 of ERISA,
respectively; neither Borrower nor any Subsidiary nor any ERISA Affiliate has
entered into an agreement pursuant to Section 4204 of ERISA; neither Borrower
nor any Subsidiary nor any ERISA Affiliate has in the past contributed to or
currently contributes to a Multi-Employer Plan; neither Borrower nor any
Subsidiary nor any ERISA Affiliate has any withdrawal liability with respect to
a Multi-Employer Plan; no steps have been instituted by Borrower or any
Subsidiary or any ERISA Affiliate to terminate any Pension Plan; no condition
exists or event or transaction has occurred in connection with any Pension Plan,
Multi-Employer Plan or Welfare Plan which could result in the incurrence by
Borrower or any Subsidiary or any ERISA Affiliate of any liability, fine or
penalty; and neither Borrower nor any Subsidiary nor any ERISA Affiliate is a
"contributing sponsor" as defined in Section 4001(a)(13) of ERISA of a
"single-employer plan" as defined in Section 4001(a)(15) of ERISA which has two
(2) or more contributing sponsors at least two (2) of whom are not under common
control. Neither Borrower nor any Subsidiary nor any ERISA Affiliate has any
liability with respect to any Welfare Plan.

              3.25 TAX RETURNS AND PAYMENT. Borrower and its Subsidiaries have
filed all federal, state, local and other tax returns which are required to be
filed and have paid all taxes which have become due pursuant to such returns and
all other taxes, assessments, fees and other governmental charges upon Borrower
and its Subsidiaries and upon their respective properties, assets, income and
franchises which have become due and payable by Borrower or any of its
Subsidiaries, except those wherein the amount, applicability or validity are
being contested by Borrower or any such Subsidiary by appropriate proceedings
being diligently conducted in good faith and in respect of which adequate
reserves in accordance with GAAP have been established. All material tax
liabilities of Borrower and its Subsidiaries were adequately provided for as of
December 31, 1996, and are now so provided for on the books of Borrower and its
Subsidiaries. There is no known proposed, asserted or assessed tax deficiency
against Borrower or any of its Subsidiaries which, if adversely determined,
could reasonably be expected to have a Material Adverse Effect.


                                       15
<PAGE>



              3.26 LABOR MATTERS. Neither Borrower nor any Subsidiary is a party
to any pending or threatened labor dispute. There are no pending or threatened
strikes or walkouts relating to any labor contract to which Borrower or any
Subsidiary is subject. Hours worked and payments made to the employees of
Borrower and its Subsidiaries have not been in violation of the Fair Labor
Standards Act or any other applicable law dealing with such matters. All
payments due from Borrower or any Subsidiary, or for which any claim may be made
against any of them, in respect of wages, employee health and welfare insurance
and/or other benefits have been paid or accrued as a liability on their
respective books. The consummation of the transactions contemplated by the Loan
Documents will not give rise to a right of termination or right of renegotiation
on the part of any union under any collective bargaining agreement to which
Borrower or any Subsidiary is a party or by which Borrower or any Subsidiary is
bound.

              3.27 MULTI-EMPLOYER PENSION PLAN AMENDMENTS ACT OF 1980. Borrower
and each Subsidiary is in compliance with the Multi-Employer Pension Plan
Amendments Act of 1980, as amended ("MEPPAA"), and neither Borrower nor any
Subsidiary has any liability for pension contributions pursuant to MEPPAA.

              3.28 INVESTMENT COMPANY ACT OF 1940; PUBLIC UTILITY HOLDING
COMPANY ACT OF 1935. Borrower is not an "investment company" as that term is
defined in, and is not otherwise subject to regulation under, the Investment
Company Act of 1940, as amended. Borrower is not a "holding company" as that
term is defined in, and is not otherwise subject to regulation under, the Public
Utility Holding Company Act of 1935, as amended.

              3.29 EMPLOYMENT AND OTHER AGREEMENTS. Except for the employment
agreements and the other agreements described in EXHIBIT 3.29 attached hereto,
true, complete and accurate copies of which have been delivered to Bank, there
are no: (a) employment agreements covering the management of Borrower or any
Subsidiary; (b) collective bargaining agreements or other labor agreements
covering any employees of Borrower or any Subsidiary; or (c) agreements for
managerial, consulting or similar services to which Borrower or any Subsidiary
is a party or by which Borrower or any Subsidiary is bound.

              3.30 CONTINUATION OF REPRESENTATION AND WARRANTIES. All
representations and warranties made under this Agreement shall be deemed to be
made at and as of the date hereof and at and as of the date of delivery of any
Compliance Certificate.

                                    ARTICLE 4
                              AFFIRMATIVE COVENANTS

         Until full payment and performance of all Obligations of Borrower under
the Loan Documents, Borrower, each Subsidiary and Guarantor shall maintain the
following covenants, conditions and restrictions:


                                       16
<PAGE>



              4.1 FINANCIAL CONDITION. Maintain at all times Borrower's and each
Subsidiary's financial condition as follows, determined in accordance with GAAP
applied on a consistent basis throughout the period involved except to the
extent modified by the following definitions:

                  (a) A maximum Total Liabilities/Tangible Net Worth ratio as
follows:

                           (i) 1.2:1 as of September 30 and December 31 of each
year; provided, however, the 1.2:1 ratio shall be amended to read 1.3:1 as of
September 30, 1997 and December 31, 1997; and

                           (ii) 1.5:1 as of March 31 and June 30 of each year.

                           The foregoing covenant shall be first tested as of
June 30, 1997.

                           Total Liabilities shall mean total liabilities less
subordinated debt. Tangible Net Worth shall mean equity plus subordinated debt.

                  (b) Maintain a net worth plus subordinated debt of not less
than:

                           (i) Fifteen Million Dollars ($15,000,000.00) as of
September 30 and December 31 of each year; and

                           (ii) Twelve Million Five Hundred Thousand Dollars
($12,500,000.00) as of March 31 and June 30 of each year.

                           The foregoing covenant shall be first tested as of
June 30, 1997.

                  (c) Maintain a debt service coverage of 1.1:1 on all principal
and interest payments and capital expenditures. Debt service coverage will be
calculated as: (i) net profit after taxes plus depreciation plus amortization
plus income taxes expensed but never to be paid less any dividends to the
Guarantor; divided by (ii) principal payments plus capital expenditures. This
covenant will be tested quarterly on a rolling four (4) quarter basis. The
payment of principal on the seller notes will not be included in the denominator
calculation of the debt service coverage. The foregoing covenant shall be first
tested as of June 30, 1997.

              4.2 FINANCIAL STATEMENTS AND OTHER INFORMATION. Maintain a system
of accounting satisfactory to Bank and in accordance with GAAP applied on a
consistent basis throughout the period involved, permit Bank's officers or
authorized representatives to visit and inspect Borrower's and each Subsidiary's
books of account and other records at such reasonable times and as often as Bank
may desire, and pay the reasonable fees and disbursements of any accountants or
other agents of Bank selected by Bank for the foregoing purposes. The foregoing
shall include, without limitation, the Bank's performing a field audit of
Borrower's and each Subsidiary's assets and systems. Unless written notice of
another location is given to Bank, Borrower's books and records


                                       17
<PAGE>



will be located at Borrower's chief executive office set forth above (and with
respect to each Subsidiary, the address provided by the Borrower to the Bank in
writing). All financial statements called for below shall be prepared in form
and content acceptable to Bank and by independent certified public accountants
acceptable to Bank.

                  In addition, Borrower shall comply with the following:

                  (a) ANNUAL STATEMENTS. Borrower shall provide Bank with annual
audited financial statements on a consolidated and consolidating basis for the
Borrower and each of its wholly-owned Subsidiaries (together with any management
letter provided to the Borrower by the Borrower's principal accounting firm), in
conformity with generally accepted accounting principles applied on a consistent
basis, within one hundred fifty (150) days of fiscal year end, to be prepared by
and bear the unqualified opinion of a Certified Public Accountant acceptable to
Bank (any national or regional accounting firm shall be deemed acceptable to the
Bank) without any impermissible qualification. As used herein, "impermissible
qualification" means relative to the opinion of any independent public
accountant as to any financial statement of Borrower that said opinion contains
no qualification or exception to any such opinion or certification: (i) which is
of a "going concern" or similar nature; (ii) which relates to the limitation on
the scope of examination of matters relevant to such financial statements; (iii)
which relates to the treatment or classification of any item in such financial
statement in which, as a condition to its removal, would require an adjustment
to such item, the effect of which would be to cause the Borrower (or any
Subsidiary) to be in default of any of the financial covenants under any of the
Loan Documents; or (iv) which is otherwise unacceptable to the Bank in the
Bank's reasonable discretion.

                  (b) QUARTERLY STATEMENTS. Borrower shall provide Bank (on an
accrual basis) with company prepared quarterly financial statements (on a
consolidated and consolidating basis for the Borrower and each of its
Subsidiaries) in conformity with generally accepted accounting principles
applied on a consistent basis, within sixty (60) days of the end of each
quarter.

                  (c) 10-Q. Borrower shall deliver to Bank the 10-Q of the
Guarantor with the quarterly statement required under subparagraph above.

                  (d) COMPLIANCE CERTIFICATE. All required financial statements
must be accompanied by a Certificate of Compliance in the form attached hereto
as EXHIBIT 2.03(d), signed by an officer of the Borrower. The foregoing
Certificate of Compliance shall also include the Borrower's calculation of all 
financial covenants.

                  (e) GUARANTOR AND SUBSIDIARY STATEMENTS AND TAX RETURNS. Cause
each Guarantor and each Subsidiary which is not consolidated with the Borrower
to deliver to Bank: (1) updated financial statements on or prior to one hundred
fifty (150) days following the Borrower's fiscal year end; and (2) a copy of
their annual federal income tax return within ten (10) days following filing.
Tax returns must be filed within the time established by federal law, including
the provisions of federal law regarding extensions of time for filing.


                                       18
<PAGE>



                  (f) SEC FILINGS. Borrower shall provide to Bank a copy of all
Securities and Exchange Commission filings (if applicable) with respect to
Borrower and the Guarantor within ten (10) days following filing.

                  (g) ADDITIONAL INFORMATION. Furnish to Bank promptly such
additional information, reports and statements respecting the business
operations and financial condition of Borrower, each Guarantor and each
Subsidiary, respectively, from time to time, as Bank may reasonably request.

              4.3 INSURANCE. Maintain insurance with responsible insurance
companies on such of its properties, in such amounts and against such risks as
is customarily maintained by similar businesses operating in the same vicinity,
specifically to include fire and extended coverage insurance covering all
assets, business interruption insurance, workers compensation insurance (if
available under applicable law) and liability insurance, all to be with such
companies and in such amounts as are satisfactory to Bank and with respect to
insurance on the Collateral, to contain a mortgagee clause naming Bank as a loss
payee or an additional insured (as applicable) as its interest may appear and
providing for at least 30 days prior notice to Bank of any cancellation,
nonrenewal or modification thereof. Satisfactory evidence of such insurance will
be supplied to Bank prior to funding under the Loan(s) and 30 days prior to each
policy renewal. Coinsurance provisions are not permitted in any insurance
policies. Further, each insurance policy provided to Bank by the Borrower shall
be written by an insurer having not less than "A-X" Best's Rating according to
the most current edition of Best's Key Rating Guide. The address for notices to
Bank shall be set forth in each policy as follows:

                                    NationsBank of Texas
                                    TX1-609-03-01
                                    P.O. Box 830632
                                    Dallas, TX 75283

                                    Re:  Obligor Number

              4.4 EXISTENCE AND COMPLIANCE. Maintain its existence, good
standing and qualification to do business, where required and comply with all
laws, regulations and governmental requirements including, without limitation,
environmental laws applicable to it or to any of its property, business
operations and transactions.

              4.5 ADVERSE CONDITIONS OR EVENTS. Advise Bank in writing within
ten (10) days of: (a) any condition, event or act which comes to its attention
that would or might materially adversely affect Borrower's, any Guarantor's or
any Subsidiary's financial condition or operations, the Collateral, or Bank's
rights under the Loan Documents; (b) any litigation filed by or against
Borrower, any Guarantor or any Subsidiary in excess of One Hundred Thousand
Dollars ($100,000) in the aggregate; (c) any event that has occurred that would
constitute an Event of Default under any


                                       19
<PAGE>



Loan Documents; and (d) any uninsured or partially uninsured loss through fire,
theft, liability or property damage in excess of an aggregate of One Hundred
Thousand Dollars ($100,000).

              4.6 TAXES AND OTHER OBLIGATIONS. Pay all of their respective
taxes, assessments and other obligations, including, but not limited to taxes,
costs or other expenses arising out of this transaction, as the same become due
and payable, except to the extent the same are being contested in good faith by
appropriate proceedings in a diligent manner.

              4.7 MAINTENANCE. Maintain all of their respective tangible
property in good condition and repair and make all necessary replacements
thereof, and preserve and maintain all licenses, trademarks, privileges,
permits, franchises, certificates and the like necessary for the operation of
their respective business.

              4.8 NOTIFICATION. Borrower shall immediately advise Bank in
writing of: (a) any and all enforcement, cleanup, remedial, removal, or other
governmental or regulatory actions instituted, completed or threatened pursuant
to any applicable federal, state, or local laws, ordinances or regulations
relating to any Hazardous Materials affecting Borrower's and/or any Subsidiary's
business operations; (b) all claims made or threatened by any third party
against Borrower or any Subsidiary relating to damages, contribution, cost
recovery, compensation, loss or injury resulting from any Hazardous Materials.
Borrower shall immediately notify Bank of any remedial action taken by Borrower
or any Subsidiary with respect to Borrower's or any Subsidiary's business
operations; and (c) the occurrence of any Default or Event of Default of which
the Borrower or any Subsidiary has knowledge.

              Without limiting the generality of the foregoing, Borrower shall
cause, except with respect to the slag pile, which property is no longer owned
by Borrower, all the recommendations in the Phase I Environmental Site
Assessment Report prepared by Terranext dated December 8, 1996, under Job No.
06104973 to be completed to Bank's satisfaction within one hundred fifty (150)
days following the date hereof and provide evidence of compliance thereof to the
Bank.

              4.9 POTENTIAL CONTINGENT LIABILITIES. Borrower shall inform Bank
within ten (10) days of any actual or potential contingent liabilities in excess
of One Hundred Fifty Thousand Dollars ($150,000) in the aggregate with respect
to either Borrower or any Subsidiary.

              4.10 SUBSIDIARIES. The following shall be applicable to each 
Subsidiary (whether or not acquired with the proceeds of the Loan):

                  (a) The Borrower shall cause each Subsidiary to guarantee the
Obligation upon terms and conditions acceptable to Bank;

                  (b) The Borrower shall collaterally assign (or cause a
Subsidiary to collaterally assign, if applicable) to the Bank the Borrower's (or
Subsidiary's) interest in each Subsidiary upon terms and conditions acceptable
to the Bank; and


                                       20
<PAGE>




                  (c) Borrower shall cause each Subsidiary to pledge all of such
Subsidiary's assets to the Bank upon terms and conditions acceptable to the Bank
which may include, without limitation, an opinion of counsel acceptable to the
Bank.

              4.11 COMPLIANCE WITH LAWS. Borrower and each Subsidiary shall duly
observe, conform and comply with all laws, decisions, judgments, rules,
regulations and orders of all governmental authorities relative to the conduct
of its business, its properties, and assets, except those being contested in
good faith by appropriate proceedings diligently pursued; and obtain, maintain
and keep in full force and effect all governmental licenses, authorizations,
consents and permits necessary to the proper conduct of the business of the
Borrower and each Subsidiary.

              4.12 VISITATION RIGHTS. Permit any authorized representative of
the Bank from time to time, upon reasonable notice to the Borrower or the
Guarantor, as applicable, and during normal business hours, to examine and copy
the records and books of, and visit and inspect the properties of, the Borrower
or any of its Subsidiaries, or the Guarantor, and to discuss the affairs and
finances of the Borrower or any of its Subsidiaries, or the Guarantor, with any
of their respective officers, directors or employees, and at the expense of the
Bank so long as no Default exists, independent public accountants.

              4.13 ERISA. Borrower and Guarantor shall furnish to Bank:

                  (a) As soon as available and in any event within fifteen (15)
days after Borrower knows or has reason to know that any Termination Event has
occurred, a statement of a senior officer of the Borrower describing the
Termination Event and the action which the Borrower proposes to take so that the
Termination Event shall not be continuing;

                  (b) Promptly after receipt of request therefor by the Bank,
copies of each annual report filed by the Borrower or any of its Subsidiaries
pursuant to Section 104 of ERISA with respect to each Plan (including, to the
extent required by Section 103 of ERISA, the related financial and actuarial
statements and opinions and other supporting statements, certifications,
schedules and information referred to in said Section 103) and each annual
report, if any, required to be filed with respect to each Plan under Section
4065 of ERISA;

                  (c) Promptly and after receipt thereof by the Borrower or any
of its Subsidiaries from the Pension Benefit Guaranty Corporation, copies of
each notice received by such party of the Pension Benefit Guaranty Corporation's
intent to terminate any Plan or to have a Trustee appointed to administer any
Plan; and

                  (d) Promptly after such request, any other documents and
information relating to any Plan that the Bank may reasonably request from time
to time.


                                       21
<PAGE>



              4.14 PAYMENT OF INDEBTEDNESS. Borrower and Guarantor shall pay all
of its Indebtedness and obligations promptly and in accordance with normal terms
and comply in all respects with all agreements, indentures, mortgages or
documents binding on it; and pay and discharge (or bond if being contested) or
cause to be paid and discharged (or bonded if being contested) promptly all
taxes, assessments and governmental charges or levies imposed upon it or upon
its property or upon any part thereof, before the same shall become in default,
as well as all claims for labor, materials and supplies or otherwise which, if
unpaid, might become a Lien upon such properties or any part thereof.

                                    ARTICLE 5
                               NEGATIVE COVENANTS

         Until full payment and performance of all Obligations of Borrower under
the Loan Documents and the termination of any obligation of the Bank to make any
Advances, neither Borrower nor any Subsidiary will, without the prior written
consent of Bank (and without limiting any requirement of any other Loan
Documents):

              5.1 LIENS. Other than a purchase money security interest which is
fully subordinated to the Bank with respect to the guaranty of the promissory
notes indicated as Paragraphs 1 and 2 on EXHIBIT 3.20 attached hereto, incur,
create or permit to exist any pledge, security interest, lien, charge or other
encumbrance of any nature whatsoever on any of Borrower's or any Subsidiary's
property (including the Collateral), whether now owned or hereafter acquired.

              5.2 BORROWINGS. Other than the Indebtedness identified on EXHIBIT
3.20 attached hereto, create, incur, assume or become liable in any manner for
any indebtedness, direct or indirect (for borrowed money, deferred payment for
the purchase of assets, lease payments, as surety or guarantor for the debt for
another, or otherwise), in excess of Seventy-Five Thousand Dollars ($75,000) in
the aggregate other than to Bank, except for normal trade debts incurred in the
ordinary course of Borrower's business.

              5.3 CHARACTER OF BUSINESS. Change the general character of
business as conducted at the date hereof, or engage in any type of business not
reasonably related to its business as presently conducted.

              5.4 ADDITIONAL NEGATIVE COVENANTS. During the Term of the Loan,
neither the Borrower nor any Subsidiary shall:

                  (a) repurchase, redeem or retire any of its stock;

                  (b) (i) make investments or acquisitions with or in any
affiliate, third party, Subsidiary, joint venture, persons or securities,
without the written consent of the Bank;


                                       22
<PAGE>



                      (ii) enter into transactions with any affiliate, third
party, Subsidiary or joint venture without the written consent of the Bank,
except those: (A) which will not diminish the value of the collateral; and (B)
which are on no less favorable terms than an arms-length transaction;

                  (c) make loans, advances or investments other than U.S.
Government and Federal Agency Obligations, Certificates of Deposit from
federally insured banks and commercial paper rated A1-P1, all with maturities
not to exceed six (6) months;

                  (d) guarantee, endorse or assume debt, except in the normal
course of business;

                  (e) merge with or acquire the assets, stock or ownership
interest of another entity;

                  (f) sell, lease, assign, or otherwise dispose of or transfer
any assets, except in the ordinary course of business;

                  (g) make, permit or suffer any change in the ownership of: (i)
Borrower; and/or (ii) any Subsidiary whereby the Borrower does not own and
control at least fifty-one percent (51%) of all ownership and voting stock of
the Subsidiary;

                  (h) make, permit or suffer any change in the ownership,
control or management of Borrower and/or any Subsidiary whether by agreements,
shareholder agreements or otherwise or enter into any agreement of merger, sale
of assets or other agreement which would be in violation of any applicable law
or regulation;

                  (i) make any payment with regard to minority interest in the
Borrower or any Subsidiary;

                  (j) except as contemplated by Paragraph above, grant, suffer
or permit any contractual or non-contractual lien or security interest in its
assets, or fail to promptly pay when due all lawful claims, whether for labor,
materials or otherwise;

                  (k) permit any change in the senior management of the
Guarantor whereby Allen C. Harper does not remain active in the senior
management of the Guarantor; or

                  (l) co-mingle the Borrower's assets with those of the
Guarantor, any Subsidiary or any of the Guarantor's subsidiaries. The foregoing
shall, among other things, be deemed to prohibit the upstreaming of funds
(including profits but excluding the amount necessary to make interest payments
on the Four Million Two Hundred Thousand Dollar [$4,200,000] and the Five
Million Eight Hundred Fifty Thousand Dollar [$5,850,000] promissory notes from
Guarantor to Charles E. Bradshaw, Jr. provided no Event of Default exists
hereunder and provided the payment thereof would not violate the terms of the
General Subordination and Assignment between Borrower, Guarantor and Bank dated
even date herewith) of Borrower to Borrower's parent unless the upstreaming of
such profits would not violate the following:


                                       23
<PAGE>



         Sixty (60) days prior to any cash payment from Borrower to Guarantor,
         the Borrower must supply the Bank a proforma balance sheet acceptable
         to the Bank that shows the Borrower meeting the following balance sheet
         tests post payment: (a) net worth plus subordinated debt of not less
         than Fifteen Million Dollars ($15,000,000.00); (b) total liabilities
         less subordinated debt to equity plus subordinated debt at a ratio not
         to exceed 1.2:1; and (c) Borrower must be in compliance with all terms,
         conditions and covenants in the Loan Documents as evidenced by a
         compliance certificate executed by an authorized officer of Borrower
         (in form and substance acceptable to the Bank) and countersigned as
         being acknowledged and agreed to by the Bank. In conjunction with the
         foregoing, prior to any payment from Borrower to Guarantor, Borrower
         must deliver to Bank audited or reviewed financial statements
         acceptable to the Bank with respect to the quarter ending no less than
         seventy-five (75) days prior to the proposed payment. In the event the
         Borrower is not in compliance with the foregoing, no payments may be
         made from Borrower to Guarantor.

                                    ARTICLE 6
                                     DEFAULT

         The occurrence of any of the following as they relate to the Borrower
or any Subsidiary or any of the Guarantors shall constitute an Event of Default:

              6.1 Failure to pay principal or interest or any other payment due
to Bank under any note or collateral security document executed in connection
with the Loan, whether parent or subsidiary, within ten (10) days following the
due date, or to other creditors, within any applicable grace period.

              6.2 Failure to perform any covenant or agreement of the Borrower,
any Subsidiary or any Guarantor contained in this Agreement within ten (10) days
following notice thereof from Bank.

              6.3 Failure to perform any other obligation imposed upon Borrower,
any Subsidiary or the Guarantor by the Loan Documents within any applicable cure
period.

              6.4 Any representation, warranty, statement or certificate made by
Borrower, any Subsidiary or Guarantor determined by Bank to be untrue in any
material respect.

              6.5 Violation, termination or default following any applicable
cure period of any agreement or contract with Bank (or its affiliates) or other
lenders or under any other material agreement involving Borrower.

              6.6 Filing of any petition for adjudication as a bankrupt or for
reorganization, whether voluntary or involuntary which is not dismissed within
ninety (90) days following filing; the appointment of a receiver or trustee or
other similar officer with respect to any substantial part of their property
which is not dismissed within ninety (90) days following filing; a general
assignment


                                       24
<PAGE>



for the benefit of creditors; any other insolvency proceeding, any dissolution
or liquidation or winding up of the affairs of the Borrower, any Subsidiary or
any Guarantor.

              6.7 A default under any agreement Borrower, any Subsidiary or any
Guarantor may have with the Bank (or its affiliates) shall constitute a default
under the Loan and a default under the Loan shall constitute a default under any
other agreement between Bank (or its affiliates) and Borrower, any Subsidiary or
any Guarantor.

              6.8 A final judgment is entered against Borrower or any
Subsidiary, other than a final judgment in connection with any condemnation, and
Borrower does not discharge the same or provide for its discharge in accordance
with its terms, or procure a stay of execution therein, in any event within
thirty (30) days of entry.

              6.9 Any federal, state or local tax lien or any claim of lien for
labor, materials or any other lien or encumbrance of any nature whatsoever is
recorded against the Borrower, any Subsidiary or any Guarantor or against the
Borrower's, any Subsidiary's, or any Guarantor's assets and is not removed by
payment or transferred to substitute security in the manner provided by law
within ten (10) days after it is recorded in accordance with applicable law, or
is not contested by Borrower, any Subsidiary or any Guarantor.

              6.10 Borrower, any Subsidiary or any Guarantor shall cease to
exist or to be qualified to do or transact business in the State in which the
Borrower's, any Subsidiary's or any Guarantor's assets are located, or shall be
dissolved or shall be a party to a merger or consolidation, or shall sell all or
substantially all of its assets.

              6.11 Any sale, conveyance, transfer, assignment or other
disposition of all or any part of the Borrower's assets, any Subsidiary's assets
or any Guarantor's assets, other than in the ordinary course of business, or any
ownership interest in Borrower or any Subsidiary.

              6.12 Borrower, any Subsidiary or any Guarantor shall default under
any obligation imposed by any indemnity whether contained within any of the Loan
Documents, the Hazardous Waste Certification, or otherwise.

              6.13 If at any time the Bank shall reasonably deem itself insecure
or shall determine that there has been an adverse material change in the
financial condition or prospects of Borrower, any Subsidiary or any Guarantor.

              6.14 The results of any field audit performed by Bank are not
satisfactory to the Bank, as determined in the Bank's sole discretion, acting
reasonably.

              6.15 Borrower or Guarantor shall be in default under any of the
Indebtedness identified on EXHIBIT 3.20 attached hereto and/or under any
agreement securing same.


                                       25
<PAGE>



              6.16 A proceeding being filed or commenced against Borrower or
Guarantor for dissolution or liquidation, or Borrower or Guarantor voluntarily
or involuntarily terminating or dissolving or being terminated or dissolved, and
has not been dismissed within ninety (90) days.

              6.17 A Termination Event has occurred; or a trustee shall be
appointed to administer any Plan or Plans under Section 4042 of ERISA; or the
Pension Benefit Guaranty Corporation shall institute proceedings to terminate or
to have a trustee appointed to administer, any Plan or Plans, and the proceeding
shall not be dismissed within ninety (90) days; or a voluntary notice of intent
to terminate is filed under Section 4041 of ERISA which would, in the opinion of
Bank, have a material adverse effect on the financial condition of the Borrower
and its Subsidiaries taken as a whole; or, with respect to any Plan as to which
the Borrower or any Subsidiary may have any liability, there shall exist a
deficiency in the Plan assets available to satisfy the benefits guaranteeable
under ERISA with respect to the Plan which is material to the financial
condition of the Borrower and such Subsidiary taken as a whole, and (a) steps
are undertaken to terminate the Plan, or (b) the Plan is terminated, or (c) any
Reportable Event which presents a material risk of termination with respect to
the Plan shall occur.

                                    ARTICLE 7
                              REMEDIES UPON DEFAULT

         If an Event of Default shall occur Bank may declare this Agreement in
default and all amounts owing under this Agreement and all other Obligations
owing by Borrower to Bank shall upon demand by Bank immediately become due and
payable (notwithstanding that the maturity date or dates expressed in any
evidence of such indebtedness may be otherwise) and Bank may foreclose Bank's
lien or security interest in the Collateral in any way permitted by law, and
Bank shall have, without limitation, the remedies of a secured party under the
Uniform Commercial Code as enacted in Florida as of the date hereof. Bank may
thereupon enter Borrower's and each Subsidiary's premises without legal process,
but in accordance with applicable laws and without incurring liability other
than liability to Borrower arising out of Bank's gross negligence or willful
misconduct, and remove the Collateral to such place as Bank may deem advisable,
or Bank may require Borrower and each Subsidiary to make the Collateral
available to Bank at Borrower's and each Subsidiary's place of business and,
with or without having the Collateral at the time or place of sale, Bank may
sell or otherwise dispose of all or any part of the Collateral whether in its
then condition or after further preparation or processing, either at public or
private sale or at any broker's board, with or without notice and with or
without advertisement, in lots or in bulk, for cash or for credit, at any time
or place, in one or more sales, and upon such terms and conditions as Bank may
elect but in all events in accordance with applicable laws. At any such sale
Bank may be the purchaser. If any Inventory shall require rebuilding, repairing,
maintenance, preparation, or is in process or other unfinished state, Bank shall
have the right, at Bank's option, to do such rebuilding, repairing, preparation,
processing or completing of manufacturing, for the purpose of putting the
Inventory in such saleable form as Bank shall deem appropriate.


                                       26
<PAGE>



         If after receipt of any payment of or any part of the Obligation, the
Bank is for any reason compelled to surrender such payment to any person because
such payment is determined to be void or voidable as a preference, impermissible
setoff, or a diversion of trust funds, or for any other reason, this Agreement
shall continue in full force and the Borrower shall remain liable to Bank for
the amount of such payment surrendered. The provisions of this Section shall be
and remain effective notwithstanding any contrary action which may have been
taken by the Bank in reliance upon such payment, and any such contrary action so
taken shall be without prejudice to the Bank's rights under this Agreement and
shall be deemed to have been conditioned upon such payment having become final
and irrevocable. The provisions of this Section shall survive the termination of
this Agreement until all periods for such surrender have ended without such
action having been instituted.

         Borrower hereby makes, constitutes and appoints Bank (and all persons
designated by Bank) the true and lawful agent and attorney-in-fact of Borrower
with full power of substitution: (a) if an Event of Default has occurred, to
receive, open and dispose of all mail addressed to Borrower relating to the
Collateral; (b) if an Event of Default has occurred, to notify and direct the
United States Post Office authorities by notice given in the name of Borrower
and to sign on behalf of Borrower, to change the address for delivery of all
mail addressed to Borrower relating to the Collateral to an address to be
designated by Bank, and to cause such mail to be delivered to such designated
address where Bank may open all such mail and remove therefrom any notes,
checks, acceptances, drafts money orders or other instruments included in the
Collateral in which Bank has a security interest under the terms of this
Agreement, with full power to endorse the name of Borrower upon any such notes,
checks, acceptances, drafts, money orders, instruments or other documents
relating to the Collateral or security of any kind and to effect the deposit and
collection thereof, and Bank shall have the further right and power to endorse
the name of Borrower on any documents relating to the Collateral; (c) to sign
the name of Borrower to drafts against its lessees or other debtors, to notices
to such lessees or other debtors, to assignments and notices of assignments,
financing statements or other public records or notices and all other
instruments and documents; (d) to do any and all things necessary and take such
actions in the name and on behalf of Borrower to carry out the intent of this
Agreement, including, without limitation, the grant of the security interest
granted under this Agreement and to perfect and protect the security interest
granted to Bank in respect of the Collateral and the Bank's rights created under
this Agreement. Borrower agrees that neither Bank nor any of its agents,
designees or attorneys-in-fact will be liable for any acts of commission or
omission (other than for acts of commission or omission which constitute gross
negligence or willful misconduct as determined by a court of competent
jurisdiction in a final, nonappealable order), or for any error of judgment or
mistake of fact or law in respect to the exercise of the power of attorney
granted under this Article. The power of attorney granted under this Article
shall be irrevocable during the Term of this Agreement.

                                    ARTICLE 8
                                     NOTICES


                                       27
<PAGE>



         All notices, requests or demands which any party is required or may
desire to give to any other party under any provision of this Agreement must be
in writing delivered to the other party at the following address:

                 Borrower: The Durango & Silverton Narrow Gauge Railroad Company
                           3700 North 29th Avenue, Suite 202
                           Hollywood, Florida 33020
                           Attention:  Chief Financial Officer

                 Bank:     NationsBank, N.A. (South)
                           One Financial Plaza, 10th Floor
                           Fort Lauderdale, Florida 33394
                           Attention:  Allen Brown

or to such other address as any party may designate by written notice to the
other party. Each such notice, request and demand shall be deemed given or made
as follows:

              8.1 If sent by hand delivery, upon delivery.

              8.2 If sent by mail, upon the earlier of the date of receipt or
five (5) days after deposit in the U.S. Mail, first class postage prepaid.

              8.3 If sent by overnight delivery service, one (1) business day
following mailing, postage prepaid.

                                    ARTICLE 9
                       COSTS, EXPENSES AND ATTORNEY'S FEES

         Borrower shall pay to Bank immediately upon demand the full amount of
all costs and expenses, including reasonable attorneys' fees (to include outside
counsel fees and all allocated costs of Bank's in-house counsel if permitted by
applicable law), incurred by Bank in connection with (a) negotiation and
preparation of this Agreement and each of the Loan Documents (not to exceed
Eighteen Thousand Dollars [$18,000] plus expenses with respect to fees), and (b)
Bank's continued administration thereof.

                                   ARTICLE 10
                                  MISCELLANEOUS

         Borrower and Bank further covenant and agree as follows, without
limiting any requirement of any other Loan Document:

              10.1 CUMULATIVE RIGHTS AND NO WAIVER. Each and every right granted
to Bank under any Loan Document, or allowed it by law or equity shall be
cumulative of each other and may be


                                       28
<PAGE>



exercised in addition to any and all other rights of Bank, and no delay in
exercising any right shall operate as a waiver thereof, nor shall any single or
partial exercise by Bank of any right preclude any other or future exercise
thereof or the exercise of any other right. Borrower expressly waives any
presentment, demand, protest or other notice of any kind, including but not
limited to notice of intent to accelerate and notice of acceleration. No notice
to or demand on Borrower in any case shall, of itself, entitle Borrower to any
other or future notice or demand in similar or other circumstances.

              10.2 APPLICABLE LAW. This Loan Agreement and the rights and
obligations of the parties hereunder shall be governed by and interpreted in
accordance with the laws of Florida and applicable United States federal law.

              10.3 AMENDMENT. No modification, consent, amendment or waiver of
any provision of this Loan Agreement, nor consent to any departure by Borrower
therefrom, shall be effective unless the same shall be in writing and signed by
an officer of Bank, and then shall be effective only in the specified instance
and for the purpose for which given. This Loan Agreement is binding upon
Borrower, its successors and assigns, and inures to the benefit of Bank, its
successors and assigns; however, no assignment or other transfer of Borrower's
rights or obligations hereunder shall be made or be effective without Bank's
prior written consent, nor shall it relieve Borrower of any obligations
hereunder. There is no third party beneficiary of this Loan Agreement.

              10.4 DOCUMENTS. All documents, certificates and other items
required under this Loan Agreement to be executed and/or delivered to Bank shall
be in form and content satisfactory to Bank and its counsel.

              10.5 PARTIAL INVALIDITY. The unenforceability or invalidity of any
provision of this Loan Agreement shall not affect the enforceability or validity
of any other provision herein and the invalidity or unenforceability of any
provision of any Loan Document to any person or circumstance shall not affect
the enforceability or validity of such provision as it may apply to other
persons or circumstances.

              10.6 INDEMNIFICATION. Borrower shall indemnify, defend and hold
Bank and its successors and assigns harmless from and against any and all
claims, demands, suits, losses, damages, assessments, fines, penalties, costs or
other expenses (including reasonable attorneys' fees and court costs) arising
from or in any way related to any of the transactions contemplated hereby and
the operation of the Borrower's business including, but not limited to, the
payment of "Taxes" (as hereinafter defined). The Borrower's obligations under
this paragraph shall survive the repayment of the Loan and any deed in lieu of
foreclosure or foreclosure of any Deed to Secure Debt, Deed of Trust, Security
Agreement or Mortgage securing the Loan.

              10.7 SURVIVABILITY. All covenants, agreements, representations and
warranties made herein or in the other Loan Documents shall survive the making
of the Loan and shall continue in full force and effect so long as the Loan is
outstanding or the obligation of the Bank to make any advances under the Loan
shall not have expired.


                                       29
<PAGE>




              10.8 FIELD AUDIT. The Bank shall be permitted to perform (for the
benefit of the Bank) inventory and accounts receivable field audits which must
be satisfactory to the Bank. Such audits shall be at the Borrower's expense
provided Borrower shall not be responsible for the expense more than once in any
twelve (12) month period unless the Borrower shall be in default.

              10.9 JURISDICTION, SERVICE OF PROCESS.

                  (a) Any suit, action or proceeding against Borrower with
respect to this Agreement, the Note, the Loan Documents or any judgment entered
by any court in respect of any thereof shall be brought in the courts of Broward
County in the State of Florida or in the U.S. District Court for the Southern
District of Florida as Bank (in its sole discretion) may elect, and Borrower
hereby accepts the nonexclusive jurisdiction of those courts for the purpose of
any suit, action or proceeding.

                  (b) In addition, Borrower hereby irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement, the Note, the Loan Documents or any judgment entered
by any court in respect of any thereof brought in the State of Florida, and
hereby further irrevocably waives any claim that any suit, action or proceeding
brought in the State of Florida has been brought in an inconvenient forum.
Borrower hereby further agrees that if any such suit, action or proceeding is
pending in more than one jurisdiction, Bank's selection of the forum shall be
binding upon the parties hereto.

              10.10 COURSE OF DEALING. No course of dealing between Bank and
Borrower or any Subsidiary shall be effective to amend, modify or change any
provision of this Agreement.

              10.11 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon Borrower, each Subsidiary and Guarantor and shall inure to the benefit of
the Bank, and their respective heirs, personal representatives, trustees,
estates, successors and assigns; provided, that the Borrower may not assign any
of its rights hereunder without the prior written consent of the Bank, which
consent may be withheld in the Bank's sole discretion. The Bank may, without the
consent of the Borrower, Guarantor, or any other Person, assign, negotiate,
hypothecate, or grant participations in this Agreement or in any of its rights
and security under this Agreement and each of the other documents contemplated
to be executed in conjunction herewith. The Borrower and each Guarantor shall
accord full recognition to any such assignment, and all rights and remedies of
the Bank in connection with the interest so assigned shall be as fully
enforceable by such assignee as they were by the Bank before such assignment. In
connection with any proposed assignment, the Bank may disclose to the proposed
assignee any information that the Borrower or any Guarantor is required to
deliver to the Bank pursuant to this Agreement.

              10.12 NET PAYMENTS. All payments by the Borrower under this
Agreement and the Note shall be made without set-off or counterclaim and in such
amounts as may be necessary in order that


                                       30
<PAGE>



all payments, after deduction or withholding for or on account of any present or
future taxes, levies, imposts, duties, or other charges of whatsoever nature
imposed by any government or any political subdivision or taxing authority
thereof including, without limitation, documentary and intangible taxes
(collectively, the "Taxes") shall not be less than the amounts otherwise
specified to be paid under this Agreement and the Note. Notwithstanding anything
to the contrary contained in this Paragraph , the Borrower shall not be liable
for the payment of any tax on or measured by net income imposed on the Bank
pursuant to the income tax laws of the United States or any of the United States
or any political subdivision thereof. The Borrower shall pay all Taxes when due
(and indemnify the Bank against any liability therefor) and shall promptly (and
in any event not later than thirty [30] days thereafter) furnish to the Bank any
certificates, receipts and other documents which may be required (in the
judgment of Bank) to establish any tax credit to which the Bank may be entitled.
The obligations of the Borrower under this Paragraph shall survive the
termination of this Agreement and the repayment of the Loan, but such
obligations shall terminate as to any claim or liability for Taxes for which the
Borrower is responsible pursuant to this Paragraph on the same date that any
such claim or liability for Taxes is barred by any applicable statute of
limitations.

              10.13 FURTHER ASSURANCES. Borrower will at its own cost and
expense execute and deliver to Bank, at any time and from time to time, any and
all further agreements, documents and instruments, and take any and all further
actions which may be required under applicable law, or which Bank may from time
to time reasonably request, in order to effectuate the intent of the
transactions contemplated by this Agreement and the other Loan Documents,
including all such actions to establish, preserve, protect and perfect the
estate, right, title and interest of the Bank to the Collateral including that
which is not Collateral on the date hereof.

              10.14 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and same instrument.

              10.15 RESURRECTION OF BORROWER'S OBLIGATIONS. To the extent that
Bank receives any payment on account of any of Borrower's Obligations, and any
such payment(s) or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, subordinated and/or required to be repaid
to a trustee, receiver or any other Person under any bankruptcy act, state or
Federal law, common law or equitable cause, then, to the extent of such
payment(s) received, Borrower's Obligations or part thereof intended to be
satisfied and any and all Liens upon or pertaining to any property or assets of
Borrower and theretofore created and/or existing in favor of Bank as security
for the payment of such Borrower's Obligations shall be revived and continue in
full force and effect, as if such payment(s) had not been received by Bank and
applied on account of Borrower's Obligations.

              10.16 EQUITABLE RELIEF. Borrower recognizes that, in the event
Borrower fails to perform, observe or discharge any of Borrower's Obligations
under this Agreement, any remedy at law may prove to be inadequate relief to
Bank; the Borrower agrees that Bank, if Bank so requests, shall be


                                       31
<PAGE>



entitled to temporary and permanent injunctive relief in any such case without
the necessity of proving actual damages.

                                   ARTICLE 11
                              AMBIGUITY OR CONFLICT

         In the event of an ambiguity or conflict of terms between any of the
provisions of the Note, the Deed of Trust, the Security Agreement, any Loan
Document and this Agreement, the terms of this Agreement shall be deemed to
amend and control all of the other agreements; and, to the extent that any of
the agreements are silent, each shall supplement the others; provided, however,
in the event of any conflict between the terms of this Agreement, the Deed of
Trust, the Security Agreement, any Loan Document, the Note and any of them, the
terms which, in Bank's sole discretion, grant Bank the greater protection with
respect to the prospect of payment of the Note, or in any other manner are of
greater benefit to Bank, shall control. All other provisions of contemporaneous
or previous agreements and understandings between Borrower, and Bank relating to
the commitment of Bank and the Note in conflict with any expressed provision
hereof shall be merged into this Agreement and be extinguished and of no further
force and effect.

                                   ARTICLE 12
                                   ARBITRATION

         ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO INCLUDING,
BUT NOT LIMITED TO, THOSE ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
RELATED AGREEMENTS OR INSTRUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM
AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH
THE FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW),
THE RULES OF PRACTICE AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES
OF JUDICIAL ARBITRATION AND MEDIATION SERVICES, INC. (J.A.M.S.), AND THE
"SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL
RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY
COURT HAVING JURISDICTION. ANY PARTY TO THIS AGREEMENT MAY BRING AN ACTION,
INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY
CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING
JURISDICTION OVER SUCH ACTION.

              12.1 SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE CITY
OF FORT LAUDERDALE, FLORIDA, AND ADMINISTERED BY ENDISPUTE, INC., D/B/A
ENDISPUTE/J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF ENDISPUTE/J.A.M.S. IS
UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE
AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL BE
COMMENCED WITHIN NINETY (90) DAYS OF THE DEMAND FOR ARBITRATION.


                                       32
<PAGE>




              12.2 RESERVATION OF RIGHTS. NOTHING IN THIS AGREEMENT SHALL BE
DEEMED TO: (A) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF
LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS AGREEMENT; OR (B) BE A
WAIVER BY THE BANK OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C. SEC. 91 OR ANY
SUBSTANTIALLY EQUIVALENT STATE LAW; OR (C) LIMIT THE RIGHT OF THE BANK HERETO
(I) TO EXERCISE SELF-HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (II)
TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR (III) TO
OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED
TO) INJUNCTIVE RELIEF OR THE APPOINTMENT OF A RECEIVER. THE BANK MAY EXERCISE
SUCH SELF-HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL
OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY ARBITRATION
PROCEEDING BROUGHT PURSUANT TO THIS AGREEMENT. AT BANK'S OPTION, FORECLOSURE
UNDER A DEED OF TRUST OR MORTGAGE MAY BE ACCOMPLISHED BY ANY OF THE FOLLOWING:
THE EXERCISE OF A POWER OF SALE UNDER THE DEED OF TRUST OR MORTGAGE, OR BY
JUDICIAL SALE UNDER THE DEED OF TRUST OR MORTGAGE, OR BY JUDICIAL FORECLOSURE.
NEITHER THIS EXERCISE OF SELF-HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE
OF AN ACTION FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL
CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN ANY
SUCH ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING
RESORT TO SUCH REMEDIES.

                                   ARTICLE 13
                                NO ORAL AGREEMENT

         THIS WRITTEN LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

                                   ARTICLE 14
                         CROSS-DEFAULT/CROSS-COLLATERAL

         An Event of Default hereunder or under any of the documents evidencing
or securing the Loan shall constitute an Event of Default under any other
indebtedness (now or hereafter existing) of the Borrower, any Guarantor or any
Subsidiary to Bank. Further, all collateral for the Loan shall also secure any
other indebtedness (now or hereafter existing) of the Borrower, any Guarantor or
any Subsidiary to Bank, and any collateral pledged by the Borrower, any
Guarantor or any Subsidiary to Bank to secure such other indebtedness shall also
secure the Loan. Any default under any


                                       33
<PAGE>



document evidencing or securing such other indebtedness, whether by the
Borrower, any Guarantor or any Subsidiary, shall constitute an Event of Default
hereunder.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed under seal by their duly authorized representatives as of the date
first above written.

<TABLE>
<CAPTION>

WITNESS:                                    BORROWER:

<S>                                          <C>
                                            THE DURANGO & SILVERTON NARROW
                                            GAUGE RAILROAD COMPANY

                                            By:                              SEAL)
--------------------------------               -----------------------------------
                                            Name:
                                                  --------------------------------
                                            Title:
--------------------------------                  --------------------------------


                                            BANK:

                                            NATIONSBANK, N.A. (SOUTH), a national banking
                                            association

                                            By:                              SEAL)
                                               -----------------------------------
                                            Name:
                                                  --------------------------------
                                            Title:
                                                  --------------------------------


                               JOINDER AND CONSENT


         THE UNDERSIGNED GUARANTOR hereby joins into this Agreement to consent
to this Agreement and agree to be bound by all of the terms, representations,
warranties, indemnities and conditions of this Agreement applicable to the
Guarantor. The undersigned acknowledges the receipt of good and sufficient
consideration for its joinder herein.

                                            FIRST AMERICAN RAILWAYS, INC.

                                            By:                              SEAL)
                                               -----------------------------------
                                            Name:
                                                  --------------------------------
                                            Title:
                                                  --------------------------------

</TABLE>


                                       34
<PAGE>



                                 EXHIBIT 2.03(d)

                            CERTIFICATE OF COMPLIANCE


         I, ___________________ , Authorized Signatory for THE DURANGO &
SILVERTON NARROW GAUGE RAILROAD COMPANY ("Borrower") under the Loan Agreement
(as amended, modified, or supplemented from time to time, the "Loan Agreement")
between Borrower and NATIONSBANK, N.A. (SOUTH) ("Bank"), dated effective as of ,
1997, do hereby certify that:

         1. This Compliance Certificate is furnished pursuant to the Loan
Agreement and is made as of _______________, 19__ ; unless otherwise defined 
herein, terms used in this Compliance Certificate have the meanings assigned to
such terms in the Loan Agreement.

         2. As of the date of this Compliance Certificate, no Default or Event
of Default has occurred and is continuing.

         3. Borrower and each Guarantor is in compliance with all requirements,
covenants and agreements of Borrower and each Guarantor contained in the Loan
Agreement. Borrower warrants and represents that the calculations set forth on
EXHIBIT A hereto accurately represent the financial condition of the Borrower as
of the dates set forth therein (and as of the date hereof if not otherwise
specified) and the calculations are computed in compliance with the financial
covenants required pursuant to the Loan Agreement.

         4. The most recent financial statements furnished by Borrower and each
Guarantor pursuant to the Loan Agreement fairly present the financial condition
of Borrower and each Guarantor as of the respective dates thereof.

         5. There has not been any material adverse change in the financial
condition of Borrower from that reflected on, and as of the date of, the
financial statement most recently furnished to Bank.

         6. There is no pending or, to the best of Borrower's knowledge,
threatened material litigation against Borrower or any Guarantor which, if
adversely determined, could reasonably be expected to have a Material Adverse
Effect.

         7. Neither Borrower nor any Guarantor is a party to any agreement or
instrument or subject to any other order, rule, regulation or other restriction
materially and adversely affecting Borrower's or any Guarantor's properties,
assets or financial condition, or Borrower's or any Guarantor's ability to
perform the agreements contained in the Loan Agreement.



                                       35
<PAGE>



         Done and executed on the        day of                   , 199     .
                                  ------        ------------------     -----


                                  ----------------------------------------------
                                  Authorized Signatory under the Loan Agreement


                                       36
<PAGE>



                                    EXHIBIT A
                            TO COMPLIANCE CERTIFICATE




                                       37
<PAGE>



                                 EXHIBIT 2.03(f)

                               REQUEST FOR ADVANCE


         I, ______________, Authorized Signatory for THE DURANGO & SILVERTON
NARROW GAUGE RAILROAD COMPANY ("Borrower"), pursuant to the provisions of that
certain Loan Agreement dated effective as of even date herewith, (as amended,
modified, or supplemented from time to time, the "Loan Agreement") between
Borrower and NATIONSBANK, N.A. (SOUTH) ("Bank"), hereby certify that:

         1. Borrower hereby requests an Advance in the aggregate principal
amount of Eight Million Five Hundred Thousand Dollars ($8,500,000) to be made on
_________________, 1997.

                  The proceeds of the Advance shall be disbursed into the
Borrower's account with Bank. The foregoing instructions shall be irrevocable as
provided in the Loan Agreement.

         2. All representations and warranties of the Borrower made in the Loan
Agreement are true and correct in all material respects as of the date hereof as
if made on the date hereof, with and after giving effect to the application of
the proceeds of the Advance in connection with which this Request for Advance is
given.

         3. There does not exist and will not exist on the date of the requested
Advance, both before and after giving effect to the requested Advance, a Default
or an Event of Default.

         4. All conditions precedent in the Loan Agreement to the funding of the
requested Advance have been met.

         5. The proceeds of the requested advance will be used for the purposes
set forth in the Loan Agreement.

         6. Terms used in this Request for Advance, not otherwise defined or
limited herein, are used as defined in the Loan Agreement.

         Done and executed on the ____ day of ______________________, 1997.



                                  ---------------------------------------------
                                  Authorized Signatory under the Loan Agreement



                                       38
<PAGE>



                                  EXHIBIT 3.06

               EXCEPTION(S) TO PARAGRAPH 3.06, OWNERSHIP OF ASSETS


         1.       Junior lien in favor of Charles E. Bradshaw, Jr. securing the
                  guaranty of Borrower of notes in the amount of $4,200,000 and
                  $5,850,000.

         2.       An assignment from Borrower to Charles E. Bradshaw, Jr. of all
                  rights to receive the pending refund of federal unemployment
                  tax of approximately $237,000.

         3.       An assignment from Borrower to Charles E. Bradshaw, Jr. of all
                  rights to receive the pending refund of Colorado State Tourism
                  Tax in the approximate amount of $167,000.

         4.       Lease #27540 between Borrower and Dennis Begrow.

         5.       Lease #501 between Borrower and Cooper Properties.

         6.       Lease #27568 between Borrower and San Miguel Power Assoc. Inc.

         7.       Lease #26849 between Borrower and City of Durango.

         8.       Lease between Borrower and S. Randall Walker.

         9.       Lease #20191 between Borrower and Greeley Gas Co.

         10.      Lease #20128 between Borrower and Greeley Gas Co.

         11.      Lease #27457 between Borrower and La Plata Electric Assoc.
                  Inc.

         12.      Lease #DS16623A between Borrower and Public Service Co. of
                  Colorado.

         13.      Lease #16609 between Borrower and Jack Ferrell.

         14.      Lease #16868 between Borrower and Dennis Begrow.

         15.      Lease #17031 between Borrower and City of Durango.

         16.      Lease #317674 between Borrower and Bruce and Paula Berg.

         17.      Lease #27702 between Borrower and Department of Natural
                  Resource.



                                       39
<PAGE>



         18.      Lease # 16773 between Borrower and Division of Wildlife.

         19.      Lease #16897 between Borrower and City of Durango.

         20.      Lease #20282 between Borrower and State of Colorado.

         21.      Equipment lease for Xerox machine.

         22.      Terms of right of repurchase contained in Agreement For Sale
                  of Railroad Cars between Cinco Animas Corporation and Borrower
                  (a copy of which is attached hereto as EXHIBIT 3.06-A).


                                       40
<PAGE>



                                 EXHIBIT 3.06-A

                       AGREEMENT FOR SALE OF RAILROAD CARS
                      BETWEEN CINCO ANIMAS CORPORATION AND
              THE DURANGO & SILVERTON NARROW GAUGE RAILROAD COMPANY




                                       41

<PAGE>



                                  EXHIBIT 3.08

              EXCEPTION(S) TO PARAGRAPH 3.08, FINANCIAL STATEMENTS


         1.       Financials prepared by Borrower for period 10/01/96 -
                  01/31/97.



                                       42
<PAGE>



                                  EXHIBIT 3.18

                                  SUBSIDIARIES


                                      NONE


                                       43
<PAGE>



                                  EXHIBIT 3.19

                                  SHAREHOLDERS

                  First American Railways, Inc. is the sole owner of all classes
                  of shares of the Borrower which constitutes one hundred 
                  thousand (100,000) shares.



                                       44
<PAGE>



                                  EXHIBIT 3.20

                                  INDEBTEDNESS


         1.       Guaranty of $4,200,000 purchase money note to Charles E.
                  Bradshaw, Jr.

         2.       Guaranty of $5,850,000 purchase money note to Charles E.
                  Bradshaw, Jr.

         3.       Pension Plan obligations in the amount of $207,089.

         4.       RRTA Employee payable in the amount of $338,076.

         5.       Unsecured loans from First American Railways, Inc. to
                  Borrower.

         6.       Lease between Borrower and Xerox Corporation dated February 5,
                  1996, with an obligation not to exceed $16,500.


                                       45
<PAGE>



                                  EXHIBIT 3.21

                             CONTINGENT LIABILITIES


         1.       Pension Plan obligation in the amount of $142,381.

         2.       Corporate guaranty of GECC airplane loan to Charles E.
                  Bradshaw, Jr. not to exceed $500,000.



                                       46
<PAGE>



                                  EXHIBIT 3.29

                              EMPLOYMENT AGREEMENTS


                                      NONE



                                       47
<PAGE>


                    AFFIDAVIT FOR EXECUTION OF LOAN AGREEMENT
                          WITHOUT THE STATE OF FLORIDA

COMMONWEALTH OF THE BAHAMAS )
                                                              )  SS:
CITY OF NASSAU                              )

         BEFORE ME, the undersigned Notary Public, duly authorized in the
Commonwealth and City aforesaid to administer oaths and take acknowledgments,
personally appeared the undersigned, to me well known and to me known to be the
persons described as witnesses to the foregoing Loan Agreement and who witnessed
the execution and delivery of the foregoing Loan Agreement, and who, first being
duly sworn by me did each depose, say and acknowledge before me that they were
present at the time that the said Loan Agreement was executed, that they saw the
same executed and delivered by __________________, and that the other
subscribing witness was likewise present and witnessed the execution and
delivery of the foregoing Loan Agreement, to a representative of NationsBank,
N.A. (South) at the City of _____________, County of ______________, State of
___________, on the date written below via Federal Express by delivery to
Federal Express in the State and County above written in accordance with the
Sender's copy/receipt of a Federal Express airbill attached as "Exhibit A".

                                   -----------------------------------------
                                   Subscribing Witness
                                   Print Name:
                                              ------------------------------
                                   Address:
                                           ---------------------------------

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


                                   -----------------------------------------
                                   Subscribing Witness
                                   Print Name:
                                              ------------------------------
                                   Address:
                                           ---------------------------------

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


         SWORN TO AND SUBSCRIBED before me and acknowledged to me this day
of______________, 1997.

                                                                         (SEAL)
                                  --------------------------------------------
                                  Notary Public, Commonwealth of the Bahamas
                                  Printed Name:
                                                ------------------------------
                                  Address:
                                          ------------------------------------
                    
                                  --------------------------------------------
                                  My Commission Expires:
                                  My Commission No. is:




                                       48