(NORTH CAROLINA RAILROAD LETTERHEAD APPEARS HERE)

                                                November 22, 1995

Dear Shareholder:

We serve as the five  directors  and  officers  elected  by you to the  Board of
Directors of the North  Carolina  Railroad  Company.  Within the past two weeks,
proxy  materials were mailed to you seeking your approval as  shareholders  of a
Lease Extension Agreement with Norfolk Southern.

Each  of us  has  served  continuously  on the  Board  of  Directors  throughout
exhaustive   negotiations   with  Norfolk   Southern  and  participated  in  the
deliberations  and  evaluation  of  the  alternatives  described  in  the  Proxy
Statement.

The  proposed  Lease  Agreement  that we are now  asking you to  approve,  after
substantial  deliberation  and several years of  negotiations,  was  unanimously
determined by us to be in your best  interest.  Several  shareholders  have made
unsubstantiated  assertions  that the  negotiations  of the Lease Agreement were
unduly  influenced  by the  State of North  Carolina,  and we are  disturbed  by
unfounded  assertions  that the State dictated the decisions of the Board or the
terms of the Lease Agreement.

Please note that in September,  your Board imposed a special rule that the Lease
Agreement  must be  approved  by  majority  of the votes  cast by the  non-State
shareholders  (in  person  or by proxy) at the  shareholder  meeting.  The Board
adopted this rule, in addition to the quorum  requirements  for the meeting,  to
ensure  that your vote and the votes of all  other  shareholders  would  have an
effect upon approval or disapproval of the Lease Agreement.

We encourage you to evaluate the Lease  Agreement on its merits after  reviewing
the information in the Proxy Statement, including the fairness opinion of Morgan
Stanley & Co.  Incorporated,  and send in your proxy card as soon as possible. A
duplicate proxy card and postage paid envelope is enclosed for your convenience.

If you have  already  mailed in your proxy  card,  we thank you for your  prompt
attention to this important matter.

Sincerely,

/s/ J. Melville Broughton, Jr.              /s/ Van Wyck Webb

/s/ Chauncey W. Lever                       /s/ Alexander H. Graham

                                            /s/ Sidney R. French