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We propose an information theoretic waveform design algorithm for target tracking in a low-grazing angle (LGA) scenario. We incorporate realistic physical and statistical effects, such as Earth's curvature, vertical refractivity gradient of lower atmosphere, and compound-Gaussian characteristics of sea-clutter, into our model. We employ a co-located multiple-input-multiple-output (MIMO) radar configuration using wideband orthogonal frequency division multiplexing (OFDM) signalling scheme. The frequency diversity of OFDM provides richer information about the target as different scattering centers resonate at different frequencies. Additionally, we use polarization-sensitive transceivers to resolve the multipath signals with small separation angles. Thus, we track the scattering coefficients of the target at different frequencies along with its position and velocity. We apply a sequential Monte Carlo method (particle filter) to track the target. Our tracker works in a closed-loop fashion with an integrated optimal waveform design technique based on mutual information (MI) criterion. We seek the optimal OFDM waveform at the current pulse duration to maximize the MI between the state and measurement vectors at the next pulse duration utilizing all the measurement history up to the current pulse. Our numerical examples demonstrate the importance of realistic physical modeling, effects of frequency diversity through OFDM MIMO configuration, and achieved performance improvements due to adaptive OFDM waveform design.