<PAGE>
 
                                                                   EXHIBIT 10(C)
--------------------------------------------------------------------------------



                           ASSET PURCHASE AGREEMENT


                                    Between


                                JOHN C. NOLAN,
                       LANCASTER NORTHERN RAILWAY, INC.,
                         CHESTER VALLEY RAILWAY, INC.,
                           EAST PENN RAILWAYS, INC.
                                      AND
                   BRISTOL INDUSTRIAL TERMINAL RAILWAY, INC.


                                      and

                         PENN EASTERN RAIL LINES, INC.


         ------------------------------------------------------------
                                     Dated


                               November 7, 1997
         ------------------------------------------------------------  




--------------------------------------------------------------------------------
<PAGE>
 
                           ASSET PURCHASE AGREEMENT

     PENN EASTERN RAIL LINES, INC., a Delaware corporation ("Purchaser") and
JOHN C. NOLAN, an individual, LANCASTER NORTHERN RAILWAY, INC., a Delaware
corporation, CHESTER VALLEY RAILWAY, INC.,  a Delaware corporation, EAST PENN
RAILWAYS, INC., a Delaware corporation, and BRISTOL INDUSTRIAL TERMINAL RAILWAY,
INC., a Delaware corporation (jointly and severally the "Seller") agree as
follows:

1.   DEFINITIONS

     1.1.  The following terms when used with initial capitalization in this
           Agreement, whether in the singular or the plural, have the meanings
           ascribed to them below:

     "Agreement" means this Asset Purchase Agreement, including its Appendices
and Exhibits.

     "Assets" means the assets of Seller identified in Appendix A to this
Agreement.

     "Cash Portion" has the meaning given to it in Section 4.1 of this
                                                   -----------        
Agreement.

     "CERCLA" means the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, 42 U.S.C. (S)9601 et seq.

     "Closing" has the meaning given to it in Section 11.1 of this Agreement.
                                              ------------                   

     "Closing Date" has the meaning given to it in Section 11.2 of this
                                                   ------------        
Agreement.

     "Contracts" means contracts, leases, commitments, agreements and
arrangements.

     "Board" means the Surface Transportation Board established under 49 U.S.C.
(S)10101 et seq. or any successor agency.

     "Emons" means Emons Transportation Group, Inc.

     "Environmental Law" means any law, judgment, decree, order, license, rule
or regulation pertaining to environmental matters, including without limitation,
those arising under the Resource Conservation and Recovery Act of 1976, as
amended (42 U.S.C. (S)6901 et seq.), CERCLA, the Superfund Amendments and
Reauthorization Act of 1986, as amended (Pub. L. 99-499, Pub. L. 99-563, Pub. L.
100-202 and Pub. L. 101-144), the Clean Water Act, as amended (33 U.S.C. (S)1251
et seq.), the Clean Air Act, as amended (42 U.S.C. (S)7401 et seq.), the Toxic
Substances Control Act, as amended (15 U.S.C. (S)2601 et seq.), the Safe
Drinking Water Act, as amended (42 U.S.C. (S)300f et seq.), the Emergency
Planning and Community Right-to-Know Act of 1986, as amended (42 U.S.C. (S)11001
et seq.) and any other federal, state or local statute, regulation, ordinance,
order or decree pertaining to the environment.

     "Hazardous Substances" means any "hazardous waste" as defined by 42 U.S.C.
(S)6903(5), any "medical waste" as defined by 42 U.S.C. (S)6903(40), any
"hazardous substance" as defined by 42 U.S.C. (S)9601(14), any "pollutant or
contaminant" as defined by 42 U.S.C. (S)9601(33), any "hazardous chemical"
pursuant to 29 CFR (S)1910.1200(c), any substance designated pursuant to 40 CFR
Part 302, any 
<PAGE>
 
"extremely hazardous substance" pursuant to 40 CFR 355, any "toxic chemical"
pursuant to 40 CFR Part 372, and any toxic substance, oil, petroleum, hazardous
material or other chemical or substance deemed hazardous by an Environmental
Law.

     "Inventory" means inventory, fuel, supplies and other materials relating to
or acquired or used for locomotive or car repair, trackage, signal, structure
and building maintenance, or otherwise in connection with the operation, use or
enjoyment of the Rail Lines or the other Assets.

     "Inventory Accounts" means the accounts on Seller's balance sheets where
Inventory is carried, which accounts shall be kept in accordance with generally
accepted accounting principles.

     "Knowledge", when used in this Agreement to modify a representation,
warranty or other statement of a party, means that the facts or situations
described in the representation, warranty or other statement as being to the
knowledge of such party are believed to be true and correct by the president,
each vice president (including senior vice presidents, executive vice
presidents, and vice presidents with other similar designations), and each
officer who is principally responsible for the subject matter involved, after
suitable investigation.

   "Penndot" means the Department of Transportation of the Commonwealth of
Pennsylvania.

   "Permitted Encumbrances" means any

   1.2.   liens for taxes, assessments, levies, fees and other government
          charges not yet due or payable or which, if due and unpaid, are being
          contested in good faith and by appropriate proceedings,

   1.3.   mechanics' and materialmen's liens and similar charges incurred in the
          ordinary course of Seller's business which individually or in the
          aggregate do not materially interfere with railroad operations on the
          Rail Lines, 

          (a)  utility easements, licenses or permits located on or crossing any
               portion of the Assets that do not materially interfere with
               railroad operations on the Rail Lines,

          (b)  road crossing agreements with governmental authorities or
               private parties that do not materially interfere with railroad
               operations on the Rail Lines,

          (c)  leases, easements, trackage rights agreements and tenancy
               agreements existing as of the date of this Agreement which are
               assumed by Purchaser in accordance with this Agreement,

          (d)  rights of reverter which have not been violated and will not be
               violated as long as the affected real property is used for
               railroad purposes,

          (e)  encumbrances specifically agreed to by Purchaser in a separate
               writing delivered to the Seller,

          (f)  matters customarily excepted by title companies in their
               commitments for title insurance or title policies as "standard
               exceptions",

                                       2
<PAGE>
 
          (g)  rights reserved to or vested in any governmental authority with
               respect to the Assets or their regulation, and

          (h)  acts done by, through or under Purchaser, its employees, agents
               and contractors.

   "Promissory Note" means the Promissory Note described in Section 4.4(a).
                                                            -------------- 

   "Purchase Price" has the meaning given to it in Section 4.1 of this
                                                   -----------        
Agreement.

   "Purchaser" means Penn Eastern Rail Lines, Inc., a Delaware corporation.

   "Rail Lines" means the lines of railroad included in the Assets which are
owned or operated by Seller.

   "Seller" means, collectively or individually, as the context requires or
permits, John C. Nolan, an individual, Lancaster Northern Railway, Inc., a
Delaware corporation, Chester Valley Railway, Inc., a Delaware corporation, East
Penn Railways, Inc., a Delaware corporation, and Bristol Industrial Terminal
Railway, Inc., a Delaware corporation.

   "Shares" has the meaning given to it in Section 4.1.
                                           ----------- 

   "Stock Portion" has the meaning given to it in Section 4.1.
                                                  ----------- 

2. PURCHASE AND SALE OF ASSETS; ASSIGNMENT OF CONTRACTS

   2.1.   General.  Under the terms and subject to the conditions contained in
          this Agreement, Seller agrees to sell and transfer to Purchaser, and
          Purchaser agrees to purchase, on the Closing Date, all of the Assets.

   2.2.   Assignment Of Contracts.  Contemporaneous with the transfer of the 
          Assets to Purchaser, each Seller agrees to assign and set-over to
          Purchaser all of such Seller's rights and interests under the
          Contracts listed on Appendix B hereto.

   2.3.   Grant Of Option.  For the period from the Closing Date through 
          December 31, 1997, Seller grants to Purchaser the right to acquire,
          for One ($1.00) Dollar, Seller's interest in that certain Lease
          Agreement Between Southeastern Pennsylvania Transportation Authority
          and East Penn Railways, Inc. to Operate Over The Bethlehem Branch
          Between Telford, Montgomery County, and Quakertown, Bucks County,
          Pennsylvania, dated as of October __, 1997 (the "SEPTA Lease").
          Purchaser's exercise of this option must be made by written notice in
          accordance with Section 17.12 on or before December 31, 1997.
                          ------- -----
 
   2.4.   Pending Transactions and Negotiations.  As additional consideration,
          Seller agrees to inform and apprise Purchaser of all pending
          negotiations, proposals, discussions regarding the purchase, lease or
          operation of additional rail lines involving Seller, to introduce
          Purchaser to third parties involved in any such pending negotiations,
          proposals, discussions, and to make its best efforts to ensure that
          such pending negotiations, proposals, discussions accrue to the
          benefit of the Purchaser.

                                       3
<PAGE>
 
3. EXCLUSION OF ASSETS

   3.1.   Contracts.  The Assets do not include any rights under Contracts not
          specifically assumed by Purchaser under Section 2.2 of this Agreement
                                                  ------- ---
          and all records of Seller relating to such Contracts.

   3.2.   Current Assets.  The Assets do not include any accounts receivable, 
          cash on hand or deposit and cash equivalents, and other current assets
          of the Seller, except for the Inventory, Contracts and intangible
          assets specifically identified in Appendix A.

   3.3.   Corporate Records.  The Assets do not include general ledgers, minute
          books, tax returns and similar records required for the Seller's
          corporate, partnership and tax purposes.

   3.4.   Claims and Litigation.  The Assets do not include rights under 
          claims and litigation or settlements of such claims and litigation 
          by or against Seller.

4. PURCHASE PRICE

   4.1.   Amount of Purchase Price.  The purchase price ("Purchase Price") for
          the Assets shall be determined and paid as follows:

          (a)  Five Hundred Thousand Dollars ($500,000) to be paid to Seller 
               in cash (the "Cash Portion"), and


          (b)  The balance of the Purchase Price shall be paid to Seller in 
               common stock (the "Stock Portion") of Emons, in the amount of
               Eighty Five Thousand (85,000) shares. The shares of common stock
               comprising the stock portion are hereinafter referred to as the
               "Shares."

   4.2.   Securities Laws Matters.  Sellers understand that the Shares will not
          be registered under the Securities Act of 1933, as amended (the
          "Act"), on the ground that the securities are being issued and sold in
          a transaction not involving any public offering and that consequently
          the transaction is exempt from registration under the Act by virtue of
          the provisions of (S) 4(2) of the Act; nor are the Shares to be
          registered under Pennsylvania or other state securities laws. Sellers
          understand that the Company's reliance upon these exemptions is
          predicated in part on the representations of the Sellers contained in
          Section 9.1 hereof.
          -----------

   4.3.   Adjustment of Purchase Price.  The Purchase Price is subject to 
          adjustment in accordance with Sections 5 and 6 below. Any such
                                        -------- ----- -
          adjustment made to the Purchase Price shall be deducted from the Cash
          Portion.

   4.4.   Payment of Purchase Price.

         (a)  The Cash Portion, as adjusted, shall be paid by wire transfer of
              immediately available funds to one or more bank accounts
              designated by Seller or, at the Seller's sole election, by one or
              more cashier's checks. One-half of the Cash Portion shall be paid
              at the Closing and the other half will be paid on January 2, 1998.
              Purchaser shall give Seller a Promissory Note substantially in the
              form of 

                                       4
<PAGE>
 
              Appendix F, covering the half of the Cash Portion to be paid on
              January 2, 1998 (the "Promissory Note").

         (b)  The Stock Portion will be paid as soon as reasonably practicable
              following the Closing Date, but in no event more than twenty (20)
              days following the Closing Date. At the Closing Purchaser will
              deliver or cause Emons to deliver instructions to its stock
              transfer agent directing such transfer agent to deliver
              certificates for the Shares.

   4.5.   Allocation of Purchase Price. The Purchase Price shall be allocated to
          the Assets as set forth on Appendix C. The Purchase Price shall be
          paid to the Seller in accordance with instructions given to Purchaser
          by the Seller. Purchaser shall have no responsibility to the Seller
          for the application of the Purchase Price paid pursuant to
          instructions given pursuant to this Section.

5. CHANGES IN ASSETS

   5.1.   Loss of and Damage to Assets. If between the date of this Agreement
          and the Closing Date, Assets with a fair market value in excess of
          $10,000 in the aggregate are sold, lost, destroyed or condemned, or
          suffer any material damage and are not replaced or repaired prior to
          the Closing Date, then, at the option of Purchaser, either:

          (a)  the Cash Purchase Price shall be reduced by the excess of:

               1.  the fair market value of the Assets immediately prior to the 
                   sale, loss, destruction, condemnation or damage, over

               2.  the salvage value, if any, of the Assets immediately 
                   following the sale, loss, destruction, condemnation or 
                   damage,

          (b)  no reduction to the Cash Purchase Price shall be made, and the
               Seller shall, on the Closing Date, assign to Purchaser all sale,
               insurance or condemnation proceeds payable to the Seller on
               account of the loss, destruction, condemnation or damage pursuant
               to an assignment reasonably satisfactory to Purchaser and pay to
               Purchaser that portion, if any, of any deductible amount under
               any insurance applicable to the claim for loss, destruction or
               damage; or

          (c)  the Agreement and the consummation of the transactions 
               contemplated by this Agreement shall be terminated.

6. TAX ALLOCATION, LEASE INCOME

   6.1.   Proration of Taxes. The Cash Purchase Price shall be adjusted for
          current real and personal property taxes affecting the Assets and due
          and payable in calendar year 1997, which shall be prorated over the
          calendar year by Seller and Purchaser. If the tax bill for the 1997
          calendar year or any prior year has not been received at the Closing
          Date and the tax amount cannot otherwise be definitely ascertained,
          allocations shall be made on the basis of the prior year's taxes. Any
          refund of such taxes applicable to the period prior to Closing shall
          be the property of and sent to Seller, and any refunds applicable to
          the period after Closing shall be the property of and sent to
          Purchaser.

                                       5
<PAGE>
 
   6.2.   Lease Rentals and License Income. Lease rentals and license income
          (which is not already by its terms calculated on a per diem basis)
          shall be prorated to the Closing Date and the amount due Purchaser, if
          any, paid within 30 days after Closing.

   6.3.   Labor Protection. Both parties contemplate that transactions
          contemplated by this Agreement will not involve the imposition of
          labor protective conditions. If labor protective conditions are
          imposed the cost of such conditions will be borne by the Seller.

7. ASSUMPTION OF LIABILITIES AND OBLIGATIONS

   7.1.   Liabilities to be Assumed.  As of the Closing, Purchaser agrees to 
          assume, discharge and pay in accordance with their respective terms
          and to become responsible for the liabilities and obligations of the
          Seller under all Contracts set forth on Appendix B, to the extent
          those liabilities and obligations accrue after the Closing.

   7.2.   Liabilities not to be Assumed.  Except as expressly provided 
          elsewhere in this Agreement, Purchaser shall not be obligated to 
          assume any liability or obligation whatsoever, including but not 
          limited to, the following:

          (a)  any litigation, arbitration, claim or similar liability of any
               type with respect to the Assets or Seller's ownership thereof,
               which is based on or arises out of an event or circumstance
               occurring prior to the Closing;


          (b)  obligations under any plan to which the Seller contributes
               pursuant to the applicable provisions of the Employee Retirement
               Income Security Act of 1974, as amended, or under any other
               employee benefit plan, pension plan or similar plan; and


          (c)  all claims against or obligations of Seller arising out of or in
               connection with any labor agreement or arrangement.

   7.3.   Insurance.  The provisions of this Section 7 shall not be construed to
                                             ---------                          
          constitute the assumption of any liabilities or obligations in a
          manner which would avoid the applicability of any insurance policy
          with respect to any event or circumstance arising prior to the
          Closing.

   7.4.   No Third Party Rights.  This Section 7 is not intended to create any
                                       ---------                              
          rights in favor of any person other than Purchaser and Seller.

8. ADMINISTRATIVE TRANSITION

   8.1.   Inventory of Loaded Cars.

          (a)  Seller will prepare and make available to Purchaser an inventory
               of all loaded cars on the Rail Lines as of 11:59 P.M., Closing
               Date, so that revenue resulting from shipments over the Rail
               Lines can be identified and properly distributed between Seller
               and Purchaser. The inventory will show separately:

               1.  Loaded cars at the interchange points or on sidings, which
                   have not moved in linehaul service on the Rail Lines as of
                   11:59 P.M., Closing Date.

                                       6
<PAGE>
 
               2.  Loaded cars at the interchange points or on sidings for which
                   linehaul service on the Rail Lines has been completed as of
                   11:59 P.M., Closing Date.

               3.  Loaded cars enroute on the Rail Lines, in a train consist or
                   at an intermediate point on the Rail Lines, as of 11:59 P.M.,
                   Closing Date.

   8.2.   Linehaul Revenue.

          (a)  For inbound cars located at an interchange point at 11:59 P.M.,
               Closing Date, and no linehaul service over the Rail Lines has
               been performed, Purchaser shall be entitled to 100 percent of the
               revenue for movement of the cars over the Rail Lines.

          (b)  For outbound cars located at an interchange point at 11:59 P.M.,
               Closing Date, and linehaul service on the Rail Lines has been
               completed, Seller shall be entitled to 100 percent of the revenue
               for movement of the cars over the Rail Lines.

          (c)  For inbound or outbound cars located on sidings or enroute on the
               Rail Lines at 11:59 P.M., Closing Date, Purchaser and Seller
               shall each be entitled to 1/2 of the revenue attributable to
               movement over the Rail Lines.

   8.3.   Miscellaneous Revenue Other Than Demurrage. Revenue from miscellaneous
          charges or switching bills for service provided by Seller up to and
          including Closing Date will be retained by Seller. Revenue from
          miscellaneous charges or switching bills for service provided by
          Purchaser after Closing Date will be retained by Purchaser.

   8.4.   Demuurage Revenue. Seller will furnish Purchaser with detailed
          placement and other data necessary to compute demurrage charges for
          all cars subject to actual or constructive placement on the Closing
          Date, and Purchaser shall bill for demurrage accrued on all such cars.
          Demurrage charges accrued up to 11:59 P.M. of the Closing Date shall
          be paid to Seller by Purchaser when customer is billed.

   8.5.   Switching Charges Assessed by Another Railroad. Charges for any
          switching performed by another railroad on behalf of the owner of the
          Rail Lines pursuant to agreement or tariff, up to and including
          Closing Date, will be paid by Seller. Such charges for switching
          performed after Closing Date will be paid by Purchaser. Such switching
          charges shall not be allocated to a revenue movement.

   8.6.   Car Accounting. An inventory of loaded and empty equipment on the Rail
          Lines as of 11:59 P.M., Closing Date, will be taken by Seller. For
          purposes of determining responsibility for car hire and car mileage
          payments, Seller shall perform a paper interchange of all such
          equipment to Purchaser effective as of 11:59 P.M., Closing Date. Car
          mileage payments and the mileage portion of car hire shall be
          calculated based on the actual location of the car as of 11:59 P.M.,
          Closing Date. Seller will be responsible for car hire and mileage
          payments accrued prior to and on the Closing Date. Purchaser will be
          responsible for car hire and mileage payments after Closing Date.
          Unless provided otherwise by an agreement signed by the parties or in
          an applicable tariff, Purchaser shall be entitled to car hire reclaim
          from Seller.

                                       7
<PAGE>
 
   8.7.   Billing and Collection. In the event Purchaser or Seller erroneously
          receives payment for billing of the other party, the party receiving
          such payment shall remit the payment to the party making the billing.

   8.8.   Freight Overcharge Claims. Liability for any overcharge claim on a
          shipment for which revenue was allocated hereunder shall be assumed by
          Seller and Purchaser in the same proportion as the linehaul revenues
          were allocated pursuant to Section 8.2 hereof.
                                     -----------        

   8.9.   Car and Trailer Repairs. Freight cars and trailers damaged on the Rail
          Lines, or requiring repairs not related to damage which are the
          responsibility of the user under applicable interchange rules, on or
          prior to Closing Date, will be the responsibility of Seller. Those
          cars and trailers damaged, or requiring repairs not related to damage
          which are the responsibility of the user under applicable interchange
          rules, subsequent to Closing Date, will be the responsibility of
          Purchaser.

   8.10.  Freight Loss and Damage.

          (a)  Seller shall be responsible for claims for freight loss and
               damage which arise from acts or omissions that occur on the Rail
               Lines prior to or on the Closing Date. Purchaser shall be
               responsible for such claims which arise from acts or omissions
               that occur on the Rail Lines subsequent to the Closing Date. If
               the date or location of an act or omission giving rise to a claim
               cannot be determined, freight loss and damage liability
               attributable to movements over the Rail Lines shall be assumed by
               Seller and Purchaser in accordance with AAR Freight Claims Rules.

          (b)  Purchaser shall indemnify, defend, and hold harmless Seller from
               freight loss and damage claims arising from acts or omissions
               that occur on the Rail Lines after the Closing Date. Seller shall
               indemnify, defend, and hold harmless Purchaser from freight loss
               and damage claims arising from acts or omissions that occur on
               the Rail Lines on or before the Closing Date.

          (c)  This provision is not intended, and shall not be interpreted, as
               an admission or acknowledgment of liability by Seller or
               Purchaser with respect to any claim for freight loss and damage.

          (d)  Purchaser and Seller will process claims in accordance with AAR
               Rules, Principles and Practices.

9. REPRESENTATIONS AND WARRANTIES

   9.1.   Representations And Warranties Of Seller. To the best of each Seller's
          knowledge, information and belief, each Seller represents and warrants
          to Purchaser as follows:

          (a)  Each Seller (except John C. Nolan) is a validly organized and
               existing corporation, in good standing under the laws of the
               state of its incorporation. Each Seller has the necessary
               authority to own property and conduct its business as now
               conducted in the Commonwealth of Pennsylvania and in such other
               states where it conducts business.

                                       8
<PAGE>
 
          (b)  All necessary corporate action of Seller (except John C. Nolan)
               required in connection with the execution and delivery of this
               Agreement and the consummation of the transactions contemplated
               by this Agreement has been taken. Subject to the effectiveness of
               the exemption or approval by the Board, (i) Seller (except John
               C. Nolan) has obtained all necessary governmental authorizations
               and approvals (or exemptions from or waivers of such
               authorizations or approvals) required in connection with this
               Agreement, and (ii) this Agreement constitutes the valid and
               binding obligation of Seller enforceable against Seller in
               accordance with its terms, except as such enforcement may be
               limited by applicable bankruptcy, insolvency, moratorium or
               similar laws affecting rights of creditors generally and general
               principles of equity.

          (c)  Except as set forth on Exhibit 1, the sale of the Assets and the
               consummation of the other transactions contemplated by this
               Agreement will not result in any breach of or default under,
               violate the conditions of, or accelerate any obligation under,
               Seller's articles of incorporation or bylaws or any material
               agreement, mortgage, lease, deed, order, law, judgment or rule to
               which Seller is a party or by which it is bound.

          (d)  No agent, broker or other person acting pursuant to the authority
               or direction of Seller is entitled to any commission or finder's
               fee in connection with the transactions contemplated by this
               Agreement.

          (e)  Seller owns the Assets described in Appendix A free and clear of
               all liens, claims or encumbrances (other than Permitted
               Encumbrances), and Appendix A is a full and complete listing of
               all assets used by Seller in the operation of the Rail Lines. The
               Assets are in good working order and are sufficient to permit the
               Purchaser to operate the Rail Lines from and after the Closing
               Date in the same manner operated by Seller prior to the Closing
               Date.

          (f)  Seller has sufficient interest in the Assets to permit the
               operation of the Rail Lines as presently conducted, and there are
               no claims which would affect its interest in the Assets so as to
               affect Purchaser's ability to conduct operations with the Assets
               following the Closing as currently conducted.

          (g)  Each Contract listed on Appendix B is in full force and effect
               and no default has occurred under any such Contract which would
               permit the other party to such Contract to terminate the Contract
               or otherwise refuse to perform its obligations thereunder, or
               which would otherwise have an adverse effect on the Assets or
               Purchaser's ability to operate the Rail Lines as currently
               operated. Seller has not waived or assigned to any other person
               any of its rights under any of the Contracts on Appendix B, and
               each of those Contracts may be assigned to Purchaser without
               impairment of any rights under the Contract.

          (h)  Seller is not a party to any indenture, security, contract or
               other agreement or subject to any judgment, order, writ or decree
               which would (A) impose any adverse condition upon Purchaser, the
               Assets or the operation of the Rail Lines or result in the loss
               of any material rights currently possessed or used by Seller or
               otherwise adversely affect or materially restrict the Assets or
               the operation of the Rail Lines as a result of the sale of the
               Assets to Purchaser as contemplated 

                                       9
<PAGE>
 
               by this Agreement or (B) adversely affect Purchaser's ability to
               conduct the operations of the Rail Lines following Closing as
               currently conducted.

          (i)  Except as set forth on Exhibit 1, there are no actions, suits or
               proceedings pending or, to the Knowledge of Seller, threatened
               against Seller with respect to the Assets or the operation of the
               Rail Lines in any court or before any federal, state, local or
               other governmental agency.

          (j)  Seller (except John C. Nolan in his individual capacity) is in
               material compliance with all applicable Environmental Laws with
               respect to the Assets and the operation of the Rail Lines.

          (k)  Seller (except John C. Nolan in his individual capacity) has
               received no written notice from any governmental agency having
               authority (including, without limitation, any federal, state or
               local governmental agency) (A) that it has been identified by the
               United States Environmental Protection Agency as a potentially
               responsible party under CERCLA with respect to a site included
               within the Assets listed on the National Priorities List (40 CFR
               Part 300 Appendix B (1990)); (B) that any Hazardous Substance has
               been discovered on a site included within the Assets; or (C) that
               any site included within the Assets is the subject of any ongoing
               or ordered remedial investigation, removal or other response
               action pursuant to any Environmental Law.

          (l)  Except with respect to matters which would not adversely affect
               the assets, or adversely affect Purchaser's ability to operate
               the Assets as currently operated or impose any cost upon
               Purchaser following the Closing, (A) no portion of the Assets has
               been used for the handling, storage, disposal or processing of
               Hazardous Substances except in material compliance with
               applicable Environmental Laws, (B) no underground storage tanks
               for Hazardous Substances are located in, on or about the Assets,
               (C) the Assets do not contain asbestos, urea formaldehyde foam
               insulation or transformers or other equipment containing
               polychlorinated biphenyls, and (D) there have been no releases of
               Hazardous Substances in, on, under or from the Assets except in
               material compliance with Environmental Laws.

          (m)  Seller is acquiring the Shares for its own account and not on
               behalf of any other person or persons. Seller is acquiring the
               Shares for investment purposes and not for resale or other
               distribution. The Shares may not be sold, transferred, assigned
               or otherwise disposed of except pursuant to an effective
               registration statement or upon receipt of an opinion of counsel
               satisfactory to the Purchaser and Emons that the transfer is
               exempt from registration under applicable state and federal
               securities laws. Seller has been informed that the certificates
               representing the Shares will bear the following or substantially
               similar legend:

               THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED
               WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933 OR UNDER
               ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED OR
               PLEDGED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
               UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR AN OPINION
               OF

                                       10
<PAGE>
 
               COUNSEL SATISFACTORY TO THE COMPANY THAT THE TRANSFER IS EXEMPT
               FROM REGISTRATION UNDER APPLICABLE FEDERAL AND STATE SECURITIES
               LAWS.

   9.2.   Representations and Warranties by Purchaser. To the best of its
          knowledge, information and belief, Purchaser represents and warrants
          to Seller as follows:

          (a)  Purchaser is a validly organized and existing Delaware
               corporation, in good standing. Purchaser has full corporate power
               and authority to conduct its business as such business is now
               being conducted and to own and operate its properties.

          (b)  All necessary corporate action of Purchaser required in
               connection with the execution and delivery of this Agreement and
               the consummation of the transactions contemplated by this
               Agreement has been authorized and obtained. Subject to the
               effectiveness of the exemption or approval by the Board, (i)
               Purchaser has obtained all necessary governmental authorizations
               and approvals (or waivers of such authorizations or approvals)
               required in connection with this Agreement, and (ii) this
               Agreement constitutes the valid and binding obligation of
               Purchaser enforceable against Purchaser in accordance with its
               terms, except as enforcement may be limited by applicable
               bankruptcy, insolvency, moratorium or similar laws affecting
               rights of creditors generally and general principles of equity.

          (c)  The purchase of the Assets and the consummation of the
               transactions contemplated by this Agreement will not result in
               any breach of or default under, violate the conditions of or
               accelerate any obligation under Purchaser's certificate of
               incorporation, bylaws or any material agreement, mortgage, lease,
               deed, order, law, judgment or rule to which Purchaser is a party
               or by which it is bound.

          (d)  No agent, broker or other person acting pursuant to the authority
               or direction of Purchaser is entitled to any commission or
               finder's fee in connection with the transactions contemplated by
               this Agreement.

          (e)  There are no actions, suits or proceedings pending or, to the
               Knowledge of Purchaser, threatened against Purchaser in any court
               or before any federal, state, local or other governmental agency
               which, if decided adversely to the Purchaser, would prohibit the
               execution, delivery and performance of this Agreement by
               Purchaser.

   9.3.   Survival. The representations and warranties contained in this
          Agreement shall survive the Closing and any termination of this
          Agreement and shall remain in full force and effect for five (5) years
          after the Closing.

                                       11
<PAGE>
 
10. CONDITIONS TO THE CLOSING

    10.1.  Obligation of Purchaser to Close. The obligation of Purchaser to
           effect the closing of the transactions contemplated by this Agreement
           is subject to the satisfaction at or prior to the Closing of the
           following conditions:

          (a)  The representations and warranties of Seller contained in Section
                                                                         -------
               9 of this Agreement shall have been true in all material respects
               -
               when made and at the time of Closing as if those representations
               and warranties had been made at that time.

          (b)  Seller shall have performed and complied in all material respects
               with all agreements and conditions required by this Agreement to
               be performed or complied with by Seller prior to or at the
               Closing.

          (c)  Seller shall have removed prior to Closing all liens, security
               interests or other encumbrances, except for Permitted
               Encumbrances, if placed or caused to be placed on the Assets.

          (d)  The Board shall have approved the transactions contemplated by
               this Agreement under the ICC Termination Act of 1995 or exempted
               the transactions contemplated by this Agreement from the
               provisions of the ICC Termination Act of 1995 requiring Board
               approval, and that approval or exemption shall have become final
               or effective (as the case may be).

          (e)  PennDOT shall have consented to the assignment of the Contracts
               to which it is a party.

          (f)  Southeastern Pennsylvania Transportation Authority shall have
               consented to the possible assignment of the SEPTA Lease.

          (g)  Frank A. Greek & Son, Inc. shall have consented in writing to
               assignment of Seller's interest in a lease agreement between
               Frank A. Greek & Son, Inc. and Bristol Industrial Terminal
               Railway, Inc. covering the property currently operated by Bristol
               Industrial Terminal Railway Inc. to Purchaser or Frank A. Greek &
                                                             -- 
               Son and Purchaser shall have entered into a lease agreement
               covering the property currently operated by Bristol Industrial
               Terminal Railway, Inc.

          (h)  Ferrellgas shall have consented in writing to assignment of
               Seller's interest in that certain track lease agreement dated
               November __, 1997, between East Penn Railways, Inc. and
               Ferrellgas to Purchaser.

          (i)  No condition shall have been imposed by the Board in connection
               with the transactions contemplated by this Agreement which has a
               material and significant adverse effect on the cost of the
               transaction or value of the transaction to Purchaser or on
               Purchaser's ability to own, use or operate the Assets taken as a
               whole in substantially the same manner as Seller owned, used or
               operated the Assets.

                                       12
<PAGE>
 
          (j)  Between the date of this Agreement and the Closing, no unrepaired
               physical loss or damage shall have occurred to the Assets
               resulting in a shut-down of any portion of the operation of the
               Rail Lines as of the Closing.

          (k)  Purchaser shall have received an executed copy of each document,
               agreement and instrument referred to in this Agreement required
               to be executed and delivered by Seller prior to or at the
               Closing.

          (l)  The transactions contemplated by this Agreement to whatever
               extent necessary shall have been performed pursuant to proper and
               requisite action taken by Seller under applicable law.

          (m)  There shall not have been instituted or threatened on or before
               Closing, any action or proceeding before any court or
               governmental agency or body or by a public authority to restrict
               or prohibit the acquisition by Seller of the Assets.

          (n)  Purchaser shall have made such audits and inspections of Seller
               and its assets and business as Purchaser deems necessary and
               appropriate, and the results of such inspections and audits shall
               be satisfactory to Purchaser.

The satisfaction of any of the conditions set forth in this subsection may be
waived by Purchaser in writing delivered at or prior to the Closing.

   10.2.  Obligation of Seller to Close. The obligation of Seller to effect the
          transactions contemplated by this Agreement is subject to the
          satisfaction prior to or at the Closing of the following conditions:

          (a)  The representations and warranties of Purchaser set forth in
               Section 9 of this Agreement shall have been true in all material
               respects when made and at the time of the Closing as if those
               representations and warranties had been made at that time.

          (b)  Purchaser shall have performed and complied in all material
               respects with all agreements and conditions required by this
               Agreement to be performed or complied with by Purchaser prior to
               or at the Closing.

          (c)  The Board shall have approved the transactions contemplated by
               this Agreement under the ICC Termination Act of 1995 or exempted
               the transactions contemplated by this Agreement from the
               provisions of the ICC Termination Act of 1995 requiring Board
               approval, and that approval or exemption shall have become final
               or effective (as the case may be).

          (d)  Seller shall have received an executed copy of each document,
               agreement and instrument referred to in this Agreement required
               to be executed and delivered by Purchaser prior to or at the
               Closing.

          (e)  The transactions contemplated by this Agreement to whatever
               extent necessary shall have been performed pursuant to proper and
               requisite action taken by Purchaser under applicable law.

                                       13
<PAGE>
 
          (f)  There shall not have been instituted or threatened on or before
               Closing, any action proceeding before any court or governmental
               agency or body or by a public authority to restrict or prohibit
               the acquisition by Purchaser of the Assets.

The satisfaction of any condition set forth in this subsection may be waived by
Seller in writing delivered at or prior to the Closing.

11. CLOSING

    11.1.  Place of Closing. The closing of the transactions contemplated by
           this Agreement ("Closing") shall take place at the offices of
           Purchaser located at 96 South George Street, Suite 400, York, PA.

    11.2.  Date and Time of Closing. The Closing shall take place at 10:00 a.m.
           Eastern Standard Time not later than the 10th business day following
           the date on which an order by the Board approving the acquisition of
           the Assets by Purchaser has become final or the date on which an
           exemption from approval by the Board becomes effective. The date on
           which the Closing occurs is referred to in this Agreement as the
           "Closing Date."

    11.3.  Deliveries By Purchaser at Closing; Post-Closing Deliveries.  At the
           Closing, Purchaser shall:

           (a)  Pay to Seller one-half of the Cash Portion as adjusted (subject
                to any withholding that Purchaser is required to make under
                Section 1445 of the Internal Revenue Code of 1986, as amended).
 
           (b)  Deliver to Seller a true and correct copy of written
                instructions issued by Emons to Emons' transfer agent directing
                the transfer agent to issue certificates to Seller representing
                the Shares.

           (c)  Deliver to Seller the Promissory Note.

           (d)  Deliver to Seller, on or before the twentieth (20th) day
                following the Closing, a certificate or certificates
                representing the Shares.

           (e)  Deliver to Seller its undertakings to assume, perform and
                discharge the liabilities and obligations of Seller to the
                extent assumed by Purchaser under this Agreement, and deliver
                such other documents or instruments as are required of Purchaser
                in order to effect or evidence the consummation of the
                transactions contemplated by this Agreement.

           (f)  Purchaser shall take all other reasonable steps that Seller
                reasonably requests in order to effectuate the transactions
                contemplated by this Agreement.

    11.4.  Deliveries by Seller at Closing.  At the Closing, Seller shall:

           (a)  Effect the transfer of the Assets to Purchaser by such quit
                claim deed or deeds in recordable form and substantially in the
                form of Appendix E hereto (as permitted for filing by a railroad
                or transmitting utility where allowed), bills of sale,
                assignments, releases, satisfactions and other documents of
                transfer or release reasonably required to transfer the
                interests of Seller in the Assets to

                                       14
<PAGE>
 
               Purchaser free and clear of all liens (except Permitted Liens)
               consistent with the terms of this Agreement (which deeds, bills
               of sale, assignments and other documents may reflect payment of
               such specific portions of the Purchase Price as requested by
               Purchaser, provided that such allocations and direction will not
               be inconsistent with Appendix C or the provisions of Section 1060
               of the Internal Revenue Code of 1986, as amended).

          (b)  Furnish to Purchaser any consents to assignments necessary to
               transfer to Purchaser all of Seller's rights under the Contracts
               listed on Appendix B.

          (c)  John C. Nolan shall have executed and delivered to Purchaser a
               Noncompetition Agreement in the form of Appendix D hereto.

          (d)  Except to the extent a corporate Seller consummates a plan of
               liquidation, each corporate Seller shall within 120 days of the
               Closing Date execute and deliver to Purchaser articles of
               amendment to its articles of incorporation effecting a change in
               such Seller's name so as to permit the use of such name by
               Purchaser in the operation of its business.

          (e)  Furnish to Purchaser an affidavit as to Seller of the type
               referred to in Section 1445(b)(2) of the Internal Revenue Code of
               1986, as amended, if Seller wishes to avoid the withholding of
               taxes as provided in Section 1445.

          (f)  Take all other reasonable steps that Purchaser reasonably
               requests in order to effectuate the transactions contemplated by
               this Agreement, including the assignment of all Contracts that
               Purchaser is to assume pursuant to this Agreement.

12. BOOKS, RECORDS AND CORPORATE NAME

    12.1.  Access to Books and Records.

           (a)  Prior to Closing, Seller will permit employees and agents of
                Purchaser (including consultants, accountants and attorneys) and
                its lenders, during normal business hours and on reasonable
                notice, to have access to Seller's properties for the purpose of
                inspecting the Assets and to inspect and copy Contracts, books,
                agreements, plans, reports and other records reflecting or
                reasonably relating to the Assets. Seller may have
                representatives present during any inspection, and may obtain
                any written reports produced by environmental consultants to
                Purchaser in connection with inspections of the Assets. Seller
                will cooperate with Purchaser's and its lenders' investigation
                of the Assets and the status of title to the Assets, and shall
                use reasonable efforts to obtain consents from third parties
                necessary for Purchaser or its consultants to inspect
                transportation contracts with those third parties. Prior to
                Closing (including if Closing never occurs), Purchaser agrees
                that all information and records obtained by Purchaser or its
                lenders pursuant to this Section shall be maintained as
                confidential.

           (b)  From and after the Closing,

                1.  Purchaser will cooperate with Seller to make available to
                    Seller, under reasonable conditions, any records of Seller
                    transferred to Purchaser 

                                       15
<PAGE>
 
                    pursuant to this Agreement necessary for Seller's corporate
                    or tax purposes; and

                2.  Seller will cooperate with Purchaser to make available to
                    Purchaser, under reasonable conditions, any records of
                    Seller related to the Assets that may be useful to Purchaser
                    in the ownership or operation of the Assets or the
                    performance of obligations assumed by Purchaser.

13. OPERATIONS PRIOR TO CLOSING

    13.1.  Operations Prior to Closing. Seller agrees that, except with the
           written consent of Purchaser, from the date of this Agreement to the
           Closing:

           (a)  Seller will not grant (or make any material amendment to) any
                trackage rights, operating rights, licenses, permits, easements
                or encumbrances affecting the Assets;

           (b)  Seller will not sell, lease, assign, mortgage, hypothecate or
                otherwise transfer or dispose of any of the Assets (other than
                Inventory used in the ordinary course of business);

           (c)  Seller shall maintain, repair and renew the Assets in the
                ordinary course, consistent with past practices (and in any
                event to a condition equal to their condition on the date of
                this Agreement, ordinary wear and tear excepted);

           (d)  Seller shall maintain in full force and effect insurance
                coverage (including any self-insurance programs) of the types
                and in the amounts in existence on June 30, 1997, with respect
                to the Assets;

           (e)  Seller shall maintain in full force and effect all Contracts,
                licenses, authorizations and approvals necessary for or related
                to the operation and use of the Assets as currently operated and
                used; provided, however, that Seller may amend, extend or
                terminate Contracts, licenses, authorizations and approvals in
                the ordinary course of business following written notice to
                Purchaser and written approval of such action from Purchaser;
                and

           (f)  Seller shall cause all transportation contracts entered into
                after the date of this Agreement to either specifically permit
                or not prohibit assignment to a purchaser of the Rail Lines.

14. CONSENTS AND APPROVALS

    14.1.  Consents and Approvals. Purchaser and Seller each will cooperate and
           use their best efforts to take, or cause to be taken, all actions,
           and to do, or cause to be done, all things necessary, proper or
           advisable under applicable laws and regulations to prepare all
           necessary documentation, to effect promptly all necessary filings and
           to satisfy all other conditions and obtain all necessary permits,
           consents, approvals, orders and authorizations of or any exemptions
           by, all third parties and all governmental entities necessary to
           consummate the transactions contemplated by this Agreement. Purchaser
           shall be solely responsible for filings or proceedings before the
           Board with respect to the approval of the acquisition of the Assets
           or securing an exemption from that approval.

                                       16
<PAGE>
 
           Seller will, without cost to Purchaser, cooperate in the filings and
           proceedings before the Board and provide any reasonably necessary
           data in connection with securing approval or exemption. Prior to
           filing any application for approval or exemption with the Board,
           Purchaser will deliver a copy to Seller with sufficient time for
           Seller to comment upon the application. Any costs, including filing
           fees, associated with any filing before the Board shall be paid by
           Purchaser.

15. INDEMNIFICATION

    15.1.  Purchaser's Indemnification. Purchaser shall defend, indemnify and
           hold harmless the Seller from and against all claims, losses, costs
           and expenses (including attorneys' fees and expenses) which arise out
           of or are based on (i) the ownership or operation of the Assets after
           the Closing, (ii) any material misrepresentation or material breach
           of warranty by Purchaser and (iii) all liabilities of Seller assumed
           by Purchaser pursuant to this Agreement, and (iv) any breach of an
           Environmental Law or the placement of any Hazardous Substance in, on,
           about or under the Assets at any time after the Closing.

   15.2.   Seller's Indemnification. Seller shall defend, indemnify and hold
           harmless Purchaser from and against all claims, losses, costs and
           expenses (including attorneys' fees and expenses) which arise out of
           or are based on (i) the ownership or operation of the Assets by
           Seller prior to the Closing; (ii) any material misrepresentation or
           material breach of warranty by Seller; (iii) all liabilities of
           Seller that are not assumed by Purchaser pursuant to this Agreement
           and (iv) (except John C. Nolan) any breach of an Environmental Law or
           the existence of any Hazardous Substance in, on, about or under the
           Assets at any time prior to the Closing.

   15.3.   Apportionment. All claims, losses, costs, and expenses giving rise to
           any indemnification hereunder, the underlying facts of which have
           arisen in part prior to the Closing and in part on or after the
           Closing, shall be reasonably apportioned between Seller and
           Purchaser.

   15.4.   Indemnification Procedures.

           (a)  The party seeking indemnification pursuant to Sections 15.1 or
                                                              ----------------
                15.2 above (the "Indemnified Party") shall give the party
                ----
                obligated to indemnify (the "Indemnifying Party") notice of any
                claim or assertion of liability by a third party with respect to
                which the Indemnified Party is seeking indemnification (a
                "Claim").

           (b)  The Indemnifying Party shall have the right to undertake the
                defense of such Claim (by counsel or other representatives of
                its own choosing and reasonably acceptable to the Indemnified
                Party) at the Indemnifying Party's sole risk and cost.
                Notwithstanding the fact that the Indemnifying Party undertakes
                the defense of a Claim, if there is a reasonable probability
                that the Claim may materially and adversely affect the
                Indemnified Party, the Indemnified Party (by counsel or through
                other representatives of its own choosing) shall have the right,
                at its expense, to participate in the defense, compromise or
                settlement of the Claim. 

                                       17
<PAGE>
 
          (c)  If the Indemnifying Party undertakes the defense of a Claim, (i)
               the Indemnifying Party shall keep the Indemnified Party informed
               of the status of the defense and furnish the Indemnified Party
               with copies of all documents, instruments and information
               reasonably requested by the Indemnified Party in connection with
               the Claim; (ii) the Indemnified Party (by counsel or other
               representatives of its own choosing and at its own expense) shall
               have the right to consult with the Indemnifying Party (and its
               counsel and representatives) concerning the Claim, and the
               Indemnifying Party and the Indemnified Party (and their
               respective counsel and representatives) shall cooperate with
               respect to the Claim; and (iii) the Indemnifying Party shall not,
               without the written consent of the Indemnified Party, settle or
               compromise a Claim or consent to the entry of a judgment without
               obtaining from the claimant or plaintiff an unconditional release
               of all liability of the Indemnified Party in respect of such
               Claim in a form satisfactory to the Indemnified Party and under
               circumstances which do not require the Indemnified Party to pay
               any money or consent to the taking or withholding of any action
               affecting it or any of its properties, assets or businesses.

          (d)  If the Indemnifying Party does not elect to undertake the defense
               of a Claim or fails to defend the Claim within a reasonable time
               after notice of the Claim, the Indemnified Party shall have the
               right to undertake the defense, compromise or settlement of the
               Claim (by counsel or other representatives of the Indemnified
               Party's own choosing) on behalf of, for the account of and at the
               risk and cost of the Indemnifying Party. In such event, the
               Indemnifying Party shall pay (in addition to any other sums
               required to be paid under the terms of this Agreement) the costs
               and expenses incurred by the Indemnified Party in connection with
               the defense, settlement or compromise of the Claim as and when
               those costs are incurred.

16. TERMINATION

    16.1.  Grounds for Termination. This Agreement and the consummation of the
           transactions contemplated by this Agreement may be terminated prior
           to the Closing:

           (a)  By the agreement in writing of Seller and Purchaser at any time,

           (b)  By either Purchaser or Seller if the Closing does not occur
                prior to [DECEMBER 15, 1997], and the failure of the Closing to
                occur is not due to the fault of, or breach of this Agreement
                by, either party,

           (c)  By Purchaser, pursuant to Section 5.1(c) hereof,
                                          --------------        
  
           (d)  By Purchaser, by written notice to Seller, if Seller has made a
                material misrepresentation in, or if Seller is guilty of a
                material breach of the representations and warranties of seller
                contained in, this Agreement, or if there has been a failure by
                Seller to comply with any of its material obligations under this
                Agreement (including without limitation the failure by Seller to
                timely satisfy the conditions to Closing set forth in Section 
                                                                      -------
                10.1), and such material 
                ----

                                       18
<PAGE>
 
               misrepresentation or breach of warranty or failure has not been
               cured after 30 days' notice,

          (e)  By Seller, by written notice to Purchaser, if Purchaser has made
               a material misrepresentation in, or if Purchaser is guilty of a
               material breach of the representations and warranties of
               Purchaser contained in, this Agreement, or if there has been a
               failure by Purchaser to comply with any of its material
               obligations under this Agreement (including without limitation
               the failure by Purchaser to timely satisfy the conditions to
               Closing set forth in Section 10.2), and such material
                                    ------- ----
               misrepresentation or breach of warranty material failure has not
               been cured after 30 days' notice, or

          (f)  By either Purchaser or Seller if the Board shall have disapproved
               the transactions contemplated by this Agreement and such
               disapproval shall have become final and not subject to further
               proceedings or appeal, whether by lapse of time or otherwise.

Termination by Purchaser or Seller pursuant to paragraphs (c) or (d) above shall
not relieve the non-terminating party of any liability for misrepresentation or
breach.

17. MISCELLANEOUS

    17.1. Title and Other Descriptions. Prior to the Closing, the description of
          the Assets may be changed by mutual agreement of Purchaser and Seller
          to add or delete items of tangible property or Contracts. From time to
          time after the Closing, at Purchaser's request and without further
          consideration, Seller will execute and deliver other instruments of
          conveyance and transfer and take other actions as Purchaser reasonably
          requires to convey, transfer to and vest in Purchaser whatever title
          Seller may have in and to the Assets, and to put Purchaser in
          possession of the Assets. In the case of Contracts and rights, if any,
          that cannot be transferred effectively without the consent of third
          parties, Seller will request these consents promptly and will make all
          reasonable efforts to obtain the consents. From time to time after the
          Closing, at Seller's request and without further consideration,
          Purchaser will execute and deliver other instruments of conveyance,
          transfer and assumption and take other actions as Seller reasonably
          requires to assume the liabilities and obligations of Seller to be
          assumed by Purchaser pursuant to this Agreement.

  17.2.   Waiver. Purchaser may in writing extend the time for or waive
          performance of any of the obligations, representations or warranties
          of Seller under this Agreement. Seller may in writing take similar
          action with respect to the obligations, representations or warranties
          of Purchaser under this Agreement.

  17.3.   Expenses. Purchaser shall be responsible for and shall pay all
          expenses, including attorney's fees, incurred by Purchaser in
          connection with this Agreement and the consummation of the
          transactions contemplated by this Agreement, and Seller shall be
          responsible for and shall pay all expenses, including attorney's fees,
          incurred by Seller in connection with this Agreement and the
          consummation of the transactions contemplated by this Agreement,
          except that sales, use, gross receipts, excise or similar taxes or
          governmental charges arising or levied with respect to the sale and
          transfer of the Assets, 

                                       19
<PAGE>
 
          whether assessed against the Assets, Seller or Purchaser, shall be
          shared equally between Seller and Purchaser.
 
   17.4.  Transitional Matters. Prior to the Closing, Purchaser and Seller may
          agree on different or additional procedures to implement their
          respective rights and obligations, including procedures which are
          required to minimize or avoid any disruption of the settlement of
          interline accounts by draft in the normal course of business.

   17.5.  Information Releases. No press release, information release or other
          public or private announcement of the existence of this Agreement or
          of the pendency of the transactions contemplated by this Agreement
          shall be made by any party without the prior approval of the other
          party, except as may be required by law including without limitation,
          reporting and disclosure requirements of the Securities and Exchange
          Commission or the rules of the NASDAQ.

   17.6.  Entire Agreement. This Agreement, including the Appendices and
          Exhibits attached to this Agreement, constitutes the entire agreement
          and understanding between Seller and Purchaser with respect to the
          sale and purchase of the Assets and the other transactions
          contemplated by this Agreement. All prior representations,
          understandings and agreements between the parties with respect to the
          purchase and sale of the Assets and the other transactions
          contemplated by this Agreement are superseded by the terms of this
          Agreement.

   17.7.  Choice of Law. The provisions of this Agreement shall be construed and
          interpreted in accordance with the laws of the Commonwealth of
          Pennsylvania, including for the purposes of choice of law, as though
          all acts and omissions related to this Agreement occurred in
          Pennsylvania.

   17.8.  Severability. The provisions of this Agreement shall, where possible,
          be interpreted in a manner necessary to sustain their legality and
          enforceability; the unenforceability of any provision of this
          Agreement in a specific situation shall not affect the enforceability
          of that provision in other situations or of other provisions of this
          Agreement.

   17.9.  Counterparts. This Agreement may be executed in two or more original
          counterparts, each of which shall for all purposes be considered an
          original of this Agreement.

   17.10. Headings. Section and subsection headings contained in this Agreement
          are inserted for convenience of reference only, shall not be deemed to
          be a part of this Agreement for any purpose, and shall not in any way
          define or affect the meaning, construction or scope of any of the
          provisions of this Agreement.

   17.11. Successors and Assigns. This Agreement shall be binding upon, and
          inure to the benefit of the respective successors and assigns of the
          parties. Purchaser may assign its rights under this Agreement, in
          whole or in part, to Emons or to another direct or indirect wholly-
          owned subsidiary of Emons.

   17.12. Notices. All notices given pursuant to this Agreement shall be
          delivered by hand, sent by United States registered or certified mail,
          postage prepaid, delivered by recognized express mail or overnight
          courier service, or delivered by electronic facsimile 

                                       20
<PAGE>
 
          with a confirmation copy delivered by any of the preceding methods,
          addressed as follows (or to another address or person as a party may
          specify on notice to the other):

          (a)  If to Seller (which shall constitute notice to all Sellers):

               Mr. John C. Nolan
               1973 Wellington Drive
               Langhorne, PA  19047

               with copies to:

               David A. Binder, Esq.
               226 North Sixth Street
               Reading, PA  19601



          (b)  If to Purchaser:
               Penn Eastern Rail Lines, Inc.
               c/o Emons Transportation Group, Inc.
               96 South George Street, Suite 400
               York, PA  17401
               Attention:  Mr. Robert Grossman, Chairman and CEO

          with copies to:

               Oppenheimer Wolff & Donnelly
               1020 Nineteenth Street NW, Suite 400
               Washington, DC  20036
               Attention:  Kevin M. Sheys, Esq.

     IN WITNESS WHEREOF, the parties hereto have executed this Purchase
Agreement as of the date first written above.


                               /s/John C. Nolan
                               ----------------------------------------------
                               JOHN C. NOLAN


                               LANCASTER NORTHERN RAILWAY, INC.



                               By:  /s/John C. Nolan
                                  -------------------------------------------
                               Name:  John C. Nolan
                                    -----------------------------------------
                               Title:  President
                                     ----------------------------------------

                                       21
<PAGE>
 
                                 CHESTER VALLEY RAILWAY, INC.



                                 By:  /s/John C. Nolan
                                    ----------------------------------------
                                 Name:  John C. Nolan
                                      --------------------------------------
                                 Title:  President
                                       -------------------------------------


                                 East Penn Railways, Inc.



                                 By:  /s/John C. Nolan
                                     ---------------------------------------
                                 Name:  John C. Nolan 
                                      --------------------------------------
                                 Title:  President    
                                       -------------------------------------


                                 BRISTOL INDUSTRIAL TERMINAL RAILWAY, INC.



                                 By:  /s/John C. Nolan
                                     ---------------------------------------
                                 Name:  John C. Nolan 
                                       ------------------------------------- 
                                 Title:  President    
                                        ------------------------------------


                                 PENN EASTERN RAIL LINES, INC.



                                 By:  /s/Scott F. Ziegler                     
                                     ---------------------------------------- 
                                 Name:  Scott F. Ziegler                     
                                        ------------------------------------- 
                                 Title:  VP - Finance, Controller & Secretary
                                         ------------------------------------ 

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