<PAGE>
 
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                                                                   EXHIBIT 10(D)

                           ASSET PURCHASE AGREEMENT


                                    Between



               NEW HAMPSHIRE AND VERMONT RAILROAD COMPANY, INC.

                                      and

                   ST. LAWRENCE & ATLANTIC RAILROAD COMPANY



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

                                     Dated

                               December 12, 1997


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




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


         ST. LAWRENCE & ATLANTIC RAILROAD COMPANY, a Delaware corporation
("Purchaser") and NEW HAMPSHIRE AND VERMONT RAILROAD COMPANY, INC., a Florida
corporation (the "Seller") agree as follows:

1.       DEFINITIONS

         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 land, trackage and fixtures comprising a portion of
the railroad right of way conveyed by the Boston and Maine Corporation (the
"B&M") to the Seller by Release Deed dated May 27, 1992 (the "B&M Deed") and
otherwise described as follows:

         A certain parcel or strip of railroad land of varying width together
         with the fixtures and improvements thereon, lying in the City of
         Groveton at Northumberland in the County of Coos County, New Hampshire,
         being a part of the railroad line formerly known as the "Groveton
         Branch" of the Boston and Maine Corporation, and being shown on
         Railroad Valuation Plans for Section 22, Maps 52 and 53, which plans
         are entitled "Right of Way and Track Map, The Concord & Montreal R.R.
         [sic], Operated by the Boston and Maine R.R. [sic]", dated June 30,
         1914 and prepared by the Office of the Valuation Engineer of the Boston
         & Maine Railroad (predecessor of the Boston and Maine Corporation), and
         being more particularly described as follows:

                  Beginning in the City of Groveton at Northumberland, Coos
                  County, New Hampshire, at a point shown on Valuation Plans for
                  Section 22, Map 53 at Station 2741+84 at the intersection with
                  Purchaser's railroad right of way, thence running in a
                  generally Southerly direction along said Valuation Section 22
                  to a point in the City of Groveton at Northumberland, Coos
                  County, New Hampshire, shown on Valuation Plans for Section
                  22, Map __ at Station __________

The above assets are more particularly described within the heavy dashed lines
shown on plans for Valuation Section 22, Map 53, duplicate copies of which have
been initialed as of the date hereof by the Seller and the Purchaser for
identification (the "Plans"). Unmarked copies of the Plans are on file with the
State of New Hampshire Department of Transportation at Concord, New Hampshire.

         "Closing" has the meaning given to it in Section 8.1 of this Agreement.
                                                  -----------

                                       1
<PAGE>
 
         "Closing Date" has the meaning given to it in Section 8.2 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.

         "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 Material" includes, for purposes of this agreement, any
substance or material: (a) the presence of which requires investigation or
remediation under any federal, state or local law or regulation, (b) which is or
becomes regulated by any federal, state or local governmental authority,
including without limitation, any substance or waste material which is defined
or listed as a "hazardous waste," "toxic waste," "extremely hazardous waste,"
"restricted hazardous waste," "industrial waste," "hazardous substance,"
"regulated substance," "solid waste," "special waste," "hazardous material,"
"pollutant" or "contaminant," or (c) which poses an unreasonable risk of injury
to human health or the environment.

         "Permitted Encumbrances" means any

              (a)   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,

              (b)   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 Assets as such operations
                    are currently conducted,

              (c)   utility easements, licenses or permits located on or
                    crossing any portion of the Assets that do not materially
                    interfere with railroad operations on the Assets as such
                    operations are currently conducted,

              (d)   road crossing agreements with governmental authorities or
                    private parties that do not materially interfere with
                    railroad operations on the Assets as such operations are
                    currently conducted,

                                       2
<PAGE>
 
              (e)   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,

              (f)   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,

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

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

              (i)   rights reserved to or vested in any governmental authority
                    with respect to the Assets or their regulation, and

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

              (k)   Any state of facts which an accurate survey or personal
                    inspection would reveal.

              (l)   Regulations of any governmental authority, agency,
                    department or instrumentality having or claiming
                    jurisdiction of or with respect to or affecting the Assets,
                    including without limitation provisions of existing
                    building, land use, subdivision control and zoning laws.

              (m)   Encumbrances of record which do not materially and adversely
                    affect the use of the Assets for railroad operations as they
                    are currently conducted.

              (n)   The reservation by any prior grantor of any right, title or
                    interest to, or with respect to, the Assets, including
                    without limitation such reservations as are contained in the
                    B&M Deed; mineral rights and rights to prospect for and
                    extract oil, gas and other hydrocarbon substances, minerals,
                    ores and metals of every nature and kind in and under the
                    Assets; and any lease, permit or agreement with respect to
                    any such reservation; provided that such reservation does
                    not materially and adversely affect the use of the Assets
                    for railroad operations as they are currently conducted.

              (o)   Encumbrances arising from the Local Rail Freight Assistance
                    Contract listed on Appendix A.


         "Purchase Price" has the meaning given to it in Section 3.1 of this
                                                         -----------
Agreement.

         "Purchaser" means St. Lawrence & Atlantic Railroad Company, a Delaware
corporation.

                                       3
<PAGE>
 
         "Seller" means New Hampshire and Vermont Railroad Company, Inc., a
Florida corporation.

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, convey, transfer and deliver 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, Seller agrees to assign and set-over to Purchaser
          all of such Seller's rights and interests under the Contracts listed
          on Appendix A hereto. Contemporaneous with the transfer of the Assets
          to Purchaser, the parties shall terminate all agreements currently in
          existence whereby Seller operates over Purchaser's track to serve the
          Wausau Paper Company facilities.

    2.3.  Condition of Assets. SELLER AND PURCHASER AGREE THAT, EXCEPT AS
          PROVIDED HEREIN: (A) THE PURCHASER HAS INSPECTED THE ASSETS AND IS
          SATISFIED WITH THE CONDITION THEREOF IN EVERY RESPECT; (B) SELLER
          MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE
          DESIGN, CONDITION, MERCHANTABILITY, FITNESS FOR ANY PARTICULAR
          PURPOSE, QUALITY OR WORKMANSHIP OF THE ASSETS; (C) SELLER SHALL NOT BE
          LIABLE TO THE PURCHASER FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES
          (INCLUDING STRICT LIABILITY IN TORT) WITH RESPECT TO THE DESIGN,
          CONDITION, QUALITY, WORKMANSHIP, SAFETY, MERCHANTABILITY OR FITNESS
          FOR ANY PARTICULAR PURPOSE OF THE ASSETS; AND (D) AT THE CLOSING,
          PURCHASER SHALL TAKE THE ASSETS IN "AS IS AND WHERE IS" AND "WITH ALL
          FAULTS" CONDITION, AND SUBJECT TO ALL LIMITATIONS ON SELLER'S RIGHT,
          TITLE AND INTEREST TO THE ASSETS. THIS SECTION SHALL NOT DIMINISH OR
          OTHERWISE ALTER THE RIGHT OF PURCHASER SECTIONS 4 AND 7 HEREOF.
                                                 ----------------

    2.4.  Title. The Assets shall be conveyed by a deed (the "Deed") in a form
          substantially identical to that attached hereto as Appendix B. Title
          to the Assets, upon Closing, shall be good and marketable, subject
          only to Permitted Encumbrances; Seller, for itself and its successors
          and assigns, warrants and covenants that at the time of the delivery
          of the Deed the Assets shall be free from all encumbrances made by
          Seller, except as shall be stated in the Deed, and shall warrant and
          defend the same to Buyer, it successors and assigns, forever against
          the lawful claims and demands of all persons claiming by, through or
          under Seller, but against none other. Except for the foregoing, Seller
          does not make, nor at Closing will make, any other warranty or
          covenant of title or otherwise.

                                       4
<PAGE>
 
3.  PURCHASE PRICE

    3.1.  Amount of Purchase Price. The purchase price ("Purchase Price") for
          the Assets is $250,000, to be paid as follows:

          (a)  Fifty Thousand Dollars ($50,000) to be paid to Seller as a fully
               refundable deposit of earnest money upon execution of this
               Agreement by all parties hereto, and

          (b)  Two Hundred Thirty Thousand Dollars ($200,000) to be paid to
               Seller at the Closing hereunder.

    3.2.  Payment of Purchase Price. All amounts due Seller hereunder shall be
          paid by wire transfer of immediately available funds to one or more
          bank accounts designated by Seller prior to the Closing or, at the
          Seller's sole election, by one or more checks issued by Purchaser.

    3.3.  Reconciliation and Payment of Switching and Car Charges. At the
          Closing, the parties shall perform a reconciliation of any and all
          outstanding switching, car or similar charges owing between them
          relating to their respective operations prior to the Closing. The net
          amount owing by one party to the other shall be paid and discharged at
          the Closing.

4.   CHANGES IN ASSETS

    4.1.  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, and such loss or damage is not caused by the
          negligent acts or omissions of Purchaser, then, at the option of
          Purchaser, either:

          (a)  the 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 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

                                       5
<PAGE>
 
          (c)  the Agreement and the consummation of the transactions
               contemplated by this Agreement shall be terminated.

5.  ASSUMPTION OF LIABILITIES AND OBLIGATIONS

    5.1.  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 A, to the extent
          those liabilities and obligations accrue after the Closing.

    5.2.  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)  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

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

    5.3.  Insurance. The provisions of this Section 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.

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

    5.5.  Proration of Taxes and Assessments. Seller shall pay any and all
          special taxes and/or assessments levied upon the Assets that are due
          and payable on or before the Closing Date. Thereafter, Purchaser shall
          pay any and all taxes and/or assessments due and payable after the
          Closing Date. Seller shall pay taxes, if any assessed on the Assets
          for the tax year prior to the year in which the Deed is delivered and
          its pro rata share of taxes for the tax year in which the Deed is
          delivered.

6.  REPRESENTATIONS AND WARRANTIES

    6.1.  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)  Seller is a validly organized and existing corporation, in good
               standing under the laws of the state of its incorporation. Seller
               has the necessary authority to own property and conduct its
               business as now conducted in the State of New Hampshire and in
               such other states where it conducts business.

                                       6
<PAGE>
 
          (b)  All necessary corporate action of Seller 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 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)  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)  Appendix A is a full and complete listing of all Contracts used
               by Seller in the operation of the Assets or related to the
               Assets.

          (f)  Each Contract listed on Appendix A 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 Assets as currently operated.
               Seller has not waived or assigned to any other person any of its
               rights under any of the Contracts on Appendix A, and each of
               those Contracts may be assigned to Purchaser without impairment
               of any rights under the Contract.

          (g)  Except for Permitted Encumbrances, 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 Assets 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 Assets as
               a result of the sale of the Assets to Purchaser as contemplated
               by this Agreement or (B) adversely affect Purchaser's ability to
               conduct the operations of the Assets following Closing as
               currently conducted.

                                       7
<PAGE>
 
          (h)  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 Assets in any court or before
               any federal, state, local or other governmental agency.

          (i)  Seller 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 A (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.

6.2.      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.

                                       8
<PAGE>
 
          (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.

    6.3.  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.

7.  CONDITIONS TO THE CLOSING

    7.1.  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)  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.

          (b)  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,
               including without limitation a release of the mortgage lien of
               B&M, insofar as such mortgage lien encumbers the Assets. Seller
               may use the Purchase Price, or any portion thereof, paid by the
               Purchaser at the Closing to clear the title of any mortgage or
               other title encumbrance not in accordance with the terms hereof,
               provided that any instrument so procured is delivered at Closing
               as a condition of 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)  The State of New Hampshire shall have waived in writing its right
               of first refusal to purchase the Assets pursuant to New Hampshire
               Rev. Stat. Ann. (S) 228; 60-b, or the time for such exercise
               shall have expired.

          (e)  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.

                                       9
<PAGE>
 
          (f)  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.

          (g)  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.

          (h)  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.

          (i)  Purchaser shall have the approval and consent of its lender,
               which approval and consent shall be obtained no later than
               December 19, 1997.

          (j)  Seller shall have executed an Interchange Agreement, in form and
               substance mutually acceptable to the parties, relating to their
               interchange operations after the Closing.

          (k)  Purchaser shall have executed an agreement of assignment and
               assumption with respect to the Local Rail Freight Assistance
               Contracts listed on Appendix A and shall be reasonably satisfied
               that the encumbrances arising from such Contracts shall not
               materially adversely affect Purchaser's operations on the Assets.

    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.

    7.2.  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)  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.

          (b)  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).

          (c)  The State of New Hampshire shall have waived in writing its right
               of first refusal to purchase the Assets pursuant to New Hampshire
               Rev. Stat. Ann. (S) 228; 60-b, or the time for such exercise
               shall have expired.

                                       10
<PAGE>
 
          (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.

          (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.

          (g)  Purchaser shall have executed an Interchange Agreement, in form
               and substance mutually acceptable to the parties, relating to
               their interchange operations after the Closing.

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

8.  CLOSING

    8.1.  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, or at such
          other location as the parties may agree upon.

    8.2.  Date and Time of Closing. The Closing shall take place at 10:00 a.m.
          Eastern Standard Time on December 19, 1997, or at such other time as
          the parties may agree upon.

    8.3.  Deliveries by Purchaser at Closing. At the Closing, Purchaser shall:

          (a)  Pay to Seller the balance of the Purchase Price.

          (b)  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.

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

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

          (a)  Deliver the Deed and such bills of sale, assignments, releases,
               satisfactions and other documents of transfer or release as are
               required or may be reasonably required to transfer the interests
               of Seller in the Assets to Purchaser consistent 

                                       11
<PAGE>
 
               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 the parties shall
               agree upon, 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 A.

          (c)  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.

          (d)  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.

9.  BOOKS AND RECORDS

    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, agreements, plans and other records reasonably relating to the
Assets. Prior to and after Closing, 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.

10. OPERATIONS PRIOR TO CLOSING

    10.1. 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);

                                       12
<PAGE>
 
          (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 October 15, 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; 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 Assets.

11. CONSENTS AND APPROVALS

    11.1. 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. 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.

12. INDEMNIFICATION

    12.1. General Indemnity.

          (a)  Except as provided in Section 12.1(b), Seller shall defend,
                                     ---------------
               indemnify and hold harmless the Purchaser from and against any
               and all claims, obligations and liabilities, and all costs,
               expenses and reasonable attorneys' fees based upon or arising out
               of any obligations, liability, loss or damage of any kind or
               nature, including personal injury or death or property damage,
               whether contingent or otherwise, known or unknown, (i) arising
               out of Seller's ownership, operation, use or possession of the
               Assets prior to the Closing, (ii) arising from breach of Seller's
               representations and warranties under Section 6.1 or (iii) arising
                                                    -----------
               from conditions on the Assets prior to the Closing.

          (b)  Except as provided in Sections 12.1(a), Purchaser shall defend,
                                     ----------------
               indemnify and hold harmless the Seller from and against any and
               all claims, obligations and liabilities, and all costs, expenses
               and reasonable attorneys' fees based upon or arising out of any
               obligation, liability, loss or damage of any kind or nature,
               including personal injury or death or property damage, whether
               contingent or otherwise, known or unknown, (i) arising out of
               Purchaser's ownership, 

                                       13
<PAGE>
 
               operation, use or possession of the Assets after the Closing,
               (ii) arising from breach of Purchaser's representations and
               warranties under Section 6.2, (iii) arising from conditions on
                                -----------
               the Assets after the Closing or (iv) arising out of the
               operation, use or possession of the Assets prior to the Closing
               by the Purchaser or any of the Purchaser's predecessors in
               interest whose liabilities and obligations with respect thereto
               Purchaser has assumed.

    12.2. Environmental Indemnity.

          (a)  Subject to Section 12.2(b), Seller shall defend, indemnify and
                          ---------------
               hold harmless Purchaser from and against any and all claims,
               obligations and liabilities, and all costs, expenses and
               reasonable attorneys' fees based upon or arising out of any
               obligation, liability, loss or damage of any kind or nature,
               whether contingent or otherwise, known or unknown, incurred under
               or imposed by any Environmental Law (including, without
               limitation, costs incurred for investigation, testing, remedial
               or corrective action) arising out of Seller's ownership,
               operation, use or possession of the Assets or arising from the
               Seller's offsite treatment, storage, transportation, disposal,
               management or migration of Hazardous Materials from the Assets,
               prior to the Closing.

          (b)  Subject to Section 12.2(a), Purchaser shall defend, indemnify and
                          ---------------
               hold harmless Seller from and against any and all claims,
               obligations and liabilities, and all costs, expenses and
               reasonable attorneys' fees based upon or arising out of any
               obligation, liability, loss or damage of any kind or nature,
               whether contingent or otherwise, known or unknown, incurred under
               or imposed by any Environmental Law (including, without
               limitation, costs incurred for investigation, testing, remedial
               or corrective action) arising out of Purchaser's, or any of the
               Purchaser's predecessors in interest whose liabilities and
               obligations with respect thereto Purchaser has assumed or to
               which Purchaser has succeeded, ownership, operation, use or
               possession of the Assets or arising from the Purchaser's, or any
               of the Purchaser's predecessors in interest whose liabilities and
               obligations with respect thereto Purchaser has assumed or to
               which Purchaser has succeeded, offsite treatment, storage,
               transportation, disposal, management or migration of Hazardous
               Materials from the Assets, prior to or after the Closing.

          (c)  If any condition on the Assets prior to the Closing or if any
               off-site treatment, storage, transportation, disposal, management
               or migration of Hazardous Materials prior to the Closing has been
               proximately caused by Purchaser or any of Purchaser's
               predecessors in interest whose liabilities and obligations with
               respect thereto Purchaser has assumed or to which Purchaser has
               succeeded, then in such event, and to the extent of any such
               causation and assumption, Seller shall not have any obligation
               under Section 12.2(a), and Purchaser shall defend, indemnify and
                     ---------------
               hold Seller harmless from and against 

                                       14
<PAGE>
 
               any and all such claims, obligations and liabilities, and all
               such costs, expenses and reasonable attorneys' fees with respect
               thereto or arising therefrom.

          (d)  If any condition on the Assets prior to the Closing or if any
               off-site treatment, storage, transportation, disposal, management
               or migration of Hazardous Materials prior to the Closing has been
               proximately caused by Seller, then in such event, and to the
               extent of any such causation and assumption, Purchaser shall not
               have any obligation under Section 12.2(b), and Seller shall
                                         ---------------
               defend, indemnify and hold Purchaser harmless from and against
               any and all such claims, obligations and liabilities, and all
               such costs, expenses and reasonable attorneys' fees with respect
               thereto or arising therefrom.

    12.3. Indemnification Procedures.

          (a)  The party seeking indemnification pursuant to this Section 12
               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.

          (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

                                       15
<PAGE>
 
               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.

13. TERMINATION

    13.1. 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 January 16, 1998, 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 4.1 hereof,
                                         -----------

          (d)  By Purchaser, if Purchaser does not have the approval and consent
               of its lender on or before December 19, 1997, pursuant to Section
                                                                         -------
               7.1(i) hereof,
               ------

          (e)  By Purchaser, by written notice to Seller, if there has been a
               failure by Seller to comply with any of its material obligations
               under this Agreement, and such material failure has not been
               cured after 30 days' notice,

          (f)  By Seller, by written notice to Purchaser, if there has been a
               failure by Purchaser to comply with any of its material
               obligations under this Agreement, and such material failure has
               not been cured after 30 days' notice, or

          (g)  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 breach.

                                       16
<PAGE>
 
14. MISCELLANEOUS

    14.1.  Movement of Seller Equipment to Danville Junction. Within three years
           after the Closing Date, Purchaser shall move up to 5 pieces of
           railroad rolling stock free of charge for Seller from Groveton to
           Danville Junction, provided that such pieces of equipment are capable
           of safe movement on their own wheels and provided further that Seller
           shall release and forever defend, indemnify and hold harmless the
           Purchaser from and against any and all claims and liabilities arising
           from such moves, other than as a result of Purchaser's gross
           negligence.

    14.2.  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.

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

    14.4.  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.
           Sales, use, gross receipts, transfer taxes, recording fees excise or
           similar taxes or governmental charges arising or levied with respect
           to the sale and transfer of the Assets shall be the sole and
           exclusive responsibility of the Purchaser.

    14.5.  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.

    14.6.  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 

                                       17
<PAGE>
 
           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 or the rules of the Securities and Exchange
           Commission and the NASDAQ.

    14.7.  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.

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

    14.9.  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.

    14.10. 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.

    14.11. 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.

    14.12. 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 the Parent or to another a wholly-owned
           subsidiary of Parent.

    14.13. 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 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):

                                       18
<PAGE>
 
         (a)      If to Seller:

                           New Hampshire and Vermont Railroad Company, Inc.
                           416 Main Street
                           Trenton, FL  32693
                           Attention:  Mr. Clyde S. Forbes, Jr.

                           with a copy to:

                           David H. Anderson, Esq.
                           288 Littleton Road, Suite 21
                           Westford, MA  01886

         (b)      If to Purchaser:

                           St. Lawrence & Atlantic Railroad Company
                           96 South George Street, Suite 400
                           York, PA 17401
                           Attention:  Mr. Robert Grossman

         IN WITNESS WHEREOF, the parties hereto have executed this Purchase
Agreement as of the date written on the cover page.

                           New Hampshire and Vermont Railroad Company, Inc.



                           By: /s/ Clyde S. Forbes, Jr.
                              ---------------------------------------
                               Clyde S. Forbes, Jr.
                               President


                           St. Lawrence & Atlantic Railroad Company



                           By: /s/ Robert Grossman
                              ---------------------------------------
                               Robert Grossman
                               Chairman & CEO

                                       19