LEASE AGREEMENT

THIS LEASE AGREEMENT, made as of this 1st day of November, 1997, by and between BERLIN MILLS RAILWAY, INC., a New Hampshire corporation (hereinafter referred to as "Lessor"), on the one hand, and ST. LAWRENCE& ATLANTIC RAILROAD COMPANY, a Delaware corporation ("Lessee"), on the other hand (the "Lease Agreement").

RECITALS

A. Lessor owns certain rail lines, all as generally shown on the maps attached hereto as Exhibit 1. The foregoing rail lines are referred to collectively hereinafter as the "Lease Lines;" and

B. Lessor desires to lease to Lessee and Lessee desires to lease from Lessor, the Leased Property, including the Lease Lines, in accordance with and subject to the terms and conditions set forth hereinafter; and

C. Lessor is a wholly-owned subsidiary of Crown Paper Co. dba Crown Vantage ("Crown Vantage"), and Crown Vantage and Lessee intend to enter into a certain Service Agreement to be dated as of November 1, 1997 as Shipper and Operator, respectively (the "Service Agreement"); and

D. Lessor and Lessee have, as of the date hereof, entered into a certain Purchase and Sale Agreement as Seller and Buyer, respectively, by which certain locomotives and other railroad assets are to be transferred to Lessee contemporaneous with the Effective Date, as hereinafter defined (the "Purchase and Sale Agreement"); and

E. It is a condition to this Lease Agreement that the Service Agreement come into, and continue in, full force and effect, and it is a further condition to this Lease Agreement that in the event the Service Agreement is canceled, expires or otherwise terminates, this Lease Agreement shall ipso facto cease and determine.

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, the parties hereto hereby agree as follows:

1. DEFINITIONS

1.1 Defined Terms. As used in this Lease Agreement, the following terms shall have the following meanings:

"Affiliate" - With respect to any person, any other person which directly or indirectly controls, is controlled by or is under common control with such person.

"Casualty Loss" - As defined in Section 11.1.

"Charge" - As defined in Section 15.1.

"Contracts" - All Easements and all other contracts, written agreements or leases to which the Lease Lines are subject, but not the Shipper Contracts.

"Easements" - Pipe, wire, utility and similar agreements or licenses, and public and private road crossing agreements or arrangements, to which the Lease Lines are subject.

"Effective Date" - As defined in Section 3.1.

"Emons" - Emons Transportation Group, Inc., a Delaware corporation and an Affiliate of Lessee.

"Encumbrance" - With respect to any portion of the Leased Property, any Contract, mortgage, pledge, lien, claim, security interest, title retention, Easement, license, or other encumbrance or restriction of any kind.

"Environmental Laws" - All applicable federal, state, municipal and local laws, statutes, ordinances, rules, by-laws, guidelines, treaties and regulations, and all applicable directives, rules, standards, requirements, policies, orders, judgments, injunctions, or decrees which have the force of law or which are capable of having the force of law, in each case relating to or addressing the environment.

"Expenses" - Any and all expenses incurred in connection with investigating, defending or asserting any claim, action, suit or proceeding incident to any matter indemnified against hereunder (including court filing fees, court costs, arbitration fees or costs, witness fees, and reasonable fees and disbursements of legal counsel and other professionals).

"Expropriation Proceeding" - As defined in Section 10.1 (a).

"Governmental Authority" - Any agency, board, bureau, executive, court, commission, department, tribunal, instrumentality or administration of the United States, the State of New Hampshire, or any local or other governmental body in a state, county, territory or possession of the United States.

"Governmental Permits" - All licenses, permits, approvals, consents, certificates, waivers, exemptions, orders and other authorizations from any and all Governmental Authorities.

"Initial Term" - As defined in Section 3.1.

"Lease Agreement" - This Lease Agreement (including all Exhibits and Schedules attached hereto) as the same may be amended or supplemented in accordance with the terms hereof

"Leased Property" - As defined in Section 2.1.

"Lease Lines" - As defined in Recital A.

"Lessee Event of Default" - As defined in Section 16.1.

"Lessor Event of Default" - As defined in Section 16.2.

"Losses" - Any and all losses, costs, obligations, liabilities, settlement payments, awards, judgments, fines, penalties, damages, expenses, deficiencies or other charges.

"Obligations" - With respect to any Contract, lease or written agreement, all responsibilities, penalties and duties of a specified party under such Contract, lease or written agreement.

"Renewal Term" - As defined in Section 3.2.

"Rental Fee" - As defined in Section 4.1.

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