<PAGE>
                                                                   EXHIBIT 10.35
                            ASSET PURCHASE AGREEMENT



                          DATED AS OF OCTOBER 15, 1996



                                 BY AND BETWEEN



                                 SUPREMEX INC.


                                      AND


                     PNG PRODUCTS INC. PAC NATIONAL GROUP,


                                      AND


                       PNG ENVELOPPE INTERNATIONALE INC.
<PAGE>
 
                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
<C>        <S>                                                                 <C>
SECTION 1. ASSETS TO BE ACQUIRED
     1.1   Description of Purchased Assets.................................... 2
     1.2   Excluded Assets.................................................... 6

SECTION 2. THE PURCHASE PRICE AND RELATED MATTERS............................. 7
     2.1   Purchase Price..................................................... 7
     2.2   Final Determination of Net Working Capital And Payment Therefor.... 8
     2.3   Adjustment of Purchase Price.......................................10
     2.4   Allocation of Purchase Price.......................................12
     2.5   Reporting of Income................................................13
     2.6   Bankruptcy.........................................................13

SECTION 3. ASSUMPTION OF ENUMERATED LIABILITIES...............................13
     3.1   Assumed Liabilities and Obligations................................14
     3.2   Excluded Liabilities...............................................14
     3.3   Employees..........................................................16
     3.4   Consent of Third Parties...........................................18

SECTION 4. REPRESENTATIONS AND WARRANTIES OF SELLERS..........................19
     4.1   Organization and Good Standing.....................................19
     4.2   Corporate Authority................................................20
     4.3   No Violation.......................................................20
     4.4   Consents and Approvals of Governmental Authorities and Others......20
     4.5   Financial Statements...............................................21
     4.6   Claims; Compliance with Laws.......................................21
     4.7   Intellectual Property..............................................21
     4.8   No Prior Sale or Licensing of Purchased Assets.....................22
     4.9   Certain Fees.......................................................22
     4.10  Title to Purchased Assets..........................................22
     4.11  Technical Information..............................................24
     4.12  Inventory..........................................................24
     4.13  Contracts..........................................................24
     4.14  Open Orders........................................................25
     4.15  Accounts Receivable................................................25
     4.16  Equipment..........................................................25
     4.17  Permits and Licenses...............................................25
     4.18  Insurance..........................................................26
     4.19  Claims.............................................................26
     4.20  Absence of Sensitive Payments......................................26
     4.21  Taxes..............................................................26
     4.22  Environmental Issues...............................................27
     4.23  Ownership and Location of Purchased Assets.........................29
     4.24  Benefit Plans......................................................29
     4.25  Trade Names........................................................31
</TABLE>
                                       i
<PAGE>
<TABLE>
<CAPTION>
<C>        <S>                                                                <C>    
     4.26  Employees..........................................................32
     4.27  Labour Matters.....................................................32
     4.28  Registration.......................................................33
     4.29  Residency..........................................................33

SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER............................33
     5.1   Organization, Good Standing and Corporate Authority................33
     5.2   No Violation.......................................................34
     5.3   Consents and Approvals of Governmental Authorities and Others......34
     5.4   Certain Fees.......................................................34
     5.5   Sales and Transfer Taxes...........................................35

SECTION 6. COVENANTS..........................................................35
     6.1   Joint Elections....................................................35
     6.2   Property Taxes.....................................................36
     6.3   Approvals; Consents................................................36
     6.4   Preservation of Business Organization..............................36
     6.5   Approval of Certain Transactions...................................36
     6.6   Exclusive Dealing..................................................38
     6.7   Further Assurances.................................................38
     6.8   Access to Offices, Officers, Accountants, Due Diligence, Etc.......38
     6.9   Receivables........................................................39
     6.10  Securities Filings.................................................39
     6.11  Accountants' Consent...............................................39
     6.12  Change of Name.....................................................40
     6.13  Environmental Site Assessment......................................40
     6.14  Preparation of Tax Returns.........................................40
     6.15  Covenants of Sellers...............................................40

SECTION 7. THE CLOSING........................................................41

SECTION 8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER...................41
      8.1  Corporate Action...................................................41
      8.2  Representations and Warranties.....................................41
      8.3  Performance of Obligations.........................................41
      8.4  Instruments of Conveyance, Etc.....................................42
      8.5  Short Term Liabilities.............................................42
      8.6  Delivery...........................................................42
      8.7  Opinion of Counsel.................................................42
      8.8  Non-Competition....................................................42
      8.9  Required Consents..................................................42
     8.10  Litigation.........................................................43
     8.11  Security...........................................................43
     8.12  No Material Damage.................................................43
     8.13  Resignations.......................................................43
     8.14  Bulk Sales.........................................................43
     8.15  Certificate of the Minister of Finance of Ontario..................43
     8.16  Class B Common Shares..............................................44
</TABLE>
                                      ii
<PAGE>
<TABLE>
<CAPTION>

<C>           <S>                                                              <C>
SECTION 9.  CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLERS.................44
     9.1    Representations and Warranties.....................................44
     9.2    Corporate Action...................................................44
     9.3    Payment............................................................45
     9.4    Documents..........................................................45
     9.5    Required Consents..................................................45
     9.6    Litigation.........................................................45

SECTION 10. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS..............45

SECTION 11. INDEMNIFICATION....................................................46
    11.1    Indemnity by Sellers...............................................46
    11.2    Environmental......................................................47
    11.3    Indemnity by Buyer.................................................47
    11.4    Notice of Claim....................................................48

SECTION 12. COMPETITION........................................................49
    12.1    Non-competition....................................................49
    12.2    Remedies...........................................................50

SECTION 13. TERMINATION; MODIFICATION OR WAIVER................................50
    13.1    Termination........................................................50
    13.2    Modification.......................................................50
    13.3    Waiver.............................................................50

SECTION 14. COSTS INCIDENT TO PREPARATION OF AGREEMENT.........................51

SECTION 15. RISK OF LOSS.......................................................51

SECTION 16. REASONABLE EFFORTS.................................................51

SECTION 17. GENERAL............................................................52
      17.1  Parties in Interest; Assignment....................................52
      17.2  Confidentiality....................................................53
      17.3  Public Statements..................................................53
      17.4  Approval...........................................................54
      17.5  Choice of Law......................................................54
      17.6  Notices............................................................54
      17.7  Entire Agreement...................................................55
      17.8  Remedies Cumulative................................................56
      17.9  Severability.......................................................56
      17.10 Interpretation.....................................................56
      17.11 Dollars............................................................57
      17.12 Counterparts.......................................................57
      17.13 Facsimiles.........................................................57
</TABLE>
                                      iii
<PAGE>

                                   SCHEDULES
<TABLE>
<CAPTION>
 
                                                                                              INDEX
                                                                                              -----
<S>           <C>                                                                             <C>
 
(a)            Intellectual Property                                                             1
(c)            Equipment                                                                         2 
(f)            Other Contracts Relating to Ownership of Assets and Operations of Business        3
(h)            Acquired Permits                                                                  4
(i)            Owned and Leased Real Property                                                    5
(k)            Computer Software Assets                                                          6
(n)            Memberships                                                                       7
(h)            Excluded Assets                                                                   8
(g)            Non-Represented Employees not Hired by Buyer                                      9
(a)            Collective Bargaining Agreements and Represented Employees                       10
(d)            Not Actively Employed Employees                                                  11 
(g)            Assigned Plans                                                                   12
(h)            Benefit Plan of which Sponsorship is Assumed by Buyer                            13
(j)            Employment Agreements                                                            14
               Material Contracts Requiring Consent                                             15
               Consents                                                                         16
               Financial Statements and Cost Savings                                            17
               Litigation                                                                       18
               Intellectual Property Exceptions                                                 19
               Prior Sales or Licenses                                                          20
(a)            Lease Exceptions                                                                 21
(c)            Liens to be Discharged and Permitted Liens                                       22
               Matters Related to Acquired Permits                                              23
               Insurance                                                                        24
               Product Liability Claims                                                         25
               Contested Taxes                                                                  26
               Environmental Matters                                                            27
(a)            Benefit Plans and Employment Arrangements                                        28
(b)            Mercer Letter                                                                    29
(i)            Method of Funding Used for the Benefit Plans                                     30
               List of Employees                                                                31
(a)            Labour Matters                                                                   32
(b)            Activities of Trade Unions                                                       33
(c)            Related Party Indebtedness                                                       34
(f)            Pay Equity Plan                                                                  35
               Forms of Consents of Landlord                                                    36
                                                                                                 

EXHIBIT A      Escrow Agreement                                                                 37
EXHIBIT B      Sellers' Counsel Opinion                                                         38
EXHIBIT C      Non-Competition                                                                  39

</TABLE>
<PAGE>
 
                               GLOSSARY OF TERMS


Defined Term                                                    Section
------------                                                    -------

Accounts Receivable                                              1.1(g)
Acquired Permits                                                 1.1(h)
Actively Employed                                                3.3(c)
Affiliate                                                           1.1
Agreement                                                       Heading
Assigned Plans                                                   3.3(g)
Assumed Liabilities                                                 3.1
Benefit Plans                                                      4.24
Books and Records                                                   4.5
Business                                                       Recitals
Business Closing Balance Sheet                                   2.2(a)
Buyer                                                           Heading
Buyer Documents                                                     5.1
Claims                                                              3.1
Closing                                                               7  
Closing Date                                                          7
Closing Financial Statements                                     2.2(a)
Computer Software Assets                                         1.1(k)
Confidential Information                                        17.2(b)
Contracts                                                        1.1(f)
EBITDA                                                           2.3(b)
Environmental Laws                                              4.22(a)
Environmental Permits                                           4.22(b)
Equipment                                                        1.1(c)
Escrow Agent                                                     2.1(c)
Escrow Amount                                                    2.1(c)
Escrow Agreement                                                 2.1(c)
Estimated Net Working Capital                                    2.1(b)
Excluded Assets                                                     1.2
Excluded Liabilities                                                3.2
Final Determination of Net Working Capital                       2.2(d)
GAAP                                                             1.1(l)
Governmental Authority                                          4.22(d)
Hazardous Substances                                            4.22(c)
Income Taxes                                                     1.2(e)
Indemnified Party                                                  11.4
Indemnifying Party                                                 11.4
Initial Purchase Price Payment                                   2.1(b)
Intellectual Property                                            1.1(a)
Interim Period                                                      6.4
Inventory                                                        1.1(d)
Laws                                                                4.6
Leased Real Property                                             1.1(i)
Liens                                                           4.10(c)
Losses                                                          11.1(a)
Mail-Well                                                          17.3
Material Adverse Change                                             4.1
Material Adverse Effect                                             4.1
<PAGE>

Glossary - page 2

Defined Term                                                             Section
------------                                                             -------

Material Contracts Requiring Consent                                         3.4
Net Working Capital                                                       2.1(a)
Neutral Accountants                                                       2.2(a)
1995 Financial Statements                                                    4.5
Non-Represented Employees                                                 3.3(b)
Open Orders                                                               1.1(e)
Outstanding Accounts Receivable                                           2.3(a)
Owned Real Property                                                       1.1(i)
Permitted Liens                                                          4.10(c)
Person                                                                       1.1
PNG Enveloppe                                                            Heading
PNG Products                                                             Heading
Purchase Price                                                            2.1(a)
Purchased Asset Requiring Consent                                            3.4
Purchased Assets                                                             1.1
Related Rights                                                            1.1(a)
Represented Employees                                                     3.3(a)
Sellers                                                                  Heading
Sellers Documents                                                            4.2
Short Term Liabilities                                                    2.1(a)
Technical Information                                                     1.1(b)
Tentative Purchase Price Payment                                          2.1(a)
Transferred Employees                                                     3.3(e)
Working Capital Assets                                                    2.1(a)
Working Capital Holdback                                                  2.1(d)
<PAGE>
 
                            ASSET PURCHASE AGREEMENT



         ASSET PURCHASE AGREEMENT dated this 15th day of October, 1996
("Agreement") by and between Supremex Inc. ("Buyer"), a corporation incorporated
  ---------                                  ----- 
under the Canada Business Corporations Act, PNG Products Inc. Pac National
Group, (hereinafter "PNG Products") and PNG Enveloppe Internationale Inc.,
                     ------------                                         
(hereinafter "PNG Enveloppe"), (PNG Products and PNG Enveloppe hereinafter
              -------------                                               
collectively referred to as "Sellers").
                             -------   

                                    RECITALS

         Sellers are engaged in the business of manufacturing and distributing
envelope products throughout Canada as presently carried on by Sellers (the
"Business").  Sellers desire to sell, and Buyer desires to acquire,
 --------                                                          
substantially all of the assets of the Business as a going concern, and to
assume certain specifically identified liabilities and obligations of Sellers
related to the Business, all upon the terms and conditions set forth herein.

         In consideration of the mutual covenants, agreements, representations
and warranties contained herein, and in reliance thereon, Buyer and Sellers,
intending to be legally bound, agree as follows:
<PAGE>
 
1. ASSETS TO BE ACQUIRED.

         1.1    Description of Purchased Assets.  Subject to the terms and
                -------------------------------                           
conditions of this Agreement, and in reliance on the representations, warranties
and covenants contained herein, on and as of the Closing Date (capitalized terms
shall be used as defined in the Sections mentioned in the Glossary of Terms to
this Agreement), Sellers will sell, convey, assign, transfer and deliver to
Buyer, and Buyer will purchase and acquire, the Business as a going concern and
all of Sellers' right, title and interest in and to the assets, properties and
rights of every kind and description, real, personal and mixed, tangible and
intangible, wherever situated in Canada constituting or used in the Business
(other than the Excluded Assets (collectively, the "Purchased Assets")),
including without limitation:

                (a) Intellectual Property and Related Rights.  All unpatented
                    ----------------------------------------                 
inventions, invention disclosures, multinational invention registrations,
patents and patent applications (including, but not limited to, all reissues,
divisions, continuations, continuations-in-part, extensions and reexaminations)
and all rights therein provided by law, multinational treaties or conventions;
publications and copyrights; trade secrets, know-how and show-how; formulas; and
all common law and registered trademarks, trademark registrations, applications
for trademark registrations, tradenames, brand names, service marks and logos;
including in each case without limitation, those identified on Schedule 1.1(a),
                                                               --------------- 
together with the goodwill associated therewith and symbolized thereby
(collectively, the "Intellectual Property"); and an assignment of any licenses
                    ---------------------                                     
therefor to or from Sellers and all income, royalties, damages and payments due
or payable to Sellers with respect thereto at any time on or after the Closing
Date, including, without limitation, damages and payments payable to Sellers for
infringement or misappropriation of any thereof throughout the world after the
Closing Date; together with an assignment of all rights of Sellers in and to,
including rights to enforce the terms of, confidentiality agreements, non-
solicitation and non-competition agreements of, and any agreements relating to
the assignment of inventions made by, prior and present employees of Sellers and
any such agreements with any other Person with respect to the Intellectual
Property (collectively, the "Related Rights");
                             --------------   

                (b) Technical Information.  All customer, dealer, supplier and
                    ---------------------                                     
installation lists; serial number records; engineering, manufacturing, design,
installation and other technical drawings and specifications, calculations and
manufacturing and production processes and techniques; research and 

                                       2
<PAGE>
 
development information; operating, maintenance and repair manuals and
instruction books; cost and estimating information, cost records, vendor data
and other business records, including without limitation, sales histories; sales
inquiries; consultant's reports; bills of material, test data and selected test
material samples; advertising and promotional literature, including reproducible
masters and all other commercial, sales, marketing and technical data relating
to the Business and the Purchased Assets as are in the possession or under the
control of Sellers, including, but not limited to, data stored electronically or
on other format (collectively, the "Technical Information");
                                    ---------------------   

               (c) Equipment.  All machinery, equipment, leasehold
                   ---------                                      
improvements, trucks, automobiles, office furniture, office equipment, computing
and telecommunications equipment (including the software loaded on such
equipment, including leased equipment if the lease agreement relating thereto is
a Contract) and an assignment of all related manufacturer or fabricator
warranties, guaranties and indemnities; existing patterns, dies, jigs, fixtures,
tooling, test equipment and working models owned by Sellers, including that
identified on Schedule 1.1(c) constituting Purchased Assets (collectively, the
              ---------------                                                 
"Equipment");
----------   

               (d) Inventory.  All raw materials inventory, work-in-process
                   ---------                                               
inventory and finished goods inventory pertaining to the Business, together with
all manufacturing supplies and boxing, labelling and other shipping materials
and an assignment of all related manufacturer or fabricator warranties,
guaranties and indemnities constituting Purchased Assets (collectively, the

"Inventory");
----------   

               (e) Open Orders.  Open orders for goods and services with
                   -----------                                          
customers of Sellers (the "Open Orders"), together with related purchase orders,
                           -----------                                          
contracts, subcontracts and accounts receivable and credit support associated
with such Open Orders;

               (f) Other Contracts.  All contracts, orders for spare parts,
                   ---------------                                         
distribution agreements, service agreements, development agreements, consulting
agreements, leases of machinery, equipment and other personal property,
guarantees, commitments, instruments and other agreements relating to the
acquisition or ownership of any of the Purchased Assets and the operation of the
Business, including those listed on Schedule 1.1(f) (the "Contracts");
                                    ---------------       ---------   

                                       3
<PAGE>
 
               (g) Accounts Receivable.  All accounts and notes receivable of
                   -------------------                                       
Sellers arising from the Business as at the Closing Date (collectively, the
                                                                           
"Accounts Receivable");
--------------------   

               (h) Permits, Licenses.  All permits, licenses, authorizations,
                   -----------------                                         
certificates, registrations, orders, franchises and other approvals required to
carry on the Business to the extent such permits, licenses, authorizations,
certificates, registrations, orders and other approvals are transferable to
Buyer (collectively, the "Acquired Permits") all of which are listed on Schedule
                          ----------------                                      
1.1(h);

               (i) Real Property.  The building bearing civic address 400
                   -------------                                         
Humberline Drive, Etobicoke, Ontario, the parcel of land upon which it is
situated, identified as Parcel 29-10, Section E-25, by PIN 07368-0028 (LT), and
the part of the road allowance between concessions III and IV, designated as
Part 1, Plan 64R-4374 and identified by PIN 07368-0070 (LT), together with all
rights, interests and appurtenances therein or thereto and the buildings,
structures, installations, fixtures and other improvements thereon (the "Owned
                                                                         -----
Real Property"); Sellers' interest as lessee or sublessee, in the lease
-------------                                                          
agreements described on Schedule 1.1(i) and the leasehold interests and
                        ---------------
leasehold improvements leased pursuant thereto (the "Leased Real Property"); if
                                                     --------------------
any, all easements, privileges, rights-of-way, surface use rights, mineral
interests, real property leasehold interests, servitudes and other real property
interests with respect to the Owned Real Property and all rights to the present
and future use of water, wastewater, drainage and other utility facilities and
amenities covering any future use with respect to the Owned Real Property; and
all prepaid real property taxes or accruals on the Books and Records of Sellers
relating to real property taxes;

               (j) Business Records.  Subject to the Sellers' rights to retain
                   ----------------                                           
copies thereof where necessary for tax purposes, all records of Sellers relating
solely to the Business, including property records and copies of personnel
records of those employees who will become employees of Buyer pursuant to the
provisions of this Agreement, but excluding income tax records.  Buyer agrees to
give Sellers access to such documents as reasonably requested by Sellers;

               (k) Computer Software Assets.  All computer software, data
                   ------------------------                              
rights, documentation and associated license, escrow, support, development and
maintenance agreements, used in the conduct of the Business, including those
listed on Schedule 1.1(k) (the "Computer Software Assets");
          ---------------       ------------------------   

                                       4
<PAGE>
 
               (l) Prepaid Expenses.  All payments made by Sellers with respect
                   ----------------                                            
to the Business, which constitute prepaid expenses of the Business in accordance
with Canadian generally accepted accounting principles ("GAAP") consistently
                                                         ----               
applied, to the extent the benefits thereof are transferable to Buyer including,
without limitation, prepaid rent or prepaid lease payments, deposits other than
those mentioned in Section (b), taxes other than Income Taxes or accruals
related thereto, Canada and Quebec Pension Plan, employer health tax and
required provincial health insurance premiums, accrued wages, salaries and
commissions and employee benefit payments, payroll and employee withholding
taxes, unemployment insurance and/or employment insurance, transfer taxes,
workers' compensation, and other charges;

               (m) Emission Offset Credits.  All emission offset credits, if
                   -----------------------                                  
any, arising from or attributable to the operation of the Business;

               (n) Memberships.  All memberships of Sellers in, and all rights
                   -----------                                                
as a member of, industry, trade, civic, social and other associations,
organizations and clubs to the extent transferable to Buyer listed on Schedule
                                                                      --------
1.1(n); and
------     

               (o) Other Intangible Assets.  The goodwill of the Business and
                   -----------------------                                   
all other intangible assets (including without limiting the generality of the
foregoing (i) the exclusive right to the Buyer to represent itself as carrying
on the Business in continuation of and in succession to Sellers and the right to
use any words indicating that the Business is so carried on including, without
limitation, the exclusive right to use the names "PNG Products", "PNG Enveloppe
Internationale" and "Globe Envelope" or derivations thereof; (ii) all records of
sales, customer lists and supplier lists of or used in connection with the
Business; and (iii) causes of action, rights of action, contract rights and
warranty and product liability claims against third parties relating to the
Purchased Assets or the Business.

         As used in this Agreement, "Person" shall mean an individual,
                                     ------                           
partnership, corporation, business trust, joint stock company, trust,
unincorporated association, joint venture, limited liability company or any
other entity of whatever nature; and "Affiliate" shall mean any Person who
                                      ---------                           
controls, is 

                                       5
<PAGE>
 
controlled by or is under common control with the designated party,
and ownership, directly or indirectly, of 20% or more of the voting stock or
other equity interest shall be deemed to constitute control.

         1.2    Excluded Assets.  Notwithstanding Section , the following
                --------------- 
assets (collectively, the "Excluded Assets") shall be excluded from this
                           ---------------
Agreement and shall not be sold, assigned or transferred to Buyer and shall not
be included in the Purchased Assets or the Working Capital Assets as finally
determined pursuant to Section 2.2:

               (a) Any intercompany deposits with any Affiliate of Sellers
and intercompany receivables from the other Seller or an Affiliate of Sellers,
except intercompany receivables for products shipped or sold by the Business to
an Affiliate of Sellers;

               (b) Any deposits paid with respect to the purchase of any goods,
machinery or equipment;

               (c) Corporate minute books and stock books;

               (d) Any claims and rights against third parties (including,
without limitation, insurance carriers), to the extent they relate to
liabilities or obligations that are not assumed by Buyer;

               (e) All payments made by Sellers with respect to the Business
which constitute prepaid income or profits taxes ("Income Taxes") (including,
but not limited to, federal income taxes and provincial income taxes) of the
Business, and all claims for refunds of Income Taxes and other governmental
charges to the extent such refunds relate to periods ending on or prior to the
Closing Date and all income tax records of Sellers and all payments made by
Sellers with respect to the Business, which constitute prepaid expenses of the
Business to the extent that the benefits thereof are not transferable to the
Buyer;

               (f) All prepaid insurance premiums and proceeds of insurance
policies listed in Schedule 4.18.

                                       6
<PAGE>
 
               (g) All cash and cash equivalents, including any escrow
accounts, wherever located, including without limitation at any Owned Real
Property or any Leased Real Property or in lock boxes or accounts (whether
maintained at a bank, thrift, mutual fund or other similar financial
institution);

               (h) Sellers licenses, permits and other governmental
authorizations and deposits that are not legally transferrable; and

               (i) All assets listed on Schedule 1.2(h).
                                        ---------------

2.  THE PURCHASE PRICE AND RELATED MATTERS.

         2.1    Purchase Price .
                --------------- 

                (a) The purchase price payable in consideration for the
Purchased Assets shall be an amount equal to the sum of (i) $20,750,000, and
(ii) the amount of the Net Working Capital, up to a maximum amount of
$7,000,000, the whole subject to any adjustment as provided in Sections 2.2 and
2.3 (the "Purchase Price").

                    As used in this Agreement,"Net Working Capital" shall mean
the amount by which the amount of the Working Capital Assets exceeds the amount
of the Short Term Liabilities, all as determined as of the Closing Date in
accordance with this Agreement; "Working Capital Assets" shall mean the Accounts
Receivable, Inventory, Prepaid Expenses and other current Purchased Assets of
the Business as at the Closing Date; "Short Term Liabilities" shall mean the
indebtedness of Sellers under their accounts payable and accrued short term
liabilities pertaining to the Business as at the Closing Date and, for greater
certainty, shall exclude the indebtedness of Sellers under their operating
facilities.

               (b) Buyer will pay to Sellers at Closing, by wire transfers or
immediately available funds to accounts (such accounts to be designated at least
three (3) days prior to the Closing Date by notice from Sellers to Buyer), (i)
an amount equal to $19,750,000, and (ii) Sellers' good faith Closing Date
estimate of Net Working Capital confirmed in writing to Buyer at least two
business days prior to the Closing Date ("Estimated Net Working Capital"), less
an amount of $375,000 on account of the Purchase Price.

                                       7
<PAGE>
 
               (c) Buyer shall deposit $1,000,000 on account of the Purchase
Price with the Escrow Agent acting pursuant to the Escrow Agreement referred to
below (such amount, together with any interest therein, additions thereto, and
releases therefrom, as more specifically described in such Escrow Agreement
being referred to herein as the "Escrow Amount") to guarantee the payment of any
                                 -------------                                  
amount that may become owing by Sellers to Buyer, as indemnity, adjustment or
otherwise pursuant to this Agreement.  The Escrow Amount, together with interest
and other income thereon (which shall be for Sellers' account unless paid to
Buyer in accordance with the terms of the Escrow Agreement), shall be held for a
term of 24 months and released by such Escrow Agent to be released in accordance
with the terms of the Escrow Agreement, substantially in the form attached
hereto as Exhibit A (the "Escrow Agreement"), which shall be entered into by the
                          ----------------                                      
escrow agent named therein (the "Escrow Agent"), Buyer and Sellers prior to or
                                 ------------                                 
on the Closing Date.

               (d) In addition to the Purchase Price, Buyer will assume at
Closing the Short Term Liabilities as at the Closing Date.

               (e) Buyer shall also deposit with the Escrow Agent pursuant to
the terms of the Escrow Agreement an amount equal to $375,000 (the "Working
                                                                    -------
Capital Holdback")  to be held, together with interest and other income thereon
----------------                                                               
(which shall be for Sellers' account unless paid to Buyer in accordance with the
terms of the Escrow Agreement) until the Net Working Capital pursuant to Section
2.2 and all adjustments pursuant to Section 2.3 are finally determined.

               (f) Buyer and its representatives shall be afforded the
opportunity to review and inspect all of the financial records, work papers,
schedules and other supporting papers relating to the Estimated Net Working
Capital of the Business and to consult with Sellers and their representatives,
if necessary, regarding the methods used in the calculation of it.

                                       8
<PAGE>
 
         2.2    Final Determination of Net Working Capital And Payment Therefor.
                --------------------------------------------------------------- 

                (a) As promptly as practicable after the Closing Date, and in
any event no later than 60 days thereafter, Sellers shall prepare, at their own
expense, and deliver to Buyer, audited consolidated financial statements of the
Business for the period beginning on January 1, 1996 and ending on the Closing
Date, including an audited consolidated balance sheet of the Business as at the
Closing Date (the "Business Closing Balance Sheet"), showing Sellers'
                   -------------------------------                   
calculation of Net Working Capital determined in accordance with GAAP
consistently applied, an audited consolidated statement of operations and
deficit and statement of changes in financial position for the period beginning
January 1, 1996 and ending at the Closing Date and the notes thereto
(collectively, the "Closing Financial Statements").

                (b) Buyer and its representatives shall be present at any
physical inventory counts with respect to the preparation of the Business
Closing Balance Sheet, and after delivery to Buyer of the Business Closing
Balance Sheet, Buyer and its representatives shall be afforded the opportunity
to review and inspect, at its own expense, all of the financial records, work
papers, schedules and other supporting papers relating to the preparation of it
and to consult with Sellers and their representatives, if necessary, regarding
the methods used in the preparation of the Business Closing Balance Sheet.

                (c) The Business Closing Balance Sheet shall be final,
conclusive and binding for purposes of this Agreement, unless Buyer shall give
written notice of disagreement with any item or items thereon within 60 days
following receipt of Business Closing Balance Sheet, specifying in reasonable
detail the nature and extent of such disagreement.  Buyer shall not be permitted
to give a notice of disagreement with respect to the Business Closing Balance
Sheet unless the aggregate amount in dispute exceeds $25,000.

                (d) If within 5 business days following receipt by Sellers of a
notice of the type referred to in Section 2.2(c), Sellers and Buyer are unable
to resolve any disagreement with respect to the calculation of Net Working
Capital, the disagreement shall be submitted for arbitration pursuant to the
Arbitrations Act (Ontario) to one of the nationally recognized Big Six chartered
accounting firms mutually agreeable to Buyer and Sellers, which is independent
of Buyer and its Affiliates and Sellers and its Affiliates (the "Neutral
                                                                 -------
Accountants"). The Neutral Accountants shall act as an arbitrator to determine 
-----------

                                       9
<PAGE>
 
and resolve only those issues still in dispute. The Neutral Accountants'
resolution shall be made within 30 days of the submission of the dispute, shall
be in accordance with this Agreement, and in a manner which is in accordance
with GAAP, shall be set forth in a written statement delivered to Sellers and
Buyer, and shall be final, conclusive and binding on Sellers and Buyer (the
"Final Determination of Net Working Capital"). Subject to 2.2(f), Buyer and
 ------------------------------------------
Sellers shall instruct the Escrow Agent to pay to Sellers and/or Buyer, as the
case may be, the balance of the Working Capital Holdback in accordance with the
Final Determination of Net Working Capital, forthwith after receipt of the Final
Determination of Net Working Capital, together with all interest and other
income on the Working Capital Holdback.

               (e) The fees and expenses of the Neutral Accountants in
connection with any such determination shall be paid one-half by Sellers and
one-half by Buyer.  Otherwise, Buyer and Sellers shall each pay their own costs
incurred, including the fees and expenses of their respective accountants or
attorneys, if any.

               (f) Buyer and Sellers shall instruct, promptly following the
determination of the Final Determination of the Net Working Capital, the Escrow
Agent to pay, and the Escrow Agent shall pay in accordance with such
instructions, the balance of the Working Capital Holdback calculated pursuant to
the Final Determination of Net Working Capital and any Adjustment of Purchase
Price pursuant to section 2.3, by certified cheque, upon the expiration of the
10-day period following receipt of such instructions. If the Working Capital
Holdback is not sufficient to cover payment to Buyer pursuant to sections 2.2
and 2.3, Sellers shall pay to Buyer within 10 days following such instructions
an amount equal to the balance due to Buyer. If payment to Buyer is unpaid
within 10 days following the expiration of the above mentioned delay, Buyer
shall be entitled to be paid by the Escrow Agent and Buyer and Sellers shall
instruct the Escrow Agent to pay, and the Escrow Agent shall pay by wire
transfer or certified cheque to the Buyer out of the Escrow Amount any amount
payable to Buyer in accordance with the Final Determination of the Net Working
Capital.

               (g) All wire transfers, if any, shall be to such accounts as the
recipient thereof may designate (at least 3 days prior to the Closing Date) in
writing for that purpose.

                                       10
<PAGE>
 
         2.3   Adjustment of Purchase Price.
               ----------------------------- 

               (a) If, 120 days following the Closing Date, (i) after
reasonable efforts by Buyer (which shall mean exercising at least the diligence
generally exercised by Buyer in collecting its own accounts receivable) to
collect the Accounts Receivable, any portion thereof remaining outstanding (the
"Outstanding Accounts Receivable") or (ii) Buyer, with Sellers' written
 -------------------------------
approval, has issued any credit notes after the Closing Date with respect to
sales made prior to the Closing Date the Purchase Price will, provided that the
Account Receivables have been assigned in accordance with the following
paragraph, be reduced by the aggregate of the amount under (i) and (ii) of this
Section 2.3(a) and Sellers shall pay to Buyer such amount.

                   Buyer shall not compromise, reduce or otherwise adjust any of
the Accounts Receivable or issue any credit notes with respect thereto without
either of Sellers' prior written approval. Buyer shall keep Sellers regularly
and fully informed concerning Buyer's collection of the Accounts Receivable.
Buyer will assign to Sellers the Outstanding Accounts Receivable in
consideration of $1.00, free and clear of Liens, and execute such documents and
do such things as may be reasonably required by Sellers in connection with such
assignment. Sellers, after such assignment, may take such proceedings as it
deems advisable to collect the Outstanding Accounts Receivable so assigned, but
Sellers will indemnify, defend and hold Buyer harmless from and against all
Claims incurred by Buyer directly, by reason of such proceedings.

               (b) Within 60 days of the Closing Date, Sellers shall deliver to
Buyer valuations of Sellers' pension plans for salaried employees and for hourly
employees, dated as at the Closing Date and prepared by a recognized actuarial
firm and the actuarial evaluations of these pension plans will be determined
using the actuarial assumptions and funding method detailed in the actuarial
reports as at January 1, 1996;

                   (i) In the event that the pension plan for salaried employees
contains a surplus of less than $4,800,000 on a going concern basis, the
Purchase Price shall be reduced by an amount equal to the amount by which the
pension surplus is below $4,800,000, unless the right to such reduction is
waived in writing by Buyer.  Such reduction shall reduce the Purchase Price;

                                       11
<PAGE>
 
                  (ii) In the event that the pension plan for hourly employees
has a deficit of more than $300,000 on a going concern basis, the Purchase Price
will be reduced by the amount in excess of such deficit, if any, unless the
right to such adjustment is waived in writing by Buyer.

               (c) Any adjustment of Purchase Price pursuant to Sections 2.3(a)
and (b) ("Adjustment of Purchase Price") and any payment pursuant thereto to
Buyer shall be made as follows: (i) first Buyer and Sellers shall instruct in
writing the Escrow Agent to pay out of the Working Capital Holdback to Buyer an
amount equal to the Adjustment of Purchase Price within 10 days following such
instructions, (ii) second, if the Working Capital Holdback is less than the
amount owed to Buyer, Sellers shall pay to Buyer an amount equal to all the
balance due to Buyer. If the amount under (ii) is unpaid within 10 days
following such instructions, Buyer shall be entitled to be paid by the Escrow
Amount and Buyer and Sellers shall instruct the Escrow Agent to pay, and the
Escrow Agent shall pay by wire transfer or certified cheque, to the Buyer out of
the Escrow Amount any amount payable to Buyer in accordance with the Adjustment
of Purchase Price.

               (d) Reference to instructions to be given by Sellers or written
approval of Sellers in Section 2.3(a) only, shall refer to the written approval
of Steve Ruddy, Vice-President, Finance of PNG Products, shall be sufficient and
shall bind Sellers.

         2.4    Allocation of Purchase Price.  The Purchase Price shall be
                ----------------------------
allocated between Sellers and among the Purchased Assets and, in filing their
respective tax returns, Buyer and Sellers shall value the Purchased Assets in
the following manner:

                (a) As to the Equipment and the Owned Real Property, their value
shall be an amount equal to the lower of their original cost or their fair
market value as at the Closing Date.  The fair market value of the Owned Real
Property and the Equipment shall be determined by independent experts designated
jointly by Sellers and Buyer, being Royal Lepage for the Owned Real Property and
a professional to be designated by Buyer for the Equipment with Sellers' consent
that they may not reasonably withhold; Sellers shall bear the cost of the expert
valuation of the Owned Real Property and Buyer shall bear the cost of the expert
valuation of Equipment;

                                       12
<PAGE>
 
                (b) As to the Net Working Capital as finally agreed between the
parties or otherwise determined pursuant to Section 2.2; and

                (c) The difference between the Purchase Price and the sum of the
amounts determined in Sections 2.4(a) and 2.4(b) above for the balance of all
Purchased Assets shall be allocated to goodwill.

                (d) Sellers shall advise Buyer as to the estimated allocation of
the Purchase Price between Sellers, at least 3 days prior to the Closing Date. A
Schedule reflecting the final allocation will be executed by Buyer and Sellers
immediately following the Final Determination of Net Working Capital.

         2.5    Reporting of Income.   Sellers will include the income of the
                --------------------                                          
Business for financial reporting purposes and in Sellers federal, provincial,
local and foreign income tax returns for all periods through the Closing Date.
Buyer will include the income of the Business for financial reporting purposes
and in Buyer's federal, provincial, local and foreign income tax returns for all
periods on and after the Closing Date to the end of Buyer's fiscal year.  Buyer
and Sellers each agree to provide the other with all information requested by
the other pertaining to the Business and to assist the other with such
reasonable information requests as may be necessary to properly and timely
prepare such returns.

         2.6    Bankruptcy.  The Buyer acknowledges that if PNG or any of the
                -----------                                                   
corporations collectively defined herein as "Sellers" becomes bankrupt before
the Closing Date, the trustee to the bankruptcy of PNG Products or PNG Enveloppe
or of any of the said corporations will be entitled to the performance of all of
the Buyer's obligations under this Agreement, and that any such bankruptcy will
not constitute grounds for an adjustment of the Purchase Price or for non-
completion of this Agreement (except as otherwise mentioned in this Agreement),
provided that all obligations, undertakings, representations, warranties and
terms and conditions in favour of the Buyer are executed, maintained or
fulfilled as the case may be and provided that the Closing shall occur no later
than November 27, 1996.  The trustee's liability under this Agreement shall be
solely in his capacity as trustee in bankruptcy and shall have no personal
liability hereunder.

                                       13
<PAGE>
 
3. ASSUMPTION OF ENUMERATED LIABILITIES.

         3.1    Assumed Liabilities and Obligations.  On and subject to the
                -----------------------------------
terms and conditions set forth in this Agreement, on the Closing Date, Buyer
shall undertake, assume, perform and otherwise pay, satisfy and discharge, and
hold Sellers harmless on and after the Closing Date from all Claims arising out
of or relating to the operation of the Business or ownership of the Purchased
Assets on and after the Closing Date but not before the Closing Date, other than
Excluded Liabilities (collectively, the "Assumed Liabilities"). As used in this
                                         -------------------
Agreement, "Claims" means any and all claims, demands, liabilities, obligations,
            ------
causes of action, proceedings, losses, damages, expenses, fines, judgments,
costs (including legal fees and consultant fees), citations, summons, orders,
directives, notices, arbitrations, audits, hearings, investigations, litigation
or suits, whether in contract, tort or otherwise, whether statutory or at common
law (whether civil, criminal, administrative, investigative, formal or
informal), whether known or unknown, fixed or contingent. Notwithstanding the
foregoing, Assumed Liabilities include the following regardless of when the act,
omission, event, circumstance or condition that gives rise to such liability
exists or arises:

               (a) Sellers' liabilities and obligations to the extent reflected
as a liability for purposes of the Net Working Capital amount, as finally
determined pursuant to Section 2.2;

               (b) the liabilities and obligations of Sellers for performance of
obligations arising on and after the Closing Date pursuant to leases or
subleases for Leased Real Property and pursuant to Open Orders, Contracts,
Acquired Permits and Computer Software Assets to the extent assigned to Buyer or
held for the benefit of the Buyer pursuant to this Agreement; and

               (c) the liabilities expressly assumed in Section 3.3.

         3.2   Excluded Liabilities.  Except as provided in Sections  3.1 and
               --------------------
3.3, Buyer will not assume or in any way become liable for, and Sellers shall be
responsible for and hold Buyer harmless from all Claims against, or debts or
obligations of, Sellers (i) with respect to Excluded Assets and (ii) with
respect to the Business and the Purchased Assets to the extent they arise out of
or relate to the Business or the ownership of the Purchased Assets based on
acts, omissions, events, circumstances or conditions existing

                                       14
<PAGE>
 
or arising prior to the Closing Date other than the express Assumed Liabilities
listed in Section 3.1(a) - (c) (collectively, the "Excluded Liabilities"),
                                                   --------------------
including without limitation the following:

               (a) the liabilities or obligations of Sellers to its stockholders
respecting dividends, distributions to its stockholders in liquidation,
redemptions of stock, or otherwise;

               (b) any obligations of Sellers for expenses, Income Taxes, or
fees incident to or arising out of the negotiation, preparation, approval or
authorization of this Agreement, or the consummation of the transactions
contemplated hereby, including, without limitation, all attorneys and
accountants fees and all brokers or finders fees or commissions payable by
Sellers and those related to Societe Immobiliere Axim Inc. and Whalen, Beliveau
& Associates Inc.;

               (c) any liability or obligation of Sellers to Affiliates of
Sellers, except payables for products sold or shipped by an Affiliate of Sellers
to Sellers and included as liabilities in the final determination of Net Working
Capital as finally determined under Section 2;

               (d) any obligations or liabilities of Sellers to indemnify its
officers, directors, agents or consultants;

               (e) all taxes imposed on Sellers, including any tax of any other
corporation, which tax is assessed against Sellers by virtue of its status as a
member of any consolidated group of which such other corporation was also a
member; and

               (f) all Claims, liabilities and obligations arising under or
imposed pursuant to Environmental Laws, which are attributable to actions or
failures to act by Sellers, with respect to the operation of or properties
utilized by Sellers prior to the Closing Date and those related to the leaking
storage tank located on the Laird Drive premises, City of Toronto, Ontario.

               (g) any liabilities or obligations of Sellers related to those
employees listed in Schedule 3.2(g) who will continue to be employed by the
Sellers and if not, all costs of terminating the employment of those employees
will be to the account of Sellers.

                                       15
<PAGE>
 
         3.3   Employees.
               --------- 

               (a) Represented Employees.  As of the Closing Date, Buyer shall
                   ---------------------
assume the collective bargaining agreements listed on Schedule 3.3(a) to the
                                                      --------------
extent they are applicable to Sellers' employees represented by the unions also
listed in Schedule 3.3(a) (the "Represented Employees");
          --------------        ---------------------

               (b) Non-Represented Employees.  As of the Closing Date,
                   -------------------------
Buyershall extend to all of Sellers' employees who are not Represented Employees
(the "Non-Represented Employees"), and who are Actively Employed, except for
      -------------------------
those employees listed in Schedule 3.2(g), written offers of employment under
substantially the same terms and conditions as to salary, commission structure,
if any, benefits, duties and working conditions as those in force prior to the
Closing Date;

               (c) Actively Employed. As used in this Agreement, the term
                   -----------------
"Actively Employed" means all full or part time employees of Sellers in the
 -----------------
Business on the Closing Date, including employees on leave from employment with
Sellers on short term disability, pregnancy or parental leave, or temporary lay-
off, but excluding those employees on long term disability.

               (d) Employees Not Actively Employed. Schedule 3.3(d) sets forth
                   -------------------------------
those employees of Sellers who are not expected to be Actively Employed by
Sellers on the Closing Date including those on Workers' Compensation. Buyer
agrees to extend written offers of employment under substantially the same terms
and conditions as to salary, commission structure, if any, benefits, duties and
working conditions as those in force prior to the Closing Date to any Non-
Represented Employee of Sellers who is not Actively Employed on the Closing Date
because such employee is on long term disability leave or on Workers'
Compensation, such offer to be made: (a) if and when such employee reports to
work with Buyer, as long as this occurs within six (6) months of the Closing
Date; and (b) as long as such employee is able to perform the essential
functions of the job employed for. Buyer shall have no obligation to offer to
hire any Non-Represented Employee who does not meet the foregoing conditions
described in (a) and (b). Any costs associated with any Non-Represented
Employees who are not Actively Employed and who are not offered employment by
the Buyer will be for the account of Sellers;

                                       16
<PAGE>
 
               (e) Transferred Employees. The term "Transferred Employees" shall
                   ---------------------            ---------------------
refer to (i) all Represented Employees, (ii) all Non-Represented Employees who
are Actively Employed by Sellers and accept offers of employment from and
commence employment with Buyer and (iii) all Non-Represented Employees who are
Employees Not Actively Employed by Sellers, but who subsequently receive offers
of employment from Buyer, and do accept such offers and commence employment with
Buyer;

               (f) Service Credit for Transferred Employees. For all Represented
                   ----------------------------------------
Employees who become Transferred Employees, Buyer shall, as required by the
terms of any collective agreement applicable to Sellers' employees, give service
credit for time worked at Sellers for purposes of vesting, eligibility for
participation, eligibility for benefit commencement, pension, medical plans and
vacation entitlement, seniority, determining leave entitlement and for
termination/severance purposes. For all Non-Represented Employees who become
Transferred Employees, Buyer shall give service credit for time worked at
Sellers for purposes of vesting, eligibility for participation, eligibility for
benefit commencement, pension, medical plans and sick leave and vacation
entitlement and for termination/severance purposes. Without limiting the
generality of the foregoing, where a Non-Represented Employee becomes a
Transferred Employee pursuant to Section (d), credit shall be given for pension
purposes from the Closing Date;

               (g) Pension Plans.  On the Closing Date, Sellers shall assign and
                   -------------                                                
Buyer shall assume sponsorship of the pension plans and funds listed on Schedule
3.3(g) (the "Assigned Plans").  Buyer shall assume the Sellers' rights and
obligations under the Assigned Plans and under all related agreements.  Each of
the parties hereto shall do all things and execute all documents necessary to
give effect to the transfer of sponsorship of the Assigned Plans, including
obtaining any necessary third party consents and making all necessary filings
with any regulatory body.  Sellers shall provide to Buyer such information in
respect of members (including both active and inactive members) of the Assigned
Plans as is reasonably required by Buyer or its agents to properly administer
the Assigned Plans;

               (h) Other Employee Compensation and Benefit Programs. Sellers
                   ------------------------------------------------
shall retain and be obligated to satisfy all liabilities under the benefit plans
listed on Schedule 3.3(h) (the "Assigned Benefit Plans") for benefits or
compensation to Sellers' employees incurred or arising with respect to the time
period ending on the day immediately preceding the Closing Date, regardless of
when such liabilities are
                                       17
<PAGE>
 
asserted, and shall, at their own expense, pay or cause its insurance carriers
to pay such liabilities in accordance with the terms and conditions of the
Assigned Benefit Plans or applicable statutes. Buyer shall assume and be
obligated to satisfy all liabilities under the Assigned Benefit Plans for
benefits or compensation to any Transferred Employees or retired employees of
Sellers incurred or arising with respect to the time period commencing on the
Closing Date, or at such later time as the employee accepts employment with the
Buyer in the case of Non-Represented Employees not Actively Employed on the
Closing Date, regardless of when such liabilities are asserted, and shall, at
its own expense, pay or cause its insurance carriers to pay such liabilities in
accordance with the terms and conditions of the Assigned Benefit Plans or
applicable statutes;

               (i) Accrued Vacation and Sick Pay.  Sellers shall retain any
                   -----------------------------                           
obligation for accrued and unused vacation time or sick leave to which Sellers'
employees who do not become Transferred Employees have become entitled up to the
Closing Date.  Buyer shall assume responsibility for any accrued and unused
vacation time or sick leave which shall become due and payable to Transferred
Employees as of the Closing Date to the extent reflected as a liability in the
determination of Net Working Capital;

               (j) Employment Agreements.  Buyer shall assume all obligations of
                   ---------------------                                        
Sellers under the employment and consulting agreements described on Schedule
                                                                    --------
3.3(j), true copies of which have been provided to Buyer;
------

               (k) Employee Rights.  Nothing contained herein shall confer 
                   ---------------
upon any former, current or future employee of Sellers or Buyer or any legal
representative or beneficiary thereof any rights or remedies, including without
limitation, any right to employment or continued employment of any nature, for
any specified period.

         3.4   Consent of Third Parties.  Nothing in this Agreement shall be
               ------------------------
construed as an attempt by Sellers to assign to Buyer any Contract, agreement,
Permit, franchise, claim or asset included in the Purchased Assets (i) which is
by its terms or by law non-assignable without the consent of any other party or
parties, unless such consent or approval shall have been given on or prior to
the Closing Date, or (ii) as to which all the remedies for the enforcement
thereof available to Sellers would not by law pass to Buyer as an incident of
the assignments provided for by this Agreement (a "Purchased Asset Requiring
                                                   -------------------------

                                       18
<PAGE>
 
Consent").  Prior to the Closing Date, Sellers shall use their best efforts to
-------                                                                       
obtain consents or approvals to the assignment of the Contracts, Open Orders,
Permits, Computer Software Assets and leases or subleases for Leased Real
Property described on Schedule 3.4 (collectively "Material Contracts Requiring
                      ------------                ----------------------------
Consent").  To the extent that any such consent or approval in respect of, or a
-------                                                                        
novation of, a Purchased Asset Requiring Consent shall not have been obtained on
or before the Closing Date, the parties hereto shall use reasonable efforts and
shall cooperate in any reasonable arrangement to assure Buyer the benefits of
such Purchased Asset Requiring Consent to the extent permitted by law.  To the
extent lawful, practicable and reasonable in the circumstances, including the
obtaining of any such necessary consent or approval after the Closing Date,
Sellers at the request and under the direction of Buyer shall take all
reasonable actions to assure that the rights of Sellers under the Purchased
Asset Requiring Consents shall be preserved for the benefit of Buyer to the
extent not involving any undue hardships upon Sellers or unreasonable time
constraints in the request or compliance with such instructions. Buyer and
Sellers shall jointly cooperate in attempting to obtain any consents required in
connection with the transactions contemplated by this Agreement.


4.       REPRESENTATIONS AND WARRANTIES OF SELLERS.

         Sellers jointly and severally hereby represent and warrant to Buyer
that:

         4.1   Organization and Good Standing.  Sellers are corporations duly
               ------------------------------
organized, validly existing and in good standing under the Canada Business
Corporations Act, in the case of PNG Products and the laws of Quebec in the case
of PNG Enveloppe, with full corporate power and authority to carry on the
Business as presently conducted by it.

               As used in this Agreement except as mentioned under Section 
8.12, a "Material Adverse Change" shall mean any change that results in a 
         -----------------------
Material Adverse Effect, and a "Material Adverse Effect" shall mean, for the 
-----------------------         -----------------------
period from the date of this Agreement until the Closing Date, a decrease of
more than $100,000 in the book value of the Purchased Assets.

         4.2   Corporate Authority.  Sellers have full corporate power and 
               -------------------
authority to execute and deliver this Agreement and all documents to be executed
by Sellers contemplated herein or necessary to

                                       19
<PAGE>
 
give effect to the transaction contemplated herein (the "Sellers Documents"), 
                                                         -----------------
to perform all the terms and conditions hereof and thereof to be performed by it
and to consummate the transactions contemplated hereby and thereby. This
Agreement and the Sellers Documents have been duly authorized and approved by
all necessary and proper corporate action of Sellers (other than necessary
shareholder approval which shall be obtained after the execution of this
Agreement but prior to Closing) and constitute, or will upon execution thereof
constitute, the valid and binding obligations of Sellers enforceable in
accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws or equitable principles from time to time in effect relating to or
affecting the rights of creditors generally.

         4.3   No Violation.  Subject to the fulfilment of the conditions in 
Section 9.5 hereof, neither the execution and delivery by Sellers of this 
Agreement or the Sellers Documents and the performance by Sellers hereunder or
thereunder, nor the consummation of the transactions contemplated hereby or
thereby, will violate, conflict with, result in the breach of or accelerate the
performance required by any of the terms, conditions or provisions of the
Certificate of Incorporation or By-laws of Sellers or any material covenant,
agreement or understanding to which Sellers are a party or any order, ruling,
decree, judgment, arbitration award or stipulation to which Sellers are subject,
that would result in the creation or imposition of any Liens upon any of the
Purchased Assets or allow any Person to accelerate any debt secured by any
Purchased Assets except as reflected as a liability for purposes of determining
the Net Working Capital as finally determined pursuant to Section 2.2.

         4.4   Consents and Approvals of Governmental Authorities and Others.
               -------------------------------------------------------------
Except as disclosed on Schedule 4.4 and other than any filings or registrations
                       ------------
 to perfect or record the transfer of any Purchased Assets to Buyer, no approval
or authorization of, filing or registration with, or notification to, any
Governmental Authority other than the Competition Bureau (Canada) is required in
connection with the execution and delivery of this Agreement or the Sellers
Documents by Sellers or the performance of their obligations hereunder or
thereunder or the consummation of the transactions contemplated hereby or
thereby. Except for the approval of the Shareholders of PNG Products or as
disclosed on Schedule 4.4, no consent, approval or authorization of any Person
             ------------
is required in connection with the execution, delivery or performance of this
Agreement by Sellers, the transfer to Buyer of the tangible personal property
included in the Purchased Assets or the assignment of the Material Contracts
Requiring Consent or the performance by Sellers of its indemnification
obligations under Section 11 of this Agreement.

                                       20
<PAGE>
 
         4.5   Financial Statements. The audited financial statements of Sellers
               --------------------
for the year ended December 31, 1995 ("1995 Financial Statements") and internal
unaudited financial statements for the 8-month period ending August 30, 1996 are
both attached as Schedule 4.5 have been prepared in accordance with GAAP
consistently applied throughout the period involved to the extent applicable,
and present fairly in all material respects the financial condition, results of
operations and cash flows of Sellers as at and for the period covered thereby,
subject only to normal year-end adjustments, in each case, except as may be
noted therein.

         All books of account and other financial records of Sellers directly
relating to the Business (the "Books and Records") have been made available to
                               -----------------                              
Buyer.

         4.6   Claims; Compliance with Laws.  Except as disclosed on Schedule
               ----------------------------                          --------
4.6 or with respect to Claims involving Environmental Laws which are covered in
---
Section 4.22, Sellers are not engaged in, or a party to, or threatened with, any
Claim relating to the Business or the Purchased Assets, and Sellers do not know
of any basis for any such Claim. There are no outstanding orders, rulings,
decrees, judgments or stipulations or proceedings relating to the Business or
the Purchased Assets to which Sellers are a party or by which Sellers are bound,
by or with any court, government, arbitrator or administrative agency. Except
with respect to Environmental Laws, which are addressed in Section 4.22, Sellers
have been and are operating the Business, and the Purchased Assets have been and
are in compliance with the requirements of all federal, provincial, municipal,
regional and local laws, statutes, regulations, charters, ordinances, by-laws,
rules, guidelines, directives, policies, judgments, injunctions, decrees, court
orders and administrative orders, in each case, of any Governmental Authority
("Laws").

         4.7   Intellectual Property.  The Intellectual Property, Related
               ---------------------
Rights, Technical Information and Computer Software Assets include all
intellectual property and proprietary rights that are necessary to operate the
Business as currently conducted by Sellers. Sellers own all Intellectual
Property, Related Rights, Technical Information and Computer Software Assets,
including the lawful right to use same, and no material rights under any patent,
trade secret or other proprietary information or computer software license known
to Sellers, is required in order to conduct the Business as currently conducted
or to manufacture and sell any product manufactured and sold by the Business.
Sellers neither own nor have rights in any patents. Except as described on
Schedule 4.7, all copyrights (where such registration is
------------
 
                                      21
<PAGE>
 
permitted or required by applicable law), trademarks, tradenames and service
marks included in the Intellectual Property are registered to or owned by or
licensed to Sellers. There are no pending or, to the knowledge of Sellers,
threatened Claims against Sellers for infringement of any patents, copyrights,
trademarks, tradenames or service marks. All licenses permitting Sellers to use
any Intellectual Property, Related Rights, Technical Information or Computer
Software Assets are in full force and effect.

         4.8   No Prior Sale or Licensing of Purchased Assets.  Except as
               ---------------------------------------------- 
disclosed on Schedule 4.8, neither of the Sellers is a party to any license with
             ------------
respect to, and has not made any sale, pledge or other transfer of, and has not
granted any rights or options to purchase or acquire, all or any part of the
Purchased Assets, except to Buyer as contemplated by this Agreement.

         4.9   Certain Fees.  Neither of the Sellers nor any of its officers,
               ------------                                                  
directors, employees or other affiliates has agreed to pay or has incurred any
Claims for any brokerage fees, commissions or finders' fees in connection with
the transactions contemplated hereby.  Sellers acknowledge that Buyer or any of
its officers, directors, employees or other affiliates are not responsible for
any and all Claims related to Societe Immobiliere Axim Inc, and Whalen, Beliveau
& Associates, Inc. and Sellers will indemnify, defend and hold Buyer harmless
for the Claims of either and related matters.

         4.10  Title to Purchased Assets.
               -------------------------- 

               (a) The leases for the Leased Real Property and all leases of
personal property included in the Purchased Assets, assuming they are binding
and enforceable against the other parties thereto, are binding and enforceable
against Sellers in accordance with their respective terms. Except as set forth
on Schedule 4.10(a), there is not, under any such lease, any existing default
   ----------------
by Sellers, or a Claim made to Sellers by any other party to any such lease that
the lease is unenforceable. All commissions payable by Sellers under or with
respect to any such lease have been paid.

               (b) The use to which the Owned Real Property is put is not
subject to any restriction or condition that could result in a Material Adverse
                                                               ----------------
Effect and conforms to all zoning, subdivision and/or planning regulations, fire
------
and safety regulations, to the requirements of the relevant local authorities
and to all Laws governing such Owned Real Property or use thereof, the violation
of which could result in a

                                       22
<PAGE>
 
Material Adverse Effect.  Sellers have not received notice of any such 
-----------------------                                      
violation from any court or Governmental Authority or of taking by eminent 
domain or condemnation proceeding.

               (c) Sellers have good and marketable title to the Owned Real
Property, and all right, title and interest in, all personal properties and
assets included in the Purchased Assets, and will transfer and convey the
Purchased Assets to Buyer, free and clear of all Liens referred to on Schedule
4.10(c) under "Liens to be Discharged", except for the following (all of which
are collectively called "Permitted Liens" and are also referred to on Schedule
                         ---------------
4.10(c) under "Permitted Liens") (i) Liens for current taxes, rules, assessments
or similar governmental charges or levies not yet due and payable; (ii) with
respect to Owned Real Property, any of the following which are not substantial
in character, amount or extent and do not detract from the value or interfere
with the present use of the real properties subject thereto or affected thereby,
or otherwise impair the operation of the Business materially or from a material
point of view: matters disclosed on a survey (including, without limitation,
encroachments, easements and rights-of-way) utility easements, rights of way,
zoning restrictions and other imperfections of title, if any and any subsisting
provisos, restrictions, limitations, conditions, exceptions and reservations in
any original grants from the Crown and any statutory limitations, exceptions,
reservations and qualifications; and (iii) Liens which are Assumed Liabilities.
As used in this Agreement, "Liens" shall mean and include all mortgages, liens,
                            -----                                              
pledges, charges, title retention or security agreements, claims, restrictions,
leases, options, rights of first offer or first refusal, confidentiality or
secrecy agreements, non-solicitation and non-competition agreements, defects of
title or other encumbrances or rights of others.

               (d) All the tangible Purchased Assets and all tangible personal
property leased by Sellers under leases included in the Purchased Assets are
used and operated in conformity with all applicable laws and regulations, the
violation of which could have a Material Adverse Effect, and are in good
                                -----------------------                 
operating order and condition, subject to reasonable wear and tear.

               (e) The Purchased Assets include all tangible and intangible
personal property which are necessary or related to the operation of the
Business as currently operated by Sellers, except the Excluded Assets.

         4.11  Technical Information.  On the Closing Date, Sellers will have
               ---------------------
delivered all patterns, manufacturer's manuals and copies of all other Technical
Information in its possession to Buyer.


                                       23
<PAGE>
 
         4.12  Inventory.
               ---------

               (a) The Inventory (whether finished or unfinished, to which title
has not yet passed, or which has not been delivered, to a customer) consists of
items, which are of a quality and quantity useable or saleable in the normal
course of the Business, are (i) in the case of finished goods, valued at the
lower of cost on a first in, first out basis or net realizable value, and (ii)
in the case of raw materials, are valued at the lower of average cost on a first
in, first out basis or replacement value, both in accordance with GAAP
consistently applied;

               (b) All items of Inventory which are (i) not in saleable
condition, obsolete or defective or (ii) have been in stock for more than twelve
(12) months, shall be valued at zero (0).

               (c) all items of Inventory which are raw materials and have been
in stock for more than six (6) months and less than twelve (12) months shall be
valued at 50% of the amount set out in 4.12(a)(ii).

               (d) all items of Inventory which are finished goods and have been
in stock for more than six (6) months and less than twelve (12) months shall be
presumed obsolete and valued at zero (0) unless there exists a sufficient
explanation for lack of movement of such items.


         4.13  Contracts.  A true and correct copy of each written material
               ---------
Contract has previously been made available to Buyer, except for sales
agreements which shall be provided to Buyer following execution hereof. All
Contracts, assuming they are binding and enforceable against the other parties
thereto, are binding and enforceable against Sellers, and neither Sellers nor,
to Sellers' knowledge, any other party to any such Contracts is in default
thereunder.

         4.14  Open Orders.  All Open Orders, assuming they are binding and
               -----------
enforceable against the other parties thereto, and are binding and enforceable
against Sellers, and neither Sellers nor, to Sellers' knowledge, any other party
thereto is in default thereunder.


                                       24
<PAGE>
 
         4.15  Accounts Receivable.  All of the Accounts Receivable arose in 
               -------------------
bona fide transactions in the ordinary course of the Business.
---- ----

         4.16  Equipment.  The Equipment listed in Schedule 1.1(c) represents 
               ---------
all of the material Equipment pertaining to the Business and the Equipment
purchased pursuant hereto is all Equipment owned by Sellers, pertaining to the
Business wherever situated.

         4.17  Permits and Licenses.  Except as disclosed in Schedule 4.17:
               --------------------

               (a) The Acquired Permits, if any, are the only permits,
certificates, authorizations, franchises, licenses or registrations or other
approvals necessary for the operation of the Business with respect to the
Purchased Assets pursuant to applicable Laws;

               (b) Sellers have no knowledge and have received no notice that
any other permit, certificate, authorization, franchise, license, registration
or other approval is required to be obtained to operate the Business with
respect to the Purchased Assets;

               (c) All Acquired Permits, if any, are in full force and effect
and, to Sellers' knowledge, no suspension or cancellation of any have been
threatened;

               (d) The Sellers are in compliance with all the material terms and
conditions of the Acquired Permits, if any, with respect to the Business and the
Purchased Assets;

               (e) No Claims have been made in writing by any Governmental
Authority or other Person relating to the Acquired Permits, if any, and no such
Claim is contemplated by any Governmental Authority or other Person nor does any
basis therefor exist.

         4.18  Insurance.  Set forth on Schedule 4.18 is a list and 
               ---------                -------------
description of  all insurance policies held by or on behalf of Sellers as of the
date hereof covering the Business, and have not received any notice of actual or
proposed cancellation or of reduction in coverage of, or of any increase in
premium

                                       25
<PAGE>
 
under, such policies of insurance.  Sellers shall maintain in effect all such
insurance until the Closing Date.

         4.19  Claims.  Except as set forth on Schedule 4.19, there is not 
               ------                          -------------
presently any Claim pending, or to Sellers' knowledge, threatened, against
relating to the operation of the Business or the Purchased Assets up to and
including the Closing Date.

         4.20  Absence of Sensitive Payments.  Sellers have not made any
               -----------------------------
contributions, payments or gifts to or for the private use of any governmental
official, governmental employee or governmental agent in any amount where either
the payment or the purpose in making such contribution, payment or gift is
illegal under the laws of Canada or any other jurisdiction; Sellers have not
established or maintained any unrecorded fund or asset for any purpose or made
any false or artificial entries on its books; and Sellers have not made any
payments to any Person with the intention or understanding that any part of such
payment was to be used for any purpose other than that described in the document
supporting the payment.

         4.21  Taxes.  Except as described on Schedule 4.21, each of the 
               -----                          -------------
Sellers has duly and timely filed all Income Tax returns required to be filed by
it or for which it may be held responsible, and has paid all Income Taxes and
other taxes, interest, penalties, duties, assessments and deficiencies due and
payable by it, in each case, which would if not so filed or paid have resulted
or would result in the imposition of a Lien on the Purchased Assets.

         4.22  Environmental Issues.  Except as set forth in Schedule 4.22:
               --------------------                          ------------- 

               (a) the Business and the Purchased Assets have been and are in
compliance with all Laws in any way relating to the environment, the protection
of the environment and to occupational health and safety ("Environmental Laws")
(environment has the meaning ascribed to it by any Environmental Law);

               (b) all permits, certificates, licences, authorizations,
registrations and other approvals, including the Acquired Permits, required
under applicable Environmental Laws for the operation of the Business and the
Purchased Assets ("Environmental Permits") have been obtained and are 
                   ---------------------


                                       26
<PAGE>
 
presently held by Sellers. The Environmental Permits are listed in Schedule 
                                                                   --------
4.22.  Sellers are in compliance with all the terms and conditions of the 
----
Environmental Permits with respect to the Business and the Purchased Assets. All
Environmental Permits are in full force and effect and are not subject to any
appeals or further proceedings or to any unsatisfied conditions. No
modification, suspension, recision, relocation or cancellation of any
Environmental Permit is pending or threatened to the knowledge of the Sellers;

               (c) No Hazardous Substances are present at, in or under the
Purchased Assets or any property currently owned, operated, occupied or leased
by the Sellers constituting part of the Business or the Purchased Assets, the
presence of which would constitute a violation of applicable Environmental Laws.
("Hazardous Substances" shall mean hazardous substances, pollutants,
  --------------------
contaminants or other substances regulated under applicable Environmental Laws);

               (d) Sellers have not received (a) a written request for
information, notice of Claim, demand or other written notification with respect
to the Purchased Assets or the Business from any Governmental Authority or
person that it is or may be potentially responsible with respect to any
environmental matter, including investigation or clean-up of any threatened or
actual release of any Hazardous Substance, with respect to the Purchased Assets
or the Business, or (b) any other written notice that it has been identified in
any litigation, administrative proceeding or investigation as a responsible
party or a potentially responsible party for any liability under any
Environmental Law with respect to the Purchased Assets or the Business. To the
best of Sellers' knowledge, there is no event or act based on which such request
for information, notice of Claim, demand, notification or other notice is
threatened or could be sent to Sellers with respect to the Purchased Assets or
the Business.  ("Governmental Authority" shall mean any federal, provincial, 
                 ----------------------
municipal governmental authority in Canada, including any court, tribunal,
agency, bureau, committee, board, commission or instrumentality constituted or
appointed by any such authority);

         (e)   Sellers have never filed any notice under any Environmental Law
reporting a discharge, emission, spill, leak or any form of release of Hazardous
Substances with respect to the Purchased Assets or the Business;

                                       27
<PAGE>
 
               (f) Sellers have not entered into any negotiations or agreements
with any Governmental Authority or Person relating to any response action or
other cleanup or remediation of any Hazardous Substance with respect to the
Purchased Assets or the Business;

               (g) There are no pending, nor have Sellers ever been the object
of or received written notice of any, Claims or investigations or inspections
affecting the Business or the Purchased Assets arising out of or related to
property damage or personal injury as a result of any alleged acts, omissions,
circumstances or conditions which would give rise to any liability under any
Environmental Law;

               (h) Sellers are not subject to or affected by any administrative
or judicial judgments, consents, decrees or orders relating to any Environmental
Laws which affect the Business or the Purchased Assets.

               (i) No PCB's, asbestos, radioactive materials or urea
formaldehyde insulation is present at, in or under the Purchased Assets or any
property currently owned, operated, occupied or leased by the Sellers with
respect to the Business, whether above ground, underground or within any
structure thereon or contained in any equipment currently owned, operated or
leased by the Sellers with respect to the Business; nor are there any
underground or above ground storage tanks, active or abandoned, at, in or under
the Purchased Assets or any property currently owned, operated, occupied or
leased by the Sellers with respect to the Business;

               (j) All wastes, effluents and air emissions affecting the
Purchased Assets have been and are handled, stored, treated, transported and
eliminated in compliance with applicable Environmental Laws other than non-
compliance which does not have a Material Adverse Effect.
                                 -----------------------

         4.23  Ownership and Location of Purchased Assets.  The Purchased 
               ------------------------------------------
Assets are all the assets of Sellers pertaining to the Business and their
existence and location have been disclosed to Buyer in the Schedules to this
Agreement.

                                       28
<PAGE>
 
         4.24  Benefit Plans.
               -------------

               (a) All bonus, deferred compensation, incentive compensation,
share purchase, share option, stock appreciation, phantom stock, savings, profit
sharing, severance or termination pay, health or other medical, life, disability
or other insurance (whether insured or self-insured), supplementary unemployment
benefit, pension, retirement, supplementary retirement and every other benefit
plan, programme, agreement or arrangement including vacation, sick leave and
leave of absence policies (whether written or unwritten) maintained or
contributed to by Sellers for the benefit of any of their employees or their
dependants or beneficiaries (the "Benefit Plans") are listed in Schedule 
4.24(a), Sellers have delivered to Buyer true, complete and up-to-date copies
thereof and all amendments thereto together with, as applicable, all funding
agreements, all summary descriptions of the Benefit Plans provided to past or
present participants therein, the most recent actuarial report, the financial
statements relating thereto, if any, and evidence of any registration in respect
thereof;

               (b) Except as disclosed in a letter dated August 1, 1996 from 
William M. Mercer Ltd., a copy of which has been provided to Buyer (the 
"Mercer Letter") and is annexed hereto as Schedule 4.24(b), Sellers have no 
 -------------  
knowledge of any fact, condition or circumstance since the date of the documents
provided in accordance with Section 4.24(a) above which would materially affect
the information contained therein and, in particular, and without limiting the
generality of the foregoing, no promises or commitments have been made by the
Sellers to amend any Benefit Plan or to provide increased benefits thereunder to
any of Sellers' employees except as required by law;

               (c) All of the Benefit Plans are, and have been since their
establishment, duly registered where required by legislation (including
registration with the relevant tax authorities where such registration is
required to qualify for tax exemption or other beneficial tax status) and are in
good standing under, and in material compliance with, all applicable legislation
and administrative guidelines issued by the regulatory authorities;

               (d) Any Benefit Plan that is a pension plan registered under the
Income Tax Act (Canada) which has been created as a result of the division of a
predecessor pension plan or the merger of one or more pension plans, has
received any approval which is required therefor from all appropriate regulatory
authorities;

                                       29
<PAGE>
 
               (e) No investment held in respect of a Benefit Plan is a
prohibited investment under the terms of the Benefit Plan and all supporting
documents, and each Benefit Plan has or had the power and authority to make each
investment and is permitted under the terms of the Benefit Plan and all
supporting documents to continue to hold such investments;

               (f) Except as permitted by the Benefit Plans and applicable
legislation, there has been no withdrawal of surplus assets or any other amounts
from any of the Benefit Plans other than proper payments of benefits to eligible
beneficiaries, and refunds of over-contributions to plan members and Sellers;

               (g) To the best of Sellers' knowledge, the past employer
contribution holidays have been permitted by the terms of the Benefit Plans and
have been in accordance with applicable legislation.

               (h) There are no material outstanding defaults or violations by
Sellers of any obligation required to be performed by them in connection with
any Benefit Plan and, to the knowledge of Sellers, no order has been made or
notice given pursuant to any applicable legislation requiring (or proposing to
require) Sellers to take (or refrain from taking) any action in respect of any
Benefit Plan;

               (i) All employer and, if applicable, employee contributions under
the Benefit Plans (including, without limitation, all current service costs and
any special payments required to be made) have been remitted in a timely manner
(other than current contributions not in arrears), and the Pension Plan for
Salaried Employees of PNG Products Inc. Pac National Group (amended and restated
as at January 1, 1992) has no past service funding liabilities and is fully
funded on both an ongoing and a solvency basis using the methods and assumptions
set out in the most recent actuarial report, which report shall be listed in
Schedule 4.24(i);

               (j) All returns, filings, reports and disclosures relating to the
Benefit Plans required pursuant to the terms of the Benefit Plans, applicable
legislation or any regulatory authority, have been filed or distributed in
accordance with all requirements, and all filing fees and levies imposed on the
Benefit Plans by regulatory authorities or applicable legislation have been made
on a timely basis;

                                       30
<PAGE>
 
               (k) With respect to the Benefit Plans, there are no actions,
suits, claims, trials, demands, investigations, arbitrations or other
proceedings pending against Sellers, or to the knowledge of Sellers, against the
funding agent or the fund of such Benefit Plans, or, to the knowledge of
Sellers, threatened, other than claims for benefits in the ordinary course or as
disclosed in writing by Sellers to Buyer;

               (l) To the knowledge of Sellers, no step has been taken, no event
has occurred and no condition or circumstance exists that has resulted or could
reasonably result in any Benefit Plan being ordered or required to be terminated
or wound-up in whole or in part or having its registration under any applicable
legislation being refused or revoked or being placed under the administration of
any trustee or receiver or any regulatory authority or being required to pay any
material taxes or penalties under any applicable legislation;

               (m) None of the Assigned Plans is a multiemployer pension plan;

               (n) The consummation of the transaction contemplated by this
Agreement shall not constitute an event under any Benefit Plan that shall or may
result in any acceleration, vesting or increase in benefits with respect any
employee or in the funding requirements of any Benefit Plan.

         4.25  Trade Names.  Sellers do not conduct the Business under any 
               -----------
name other than "PNG Products", "PNG Enveloppe Internationale" and "Globe
Envelope".

         4.26  Employees.  Schedule 4.26  contains a complete list of all 
               ---------   -------------
Represented Employees and all Non-Represented Employees to be offered employment
by Buyer setting out each employee's title, age, length of service, salary,
bonus or commission and any Benefits Plans to which such employee is entitled
and indicating whether such employee is covered by a collective agreement.

         4.27  Labour Matters.
               --------------
               
               (a) Except as disclosed in Schedule 4.27(a), no trade union, 
counsel of trade unions, employee bargaining agency or affiliated bargaining
agent:

                                       31
<PAGE>
 
                   (i)  holds bargaining rights with respect to the Purchased
                        Assets by way of certification, interim certification,
                        voluntary recognition, designation or successor rights;

                  (ii)  has, to the best of the Sellers' knowledge, applied to
                        be certified as the bargaining agent of any of the Non-
                        Represented Employees; or

                 (iii)  has, to the best of the Sellers' knowledge, applied to
                        have Sellers declared a related employer or a successor
                        employer pursuant to any labour or employment
                        legislation;

               (b) Except as disclosed in Schedule 4.27(b), there are, to the 
best of the Sellers' knowledge, no actual, threatened or pending organizing
activities of any trade union, counsel of trade unions, employee bargaining
agency, affiliated bargaining agent or employee association or any actual,
threatened or pending unfair labour practice complaints pertaining to the
Purchased Assets, nor have there been any such activities or complaints within
the last three years;

               (c) Except for such indebtedness as is disclosed in Schedule 
4.27(c), no director, officer, shareholder or employee, past or present, holding
office or shares of or employed in connection with the Purchased Assets or of
any person not dealing at arm's length within the meaning of the Income Tax Act
(Canada) with any such person is indebted to the Sellers;

               (d) All vacation pay for Represented Employees and Non-
Represented Employees is properly reflected and accrued in the books and
accounts of the Sellers.

               (e) Sellers have provided to Buyer all up-to-date documents
pertaining to compensation practices, benefits and other terms and conditions of
employment of all Represented Employees and Non-Represented Employees and have
fully disclosed to the Buyer the terms pertaining thereto;

                                       32
<PAGE>
 
               (f) Sellers have prepared and posted a Pay Equity Plan for all
Represented Employees and Non-Represented Employees in Ontario as required by
the Pay Equity Act (Ontario), which Pay Equity Plan is attached hereto as
Schedule 4.27(f).

        4.28    Registration. Sellers are registered under Part IX of the
                -----------
Excise Tax Act and hold respectively registration numbers 129406526 for PNG
Products and R101487791 for PNG Enveloppe; PNG Products is registered in Ontario
under PST 1479-2052 and PNG Enveloppe in Quebec under QST 1001049409.

        4.29    Residency. None of the Sellers is a non-resident of Canada for
                ---------
the purposes of section 116 of the Income Tax (Canada) or section 1097 of the
Taxation Act (Quebec) and none of the proceeds of the sale will be received for
or on behalf of any person who is a non-resident of Canada for the purposes of
such legislation.


5.      REPRESENTATIONS AND WARRANTIES OF BUYER.

        Buyer represents and warrants to Sellers as follows:

        5.1     Organization, Good Standing and Corporate Authority. Buyer is a
                ---------------------------------------------------
corporation duly incorporated, validly existing and in good standing under the
Canada Business Corporations Act, has full corporate power and authority to
execute and deliver this Agreement and all documents to be executed by Buyer
contemplated herein or necessary to give effect to the transaction contemplated
herein (the "Buyer Documents"), to perform all the terms and conditions hereof
and thereof to be performed by it and to consummate the transactions
contemplated hereby and thereby. This Agreement and the Buyer Documents have
been duly authorized and approved by all necessary and proper corporate action
of Buyer and constitute, or will upon execution thereof constitute, the valid
and binding obligations of Buyer, enforceable in accordance with their
respective terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws or equitable
principles from time to time in effect relating to or affecting the rights of
creditors generally.

                                       33
<PAGE>
 
        5.2     No Violation. Except for consents required under Buyer's senior
                ------------
loan agreements (which consents will be obtained prior to Closing) neither the
execution and delivery by Buyer of this Agreement or the instruments of transfer
and other documents delivered or to be delivered pursuant hereto by Buyer and
the performance by Buyer hereunder or thereunder, nor the consummation of the
transactions contemplated hereby or thereby, will violate, conflict with, result
in the breach of or accelerate the performance required by any of the terms,
conditions or provisions of the Certificate of Incorporation or By-laws of Buyer
or any covenant, agreement or understanding to which Buyer is a party or any
order, ruling, decree, judgment, arbitration award or stipulation to which Buyer
is subject, or constitute a default thereunder.

        5.3     Consents and Approvals of Governmental Authorities and Others.
                -------------------------------------------------------------
Other than has been obtained, no approval or authorization of, filing or
registration with, or notification to, any Governmental Authority is required in
connection with the execution and delivery of this Agreement or the other
documents delivered or to be delivered pursuant hereto by Buyer or the
performance of its obligations hereunder or thereunder or the consummation of
the transactions contemplated hereby or thereby.

        5.4     Certain Fees.  Neither Buyer nor any of its officers, directors,
                ------------
employees or other affiliates has agreed to pay or has incurred any Claims for
any brokerage fees, commissions or finders' fees in connection with the
transactions contemplated hereby, including any fees or commissions to Societe
Immobiliere Axim Inc. or Whalen, Beliveau & Associates.

        5.5     Sales and Transfer Taxes. The Buyer is registered under Part IX
                ------------------------
of the Excise Tax Act (Canada) and holds registration number 140852179RT and is
registered under the Act respecting the Quebec Sales Tax and holds registration
number 1018155482TQ0001.

                                       34
<PAGE>
 
6.       COVENANTS.

         6.1   Joint Elections.
               ---------------

               (a) The Sellers and the Buyer will, as at the Closing Date,
jointly execute elections, in prescribed form and containing the prescribed
information, to have subsection 167(1.1) of the Excise Tax Act (Canada) and
section 75.1 of the Act respecting the Quebec Sales Tax apply to the sale and
purchase of the Purchased Assets hereunder so that no tax is payable in respect
of such sale and purchase under Part IX of the Excise Tax Act (Canada) or
section 16 of the Act respecting the Quebec Sales Tax. The Buyer will file such
elections with the Minister of National Revenue and the Quebec Ministry of
Revenue within the times prescribed by the Excise Tax Act (Canada) and The Act
respecting the Quebec Sales Tax, respectively;

               (b) the Sellers and the Buyer will, within six months of the
Closing Date, jointly execute elections under subsection 22(1) of the Income Tax
Act (Canada) and section 184 of the Taxation Act (Quebec) in the form prescribed
for such purpose in respect of all Accounts Receivable sold by the Sellers
pursuant to this Agreement. Such election will designate the portion of the
Purchase Price, as adjusted pursuant to this Agreement, allocated to such
Accounts Receivable as the consideration paid by the Buyer therefor.

               (c) Buyer shall pay, in addition to the Purchase Price, all
applicable consumption, sales or transfer taxes arising from the purchase and
sale of the Purchased Assets, including, without limitation, goods and services
tax, provincial sales tax and land transfer tax.

         6.2   Property Taxes.  All applicable real and personal property taxes
               --------------
levied or assessed against the Purchased Assets for the period up to and
including midnight preceding the Closing Date shall be either paid by Sellers or
accruals of any material amount therefor shall exist on Sellers' books and
records.  The land transfer tax shall be payable by Buyer on registration of the
deed in respect of the conveyance of the Owned Real Property from PNG Products
to Buyer.

                                       35
<PAGE>
 
         6.3   Approvals; Consents.
               -------------------

               (a) Subject to Section 3.4, Sellers shall use their reasonable
efforts to obtain the consents of all other parties to all leases of Leased Real
Property in a form similar to the two specimens of the Consent of Landlord and
Estoppel Certificate annexed as Schedule 6.3, to which form Buyer may consider
reasonable modifications, and to all Contracts, Open Orders, Permits and rights
of Sellers, which require the consent of such parties for the consummation of
the transactions contemplated hereby. Sellers agree to assist Buyer with filing
all necessary applications and transferring or obtaining all Acquired Permits
and to execute such further documents or other statements or provide such
further information to Buyer, Persons or Governmental Authority as may be
required.

               (b) Buyer will promptly file and use their reasonable efforts to
have issued to it, and shall make such filings as may be required in connection
with the transfer to Buyer by Sellers of, all Acquired Permits including
Environmental Permits, if any, relating to the Business that are currently
maintained by Sellers and which are required to be obtained by an owner or
operator of the Business.

         6.4   Preservation of Business Organization. From the date of
               -------------------------------------
execution of the Agreement and until Closing (the "Interim Period"), Sellers
                                                   --------------
will conduct the Business in the ordinary course, in compliance with all
applicable laws, rules and regulations, the noncompliance with which could have
a Material Adverse Effect, and will use its best efforts to preserve Sellers'
  -----------------------
business relationships intact and to preserve the goodwill of the Business with
its employees, suppliers, customers and others having business relations with
it.

         6.5   Approval of Certain Transactions.  Except as specifically
               --------------------------------
contemplated by this Agreement, without the prior written consent of Buyer,
Sellers will not, during the Interim Period, in the conduct of the Business:

               (a) incur or agree to incur any liability or obligation or enter
into any agreement or transaction which cannot be cancelled upon sixty days (60)
notice, or which contains indemnity obligations of any kind by either Seller;

                                       36
<PAGE>
 
               (b) incur any additional indebtedness for capital or operating
lease obligations or incur or agree to incur any other liability or obligation
which would constitute an Assumed Liability;

               (c) fail to manage the Business' operations in a prudent,
businesslike manner.

               (d) mortgage, pledge, sell, lease, distribute, dispose of or
otherwise encumber or convey any interest in any Purchased Assets other than
sales of Inventory in the ordinary course of business;

               (e) enter into any contract or commitment which includes
obligations or disbursements of greater than $100,000 in connection with the
Business or the Purchased Assets;

               (f) waive or release any material rights with respect to the
Purchased Assets or the Business;

               (g) change its methods of accounting in respect of the Business;

               (h) except as required by an employment agreement listed in
Schedule 3.3(j) or a collective agreement listed in Schedule 3.3(a) or by
applicable law, adopt or modify any bonus, pension, profit sharing or other
compensation or employee benefit plan or enter into or modify any Contract or
terms and conditions of employment, in each case with respect to any Transferred
Employees; or

               (i) take any other action (i) which would result in a Material
                                                                     --------
Adverse Change or (ii) which if taken prior to the date hereof would constitute
--------------                                                                 
a breach of any representation or warranty in any material respect contained in
Section 4 of this Agreement.

         6.6   Exclusive Dealing.  After the date of this Agreement and until
               -----------------
November 27, 1996, Sellers will not:

               (a) solicit or initiate discussions or engage in negotiations
with any Person other than Buyer (whether or not such discussions are initiated
by Sellers), with respect to the possible acquisition of

                                       37
<PAGE>
 
Sellers or the Purchased Assets by such Person (whether by merger, purchase of
capital stock, purchase of assets or otherwise);

               (b) provide any information with respect to Sellers, the Business
or the Purchased Assets to any Person other than Buyer relating to the possible
acquisition of Sellers, the Business or the Purchased Assets by such Person
(whether by merger, purchase of capital stock, purchase of assets or otherwise);
or

               (c) enter into a transaction with any Person other than Buyer
concerning the possible acquisition of Sellers, the Business or the Purchased
Assets by such Person (whether by merger, purchase of capital stock, purchase of
assets or otherwise).

         6.7   Further Assurances. From time to time after the Closing, at
               ------------------ 
Buyer's request and without further consideration, Sellers will, consistent with
Section 3.4, execute and deliver such other and further instruments of
conveyance, assignment and transfer, and take such other action, as Buyer may
reasonably request for the more effective conveyance and transfer of the
Purchased Assets to Buyer. To the extent that the assignment of confidentiality,
non-solicitation and non-competition agreements to Buyer is not enforceable
against the other parties to such agreements, Sellers shall use their best
efforts, consistent with Section 3.4, to enforce such agreements with respect to
the Business.

         6.8   Access to Offices, Officers, Accountants, Due Diligence, Etc.
               -------------------------------------------------------------
Sellers will afford to the officers and authorized representatives of Buyer
(including without limitation, attorneys, accountants, surveyors, building
inspectors, engineers, environmental consultants, insurance brokers, financial
advisors and bankers) access to the offices, officers, properties, books and
records of Sellers and the Business, including contact with attorneys,
accountants and other representatives of Sellers, and will furnish Buyer with
such additional financial and operating data and other information as to the
Business and Purchased Assets, including all information regarding employees and
independent workers, as Buyer may from time to time reasonably request.
Investigations conducted by Buyer and its agents shall be conducted in such a
manner as to minimize, to the extent reasonably practicable, the disruption of
orderly business operations of Sellers and properties examined shall be returned
to their preexamination condition by Buyer.

                                       38
<PAGE>
 
         6.9   Receivables. If, after the Closing, any monies or other assets
               -----------
are received by Buyer to which Sellers are entitled, Buyer shall hold such
monies and assets in trust for Sellers and shall account for and pay the same to
Sellers within 20 days after receipt. If, after the Closing, any monies or other
assets are received by Sellers to which Buyer is entitled (including without
limitation, monies or assets resulting from collection of Accounts Receivable
and the sale of Inventory), Sellers shall hold such monies and assets in trust
for Buyer and shall account for and pay the same to Buyer within 20 days after
receipt.

         6.10  Securities Filings. Sellers acknowledge that Buyer or one or more
               ------------------
of its Affiliates is required to file reports and other documents in the United
States under the American federal and various state securities laws, rules and
regulations to which they are subject. Upon request of Buyer and at Buyer's
expense, Sellers shall cooperate with Buyer or any such Affiliate in any
reasonable manner to assist Buyer in obtaining any and all audited and unaudited
financial statements and other information (including, without limitation, any
opinions, certificates, consents or schedules related thereto) relating to the
Purchased Assets, the Business or the Assumed Liabilities which may be required
in connection with such filings, and Sellers shall permit, and use their
reasonable efforts to cause their accountants subject to receipt by them, of all
required releases, to give to Buyer and its auditors access to their working
papers for purposes hereof. Sellers shall cooperate with Buyer in permitting
Buyer or its representatives to take such physical inventories as Buyer may
require, shall make Sellers' personnel available to assist Buyer or such
representatives with respect thereto, and shall give Buyer and its
representatives access to the locations of such inventories for such purpose.

         6.11  Accountants' Consent.  Upon request in writing by Buyer, Sellers
               --------------------
shall cooperate with Buyer at Buyer's expense in obtaining the assistance of
their accountants with respect to the filing of any or all financial information
respecting the Business with the United States Securities and Exchange
Commission.

         6.12  Change of Name.  No more than 30 days following the Closing Date,
               --------------
Sellers shall change their corporate names to ones not including the words "PNG
Enveloppe", "PNG Products", "PAC National Group" or words similar thereto.

         6.13  Environmental Site Assessment.  Sellers shall bear the cost of a
               -----------------------------
Phase I environmental site assessment to be completed by Pilko & Associates Inc.
at the Owned Real Property and each of the 

                                       39
<PAGE>
 
Leased Real Properties designated by Buyer and its lenders, up to a maximum of
$50,000 payable as at the Closing Date.

         6.14  Preparation of Tax Returns. Buyer and Sellers shall cooperate
               --------------------------
fully in connection with the preparation and filing of the tax returns pursuant
to Section 2.4 and any audit, litigation or other proceeding with respect to
Taxes. Such cooperation shall include the retention and the provision of any
records and information which are relevant to any such filings, audit,
litigation, or other proceeding and making employees available to provide
additional information and explanation of any material provided hereunder. Buyer
agrees (a) to retain all books and records relating to any taxable period
beginning before the Closing Date until the expiration of the statute of
limitations, including any extensions thereof, of the respective taxable
periods, and to abide by all record retention agreements entered into with any
taxing authority, (b) to give Sellers written notice prior to transferring,
destroying or discarding any such books and records and, if to be destroyed or
discarded, to allow Sellers to take possession of such books and records, and
(c) to provide access to and copies of such books and records as required by
Sellers.

         6.15  Covenants of Sellers.  The covenants of Sellers contained in this
               --------------------
Section shall be joint and several obligations of Sellers.


7.       THE CLOSING.

         The closing of the sale and purchase of the Purchased Assets (the
"Closing") shall take place at 10:00 a.m., local time, on November 27, 1996, at
 -------                                                                       
the offices of McCarthy & Tetrault at "Le Windsor", 1170 Peel, Montreal, Quebec
H3B 4S8, or at Goodman, Phillips & Vineberg, 250 Yonge Street, Suite 2400,
Toronto, Ontario M5B 2M6 as shall be mutually agreed (such date being herein
sometimes referred to as the "Closing Date"). A physical count of Inventory
                              ------------                                 
shall be jointly conducted by Buyer and Sellers within 2 days of the Closing
Date.

                                       40
<PAGE>
 
8.       CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER.

         The obligation of Buyer to acquire the Purchased Assets, pay the
Purchase Price and assume the Assumed Liabilities is subject to the
satisfaction, or waiver in writing by Buyer, on or prior to the Closing Date of
each of the following conditions:

         8.1   Corporate Action.  All corporate and other actions necessary to
               ----------------
authorize and effectuate the consummation of the transactions contemplated
hereby by Sellers, including shareholder approval, shall have been duly taken or
obtained prior to the Closing, and Sellers on behalf of Sellers shall have
delivered to Buyer a certificate of duly authorized officers or employees of
Sellers to that effect, together with certified copies of resolutions of the
Board of Directors and shareholders of Sellers authorizing the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby.

         8.2   Representations and Warranties. The representations and
               ------------------------------
warranties of Sellers set forth in this Agreement shall be true and correct in
all material respects on and as of the Closing Date with the same effect as
though all such representations and warranties had been made on and as of such
date and there shall have been delivered to Buyer a certificate to that effect,
dated the Closing Date, signed by a duly authorized officer of Sellers on behalf
of Sellers.

         8.3   Performance of Obligations.  Each and all of the covenants and
               --------------------------
agreements of Sellers to be performed or complied with pursuant to this
Agreement on or prior to the Closing Date shall have been duly performed and
complied with or duly waived and there shall have been delivered to Buyer a
certificate to that effect, dated the Closing Date, signed by a duly authorized
officer of Sellers on behalf of Sellers.

         8.4   Instruments of Conveyance, Etc.   Sellers shall have executed and
               -------------------------------
delivered to Buyer special warranty deeds conveying good and marketable fee
simple title to the Owned Real Property, evidence satisfactory to Buyer that the
sale and purchase of the Owned Real Property shall be in compliance with the
provisions of the Planning Act (Ontario) and such bills of sale, assignments and
instruments of transfer and conveyance and certificates of title as shall be
reasonably required by Buyer for the transfer to Buyer of all of Sellers' right,
title and interest to and in the Purchased Assets free and clear of Liens,
except Liens which are Permitted Liens or Assumed Liabilities. Sellers shall
have also 

                                       41
<PAGE>
 
delivered to Buyer a title report and opinion respecting the Owned Real Property
which shall be to the satisfaction of Buyer acting reasonably, incorporating
such qualifications and assumptions as are reasonable and customary in
transactions of this nature.

         8.5   Short Term Liabilities. Sellers shall have delivered to Buyer a
               ----------------------
list of Accounts receivable and Short Term Liabilities as at the Closing Date.

         8.6   Delivery.  On the Closing Date, Sellers shall deliver or give up
               --------
physical possession of all Equipment, Inventory, Technical Information and
tangible property included in the Purchased Assets and any tangible evidence of
all Intellectual Property, Open Orders and Accounts Receivable to Buyer.

         8.7   Opinion of Counsel. Buyer shall have been provided with an
               ------------------
opinion of Sellers' counsel addressed to Buyer and to its lenders substantially
in form attached as Exhibit B.

         8.8   Non-Competition.  Sellers shall have delivered to Buyer non-
               ---------------
competition undertakings having a term of one year, substantially in the form
attached as Exhibit C, executed by each holder of Class B Common Shares of the
capital stock of PNG Products receiving consideration greater than $105,000 for
the sale of such shares pursuant to section 8.16.

         8.9   Required Consents.  Sellers shall have obtained consents and
               -----------------
approvals with respect to the assignment of all Material Contracts Requiring
Consent (or made reasonable arrangements, in accordance with section 3.4, to
assure Buyer the benefits thereof) and of all Governmental Authorities required
for the transactions contemplated hereby and all waiting periods specified by
law the passing of which is necessary for the consummation of such transactions
shall have passed or been terminated.

         8.10  Litigation. Except as set out in Schedule 4.6, no order of any
               ----------                       ------------  
court or administrative agency shall be in effect which restrains or prohibits
(or attempts to do either) the transactions contemplated hereby and there shall
not have been threatened, nor shall there be pending, any action or proceeding
by or before any court or governmental agency or other regulatory or
administrative agency or commission, challenging any of the transactions
contemplated by this Agreement or seeking monetary relief by reason of the
consummation of such transactions.

                                       42
<PAGE>
 
         8.11  Security. Sellers shall have obtained the release and discharge
               --------
from their lenders with respect to any security interests in, or mortgages or
deeds of trust encumbering, the Purchased Assets delivered upon payment of the
Purchase Price pursuant to Section 2.

         8.12  No Material Damage. Since the date of this Agreement, there shall
               ------------------
not have occurred any material damage to the Purchased Assets by fire or other
                      ---------------
hazard which would result in a material damage to the Business.

         8.13  Resignations.  Each Transferred Employee who has accepted Buyer's
               ------------
offer of employment and who is a director or officer of Sellers or any of its
Affiliates shall have resigned such directorship or office.

         8.14  Bulk Sales.  Sellers shall ensure that the sale of the Purchased
               ----------
Assets of Sellers as contemplated herein shall comply with the provisions of
Articles 1767 and following of the Civil Code of Quebec concerning sale of an
enterprise to the extent applicable and shall comply with or be exempted from
the requirements of the Bulk Sales Act (Ontario), and any similar bulk sale
legislation in force in any applicable jurisdiction.

         8.15  Certificate of the Minister of Finance of Ontario.  Sellers shall
               -------------------------------------------------
have delivered to Buyer a certificate issued by the Minister of Finance of
Ontario pursuant to Section 6 of the Retail Sales Act (Ontario) which shall
indicate that Sellers have paid all taxes, collectable or payable under such Act
in connection with the Business up to the Closing Date or have entered into an
arrangement satisfactory to the Minister of Revenue of Ontario for the payment
of such taxes.

         8.16  Class B Common Shares. An offer will have been made to all of the
               ---------------------
holders of the outstanding Class B common shares of PNG Products to purchase all
such Shares at a price equal to the original cost ($4.45 per share) (excluding
the 101,131 shares formerly held by P. Boshaw) and subject to compliance by the
holders of Class B common shares as to the delivery with good and marketable
title of certificates representing such shares, payment for the shares shall be
made within 10 days after the Closing Date.

                                       43
<PAGE>
 
9.       CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLERS

         The obligation of Sellers to sell or otherwise transfer the benefits of
the Purchased Assets hereunder is subject to the satisfaction, or waiver in
writing by Sellers, on or prior to the Closing Date of each of the following
conditions:

         9.1   Representations and Warranties. The representations and
               ------------------------------
warranties of Buyer set forth in this Agreement shall be true and correct in all
material respects on and as of the Closing Date with the same effect as though
all such representations and warranties had been made on and as of such date and
there shall have been delivered to Sellers a certificate to that effect, dated
the Closing Date, signed by a duly authorized officer of Buyer.

         9.2   Corporate Action. The execution and delivery of this Agreement by
               ----------------
Buyer and consummation by Buyer of the transactions contemplated hereby shall
have been duly authorized by all necessary corporate action of Buyer and there
shall have been delivered to Sellers a certificate of duly authorized officers
or employees of Buyer to that effect, together with certified copies of
resolutions of the Board of Directors of Buyer authorizing the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby.

         9.3   Payment. Buyer shall pay the Purchase Price to Sellers according
               -------
to Section 2.

         9.4   Documents. Buyer shall have executed and delivered such
               ---------
agreements including, without limitation, assumption agreements pursuant to bulk
sales legislation and assumption/transfer agreements for Accounts Receivable
which the Sellers re-acquire as Sellers shall reasonably request.

         9.5   Required Consents. The transactions contemplated by this
               -----------------
Agreement shall have been approved by Sellers' shareholders. Sellers shall have
obtained all consents and approvals of all third parties with respect to the
assignment of all Material Contracts Requiring Consent (or made reasonable
arrangements, in accordance with Section 3.4, to assure Buyer the benefits
thereof) and all Governmental Authorities required for the transactions
contemplated hereby and the consent of Bank of Montreal, and all
                                       44
<PAGE>
 
waiting periods specified by law the passing of which is necessary for the
consummation of such transactions shall have passed or been terminated.

         9.6   Litigation. No order of any court or administrative agency shall
               ----------
be in effect which restrains or prohibits (or attempts to do either) the
transactions contemplated hereby and there shall not have been threatened, nor
shall there be pending, any action or proceeding by or before any court or
governmental agency or other regulatory or administrative agency or commission,
challenging any of the transactions contemplated by this Agreement or seeking
monetary relief by reason of the consummation of such transactions, except for
any proceeding by Societe Immobiliere Axim Inc. or Whalen, Beliveau & Associates
Inc.


10.      SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.

         All representations and warranties made by Sellers or Buyer as to any
fact or condition existing on or before the Closing Date in this Agreement, in
any Schedule or in any certificate delivered pursuant hereto, shall survive the
Closing for a period of four (4) years; provided that there shall be no
termination of any such representation or warranty as to which a Claim has been
asserted prior to the termination of any such survival period. All such
representations and warranties shall be unaffected by any investigation made by
or on behalf of Buyer or by knowledge obtained as a result thereof or otherwise.
Except as otherwise expressly provided in this Agreement, all covenants,
agreements, undertakings and indemnities set forth in this Agreement shall
survive for a period of four (4) years provided that there shall be no
termination of any such covenants, agreements, undertakings and indemnities as
to which a Claim has been asserted prior to the termination of any such survival
period.

                                       45
<PAGE>
 
11.      INDEMNIFICATION.

         11.1  Indemnity by Sellers.
               --------------------

               (a) Buyer shall assume no liability of or relating to the
Business other than those expressly assumed by Buyer. Sellers shall, jointly and
severally, defend, hold harmless and indemnify Buyer from any Claims, or
Liabilities originating from Excluded Liabilities. Buyer shall defend, hold
harmless and indemnify Sellers from any Claims or Liabilities originating from
Assumed Liabilities.

               (b) Except for Losses, if any, arising under Environmental Laws
or with respect to Section 4.22, which are addressed in Section 11.2, Sellers,
following the Closing Date, shall defend, indemnify and hold Buyer, its
officers, directors, employees, subsidiaries and Affiliates harmless from and
against all Claims, damages, losses, liabilities, costs and expenses (including
attorneys' fees and disbursements and any other legal costs) (collectively,
"Losses") arising out of or resulting from:
 ------

                   (i)   Sellers' operation or ownership of the Business or the
Purchased Assets before the Closing Date;

                   (ii)  the Excluded Liabilities;

                   (iii) the breach by Sellers of any covenant contained herein
or in any Sellers Document requiring performance after the Closing Date; and

                   (iv)  the failure of any representation or warranty of
Sellers contained herein, in any Sellers' Document, in any Schedule or in any
certificate delivered on the Closing Date pursuant hereto to be true and correct
in any material respect.

               (c) Except for Claims by Stanley Kiyon or Claims arising under
Sections 4.6 and 4.9 which Sellers shall assume in full, Sellers shall not have
any liability under Section 11.1(b)(iv) until the aggregate amount of all such
Losses exceeds $50,000, and then only to the extent that such aggregate Losses
exceed $50,000.

                                       46
<PAGE>
 
               (d) Sellers shall indemnify and hold Buyer harmless for any and
all expenses, liabilities or Claims that any employee shall have against Buyer
arising out of the pre-Closing operation of the Business or by those employees
listed in Schedule 3.2(g).

         11.2  Environmental.  Sellers shall defend, indemnify and hold Buyer
               -------------
harmless from and against all Losses arising under any Environmental Law and
arising out of or resulting from activities occurring or conditions originating
prior to Closing which activities or conditions are included in the information
provided in Schedule 4.22, or which are asserted against Buyer in respect of the
Purchased Assets and the Business on or prior to December 31, 2002.

         11.3  Indemnity by Buyer.
               ------------------- 
     
               (a) Buyer shall defend, hold harmless and indemnify Sellers from
any Claims with respect to liabilities assumed by Buyer hereunder.

               (b) Buyer, following the Closing Date, shall indemnify and hold
Sellers, its officers, directors, employees, subsidiaries and Affiliates
harmless from and against all Losses arising out of or resulting from:

                   (i)    Buyer's operation or ownership of the Business or the
Purchased Assets on and after the Closing Date, except as expressly provided in
Sections 11.1 and 11.2;

                   (ii)   the Assumed Liabilities;

                   (iii)  the breach by Buyer of any covenant contained herein
or in any agreement entered into by Buyer pursuant to this Agreement requiring
performance after the Closing Date; and

                   (iv)   the failure of any representation or warranty of Buyer
contained herein, in any Schedule or in any certificate delivered on the Closing
Date pursuant hereto to be true and correct in any material respect.

                                       47
<PAGE>
 
               (c) Buyer shall indemnify and hold Sellers harmless for any and
all expenses, liabilities and Claims that any employee shall have against
Sellers related to matters arising out of Buyer's operation of the Business of
the Purchased Assets after the Closing Date.

               (d) Buyer shall not have any liability under Section 11.3(b)(iv)
until the aggregate amount of all such Losses exceeds $50,000, and then only to
the extent that such aggregate Losses exceed $50,000.

         11.4  Notice of Claim. Promptly after service of notice of any Claim or
               ---------------
of process on a party entitled to indemnification under this Agreement
(hereinafter in this Section 11.4, the "Indemnified Party") by any third party,
                                        -----------------
or promptly after obtaining actual knowledge by the Indemnified Party of any
other Claim, in any matter in respect of which indemnity may be sought pursuant
to this Section 11, the Indemnified Party shall promptly notify Buyer or
Sellers, whichever is or may be responsible for indemnification hereunder
(hereinafter in this Section 11.4, the "Indemnifying Party") of the receipt
                                        ------------------
thereof. In the case of any action or proceeding by a third party, the
Indemnifying Party shall have the right to participate in, or assume, at its own
expense, the defense of any such Claim or process or settlement thereof. After
notice from the Indemnifying Party of its election so to assume the defense
thereof, the Indemnified Party shall not be liable to the Indemnifying Party for
any legal or other expense in connection with such defense. Such defense shall
be conducted expeditiously (but with due regard for obtaining the most
favourable outcome reasonably likely under the circumstances, taking into
account costs and expenditures) and the Indemnified Party shall be advised of
all significant developments. With respect to any matter which is the subject of
any such Claim and as to which the Indemnified Party fails to give the
Indemnifying Party such notice as aforesaid, and such failure adversely affects
the ability of the Indemnifying Party to defend such Claim or materially
increases the amount of indemnification which the Indemnifying Party is
obligated to pay hereunder, the amount of indemnification which the Indemnified
Party shall be entitled to receive shall be reduced to an amount which the
Indemnified Party would have been entitled to receive had such notice been
timely given. The Indemnifying Party shall not settle or compromise any such
Claim or other proceeding without the Indemnified Party's prior written consent,
unless the terms of such settlement or compromise, discharge and release the
Indemnified Party from any and all liabilities and obligations thereunder
provided, however, that such consent shall be given reasonably and if the
Indemnified Party does not agree to give any consent in respect of a settlement
which the Indemnifying Party wishes to accept, the Indemnified Party will not be
entitled to any indemnity
                                       48
<PAGE>
 
in respect of the excess of the final settlement amount over the original amount
at which the Indemnifying Party wished to settle. Notwithstanding the foregoing,
(a) the Indemnified Party at all times shall have the right, at its option and
expense, to participate fully in the defense or settlement of such Claim or
other proceeding; and (b) if the Indemnifying Party does not proceed diligently
to defend or settle such Claim or other proceeding within 20 days after its
receipt of notice of the assertion or commencement of such Claim or proceeding,
the Indemnified Party shall have the right, but not the obligation, to undertake
the defense or settlement of such Claim or other proceeding at the expense of
the Indemnifying Party. Sellers and Buyer agree that, for the purpose of
enforcing any right of indemnity hereunder, the Indemnified Party may join the
Indemnifying Party in any third party Claim or other proceeding as to which such
right of indemnity would apply. Sellers and Buyer shall cooperate fully in
defending or settling any third party Claim or other proceeding, and the
defending party shall have reasonable access to the books and records and
personnel of the other party that are relevant to such Claim or proceeding,
except to the extent any disclosure would constitute a waiver of attorney/client
or attorney work product privilege or would violate any third party contractual
agreement or constitute a violation of any law or court order. Such books and
records shall be subject to the confidentiality provisions of Section 17.2
except to the extent necessary to disclose information contained therein in the
course of the proceedings resolving such Claim or as otherwise required to be
disclosed by applicable law.


12.      COMPETITION.

         12.1  Non-competition.  For a period of five (5) years following the
               ---------------
Closing Date, neither Sellers nor any successor, assign or any of its Affiliates
shall engage, directly or indirectly, in any business that manufactures, sells
or distributes envelopes in Canada or the United States without the prior
written consent of Buyer.

         12.2  Remedies.  Sellers agree that if they or any of their successors,
               --------
assigns or Affiliates commit or threaten to commit a breach of any of the
covenants and agreements contained in Section 12.1, Buyer shall have the right
to seek and obtain appropriate injunctive and other equitable remedies therefor,
in addition to any other rights and remedies that may be available at law, it
being acknowledged and agreed that any such breach would cause irreparable
injury to Buyer and that money damages would not provide an adequate remedy
therefor.

                                       49
<PAGE>
 
13.      TERMINATION; MODIFICATION OR WAIVER.

         13.1  Termination. This Agreement may be terminated at any time prior
               -----------
to the Closing:

               (a) by mutual written agreement of Buyer and Sellers;

               (b) by either party if a banking moratorium has been declared;

               (c) by Buyer, if all of the conditions precedent to Buyer's
obligations set forth in Section hereof have not been satisfied by Sellers or by
a trustee to the bankruptcy of any of the Sellers, as provided in Section 2.6,
through no fault or failure of Buyer, on or before the Closing Date; or

               (d) by Sellers, if all of the conditions precedent of Sellers'
obligations set forth in Section  hereof have not been satisfied, through no
fault of Sellers, on or before the Closing Date.

         13.2  Modification.  This Agreement may be amended, modified and
               ------------
supplemented only by written agreement of the parties hereto.

         13.3  Waiver.  Any failure of Sellers or Buyer to comply with any
               ------
obligation, covenant, agreement or condition contained herein may be expressly
waived in writing by Buyer in the case of any such failure by Sellers or by
Sellers in the case of any such failure by Buyer, but such waiver or failure to
insist upon strict compliance shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.  Whenever this Agreement requires
or permits consent by or on behalf of any party hereto, such consent shall be
given in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 13.3. No delay or failure on the part of
any party in exercising any rights hereunder, and no partial or single exercise
thereof, will constitute a waiver of such rights or of any other rights
hereunder.

                                       50
<PAGE>
 
14.      COSTS INCIDENT TO PREPARATION OF AGREEMENT.

         Each of the parties hereto shall pay, without right of reimbursement
from the other, all costs incurred by it incident to the preparation, execution
and delivery of this Agreement and the performance of its obligations hereunder,
whether or not the transactions contemplated by this Agreement shall be
consummated, including without limitation fees and disbursements of legal
counsel, accountants and consultants employed by the respective parties hereto
in connection with the transactions contemplated by this Agreement.


15.      RISK OF LOSS.

         All risk of damage or loss of any sort from any cause with respect to
the operation of the Business or the Purchased Assets shall remain with Sellers
until the Closing.


16.      REASONABLE EFFORTS.

         Each of the parties covenants to use its reasonable efforts to cause
the satisfaction of all conditions to Closing to be performed by it or satisfied
on its part at or prior to Closing.

                                       51
<PAGE>
 
17.      GENERAL.

         17.1  Parties in Interest; Assignment.
               -------------------------------

               (a) This Agreement shall be binding upon, and inure to the
benefit of, the parties hereto and their respective successors and permitted
assigns. Except as otherwise expressly provided in this Agreement, this
Agreement is not made for the benefit of any Person not a party hereto, and
nothing in this Agreement will be construed as giving any Person, other than the
parties hereto and their respective successors and permitted assigns, any right,
remedy or claim under or in respect of this Agreement, or any provision hereof.

               (b) Buyer may assign its rights under this Agreement and the
Sellers Documents for collateral security purposes to the lenders providing
financing for the transactions contemplated hereby and all extensions, renewals,
replacements, refinancings and refundings thereof in whole or in part; provided,
that upon the foreclosure, sale in lieu of foreclosure, deed in lieu of
foreclosure, or deed of the Purchased Assets or a substantial portion thereof by
and to any such lender or any of its Affiliates, or the Buyer or grantee from
any of such parties, the representations, warranties and covenants of Sellers
contained herein and in the Sellers Documents shall inure to the benefit of, and
shall be enforceable by, any such lender, Affiliate or person.

               (c) Without limiting any of its rights or obligations under this
Agreement, Buyer may direct Sellers to assign, transfer, convey and deliver any
of the Purchased Assets to any direct or indirect wholly owned subsidiary of
Buyer, or otherwise in connection with Buyer's financing of this transaction
provided such assignee is a Canadian resident under the Income Tax Act (Canada).

               (d) Except as expressly provided in this Section 17.1, neither
Buyer nor Sellers shall assign its rights and obligations under this Agreement
without the prior written consent of the other.

               (e) Notwithstanding any provision of the Section 17.1 to the
contrary, Sellers shall remain liable for and with respect to all obligations of
Sellers hereunder after any assignment by Sellers or any permitted assign of all
or any portion of Sellers' interest in this Agreement or its rights and
obligations

                                       52
<PAGE>
 
hereunder, and Buyer shall remain liable for and with respect to all obligations
of Buyer hereunder after any assignment by Buyer or any permitted assign of all
or any portion of Buyer's interest in this Agreement or its rights and
obligations hereunder.

         17.2  Confidentiality.
               ---------------

               (a) In the event of termination of this Agreement prior to
Closing, Buyer shall promptly return or destroy all documents, records or other
information concerning Sellers and/or the Business and shall not retain any
copies of same.

               (b) From and after the Closing Date, Sellers shall not make or
permit the making of, and shall cause its Affiliates not to make or permit the
making of, any disclosure, publication or use of any non-public, confidential
and/or proprietary information relating to the Purchased Assets or the Business
that is not generally known by or available to the public (the "Confidential
                                                                ------------
Information").  Notwithstanding the foregoing, Sellers and its Affiliates may
------------                                                                 
disclose, publish or use, and may permit the disclosure, publication or use of,
any Confidential Information if, but only to the extent that, such disclosure,
publication or use is previously authorized in writing by Buyer or is required
by law.  In the latter case, Sellers or its Affiliates shall notify Buyer as far
in advance of the disclosure, publication or use as possible.

         17.3  Public Statements.  Other than announcements and disclosure to
               -----------------
Sellers' employees and shareholders, neither party to this Agreement shall,
without the prior written consent of the other party hereto, make or cause to be
made any press release or other public statement or announcement that directly
or indirectly discloses the transactions contemplated by this Agreement;
provided that either party may make such press release, public statement or
announcement if such disclosure is required by law.  If a party determines that
it is required to make any such press release, public statement or announcement,
it will give the other party advance notice thereof, including the text of such
press release, public statement or announcement. Notwithstanding the foregoing,
Mail-Well, Inc. ("Mail-Well") the ultimate parent of Buyer, may make any press
release, public statement or announcement if such disclosure is, in the opinion
of Mail-Well's legal counsel, required by law, or otherwise prudent by virtue of
its status as a publicly traded company in the United States.

                                       53
<PAGE>
 
         17.4  Approval. Except as mentioned in Section 3.2(d), for the purposes
               --------
of any written approval which may be required of Sellers under this Agreement,
the written approval of Dick Schroeder and either Steve Ruddy or Ron Burns shall
be sufficient and shall bind Sellers.

         17.5  Choice of Law.  This Agreement shall be governed by, construed,
               -------------
interpreted and the rights of the parties determined in accordance with the
laws, including equitable principles but without regard to principles of
conflict of laws of the province of Ontario and the laws of Canada applicable
therein.  For the purposes of all legal proceedings, this Agreement shall be
deemed to have been performed in the Province of Ontario and the Courts of
Ontario shall have exclusive jurisdiction to entertain any action arising under
this Agreement.  The Sellers and Buyer each hereby attorns to the jurisdiction
of the Courts of the Province of Ontario.

         17.6  Notices. Any notice, request, consent, waiver or other
               -------
communication required or permitted to be given hereunder shall be effective
only if in writing and shall be deemed sufficiently given only if delivered in
person or sent by telecopy, telegram, cable or by certified or registered mail,
postage prepaid, return receipt requested, addressed as follows:

          If to Buyer:
          ------------

          Supremex Inc.
          345 Montee de Liesse
          St. Laurent, Quebec  H4T 1P7

          Attention:  Luc Desjardins
          ---------   President and Chief Executive Officer

          Fax no.:    (514) 738-6657

          with a copy to:

          Mail-Well, Inc.
          23 Inverness Way, Suite 160
          Englewood, Colorado  80112

          Attention:  Roger Wertheimer
          ---------   Vice President, General Counsel and Secretary

          Fax no.:    (303) 397-7400

                                       54
<PAGE>
 
          If to Sellers:
          ------------- 

          PNG Products Inc. Pac National Group/
          PNG Enveloppe Internationale Inc.
          400 Humberline Drive
          Etobicoke, Ontario
          M9W 5T3

          Attention:  Stephen M. Ruddy
          ---------                   

          Fax no.:  (416) 675-5764

          with copies to:

          Goodman Phillips & Vineberg
          250 Yonge Street, Suite 2400
          Toronto, Ontario
          M5B 2M6

          Attention:  Stephen N. Pincus
          ---------                    

          Fax no.:    (416) 979-1234

          and

          Blake Cassels & Graydon
          P.O. Box 25,
          Commerce Court West
          Toronto, Ontario
          M5L 1A9

          Attention:  Alan Bell
          ---------            

          Fax no.:  (416) 863-2653


or to such other Person or address as either such party may have specified in a
notice duly given by the sender as provided herein.  Such notice or
communication shall be deemed to have been given as of the date so delivered,
telegraphed, cabled or mailed.

         17.7  Entire Agreement.  This Agreement (including the schedules and
               ----------------
exhibits attached hereto) constitutes the entire agreement and understanding of
the parties relating to the subject matter hereof and supersedes all prior and
contemporaneous agreements and understandings, representations and warranties,

                                       55
<PAGE>
 
whether oral or written, relating to the subject matter hereof including the
Letter of Offer dated June 14, 1996.  The terms of this Agreement cannot be
changed, modified, released or discharged orally.

         17.8  Remedies Cumulative.  The rights and remedies provided in this
               -------------------
Agreement are cumulative and are not exclusive of any rights or remedies a party
may otherwise have at law or in equity.

         17.9  Severability.  The unenforceability or invalidity of any Section
               ------------
or subsection or provision of this Agreement shall not affect the enforceability
or validity of the balance of this Agreement. If any provision of this Agreement
is so broad as to be unenforceable, such provision shall be interpreted to be
only as broad as is enforceable.

         17.10 Interpretation.  In this Agreement, unless the context otherwise
               --------------
requires:

               (a) Any reference to any Section, Schedule or Exhibit contained
in this Agreement shall refer to such Section, Schedule or Exhibit as set forth
in or attached to this Agreement, notwithstanding use of or failure to use the
term "hereof," "hereto" or "herein" in connection with such reference.

               (b) Words shall apply equally to both singular and plural forms
of the terms defined, and words importing gender shall include all genders.

               (c) The Schedules attached to this Agreement shall be considered
to be incorporated for all purposes of this Agreement, whether or not reference
thereto is made in each case.

               (d) The Exhibits attached to this Agreement shall be considered
to be incorporated within any Section of this Agreement solely by reference
thereto.

               (e) Unless expressly limited, all references to agreements are
references to agreements as the provisions thereof may be amended, modified or
waived from time to time.

                                       56
<PAGE>
 
               (f) The word "including" when following any general statement,
term or matter shall not be construed to limit such general statement, term or
matter to the specific items or matters set forth immediately following such
word, whether or not non-limiting language (such as "without limitation" or "but
not limited to" or words of similar import) is used with reference thereto, but
rather shall be deemed to refer to all other items or matters that could
reasonably fall within the broadest possible scope of such general statement,
term or matter.

               (g) All accounting terms used herein and not otherwise defined
shall have the meanings assigned to them in accordance with GAAP.

         17.11 Dollars.  The symbol "$" when used herein represents Canadian
               -------
dollars.

         17.12 Counterparts.  This Agreement may be executed in any number of
               ------------                                                  
counterparts, each of which so executed will be deemed to be an original, but
all of which together will  constitute one and the same agreement.

         17.13 Facsimiles.  Any facsimile signature of any party hereto shall
               ----------                                                    
constitute a legal, valid and binding execution hereof by such party.

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


                         By:______________________________________

                         Title:___________________________________


                         By:______________________________________

                         Title:___________________________________

                                       57
<PAGE>
 
                         PNG ENVELOPPE INTERNATIONALE INC.


                         By:________________________________________

                         Title:_____________________________________

                                       58