CADMUS COMMUNICATIONS CORP/NEW
8-K, 1999-03-12
COMMERCIAL PRINTING
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                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

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


                                   Form 8-K

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


               CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                     THE SECURITIES EXCHANGE ACT OF 1934


    Date of Report (Date of earliest event reported)    March 1, 1999


                        CADMUS COMMUNICATIONS CORPORATION
             (Exact name of registrant as specified in its charter)




         Virginia                       0-12954                54-1274108
(State or other jurisdiction of        (Commission         (I.R.S. Employer
 incorporation or organization)        File Number)       Identification Number)



6620 West Broad Street, Suite 240, Richmond, Virginia                 23230
     (Address of principal executive offices)                       (Zip Code)



Registrant's telephone number, including area code              (804) 287-5680
                                                                --------------





<PAGE>




Item 2.  Acquisition or Disposition of Assets

On March 1, 1999, Cadmus Communications  Corporation ("Cadmus" or the "Company")
consummated the sale of certain assets and liabilities  related to the Company's
Financial Communications ("CFC") division to R. R. Donnelley & Sons Company (the
"Purchaser").  The sale was pursuant to the terms of an Asset Purchase Agreement
dated February 20, 1999,  (the  "Agreement"),  by and among  Washburn  Graphics,
Inc.,  Washburn of New York, Inc., Cadmus  Communications  Corporation,  and the
Purchaser. A copy of the Agreement is filed as Exhibit 2 hereto and incorporated
herein by reference.  Washburn Graphics, Inc. and Washburn of New York, Inc. are
wholly-owned subsidiaries of Cadmus.

Pursuant  to the  Agreement,  the  Company  sold  certain  of the assets and was
relieved  of certain of the  liabilities  which were  employed by the Company in
operating  the CFC  division.  The assets  sold  included  certain  receivables,
inventory,  and machinery and equipment which were specific to CFC's business of
marketing,  selling and distribution of financial printing services, mutual fund
printing services,  shareholder communications printing services, and activities
related thereto.

The initial  purchase price for the assets and assumption of the liabilities was
$35 million in cash.  The purchase  price was  established  through  arms-length
negotiations  among the parties.  The funds received in the sale will be used to
pay down debt.





Item 7.  Financial Statements and Exhibits.

(b)   Pro forma financial statements of Cadmus Communications Corporation

          The required pro forma financial  statements of Cadmus  Communications
          Corporation  are not  included  in this  report  but  will be filed by
          amendment within 60 days of the due date of this report.

(c)   Exhibits

          Index of Exhibits

            Exhibit 2. Asset Purchase  Agreement dated February 20, 1999, by and
            among Washburn  Graphics,  Inc.,  Washburn of New York, Inc., Cadmus
            Communications Corporation, and R. R. Donnelley & Sons Company - The
            schedules  and exhibits to this  Agreement are omitted in accordance
            with the  instructions  to Item  601 (b) (2) of  Regulation  S-K.  A
            listing of such schedules and exhibits is found in the Agreement and
            Cadmus  hereby  undertakes  to supply the  Securities  and  Exchange
            Commission  supplementally  with a copy of any  such  exhibits  upon
            request.

<PAGE>



                  Signatures

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned hereunto duly authorized on March 12, 1999.


                          CADMUS COMMUNICATIONS CORPORATION


                          By:   /s/ C. Stephenson Gillispie, Jr.
                                ----------------------------------
                                C. Stephenson Gillispie, Jr.
                                Chairman, President, and Chief Executive Officer






<PAGE>



                                  Exhibit Index


      Exhibit


      2.    Asset  Purchase  Agreement  dated as of February 20, 1999, by
            and among  Washburn  Graphics,  Inc.,  Washburn of New York,  Inc.,
            Cadmus  Communications  Corporation,  and R.  R.  Donnelley  & Sons
            Company.



<PAGE>



                                                            EXHIBIT 2





                            ASSET PURCHASE AGREEMENT

                                  By and Among

                WASHBURN GRAPHICS, INC., WASHBURN OF NEW YORK, INC.,

                        CADMUS COMMUNICATIONS CORPORATION

                                       And

                         R. R. DONNELLEY & SONS COMPANY





<PAGE>



                                TABLE OF CONTENTS

                                                                           Page

RECITALS.....................................................................1

ARTICLE I DEFINITIONS........................................................1

      1.1. Accounts..........................................................1
      1.2. Affiliate.........................................................2
      1.3. "Agreed Rate".....................................................2
      1.4. Agreement.........................................................2
      1.5. Assignment and Assumption Agreement...............................2
      1.6. Assumed Leases....................................................2
      1.7. Assumed Liabilities...............................................2
      1.8. Bill of Sale......................................................3
      1.9. Books and Records.................................................3
      1.10. Business.........................................................3
      1.11. Buyer............................................................4
      1.12. Buyer's Closing Certificate......................................4
      1.13. CERCLA...........................................................4
      1.14. Closing..........................................................4
      1.15. Closing Balance Sheet............................................4
      1.16. Closing Date.....................................................4
      1.17. Code.............................................................5
      1.18. Computer Assets..................................................5
      1.19. Contaminant......................................................5
      1.20. Contracts........................................................5
      1.21. Customer List....................................................5
      1.22. Effective Time...................................................5
      1.23. Employee Benefit Plan............................................6
      1.24. Employees........................................................6
      1.25. Employment Agreements............................................6
      1.26. Environmental Law................................................6
      1.27. ERISA............................................................6
      1.28. ERISA Affiliate..................................................6
      1.29. Excluded Assets..................................................6
      1.30. Final Balance Sheet..............................................7
      1.31. Financial Statements.............................................7
      1.32. Fixtures and Equipment...........................................7
      1.33. GAAP.............................................................7
      1.34. Initial Purchase Price...........................................7
      1.35. Intangibles......................................................7
      1.36. Inventory........................................................8
      1.37. Joint Marketing Agreement........................................8
      1.38. Key Employees....................................................8
      1.39. Knowledge........................................................9
      1.40. Law..............................................................9
      1.41. October Balance Sheet............................................9

<PAGE>

      1.42. OSHA.............................................................9
      1.43. Parent...........................................................9
      1.44. Permits..........................................................9
      1.45. Permitted Liens.................................................10
      1.46. Person..........................................................10
      1.47. Prepaid Assets..................................................10
      1.48. Premises........................................................10
      1.49. Printing Services Agreement.....................................10
      1.50. Purchased Assets................................................10
      1.51. RCRA............................................................11
      1.52. Release.........................................................11
      1.53. Remedial Action.................................................11
      1.54. Retained Business...............................................12
      1.55. Retained Liabilities............................................12
      1.56. Seller or Sellers...............................................13
      1.57. Sellers'Closing Certificate.....................................13
      1.58. Services Agreement..............................................13
      1.59. Significant Customer............................................13
      1.60. Tax or Taxes....................................................14
      1.61. Tax Return......................................................14

ARTICLE II PURCHASE AND SALE; ASSIGNMENT AND ASSUMPTION.....................14

      2.1. Sale of Purchased Assets.........................................14
      2.2. Adjustment of Purchase Price.....................................15
      2.3. Collection of Accounts...........................................17
      2.4. Transfer or Sales Taxes..........................................18
      2.5. Allocation of Purchase Price.....................................19

ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS AND PARENT............20

      3.1. Organization and Good Standing; Subsidiaries and Investments.....20
      3.2. Foreign Qualification............................................21
      3.3. Authorization; Enforceability....................................21
      3.4. Conflicts or Violations; Required Consents.......................21
      3.5. Litigation.......................................................22
      3.6. Compliance with Law..............................................22
      3.7. Environmental Conditions.........................................22
      3.8. Permits..........................................................24
      3.9. Taxes............................................................25
      3.10. Title to Purchased Assets.......................................26
      3.11. Condition of Fixtures and Equipment.............................26
      3.12. Customer List...................................................26
      3.13. Contracts and Assumed Leases....................................26
      3.14. Books and Records...............................................27
      3.15. Employment Agreements and Benefits..............................27
      3.16. Employee Matters................................................29
      3.17. Affiliated Transactions.........................................30
      3.18. Fees and Expenses of Brokers and Others.........................31
      3.19. Insurance.......................................................31

<PAGE>

      3.20. Intangibles.....................................................31
      3.21. Intentionally Deleted...........................................32
      3.22. Financial Statements............................................32
      3.23. No Adverse Change...............................................32
      3.24. Availability of Assets..........................................34
      3.25. Disclosure......................................................34
      3.26. Year 2000 Matters...............................................34

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER..........................35

      4.1. Organization.....................................................35
      4.2. Authorization; Enforceability....................................35
      4.3. No Conflict or Violation; Required Consents......................35
      4.4. No Litigation....................................................36
      4.5. Fees and Expenses of Brokers and Others..........................36

ARTICLE V CERTAIN UNDERSTANDINGS AND AGREEMENTS.............................36

      5.1. Conduct of Seller Prior to Closing...............................36
      5.2. Negative Covenants...............................................37
      5.3. Access...........................................................38
      5.4. No Shopping......................................................38
      5.5. Best Efforts.....................................................39
      5.6. Publicity........................................................39
      5.7. Employees........................................................40
      5.8. WARN Act.........................................................42
      5.9. Benefit Obligations..............................................42
      5.10. Cooperation.....................................................45
      5.11. Books and Records; Personnel....................................45
      5.12. Bulk Transfers Laws.............................................46
      5.13. Like-Kind Exchange..............................................46
      5.14. Discharge of Sellers Liabilities................................47
      5.15. Discharge of Buyer's Liabilities................................47

ARTICLE VI CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER.................47

      6.1. Compliance With Law..............................................47
      6.2. Accuracy of Representations and Warranties.......................48
      6.3. Proceedings and Instruments Satisfactory.........................48
      6.4. HSR Act Waiting Period...........................................48
      6.5. No Litigation....................................................48
      6.6. No Material Adverse Change.......................................49
      6.7. Employment Agreements............................................49
      6.8. Consents.........................................................49
      6.9. Seller's Performance.............................................49
      6.10. Good Title to Purchased Assets..................................49
      6.11. Deliveries at Closing...........................................50

<PAGE>


ARTICLE VII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER AND PARENT....50

      7.1. Compliance with Law..............................................50
      7.2. Accuracy of Representations and Warranties.......................51
      7.3. Proceedings and Instruments Satisfactory.........................51
      7.4. Consents.........................................................51
      7.5. No Litigation....................................................51
      7.6. HSR Act Waiting Period...........................................52
      7.7. Buyer's Performance..............................................52
      7.8. Deliveries at Closing............................................52

ARTICLE VIII ACTIONS BY SELLERS, PARENT AND BUYER AFTER THE CLOSING.........53

      8.1. Sellers' and Parent's Indemnity..................................53
      8.2. Buyer's Indemnity................................................54
      8.3. Notice of Claims.................................................56
      8.4. Third Person Claims..............................................56
      8.5. Limitations on Indemnification...................................57
      8.6. Indemnity Amounts to be Computed on After-Tax Basis..............57
      8.7. Litigation Support...............................................58
      8.8. Noncompetition Covenant..........................................58
      8.9. Non-Solicitation.................................................60
      8.10. Post-Closing Cooperation........................................61

ARTICLE IX TERMINATION......................................................61

      9.1. Termination Event................................................61
      9.2. Effect of Termination............................................62

ARTICLE X MISCELLANEOUS.....................................................62

      10.1. Entire Agreement; Amendment.....................................62
      10.2. Expenses........................................................63
      10.3. Governing Law; Consent to Jurisdiction..........................63
      10.4. Assignment......................................................63
      10.5. Notices.........................................................64
      10.6. Counterparts; Headings..........................................65
      10.7. Severability....................................................65
      10.8. No Reliance.....................................................65
      10.9. Interpretation..................................................66
      10.10. Specific Performance...........................................66



<PAGE>



                             SCHEDULES AND EXHIBITS

SCHEDULE    DESCRIPTION

1.1         Accounts
1.6(a)      Assumed Leases for Office Space
1.6(b)      Assumed Leases for Equipment
1.18        Computer Assets
1.20        Contracts
1.24        Employees
1.29        Excluded Assets
1.31        Financial Statements
1.32        Fixtures and Equipment
1.35        Intangibles
1.44        Permits
1.45        Permitted Liens
1.47        Prepaid Assets
1.48        Premises
1.59        Significant Customers
2.5         Allocation of Purchase Price
3.1         Investments
3.2         Foreign Qualifications
3.4(a)      Conflicts or Violations
3.4(b)      Required Consents
3.5         Litigation
3.6.        Compliance with Law
3.7         Environmental Conditions
3.9         Tax Exceptions
3.12        Significant Customer Exceptions
3.15        Employment Agreements and Benefits
3.16(a)     Independent Contractors
3.16(b)     Employment Matters
3.16(c)     Collective Bargaining Arrangements
3.17        Affiliated Transactions
3.23        Adverse Changes
4.3         Required Consents
8.8         Non-Competition


<PAGE>



EXHIBIT     DESCRIPTION

A           Assignment and Assumption Agreement
B           Bill of Sale
C           Buyer's Closing Certificate
D           Principal Terms of Joint Marketing Agreement
E           Sellers' Closing Certificate
F           Printing Services Agreement
G           Services Agreement
H           Opinion of Sellers' and Parent's Counsel
I           Opinion of Buyer's Counsel



<PAGE>


                            ASSET PURCHASE AGREEMENT

      THIS ASSET PURCHASE AGREEMENT,  made as of February 20, 1999, by and among
Washburn  Graphics,  Inc., a North Carolina  corporation,  Washburn of New York,
Inc., a New York corporation  (each a "Seller" and together  "Sellers"),  Cadmus
Communications  Corporation,  a Virginia  corporation  and the parent  entity of
Sellers  ("Parent") and R. R. Donnelley & Sons Company,  a Delaware  corporation
("Buyer"), provides as follows:
                                    RECITALS

      WHEREAS,  one of the  businesses  engaged in by Sellers is the business of
the marketing,  selling and distribution of financial printing services,  mutual
fund  printing  services,  shareholder  communications  printing  services,  and
activities related thereto; and
      WHEREAS, Sellers desire to sell certain of their assets and be relieved of
certain of their  liabilities  which are  employed by Sellers in  operating  the
Business,   and  Buyer  desires  to  purchase  those  assets  and  assume  those
liabilities.
      NOW,  THEREFORE,  in  consideration  of the  Recitals  and  of the  mutual
covenants,  conditions  and  agreements  set forth herein and for other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged, the parties hereto agree that:

                                    ARTICLE I
                                   DEFINITIONS

      When used in this  Agreement,  the following terms shall have the meanings
specified:

            1.1.  Accounts.

      "Accounts"  shall  mean all  accounts  receivable,  notes  receivable  and
associated rights of the Business (including,  without limitation,  all security
deposits,  letters of credit and security interests in collateral)  arising from
the sale of goods and services  outstanding as of the Effective Time, other than
(i) any refunds,  (ii) the account with FPC Greenaway and (iii) accrued  finance
charges,  all of such Accounts as of October 31, 1998,  being listed on Schedule
1.1.

<PAGE>

            1.2.  Affiliate.

      "Affiliate"  shall mean,  with respect to any Person,  any other Person or
entity,  that  directly  or  indirectly  through  one  or  more  intermediaries,
controls, or is controlled by, or is under common control with, such Person.

            1.3.  "Agreed Rate".

      "Agreed Rate" means the prime rate  published by the Wall Street  Journal,
Eastern Edition,  as that rate may vary from time to time, or if that rate is no
longer published, a comparable rate.

            1.4.  Agreement.

      "Agreement"  shall mean this Asset Purchase  Agreement,  together with the
Exhibits and Schedules  attached hereto, as the same may be amended from time to
time in accordance with the terms hereof.

            1.5.  Assignment and Assumption Agreement.

      "Assignment  and  Assumption  Agreement"  shall  mean the  Assignment  and
Assumption Agreement between Sellers and Buyer in the form of Exhibit A.

            1.6.  Assumed Leases.

      "Assumed  Leases" shall mean those leases for all  facilities  used by the
Business and listed on Schedule 1.6(a) hereto and those equipment leases used by
the Business and listed on Schedule 1.6(b) hereto.

            1.7.  Assumed Liabilities.

      "Assumed Liabilities" shall mean the following liabilities  (excluding any
Retained  Liabilities)  relating to the Business to be assumed by the Buyer: (i)
accrued  liabilities  in the  ordinary  course  of the  Business,  and all other
liabilities  and  obligations  of or  related  to the  Purchased  Assets and the
operations of the Business,  in each such case,  which are outstanding as of the
Closing  Date  and  reflected  on  the  Closing  Balance  Sheet;  and  (ii)  all
liabilities and obligations of Sellers to be paid or performed after the Closing
Date under (a) the Assumed  Leases and (b) all  obligations  with respect to all
Contracts  except, in each case, to the extent such liabilities and obligations,
but for a breach or default by  Sellers,  would  have been  paid,  performed  or
otherwise  discharged  on or prior to the Closing Date or to the extent the same
arise out of any such breach or default.

<PAGE>

            1.8.  Bill of Sale.

      "Bill of Sale"  shall  mean  the  bill of sale in the  form of  Exhibit  B
hereto.

            1.9.  Books and Records.

      "Books and Records" shall mean original or true and complete copies of all
of the books, records, files, data and information of Sellers relating primarily
to the Business including, without limitation, all customer lists, financial and
accounting records (excluding Tax Returns),  purchase orders and invoices, sales
orders and sales order log books, credit and collection records,  correspondence
and  miscellaneous  records with respect to customers and supply sources and all
other general  correspondence,  records,  books and files relating solely to the
Business,  unless subject to a third party confidentiality agreement as to which
Sellers  cannot  obtain  a  consent  from  such  third  party  to  release  such
information to Buyer or unless such information relates to activities of Sellers
other than the  Business,  in which case the Books and Records will include only
such portion as relates solely to the Business.

            1.10. Business.

      "Business"  shall  refer to the  marketing,  selling and  distribution  of
financial  printing  services,   mutual  fund  printing  services,   shareholder
communications  printing services,  and activities related thereto, as conducted
by Cadmus  Financial  Communications,  a unit of  Parent,  as of the date of the
Agreement, excluding the Retained Business.

            1.11. Buyer.

      "Buyer" shall mean R. R. Donnelley & Sons Company, a Delaware corporation.

            1.12. Buyer's Closing Certificate.

      "Buyer's  Closing   Certificate"  shall  mean  the  certificate  of  Buyer
substantially in the form of Exhibit C hereto.

            1.13. CERCLA.

      "CERCLA" means the Comprehensive Environmental Response,  Compensation and
Liability  Act, 42 U.S.C.  ss.ss.  9601 et seq.,  any  amendments  thereto,  any
successor statutes, and any regulations promulgated thereunder.

            1.14. Closing.

      "Closing" shall mean the meeting of the parties held at 10:00 a.m.,  local
time,  on the Closing  Date,  at the  offices of Hunton &  Williams,  Riverfront
Plaza, East Tower, 951 East Byrd Street, Richmond,  Virginia, or such other time
and place as the parties may mutually agree in writing.

            1.15. Closing Balance Sheet.

      "Closing Balance Sheet" shall mean the unaudited ProForma Balance Sheet of
the Business  setting forth the Purchased  Assets and Assumed  Liabilities as of
the  Closing  Date,  prepared by  representatives  of Buyer in  accordance  with
Section 2.2 hereof.

            1.16. Closing Date.

      "Closing Date" shall mean March 1, 1999, or such other date as the parties
may mutually agree in writing.

<PAGE>

            1.17. Code.

      "Code" shall mean the Internal  Revenue Code of 1986, as amended,  and any
predecessor thereto.

            1.18. Computer Assets.

      "Computer  Assets"  shall mean the  computer  hardware  owned or leased by
Sellers,  used in the  operation of the Business and located on the Premises and
listed on  Schedule  1.18,  and all  software  owned or  licensed by Sellers and
installed in such computer hardware.

            1.19. Contaminant.

      "Contaminant" means any waste, pollutant,  hazardous or toxic substance or
waste,  petroleum,  petroleum-based  substance or waste,  special waste,  or any
constituent of any such substance or waste.

            1.20. Contracts.

      "Contracts"  shall mean those  contracts,  agreements,  blanket  and other
purchase  orders,  leases of personal or moveable  property  (such as computers,
copiers and  vehicles),  sales orders,  license  agreements,  relationships  and
commitments and invoices  related  thereto,  to which either Seller on behalf of
the  Business is a party or by which either  Seller is bound being  specifically
listed on Schedule 1.20 hereto.

            1.21. Customer List.

      "Customer List" shall mean the customer list of the Business,  in the form
reasonably  specified by Buyer,  and  delivered by Sellers to Buyer prior to the
date of this Agreement and updated at Closing.

            1.22. Effective Time.

      "Effective  Time" shall mean 12:01 a.m.,  Richmond,  Virginia time, on the
Closing Date.

<PAGE>

            1.23. Employee Benefit Plan.

      "Employee  Benefit Plan" shall mean an "employee  benefit plan" as defined
in Section 3(3) of ERISA.

            1.24. Employees.

      "Employees"  shall  mean  the  employees  of  Sellers  necessary  for  the
operation of the Business as listed on Schedule 1.24 hereto.

            1.25..Employment Agreements.

      "Employment Agreements" shall mean the employment agreements,  dated as of
the Closing Date, between Buyer and the Key Employees.

            1.26. Environmental Law.

      "Environmental  Law"  means  all  Laws  derived  from or  relating  to all
federal,  state and local laws or  regulations  relating  to or  addressing  the
environment,  health or safety, including but not limited to CERCLA and RCRA and
any state equivalent thereof.

            1.27. ERISA.

      "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.

            1.28. ERISA Affiliate.

      "ERISA  Affiliate" shall mean each entity that is a member of a controlled
group or affiliated  service group of which either Seller is a member or that is
under common control with either Seller  (within the meaning of Section  414(b),
414(c), 414(m) or 414(o) of the Code).

            1.29. Excluded Assets.

      "Excluded Assets" shall mean (i) all cash and cash equivalents  related to
the  Business,  (ii) all assets  listed on Schedule 1.29 and (iii) all assets of
each Seller not used primarily in connection with the Business.

<PAGE>

            1.30. Final Balance Sheet.

      "Final  Balance  Sheet" shall have the meaning as set forth in Section 2.2
hereof.

            1.31. Financial Statements.

      "Financial  Statements"  shall  mean  the  internally  prepared  unaudited
ProForma  Balance Sheet of the Business  setting forth the Purchased  Assets and
Assumed  Liabilities as of June 30, 1997, June 30, 1998 and October 31, 1998 and
the Consolidating  Operations Statement of the Business for the years ended June
30, 1998,  June 30, 1997 and June 30, 1996, all of which are attached  hereto as
Schedule 1.31.

            1.32. Fixtures and Equipment.

      "Fixtures  and  Equipment"  shall mean all  tangible  assets  (other  than
Inventory)  associated  with or used in connection with the Business and located
on the  Premises,  including,  but not  limited  to,  all  furniture,  fixtures,
leasehold improvements and equipment located on the Premises, including, without
limitation, those items listed on Schedule 1.32.

            1.33. GAAP.

      "GAAP" shall mean generally accepted  accounting  principles as applied by
Sellers in a manner consistent with prior periods.

            1.34. Initial Purchase Price.

      "Initial Purchase Price" shall mean $35,000,000 in cash.

            1.35. Intangibles.

      "Intangibles"  shall mean the following  categories of intangible property
owned or licensed by Sellers and necessary for the operation of the Business and
listed on Schedule 1.35: all inventions,  patents and patent  applications;  all
registered and unregistered trademarks, service marks, trade dress, logos, trade
names and brand names, and any combination of such names, including all goodwill
associated  therewith  and  all  applications,  registrations  and  renewals  in
connection   therewith;   all  copyrightable   works,  all  copyrights  and  all
applications,  registrations  and renewals in  connection  therewith;  all trade
secrets and confidential  business  information  (including ideas,  research and
development, know-how, compositions, designs, drawings, specifications, customer
and supplier lists,  pricing and cost  information and business and market plans
and proposals);  all computer  software and source code (including hard copy and
soft copy as well as all data and related documentation);  all financial models;
all  accounting  systems,  and all other  intellectual  or industrial  property,
provided,  however,  Intangibles  shall  specifically  exclude  all  Intangibles
related to the Retained Business.

<PAGE>

            1.36. Inventory.

      "Inventory"  shall mean all of Sellers'  inventories  of raw materials and
work in process, good and useable by the Business, excluding any obsolete items;
provided,  however,  Inventory shall specifically  exclude all paper supplied by
Gould.
            1.37. Joint Marketing Agreement.

      "Joint Marketing Agreement" shall mean the joint marketing agreement to be
entered  into between  Buyer and Parent,  the  principal  terms of which are set
forth on Exhibit D attached hereto.

            1.38. Key Employees.

      "Key  Employees"  shall mean Mr. Alan J. Roberts,  Mr. H. Johnson  Mullis,
Jr., Mr. David Burkhardt, Mr. James A. Casteen, Mr. William E. Downs, Mr. George
M. Lee, Mr. William A. Nanny, Jr., Mr. Harry Pollock, Mr. Michael E. Ransom, Mr.
Daniel Sullivan,  Mr. Todd E. Wilson and Rusty E. Ziegler, with whom Buyer shall
enter   into   Employment   Agreements   in   accordance   with   Section   5.7.

<PAGE>

            1.39. Knowledge.

      "Knowledge"  as  to  Sellers  shall  mean  the  actual  knowledge,   after
reasonable inquiry, of H. Johnson Mullis, Jr., Steven R. Isaac, David E. Bosher,
Bruce V. Thomas, C. Stephenson Gillispie, Jr., Vickie Templeman, Carla S. Keeney
and David Butler.

            1.40. Law.

      "Law" shall mean any federal,  state,  local or other law or  governmental
requirement  of any kind,  and the rules,  regulations  and  orders  promulgated
thereunder.

            1.41. October Balance Sheet.

      "October  Balance  Sheet"  shall mean the  internally  prepared  unaudited
ProForma  Balance Sheet of the Business  setting forth the Purchased  Assets and
Assumed Liabilities as of October 31, 1998, included in the Financial Statements
attached hereto.

            1.42. OSHA.

      "OSHA" means the Occupational  Safety and Health Act, 29 U.S.C. ss.ss. 651
et seq.,  any amendment  thereto,  any successor  statute,  and any  regulations
promulgated thereunder.

            1.43. Parent.

      "Parent"  shall  mean  Cadmus  Communications   Corporation,   a  Virginia
corporation and the parent entity of Sellers.

            1.44. Permits.

      "Permits"   shall  mean  all   governmental   approvals,   authorizations,
registrations,  permits and licenses owned by either Seller that are used in the
operation of the Business,  and that may be transferred to Buyer,  which Permits
are listed on Schedule 1.44 hereto.

<PAGE>

            1.45. Permitted Liens.

      "Permitted  Liens"  shall mean the liens  listed on Schedule  1.45 hereto,
together with liens for taxes not yet due and payable and encumbrances which, do
not materially  detract from the value of or materially  impair the existing use
of the property affected by such encumbrance.

            1.46. Person.

      "Person"   shall  mean  any   individual,   corporation,   proprietorship,
partnership, limited liability company, trust or other legal entity.

            1.47. Prepaid Assets.

      "Prepaid  Assets"  shall mean all prepaid  property  taxes,  expenses  and
deposits of Sellers used in the  operation of the  Business,  other than prepaid
insurance premiums, which Prepaid Assets are listed on Schedule 1.47.

            1.48. Premises.

      "Premises" shall mean the real property and  improvements  owned or leased
by Sellers and used in the operation of the  Business,  as described on Schedule
1.48 attached hereto.

            1.49. Printing Services Agreement.

      "Printing  Services  Agreement" shall mean the printing services agreement
substantially in the form of Exhibit E attached hereto.

            1.50. Purchased Assets.

      "Purchased  Assets"  shall mean all of the assets used in or  necessary to
the operation of the  Business,  including but not limited to:

                  (a) the Accounts;
                  (b) the Assumed Leases;
                  (c) the Books and Records;
                  (d) the Computer Assets;
<PAGE>

                  (e) the Contracts;
                  (f) the Customer List;
                  (g) the Fixtures and Equipment;
                  (h) the Intangibles;
                  (i) the Inventory;
                  (j) the Permits;
                  (k) the Prepaid Assets;

                  (l) all of Sellers rights,  claims or causes of action against
third  parties  relating to the  Purchased  Assets  arising out of  transactions
occurring prior to the Closing Date; and
                  (m)  Sellers  interest  in  and to all  telephone,  telex  and
telephone  facsimile numbers and other directory  listings utilized primarily in
connection with the Business;
      but shall specifically exclude the Excluded Assets.

            1.51. RCRA.

      "RCRA" means the Resource  Conservation and Recovery Act, 42 U.S.C. ss.ss.
6901 et  seq.,  and any  successor  statute,  and  any  regulations  promulgated
thereunder.

            1.52. Release.

      "Release" means release,  spill, emission,  leaking,  pumping,  injection,
deposit, disposal, discharge,  dispersal, leaching or migration of a Contaminant
into the  environment  or into or out of any Business  property,  including  the
movement of Contaminants through or in the air, soil, surface water, groundwater
or Business property.

            1.53. Remedial Action.

      "Remedial Action" means actions required to by Governmental  Authority (i)
clean up, remove,  treat or in any other way address  Contaminants in the indoor
or outdoor  environment;  (ii)  prevent  the  Release or  threatened  Release or
minimize the further Release of Contaminants or (iii)  investigate and determine
if a remedial  response is required by a  Governmental  Authority  and to design
such a response  and  post-remedial  investigation,  monitoring,  operation  and
maintenance.

<PAGE>

            1.54. Retained Business.

      "Retained  Business"  shall mean all assets and  operations of Sellers not
included in the Purchased Assets,  including, but not limited to, all assets and
operations used in Sellers' "Rack Brochure"  business,  the Excluded Assets, the
business  associated with Cadmus Specialty  Packaging and Promotional  Printing,
and the businesses of Sellers and Parent, other than the Business.

            1.55. Retained Liabilities.

      "Retained  Liabilities"  shall mean all liabilities or obligations of each
Seller,  direct or  indirect,  known or  unknown,  absolute or  contingent,  not
expressly assumed by Buyer pursuant to the Assignment and Assumption  Agreement,
including without limitation (i) any intra-company or inter-company  obligations
between  each  Seller  or any of its  Affiliates  and  the  Business;  (ii)  any
obligation  of the Business  with respect to  indebtedness  for borrowed  money;
(iii) all liabilities relating to the Retained Business; (iv) any liabilities in
respect of Taxes for which  either  Seller is liable,  except for (A) Taxes that
Buyer is to pay under Section 2.4 and (B) property taxes with respect to periods
(or portions thereof) after the Closing Date; (v) any liabilities or obligations
in respect of any Excluded Assets; (vi) any liabilities in respect of the claims
or proceedings  described in Schedule 3.5; (vii) any liabilities and obligations
related to, associated with or arising out of (i) the occupancy,  operation, use
or control of any of the  Premises on or prior to the  Closing  Date or (ii) the
operation of the Business on or prior to the Closing Date, in each case incurred
or imposed by any Environmental Law (including,  without limitation, any Release
of  any  Contaminant  on,  at or  from  (1)  the  Premises,  including,  without
limitation,  all  facilities,  improvements,  structures and equipment  thereon,
surface water thereon or adjacent thereto and soil or groundwater thereunder, or
any conditions whatsoever on, under or in the vicinity of such real property) or
(2) any real property or facility owned by a third Person to which  Contaminants
generated  by the  Business  were sent for  treatment  or disposal  prior to the
Closing  Date;  (viii) except as provided in Section 5.7 (relating to the shared
severance  obligation  described  therein),  all  liabilities,  whether  direct,
indirect,  contingent  or  otherwise,  relating to all employee  benefit  plans,
programs, agreements or arrangements of any kind whatsoever of either Seller and
its  Affiliates;  and  (ix)  accrued  liabilities  of any  kind  required  to be
reflected on the Closing  Balance Sheet  prepared in accordance  with GAAP which
were not reflected thereon as a dollar amount.

<PAGE>

            1.56. Seller or Sellers.

      "Seller" or "Sellers" shall mean each of Washburn Graphics,  Inc., a North
Carolina corporation and Washburn of New York, Inc., a New York corporation.

            1.57. Sellers' Closing Certificate.

      "Sellers'  Closing  Certificate"  shall  mean the  certificate  of Sellers
substantially in the form of Exhibit F hereto.

            1.58. Services Agreement.

      "Services   Agreement"  shall  mean  the  transition   services  agreement
substantially in the form of Exhibit G hereto.

            1.59. Significant Customer.

      "Significant  Customer"  shall mean each of the ten largest  customers  of
Sellers, collectively, as listed on Schedule 1.59.

<PAGE>

            1.60. Tax or Taxes.

      "Tax" or "Taxes" shall mean: (i) any federal,  state,  county,  local,  or
other net income,  gross income,  gross receipts,  windfall  profit,  severance,
property,  production,  sales,  use,  license,  excise,  franchise,  employment,
payroll,  withholding,  alternative or add-on minimum, ad valorem,  value added,
transfer,  stamp,  or  environmental  tax,  or  any  other  tax,  custom,  duty,
governmental  fee or other  like  assessment  or charge of any kind  whatsoever,
together  with any  interest or penalty,  addition to tax or  additional  amount
imposed by any governmental authority; and (ii) any liability for the payment of
amounts with  respect to payments of a type  described in clause (i) as a result
of being a member of an affiliated,  consolidated, combined or unitary group, or
as a result of any obligation under any Tax sharing arrangement or Tax indemnity
agreement.

            1.61. Tax Return.

      "Tax Return" shall mean any report, return,  information return, statement
or other information required to be supplied to a taxing authority in connection
with Taxes (including any attached  schedules),  including,  without limitation,
any return of an  affiliated  or  combined or unitary  group,  claim for refund,
amended return, or declaration of estimated Tax.

                                   ARTICLE II
                  PURCHASE AND SALE; ASSIGNMENT AND ASSUMPTION

            2.1.  Sale of Purchased Assets.

      (a) At the  Closing,  Sellers  shall sell,  convey,  transfer,  assign and
deliver to Buyer the  Purchased  Assets,  free and clear of all  liens,  claims,
mortgages or encumbrances,  except for Permitted Liens. Sellers will execute and
deliver the Bill of Sale and such other  documents of transfer and assignment as
may be necessary to consummate the foregoing.

      (b) At the Closing,  Buyer shall purchase the Purchased Assets and in full
payment  therefor (i) shall assume all of Sellers' rights and obligations  under
the  Assumed  Liabilities  and  (ii)  shall  pay  Sellers  by wire  transfer  in
immediately available funds an amount equal to the Initial Purchase Price.

<PAGE>

            2.2.  Adjustment of Purchase Price.

      (a) Within 45 days after the Closing Date,  representatives of Buyer shall
prepare and deliver to Sellers a draft  Closing  Balance Sheet as of the Closing
Date, prepared in a manner consistent with the October Balance Sheet except: (i)
that there shall be no reserves  recorded  for  Accounts,  (ii) with  respect to
Inventory, representatives of Buyer and Sellers will jointly determine the value
thereof at the lower of cost or market and the portion thereof which is not good
and useable by the  Business or  obsolete,  and  Inventory,  as reflected on the
Closing  Balance Sheet,  shall be reduced by the amounts of such Inventory which
is not good and useable by the  Business or obsolete and (iii) there shall be no
depreciation  taken for the period  commencing on October 31, 1998 and ending on
the Closing  Date.  If either  Seller  shall have any  objections  to such draft
balance sheet, it will deliver a detailed statement describing its objections to
the other party within 15 days after receipt thereof. Buyer and Sellers will use
their  reasonable  best  efforts  to  resolve  any such  objections.  If a final
resolution is not obtained within 10 days after Buyer has received the statement
of  objections,  Buyer and  Sellers  will  select an  accounting  firm  mutually
acceptable to them to resolve any remaining objections. If Buyer and Sellers are
unable to agree on the choice of an accounting  firm, they will select a "Big 5"
firm by lot after  excluding  Arthur  Andersen,  LLP. The accounting  firm shall
resolve the  unresolved  objections  as promptly as reasonably  practicable  and
deliver written notice to each of Buyer and Sellers setting forth its resolution
of the disputed matters.  In addition,  if Buyer and Sellers have a dispute over
the determination of Inventory the accounting firm will resolve such dispute.

      (b) Buyer will revise the draft Closing Balance Sheet, as appropriate,  to
reflect  the  resolution  of all  objections  (as agreed  upon by the parties or
directed by such  accounting  firm) and deliver  the  revised  balance  sheet to
Sellers  within 5 days after the  resolution  of such  objections.  Such revised
balance sheet shall constitute the "Final Balance Sheet."

<PAGE>

      (c) The  Initial  Purchase  Price is  subject  to  adjustment,  upward  or
downward  on a dollar  for dollar  basis,  based upon the change in the net book
value between the October  Balance Sheet and the Final Balance Sheet.  "Net book
value"  shall be measured by the  difference  between the  Purchased  Assets and
Assumed  Liabilities as reflected on the applicable  balance sheet.  If the "net
book value"  reflected on the Final  Balance Sheet is greater than the "net book
value"  reflected on the October Balance Sheet,  Buyer shall pay Sellers in cash
the amount of the  difference.  If the "net book value"  reflected  on the Final
Balance Sheet is less than the "net book value" reflected on the October Balance
Sheet, Seller shall pay Buyer in cash the amount of the difference.  Any payment
required  by this  subsection  shall be made  within  five days  after the Final
Balance Sheet is finally determined. The Closing Balance Sheet is to reflect (i)
prepaid  property  taxes as an asset and (ii) accrued  property taxes payable by
the  person  who is the  owner  of the  property  after  the  Closing  Date as a
liability.  The  parties  agree  that all  property  taxes  (including,  without
limitation, property taxes payable by the tenant or lessee under any lease) will
be  pro-rated  as of the  Closing  Date  and  that,  notwithstanding  any  other
provision of this  Agreement,  the  economic  burden of any property tax will be
borne by Sellers for all periods (or portions  thereof) through the Closing Date
("Pre-Closing  Period") and by Buyer for all periods (or portions thereof) after
the Closing Date ("Post-Closing Period"). Accordingly, notwithstanding any other
provision  of this  Agreement,  (i) if either  Seller  pays a property  tax with
respect to a Post-Closing  Period,  Buyer will reimburse such Seller upon demand
for the  amount of such  property  tax to the extent it is not  reflected  as an
asset on the Final  Balance  Sheet;  and (ii) if Buyer pays a property  tax with
respect to a Pre-Closing  Period,  the  appropriate  Seller will reimburse Buyer
upon  demand  for  the  amount  of such  property  tax to the  extent  it is not
reflected as a liability on the Final Balance Sheet.

      (d) If any unresolved  objections are submitted to an accounting  firm for
resolution as provided above,  Buyer and Sellers will share equally the fees and
expenses of such accounting firm.

            2.3.  Collection of Accounts.

      (a) During the 90-day period  following the Closing Date (the  "Collection
Period"),  Buyer shall  collect the Accounts in accordance  with its  collection
practices,  except that with respect to any particular  Account,  Buyer shall be
under  no  obligation  to  commence  or not to  commence  litigation  to  effect
collection.  Buyer shall not make any adjustment,  concession or settlement with
respect to any particular Account without first obtaining the written consent of
Sellers, which shall not be unreasonably withheld or delayed.

      (b) After the Collection Period and through the 30 days thereafter,  Buyer
may notify  Sellers of  Buyer's  desire to sell all of an Account  which is then
outstanding  (a  "Reassigned  Account").  Any such notice to Sellers shall be in
writing,  shall  include a  certification  by Buyer  that Buyer has not made any
adjustment,  concession or settlement  with respect to such  Reassigned  Account
that Buyer desires to sell to Sellers, except as contemplated in Section 2.3(a),
and shall be signed by any Senior Vice  President  of R.R.  Donnelley  Financial
Business Unit. Within five days of receipt of such notice,  Sellers shall pay to
Buyer,  by wire transfer of immediately  available funds to such bank account as
Buyer  shall  designate  in writing to  Sellers,  the amount of such  Reassigned
Account set forth in Buyer's  notice,  plus interest  thereon,  if any, from the
fifth day after receipt of Buyer's notice to the date of payment  thereof at the
Agreed Rate therefor. Upon receipt of payment therefor,  Buyer shall transfer to
Sellers,  without recourse or warranty, all of Buyer's right, title and interest
in, to and under  such  Reassigned  Account  sold to  Sellers  pursuant  to this
Section 2.3. If Buyer shall receive any remittance from any account debtors with
respect to any account  transferred to Sellers  pursuant to this Section 2.3(b),
Buyer shall  endorse such  remittance  to the order of Sellers and forward it to
Sellers immediately upon receipt thereof.

<PAGE>

      (c) If, after the Closing Date,  Sellers shall receive any remittance from
any account  debtors  with  respect to the Accounts  (excluding  any  Reassigned
Accounts  reassigned to Sellers),  Sellers shall endorse such  remittance to the
order of Buyer and forward it to Buyer immediately upon receipt thereof, and any
such  amounts  shall be deemed to have been  collected  by Buyer for purposes of
this Section 2.3.

      (d)  The  parties  agree  that,  in  the  absence  of  specific   customer
instructions  to apply,  or not to apply,  payments  to specific  invoices,  the
payments  received by Buyer from  customers  of the Business  subsequent  to the
Closing Date shall be applied  against the oldest  outstanding  balances of such
Accounts.

      (e) During  the  period  beginning  after the time  Buyer  re-assigns  any
Accounts to Seller, a payment from a customer shall be deemed to be payment of a
Reassigned Account if (i) instructions  received from the customer indicate that
the payment applies to the Reassigned  Account,  (ii) Buyer has not continued to
do business  with the customer  after the Closing Date or (iii) for the first 90
days after the  assignment of the Reassigned  Account,  the payor shall not have
directed,  in writing, that the amount paid be applied to any receivable that is
not a Reassigned Account.

            2.4. Transfer or Sales Taxes.

      Buyer will pay all sales, stamp,  recordation,  real property transfer and
gains,  and  similar  Taxes  arising  out of, or related  to,  the  transactions
contemplated  by this  Agreement.  Each of the Sellers agrees to timely sign and
deliver such  certificates  or forms as may be reasonably  requested by Buyer at
least one day before the Closing Date and reasonably  necessary and  appropriate
to establish an exemption from (or otherwise  reduce),  and cooperate with Buyer
as reasonably necessary to file Tax Returns with respect to, such Taxes.

<PAGE>

            2.5. Allocation of Purchase Price.

      (a)  Within  30 days  after  determination  of the  final  Purchase  Price
pursuant  to Section  2.2,  Buyer  shall  deliver  to  Sellers a  schedule  (the
"Allocation Schedule") allocating the Purchase Price (including, for purposes of
this Section 2.5, any other consideration paid to Sellers, including the Assumed
Liabilities to the extent they constitute part of the amount realized by Sellers
for federal  income tax purposes and excluding any amount  constituting  imputed
interest or original  issue  discount  for such  purposes)  among the  Purchased
Assets.  Sellers shall have a period of 15 days after receipt of the  Allocation
Schedule  to  present  in  writing  to Buyer  any  objections  thereto,  and the
Allocation  Schedule  shall be deemed to be  acceptable  to  Sellers,  and shall
become final and binding on the parties, except to the extent that Sellers shall
have presented such written  objection within such time period.  If Seller shall
raise any such objection  within such 15 day period,  Buyer and Sellers will use
their  reasonable best efforts to resolve such objection.  If a final resolution
is not  obtained  within 10 days  after  Buyer has  received  the  statement  of
objections,  the dispute shall be submitted to a mutually acceptable  accounting
firm or otherwise resolved in accordance with the procedure set forth in Section
2.2(a).  This allocation is intended to comply with the  requirements of Section
1060 of the Code and the  regulations  thereunder,  and no party  shall take any
position inconsistent with this allocation for income tax purposes,  except that
Buyer's cost for the Purchased Assets may differ from the amount so allocated to
the extent necessary to reflect Buyer's capitalized acquisition costs other than
the amount  realized by Sellers.  Buyer and Sellers each agrees to file Internal
Revenue Service From 8594, and all applicable  federal state,  local and foreign
Tax Returns, in accordance with the final Allocation Schedule. Buyer and Sellers
each  agrees  to  provide  the  other  promptly  upon  request  with  any  other
information required to complete Form 8594.


                                   ARTICLE III
              REPRESENTATIONS AND WARRANTIES OF SELLERS AND PARENT

      Sellers and Parent, jointly and severally,  represent and warrant to Buyer
that:

            3.1.  Organization and Good Standing; Subsidiaries and Investments.

      (a) Each of the Sellers is a corporation duly organized,  validly existing
and in good standing  under the laws of the State of North Carolina or the State
of New York, as the case may be, and each has full corporate power and authority
to enter  into and  perform  its  obligations  hereunder.  Each  Seller has full
corporate  power to carry on the  Business as it is now being  conducted  and to
own,  operate  and hold under  lease its assets  and  properties  as, and in the
places where, such properties and assets now are owned, operated or held.

      (b) Parent is a corporation  duly organized,  validly existing and in good
standing under the laws of the  Commonwealth  of Virginia and has full corporate
power and authority to enter into and perform its obligations hereunder.  Parent
has full corporate  power to carry on the Business as it is now being  conducted
and to own,  operate and hold under lease its assets and  properties  as, and in
the places where, such properties and assets now are owned, operated or held.

      (c) Except as set forth in Schedule  3.1,  each of the  Sellers  does not,
directly or  indirectly,  (i) own, of record or  beneficially,  any  outstanding
voting  securities or other equity  interests in any  corporation,  partnership,
joint venture or other entity which is involved in or relates to the Business or
(ii) control any corporation,  partnership,  joint venture or other entity which
is  involved  in or relates to the  Business,  other than its  ownership  of the
Purchased Assets.

<PAGE>

            3.2.  Foreign Qualification.

      Schedule 3.2 attached  hereto lists each foreign  jurisdiction  where each
Seller is  qualified  to do  business  as a foreign  corporation  and is in good
standing. There is no jurisdiction where the failure of either Seller to qualify
to do business as a foreign  corporation would have a material adverse effect on
either Sellers' operations, financial condition or assets.

            3.3.  Authorization; Enforceability.

      The execution,  delivery and performance by Parent and each of the Sellers
of this  Agreement  and of all of the  documents  and  instruments  contemplated
hereby to which it is a party are within the corporate  power of Parent and each
of the Sellers and have been duly authorized by all necessary  corporate  action
of Parent and each of the Sellers.  This  Agreement is, and the other  documents
and  instruments  required  hereby to which  Parent and each of the Sellers is a
party will be, when executed and delivered by Parent and each of the Sellers and
the parties thereto, the valid and binding obligations of Parent and each of the
Sellers,  enforceable  against Parent and each of the Sellers in accordance with
their respective terms.

            3.4. Conflicts or Violations; Required Consents.

      Except as set forth in Schedule  3.4(a)  attached  hereto,  the execution,
delivery and  performance of this Agreement by Parent and each of the Sellers do
not and will not  violate or  conflict  with any  provision  of the  Articles of
Incorporation or Bylaws of Parent or either Seller, as the case may be, any Law,
judgment,  order or decree binding on Parent or either Seller,  or any Contract,
Assumed Lease, mortgage, deed of trust, indenture,  Permit, license,  franchise,
commitment,  authorization  or concession,  or other  agreement or instrument to
which Parent or either Seller is a party or by which it is bound.

      Except as set forth on Schedule  3.4(b)  hereto,  except for the filing of
Premerger Notification and Report Forms under the HSR Act and except for certain
of the equipment  leases listed on Schedule 1.6(b) which have annual payments of
less than  $25,000,  no  consent  of any  Person,  and no notice  to,  filing or
registration  with, or authorization,  consent or approval of, any governmental,
regulatory or  self-regulatory  agency is necessary or is required to be made or
obtained by Parent or either Seller in connection  with the  consummation of the
transactions contemplated by this Agreement.

<PAGE>

            3.5.  Litigation.

      Except  as set  forth on  Schedule  3.5  hereto,  there is no  litigation,
arbitration proceeding,  governmental  investigation,  citation or action of any
kind  pending or, to the  Knowledge  of either  Seller,  proposed or  threatened
against  either  Seller,  relating to the Business,  the Purchased  Assets,  the
Assumed  Liabilities,  this Agreement or the  transactions  contemplated by this
Agreement.

            3.6.  Compliance with Law.

      Except as set forth on Schedule 3.6. hereto,  the conduct of the Business,
the use of the Purchased  Assets and  performance  under the Contracts by either
Seller has not violated,  since January 1, 1998,  and currently does not violate
or conflict with any Law.

            3.7.  Environmental Conditions.

      Except as set forth in Schedule  3.7, to each of the  Sellers'  Knowledge:

      (a) the  operations of the Business  comply in all material  respects with
all applicable Environmental Laws;

      (b)  each  Seller  has,  in  respect  of  the   Business,   obtained   all
environmental,  health and safety Permits necessary for its operation,  all such
Permits are in good  standing and each Seller is in  compliance  in all material
respects with all terms and conditions of such Permits;

<PAGE>

      (c) none of the  Sellers,  with  respect  to the  Business,  or any of the
Premises or, to either Sellers' Knowledge, any prior properties or operations of
the  Business,  is  subject  to any  on-going  investigation  by,  order from or
agreement  with any Person  (including  without  limitation  any prior  owner or
operator of Division  Property)  respecting (i) any Environmental  Law, (ii) any
Remedial  Action  or (iii) any claim of Losses  and  Expenses  arising  from the
Release or threatened Release of a Contaminant into the environment;

      (d)  Neither  Seller  is,  with  respect to the  Business,  subject to any
judicial or administrative  proceeding,  order,  judgment,  decree or settlement
alleging or addressing a violation of or liability under any Environmental Law;

      (e) Neither Seller has with respect to the Business:

          (i)  reported a Release of a hazardous  substance  pursuant to Section
103(a) of CERCLA, or any state equivalent;

          (ii) filed a notice pursuant to Section 103(c) of CERCLA;

          (iii) filed notice  pursuant to Section 3010 of RCRA,  indicating  the
generation of any hazardous waste, as that term is defined under 40 CFR Part 261
or any state equivalent; or

          (iv) filed any notice under any applicable Environmental Law reporting
a substantial violation of any applicable Environmental Law;

      (f) there is not now, nor to the Knowledge of either Seller has there ever
been, on or in any of the Premises:

<PAGE>

          (i) any  treatment,  recycling,  storage or disposal of any  hazardous
waste,  as that term is defined  under 40 CFR Part 261 or any state  equivalent,
that requires or required a Permit pursuant to Section 3005 of RCRA; or

          (ii) any underground  storage tank or surface  impoundment or landfill
or waste pile.

      (g)  there  is not now on or in any of the  Premises  any  polychlorinated
biphenyls  (PCB) used in pigments,  hydraulic oils,  electrical  transformers or
other equipment;

      (h) Neither Seller has, with respect to the Business,  received any notice
or claim,  including information requests under CERCLA, to the effect that it is
or may be liable to any Person as a result of the Release or threatened  Release
of a Contaminant;

      (i) no environmental encumbrance has attached to any of the Premises; and

      (j) any  asbestos-containing  material  which  is on or part of any of the
Premises is in good repair  according  to the current  standards  and  practices
governing  such  material,  and its presence or  condition  does not violate any
currently applicable Environmental Law.

            3.8.  Permits.

      The  Permits  represent  all permits  required to operate the  Business as
currently  conducted by Sellers,  and there are no additional  permits for which
the failure to obtain  would have a material  adverse  effect on the Business or
the Purchased  Assets.  The Permits are in full force and effect,  and have been
and are being complied with in all material respects.  Each Seller agrees to use
its best  efforts  to assist  Buyer in  effecting  the  replacement,  renewal or
transfer of the Permits.  In addition,  Seller agrees to use its best efforts to
assist Buyer in obtaining any air and waste water  permits  necessary to operate
the Business as currently conducted.

<PAGE>

            3.9.  Taxes.

      Except as set forth on  Schedule  3.9  hereto:  (i) each Seller has timely
filed or caused to be filed all required Tax Returns  relating to the  Purchased
Assets,  the Assumed  Liabilities and the Business which, if not so filed, could
reasonably be expected to have a material adverse effect on the Purchased Assets
or the results of  operations  of the Business and has timely paid all Taxes due
pursuant to such Tax Returns,  and there are no unpaid Taxes due and payable the
nonpayment of which could result in a lien upon any of the  Purchased  Assets or
could cause  Buyer to incur any  liability  other than the Assumed  Liabilities;
(ii) all such Tax Returns are complete  and  accurate in all  material  respects
and, to the extent applicable, disclose all Taxes required to be paid in respect
of the Purchased Assets, the Assumed  Liabilities and the Business;  (iii) there
is no action,  suit,  investigation,  audit,  claim or assessment pending or, to
either  Seller's  Knowledge,  proposed  with respect to Taxes  applicable to the
Purchased Assets, the Assumed Liabilities and the Business;  (iv) neither Seller
has waived any  statute of  limitations  in respect of Taxes  applicable  to the
Purchased  Assets,  the Assumed  Liabilities  and the  Business  which waiver is
currently in effect; (v) all monies required to be withheld by either Seller for
Taxes (including,  without limitation, from employees of the Business for income
Taxes and social  security and other payroll Taxes) with respect to the Business
have been  collected  and  withheld,  and either paid to the  respective  taxing
authorities  or set  aside in  accounts  for such  purpose;  (vi) to the  extent
constituting  an  Assumed  Liability,  no  payment  or  other  benefit,  and  no
acceleration of the vesting of any options, payments or other benefits, will be,
as a  direct  or  indirect  result  of the  transactions  contemplated  by  this
Agreement, an "excess parachute payment" to a "disqualified individual" as those
terms are  defined  in  Section  280G of the Code and the  Treasury  Regulations
thereunder; and (vii) no payment to either Seller contemplated by this Agreement
is subject to withholding under Section 1445 of the Code.

<PAGE>

            3.10. Title to Purchased Assets.

      The Sellers own good,  valid and marketable  title to all of the Purchased
Assets free and clear of any and all mortgages,  liens,  encumbrances,  charges,
claims,  restrictions,   pledges,  security  interests  or  impositions,  except
Permitted  Liens.  Upon delivery of the Purchased Assets to Buyer at the Closing
and upon Buyer's  payment of the Initial  Purchase  Price and  assumption of the
Assumed  Liabilities,  good, valid and marketable title to the Purchased Assets,
free  and  clear  of  all  mortgages,  liens,  encumbrances,   charges,  claims,
restrictions,  pledges,  security  interests or  impositions,  except  Permitted
Liens, will pass to Buyer.

            3.11. Condition of Fixtures and Equipment.

      The  Fixtures  and  Equipment,  taken  as a whole,  are in good  operating
condition and repair,  subject to ordinary wear and tear,  and are generally fit
for the purposes for which they are being  utilized.  The Fixtures and Equipment
listed on Schedule  1.32 hereto  constitute  all  Fixtures  and  Equipment as of
October 31, 1998, with a book value in excess of $2,000 per item.

            3.12. Customer List.

      Prior to the date  hereof,  the Sellers  will have  delivered to Buyer the
Customer  List and such  Customer  List will be updated by Sellers  prior to the
Closing.  Except as set forth in Schedule  3.12,  neither Seller has received in
writing any notice of, nor to the Knowledge of either Seller,  does there exist,
any actual or threatened  termination,  cancellation  or  limitation  of, or any
modification  or change in, the  business  relationship  of the Sellers with any
Significant Customer.

            3.13.Contracts and Assumed Leases.

      The Sellers have provided to Buyer true and complete  copies of all of the
Contracts  and  Assumed  Leases   (including  all  amendments  or  modifications
thereto).  Each  Contract and each Assumed Lease is in full force and effect and
is enforceable in accordance with its terms,  except as the enforcement  thereof
may be limited or otherwise affected by bankruptcy, insolvency,  reorganization,
moratorium or other laws generally affecting the rights of creditors and subject
to general equity principles (whether  considered at law or in equity).  Neither
Seller is,  and to the  Knowledge  of  Sellers  no other  party is, in breach or
violation  of, or default  under,  and to the  Knowledge of Sellers  there is no
valid basis for a claim of breach or violation  of, or default  under,  any such
Contracts or Assumed Leases, and no event has occurred that constitutes or, with
the lapse of time or the  giving of notice,  or both,  would  constitute  such a
breach or violation or default by either Seller, or to the Knowledge of Sellers,
any other party under any of the Contracts or Assumed Leases, thereunder. Except
as set forth on Schedule  3.4(a)  hereto,  all rights  under the  Contracts  and
Assumed Leases may be enjoyed,  and all  obligations or services  required to be
performed,  under the  Contracts  and Assumed  Leases may be performed by Buyer,
without any further  consents or assignments.  Neither Seller has made any prior
assignment of any Contract or Assumed Lease or any of its  respective  rights or
obligations thereunder.

<PAGE>
            3.14. Books and Records.

      The Books and Records are complete  and accurate in all material  respects
and have been  maintained in accordance  with customary  industry  practices and
constitute the Customer List,  the financial and  accounting  records,  purchase
orders  and  invoices,  sales  orders  and sales  order log  books,  credit  and
collection  records,  correspondence  and miscellaneous  records with respect to
customers  and supply  sources and all other  general  correspondence,  records,
books and files relating to the Business,  provided, however, that in connection
with the Books and Records  containing more information than the Business,  only
as such portion relates to the Business.

            3.15. Employment Agreements and Benefits.

      (a) Seller  Plans.  Schedule  3.15 sets forth a true and complete  list of
each Employee  Benefit Plan maintained by either Seller.  Except as disclosed on
Schedule 3.15: (i) neither  Seller has maintained any employee  pension  benefit
plan  subject to Title IV of ERISA,  during the last ten years and (ii)  neither
Seller has been required to contribute to any "multiemployer plan" (as such term
is defined in Section 3(37) of ERISA).

      (b)  Compliance  With Law;  Controlled  Group  Liabilities.  Each Employee
Benefit Plan maintained by either Seller complies,  and has been administered to
comply,  in all material  respects with all  requirements of law and regulations
applicable  thereto,  and there has been no  notice  issued by any  governmental
authority  questioning or  challenging  such  compliance.  There are no actions,
suits or claims (other than routine  claims for benefits)  pending or, to either
Sellers' Knowledge, threatened involving such plans or the assets of such plans.
Neither Seller has any obligations for which Buyer will bear any liability under
any of such  Employee  Benefit  Plans  (whether  welfare  plans or otherwise) to
provide health or death benefits to or in respect of former employees, except as
specifically  required by the continuation  requirements of Part 6 of Title I of
ERISA. No payments will be triggered as a result of the transaction contemplated
by this Agreement for which Buyer will bear any liability (other than the shared
severance  obligation described in Section 5.7). Neither Seller has any material
liability  of any kind  whatsoever,  whether  direct,  indirect,  contingent  or
otherwise,  (i) on account of any violation of the health care  requirements  of
Part 6 of Title I of ERISA or  Section  4980B of the Code,  (ii)  under  Section
502(i) or  Section  502(l) of ERISA or  Section  4975 of the Code,  (iii)  under
Section  302 of ERISA or  Section  412 of the Code,  or (iv)  under  Title IV of
ERISA.

      (c) Indemnity.  Seller hereby agrees to indemnify Buyer and its Affiliates
and to defend and hold Buyer and its  Affiliates  harmless  from and against any
and all liabilities, claims, losses and expenses arising out of any claims by or
in respect of the receipt by Buyer's Code section 401(k) plan of a rollover of a
distribution  from Seller's Code section 401(k) plan payable in connection  with
treating the transactions contemplated by this Agreement as a distribution event
with respect to Seller's  Code section  401(k) plan.  Notwithstanding  any other
provision of this Agreement to the contrary, the indemnitees provided for herein
shall be in addition to those contained in Article VIII, shall not be subject to
any  minimum  or  maximum  amount  of  liability  or other  basket  or  monetary
limitation,  and  shall  survive  until  60 days  after  the  expiration  of the
applicable statute of limitations with respect thereto.

<PAGE>

            3.16. Employee Matters.

      All of the Employees are employed by Sellers. The Employees constitute all
employees  that  are  primarily  engaged  on the date of this  Agreement  in the
operation of the Business.  The Employees  constitute  substantially  all of the
employees necessary for the conduct of the Business.

      Except  for wages  and  benefits  accrued  in the  ordinary  course of the
Business,  Seller is not indebted to nor a creditor of any Employee.  All of the
material independent  contractors currently engaged by Sellers in the conduct of
the Business are set forth on Schedule  3.16(a) hereto.  To Sellers'  Knowledge,
each  Seller  is in  compliance  with all  applicable  federal  and  state  laws
(including,  without limitation,  OSHA) respecting  employment,  wages and hours
with respect to the  Employees and is not liable for any arrears of wages or any
Taxes or penalties for failure to comply with the foregoing. Except as set forth
on  Schedule  3.16(b)  hereto,  no  complaints  have been filed or, to  Sellers'
Knowledge,  have been  threatened  to be filed  against  either  Seller with any
federal,  state, or local court or agency having  jurisdiction over such matters
alleging  that  either   Seller  has  violated  any  Law  governing   employment
discrimination  (of any  kind),  labor-management  relations,  wages and  hours,
safety and health,  immigration,  contracting with government, or any common law
dealing  with  employment.  Neither  Seller  has been  threatened  by any former
employee of the Business with any suit  alleging  wrongful  termination  and, to
Sellers' Knowledge, there are no facts which might form a basis for such a suit.

      Except as set forth on Schedule 3.16(c)  attached hereto,  with respect to
the Employees, neither Seller is a party to, bound by, or negotiating in respect
of any  collective  bargaining  agreement or any other  agreement with any labor
union,  association or other employee group, nor is any Employee  represented by
any labor union or similar association.  No labor union or employee organization
has been certified or recognized as the collective bargaining  representative of
any Employee.  Except as set forth on Schedule 3.16(c)  attached hereto,  to the
Knowledge of either Seller, there are no formal union  organizational  campaigns
or representation  proceedings  underway or formally  threatened with respect to
any  Employee  nor are there any  existing or  threatened  labor  strikes,  work
stoppages, slowdowns, disputes, grievances, unfair labor practice charges, labor
arbitration  proceedings or other disturbances affecting any Employee.  Schedule
1.24  contains  a true and  complete  list of the names,  title and annual  base
salary for the preceding fiscal year for all Employees.

            3.17. Affiliated Transactions.

      Except as set forth on Schedule 3.17 hereto, neither Seller has purchased,
licensed or leased or otherwise  acquired any property or assets or obtained any
services from, or sold,  licensed,  leased or otherwise disposed of any property
or assets or provided  any  services to any  Employee  (except  with  respect to
remuneration  for  services  as an  employee  of  either  Seller),  shareholder,
officer, or director, or affiliate of any of the foregoing.  Except as set forth
on Schedule  3.17 hereto,  neither  Seller owes any  contractual  obligation  or
commitment to any of the foregoing (other than compensation for current services
not yet due and  payable  and  reimbursement  expenses  arising in the  ordinary
course  of  business)  and  none of the  foregoing  owes any  amount  or has any
contractual obligation to either Seller.

<PAGE>

            3.18. Fees and Expenses of Brokers and Others.

      Neither  Seller is committed to any liability for any brokers' or finders'
fees or any similar fees in connection  with the  transactions  contemplated  by
this Agreement,  and has not retained any broker or other intermediary to act on
its behalf in connection with the  transactions  contemplated by this Agreement,
except that Parent has  retained  Lighthouse  Holdings,  LLC to represent it and
Sellers in connection with such  transactions.  Pursuant to a separate agreement
with Parent,  Lighthouse Holdings,  LLC will be paid a fee upon the consummation
of the transactions  contemplated by this Agreement. Such fee and all other fees
and  expenses  (including   attorneys'  and  accountants'  fees)  of  Parent  in
connection with the transactions contemplated herein shall be the responsibility
of Parent.

            3.19. Insurance.

      All of the  insurable  Purchased  Assets are  insured  for the  benefit of
Sellers or are self-insured by Sellers in accordance with Sellers past practices
in the conduct of the Business, and will be so insured through the Closing Date,
in amounts and against risks reasonably deemed adequate by Sellers. Sellers have
delivered complete copies of such policies to Buyer.

            3.20. Intangibles.

      Each Seller owns  exclusively or has the exclusive right to use,  pursuant
to license,  sublicense,  agreement or permission,  all Intangibles necessary or
customarily  used for the  operation of the Business as presently  conducted and
which are listed on Schedule  1.35.  Each item of  Intangibles  owned or used by
either Seller in the conduct of the Business  immediately  prior to Closing will
be owned or  available  for use by Buyer on  substantially  identical  terms and
conditions  immediately  subsequent to the Closing.  To the Sellers'  Knowledge,
each has taken  all  necessary  action  to  maintain  and  protect  each item of
Intangibles  that it owns or uses  and no  owned  item of  Intangibles  has been
abandoned. Each item of Intangibles used by either Seller pursuant to license or
other  authorization  of a third  party is used with the  authorization  of such
third party and, to the Knowledge of either Seller, every other claimant of such
Intangibles  thereto.  (i) To Sellers' Knowledge,  neither Seller has interfered
with,  infringed upon,  misappropriated or otherwise come into conflict with any
intellectual  property  rights of any  third  party;  (ii)  neither  Seller  has
received  any  charge,  complaint,  claim,  demand or notice  alleging  any such
interference,  infringement,  misappropriation or violation (including any claim
that either Seller must license or refrain from using any intellectual  property
rights of any third party); and (iii) to Sellers' Knowledge,  no third party has
interfered with, infringed upon, misappropriated or otherwise come into conflict
with any Intangibles rights of either Seller.

<PAGE>

            3.21. Intentionally Deleted.

            [Intentionally Deleted]

            3.22. Financial Statements.

      The  Financial  Statements  present  fairly the  financial  condition  and
results of  operations  of the  Business  as of the dates,  and for the  periods
indicated.  The Financial  Statements  have been prepared in accordance with the
Books and Records of the Sellers and do not reflect any  transactions  which are
not bona fide transactions.

            3.23. No Adverse Change.

      Except as set forth in Schedule 3.23, since October 31, 1998, the Business
has been  operated  in the  ordinary  course and there has been no change and no
fact or condition  exists or to the Knowledge of either Seller,  is contemplated
or threatened  (other than general economic or industry  conditions) which might
cause such a change in the future in the Purchased  Assets,  or in the condition
or future prospects of the Business,  financial or otherwise, which individually
or in the aggregate,  might have a material  adverse effect on the properties or
condition,  financial or  otherwise,  or in the results of  operations or future
operations, of the Business.  Without limiting the foregoing,  since October 31,
1998, there has not been: (a) any loss,  damage,  condemnation or destruction to
any of the properties of the Business (whether covered by insurance or not); (b)
any loss or to Sellers' Knowledge,  threatened loss of any Significant  Customer
or any Key Employee;  (c) any increase in the rate of compensation payable or to
become payable,  to any Employee,  or any change in any profit  sharing,  bonus,
deferred compensation, savings, insurance, pension, retirement or other employee
benefit plans with any Employee,  other than customary  increases or adjustments
granted  to  Employees  in  accordance  with  past  practice;  (d) any  material
amendment,  termination or modification of any Contract,  except in the ordinary
course of Business and consistent with past practices; (e) any mortgage, pledge,
lien or encumbrance  made on any of the Purchased  Assets,  except for Permitted
Liens;  (f) any sale,  transfer or other  disposition of assets of the Business,
other than in the  ordinary  course of the Business or as  contemplated  by this
Agreement;  (g) any  cancellation  of any debts  owed to or  claims  held by the
Business  (including the  settlement of any claims or litigation)  other than in
the  ordinary  course of the Business  consistent  with past  practice;  (h) any
creation of any indebtedness for borrowed money in respect of the Business;  (i)
any  acceleration  or  delay in  collection  of  notes  or  accounts  receivable
generated by the Business in advance of or beyond their regular due dates or the
dates when the same  would have been  collected  in the  ordinary  course of the
Business consistent with past practice; (j) any delay or acceleration in payment
of any account  payable or other  liability of the Business beyond or in advance
of its due date or the date  when  such  liability  would  have been paid in the
ordinary course of the Business consistent with past practice; or (k) any change
in the accounting principles and practices used by Sellers from those applied in
the  preparation  of the October  Balance  Sheet and the related  statements  of
income and cash flow for the period then ended.

<PAGE>

            3.24. Availability of Assets.


      (a) Except as set forth in Schedule 1.29, the Purchased Assets  constitute
all the assets used in the Business  (including,  but not limited to, all books,
records,  computers and computer programs and data processing  systems),  except
for any such  assets  the  failure  of which to have  would not have a  material
adverse effect on the Buyer's ability to operate the Business.

      (b)  Schedule  3.17 sets  forth a  description  of all  material  services
provided by either  Seller or any Affiliate of either Seller with respect to the
Business  utilizing  either (i) assets not included in the  Purchased  Assets or
(ii) employees not listed in Schedule 1.24.

            3.25. Disclosure.

      None of the  representations  or warranties of Seller and Parent contained
herein and none of the  information  contained in the  Schedules  referred to in
this  Article III is false or  misleading  in any  material  respect or omits to
state a fact  herein  or  therein  necessary  to make the  statements  herein or
therein not misleading in any material respect.

            3.26. Year 2000 Matters.

      The equipment  and the Computer  Assets that are included in the Purchased
Assets (the  "Systems")  are Year 2000  Compliant or, as to Systems that are not
yet Year 2000  Compliant,  all actions  necessary to be taken by Sellers to make
such Systems Year 2000  Compliant by June 30, 1999 have been taken by Sellers or
their  agents.  The term "Year 2000  Compliant"  as used  herein  means that the
Systems  (i) are capable of  recognizing,  processing,  managing,  representing,
interpreting and manipulating  correctly date related data for dates earlier and
later than January 1, 2000,  (ii) have the ability to provide  date  recognition
for any data element,  (iii) have the ability to automatically function into and
beyond  the year 2000  without  human  intervention  and  without  any change in
operations associated with the advent of the year 2000, (iv) have the ability to
correctly interpret data, dates and time into and beyond the year 2000, (v) have
the ability not to produce noncompliance in existing information,  nor otherwise
corrupt  such data into and beyond the year 2000,  and (vi) have the  ability to
correctly process on and after January 1, 2000 data containing dates before that
date.

<PAGE>

                                   ARTICLE IV
                     REPRESENTATIONS AND WARRANTIES OF BUYER

      Buyer hereby represents and warrants to each Seller and Parent that:

            4.1.  Organization.

      Buyer  is a  corporation  duly  organized,  validly  existing  and in good
standing under the laws of the State of Delaware,  and has full corporate  power
and authority to enter into and perform its obligations hereunder.

            4.2.  Authorization; Enforceability.

      The execution,  delivery and performance by Buyer of this Agreement and of
all of the  documents  and  instruments  contemplated  hereby to which each is a
party are within the corporate  power of Buyer and have been duly  authorized by
all  necessary  corporate  action of Buyer.  This  Agreement  is,  and the other
documents  and  instruments  required  hereby to which Buyer is a party will be,
when  executed and  delivered  by Buyer,  the valid and binding  obligations  of
Buyer, enforceable against Buyer in accordance with their respective terms.

            4.3.  No Conflict or Violation; Required Consents.

      The  execution,  delivery and  performance of this Agreement by Buyer does
not and will not  violate or  conflict  with any  provision  of the  Articles of
Incorporation or Bylaws of Buyer, any Law, judgment,  order or decree binding on
Buyer or any  contract,  lease,  mortgage,  deed of  trust,  indenture,  permit,
license, franchise, commitment,  authorization or concession, or other agreement
or instrument applicable to Buyer.

<PAGE>

      Except as set forth on  Schedule  4.3  hereto and except for the filing of
Premerger  Notification  and  Request  Forms  under  the HSR Act and any  filing
requirement  necessary under the Securities Exchange Act of 1934, as amended, no
consent  of any  person,  and no notice  to,  filing or  registration  with,  or
authorization,   consent  or  approval  of,  any  governmental,   regulatory  or
self-regulatory  agency is  necessary  or is  required to be made or obtained by
Buyer in connection with the  consummation of the  transactions  contemplated in
this Agreement.

            4.4.  No Litigation.

      There   is   no   litigation,    arbitration   proceeding,    governmental
investigation,  citation or action of any kind  pending or, to the  knowledge of
Buyer,  proposed or threatened  against Buyer  relating to this Agreement or the
transactions contemplated hereby.

            4.5.  Fees and Expenses of Brokers and Others.

      Buyer is not  committed to any liability for any brokers' or finders' fees
or any similar fees in connection  with the  transactions  contemplated  by this
Agreement,  and has not retained any broker or other  intermediary to act on its
behalf in connection with the transactions contemplated by this Agreement.

                                    ARTICLE V
                      CERTAIN UNDERSTANDINGS AND AGREEMENTS

            5.1.  Conduct of Seller Prior to Closing.

      From the date  hereof  through the  Closing  Date,  each Seller and Parent
shall  cause  the  Business  to be  conducted  in  the  ordinary  course  and in
accordance  with  past  practice  and  shall  not take any  action  inconsistent
therewith,  except as otherwise  permitted by this  Agreement or consented to by
Buyer in writing,  which consent  shall not be  unreasonably  withheld.  Without
limiting the generality of the foregoing, each Seller and Parent shall: (a) keep
full and complete  Books and Records;  (b) maintain in full force and effect the
insurance  policies  heretofore  maintained on the Purchased Assets (or policies
providing   substantially  the  same  coverage);   (c)  take  such  commercially
reasonable  action as may be necessary to preserve the Purchased  Assets in good
condition,  normal wear and tear excepted;  (d) promptly advise Buyer in writing
of any loss or threatened  loss of a Significant  Customer or an Employee or any
other material  adverse change in the Business,  the Purchased Assets or Assumed
Liabilities that has occurred or which each Seller and Parent reasonably believe
will occur; (e) use their best efforts to preserve the Business  intact,  and to
preserve for Buyer the existing goodwill of the suppliers,  customers and others
having  business  relations  with each  Seller and Parent in the  conduct of the
Business;  and (f) comply with all Laws  applicable to each Seller and Parent in
the conduct of the Business.

<PAGE>

            5.2.  Negative Covenants.

      From the date hereof through the Closing Date, each Seller and Parent will
not,  with  respect  to the  Business,  except as  otherwise  permitted  by this
Agreement  or  consented  to by Buyer in writing:  (a) incur any trade  accounts
payable or make any  commitment to purchase  quantities of any item of Inventory
in  excess  of the  respective  normal  levels  in the  ordinary  course  of the
Business;  (b) pledge or hypothecate  any of the Purchased  Assets to secure any
indebtedness;  (c) assign any of the Contracts or Assumed Leases; (d) other than
in the  ordinary  course  of the  Business,  increase  or  decrease  the rate of
compensation of, or pay any unusual compensation to, any Employee, or enter into
any agreement to increase or decrease the rate of compensation of, or to pay any
unusual  compensation  to,  any such  Employee;  (e)  enter  into or  amend  any
collective bargaining agreement, amend any Employee Benefit Plan to increase the
benefits  thereunder  to  Employees,  or create or modify any  pension or profit
sharing plan, bonus, deferred compensation, death benefit, health, or retirement
plan,  or  increase  the level of benefits  under any such plan,  or increase or
decrease any severance or termination  pay benefit or any other fringe  benefit;
(f)  sell  or  dispose  of any of the  Purchased  Assets  otherwise  than in the
ordinary  course of the  Business;  (g) create any  subsidiaries  effecting  the
Business; (h) make any capital expenditures in excess of $50,000 with respect to
the Business  (unless  previously  disclosed  to Buyer in writing  prior to this
Agreement); or (i) agree to do any of the foregoing.

<PAGE>

            5.3.  Access.

      Between  the  date  hereof  and  the  Closing  Date  and  subject  to  the
Confidentiality   Agreement,  dated  December  3,  1998,  (the  "Confidentiality
Agreement"),  between  Seller and Buyer,  each  Seller and Parent  shall give to
authorized  representatives  of Buyer  access  to those Key  Employees  who have
entered into Employment Agreements with Buyer, and the Books and Records and all
data and  financial  information  supporting  the October  Balance  Sheet,  at a
mutually  agreeable  location other than the Premises (other than for one agreed
to on-site visit to each of the Premises) all during normal  business  hours and
upon reasonable notice in a manner as not to disrupt normal business  activities
or  prevent  strict   maintenance  of   confidentiality  as  set  forth  in  the
Confidentiality  Agreement.  Each Seller will also cause its officers to furnish
to  Buyer  any and  all  financial,  technical  and  operating  data  and  other
information  pertaining  to the  Business,  as  Buyer  shall  from  time to time
reasonably request for such purpose,  subject to the  Confidentiality  Agreement
between Buyer and Seller. Upon receipt of a written acknowledgment of Buyer that
all conditions to Closing set forth in Article VI have been satisfied or waived,
Sellers and Parent will give to  authorized  representatives  of Buyer access to
Employees.

            5.4.  No Shopping.

      From the date hereof  through the Closing Date or the date of  termination
of this Agreement,  whichever  shall occur sooner,  each Seller and Parent shall
not, directly or indirectly, through any officer or director of either Seller or
Parent,  any agent or otherwise,  with respect to the Business  (other than with
Buyer):  (a) solicit,  initiate,  encourage  the  submission  of,  respond to or
discuss  inquiries  or  proposals  of offers  from any  Person  relating  to any
acquisition or purchase of any of the Purchased  Assets,  or any exchange offer,
merger, consolidation,  business combination or sale of substantial assets, sale
of securities, or similar transactions involving the Business (other than in the
ordinary course of the Business) (a "Competing Transaction");  (b) enter into or
participate   in  any   discussions  or   negotiations   regarding  a  Competing
Transaction,  or furnish to any other Person any information with respect to the
Purchased  Assets;  or (c)  otherwise  cooperate  in any way with,  or assist or
participate  in,  facilitate  or  encourage,  any effort or attempt by any other
Person to do or seek a  Competing  Transaction.  Either  Seller or Parent  shall
promptly notify Buyer of any proposal relating to a Competing  Transaction or if
any inquiry or contact  with any Person with  respect  thereto is made and shall
promptly  deliver to Buyer copies of any such written  proposal or offer and any
communications  made in response thereto.  It is agreed that a sale in any form,
including a sale of equity,  of either Seller or Parent's  remaining  assets not
associated with the Business shall not be a Competing Transaction.

            5.5.  Best Efforts.

      Each Seller,  Parent and Buyer shall each use its commercially  reasonable
best  efforts,  and shall  cooperate  with and  assist  the  other  party in its
efforts,  to  obtain  such  consents  and  approvals  of  third  parties  to the
transactions  contemplated  hereby as may be necessary to transfer the Purchased
Assets and assign the Assumed Liabilities to Buyer.

            5.6.  Publicity.

      No party shall at any time  during the  consummation  of the  transactions
contemplated  hereby,  make any public disclosure of the terms and conditions of
any  transaction  or the fact that  discussions  for an  acquisition  are taking
place,  except to the extent that such disclosure is required by law or has been
otherwise  agreed to by the other  party.  In any event,  the parties  will work
together to ensure that any  disclosure is accurate and in the best interests of
both parties.

<PAGE>

            5.7.  Employees.

      Immediately  prior to the Effective  Time,  Sellers shall terminate all of
the Employees,  other than any Employees (not to exceed 30) with respect to whom
Buyer has  indicated to Sellers in writing prior to the Closing that it does not
intend  to  offer  employment  ("Retained  Employees").   Effective  immediately
following  the  Effective  Time,  Buyer  will  offer  employment  to  all of the
Employees,  other than the Retained Employees. Buyer shall enter into Employment
Agreements  with the Key  Employees  (for whom  meaningful  operating  and sales
leadership roles will be provided).  All such Employment Agreements will contain
terms and conditions  reasonable under the  circumstances and will be similar in
form and content with  agreements  currently in place  between R.R.  Donnelley &
Sons Financial Business Unit and other key employees and sales  representatives.
Buyer shall keep on its payroll all Employees  accepting  employment  with Buyer
until May 31, 1999, except for Employees Buyer terminates for cause.

      With respect to any Employee  terminated by Buyer or Sellers without cause
and without an offer of  comparable  employment by either Buyer or Sellers after
the date of this Agreement and on or before June 30, 1999, Buyer and each Seller
agree as  follows:

      (i)  each Seller  will use its  reasonable  efforts to find  opportunities
           within its organization to re-employ these Employees;

      (ii) if either Seller does not offer  re-employment  to any such Employee,
           such  Employee  shall be  entitled  to  separation  pay  equal to the
           separation pay then provided to similarly  situated  employees  under
           the R.R.  Donnelley & Sons Company  Separation  Pay Plan (or equal to
           such other amounts as Buyer and Sellers hereafter  agree).  Buyer and
           Sellers  will each be  financially  responsible  to the other for the
           cost of one-half (subject to the immediately  following clause (iii))
           of the  aggregate  severance  benefits  due to  such  Employees  with
           benefits  being  provided  by the  severance  plan of the entity with
           which the  Employee  last was employed  and with  settlement  of such
           liability between Buyer and Sellers to be made monthly; and

<PAGE>


    (iii)  Buyer's  aggregate  liability for  separation  pay pursuant to clause
           (ii)  above  shall  not  exceed  $200,000.  Any  amount  by which the
           aggregate  liability for such separation pay exceeds $400,000 will be
           borne entirely by Sellers.

      With  respect to any  Employee  who  accepts an offer of  employment  from
Buyer,  Buyer shall be solely  responsible  (as between  Buyer and  Sellers) for
determining  whether to  terminate  the  employment  of such  Employee  or offer
employment in another capacity.  As to any such Employee,  Buyer shall be solely
responsible (as between Buyer and each Seller) for satisfying any requirement to
provide notice of termination under any Law, any requirement to provide benefits
or coverage  continuation under any employee benefit plan or program (other than
the shared  severance  obligation  described  above),  and any requirement  with
respect to  unemployment  compensation  benefits.  In  addition,  as to any such
Employee,  Buyer shall be solely  responsible (as between Buyer and Sellers) for
any  liability  (other than the shared  severence  obligation  described  above)
resulting from any termination by Buyer and for defending against any claim that
any such termination was wrongful or in violation of any Law.

      With  respect to any Employee  who  declines an offer of  employment  from
Buyer and any Retained Employee, Sellers shall be solely responsible (as between
Buyer and Sellers) for  determining  whether to terminate the employment of such
Employee  or offer  employment  in another  capacity.  As to any such  Employee,
Sellers  shall  be  solely  responsible  (as  between  Buyer  and  Sellers)  for
satisfying  any  requirement  to  provide  notice of  termination  under any Law
(except as provided in Section 5.8 below),  any requirement to provide  benefits
or coverage  continuation under any Employee Benefit Plan (other than the shared
severance  obligation  described  above),  and any  requirement  with respect to
unemployment  compensation  benefits.  In  addition,  as to any  such  Employee,
Sellers  shall be solely  responsible  (as between  Buyer and  Sellers)  for any
liability  resulting  from any  termination  by either  Seller and for defending
against any claim that any such  termination was wrongful or in violation of any
Law.

<PAGE>

            5.8.  WARN Act.

      Buyer  acknowledges  and  warrants  to  Sellers  that  Buyer's  actions in
connection with the transactions  contemplated by this Agreement will not result
in a  "plant  closing"  or  "mass  layoff"  within  the  meaning  of the  Worker
Adjustment  and  Retraining  Notification  Act  ("WARN  Act"),  and Buyer  shall
indemnify  Sellers  against any expense  incurred  by either  Seller,  including
attorneys'  fees, if applicable,  in connection with the application of the WARN
Act to  either  Seller  as a result  of the  transactions  contemplated  by this
Agreement;  provided  that,  prior to the  Closing  Date,  neither  Seller  will
temporarily or permanently close or shut down any "single site of employment" or
any  "facility" or any  "operating  unit,"  "department"  or "service"  within a
single  site of  employment,  as such terms are used in the WARN Act,  within or
constituting part of the Business.  Each Seller represents that the Business has
not had, and will not have, any such closures or shutdowns  within the period of
at least ninety (90) days prior to the Closing Date.

            5.9.  Benefit Obligations.

      (a) Buyer and each Seller agree that,  except as specifically set forth in
this  Agreement,  Sellers shall be solely  responsible  for all  liabilities  or
obligations  of any kind  with  respect  to the  employment  by  Sellers  of the
Employees prior to the Effective Time, including, but not limited, to any claims
by any Employees related to their employment by Sellers or to the termination of
their  employment  by Sellers  prior to and as of the  Effective  Time.  Without
limiting the  generality  of the  foregoing  sentence,  Sellers  shall be solely
responsible for the following  matters related to either Sellers'  employment of
the  Employees  and  the  termination  of  such  employment  prior  to or at the
Effective Time: (i) any required compliance with the Consolidated Omnibus Budget
Reconciliation  Act of 1985,  as amended  ("COBRA");  and (ii) all  alleged  and
actual  obligations  and  claims  arising  from or  relating  to any  employment
agreement,  collective bargaining  agreement,  Employee Benefit Plan, grievance,
arbitration,  unfair labor practice  charge,  or compliance  with any applicable
state or federal labor or  employment  law  (including,  but not limited to, all
laws  pertaining  to   discrimination,   workers'   compensation,   unemployment
compensation, occupational safety and health, unfair labor practices, family and
medical leave, wages, hours or employee benefits).

      (b) Buyer shall  assume  liability  as of the Closing Date for the accrued
paid time off  entitlement of each Employee who becomes an employee of Buyer and
shall pay each such  Employee's  wages or salary during their paid time off when
taken.  If an Employee  with accrued paid time off  terminates  employment  with
Buyer on or  before  within  one year of the  Closing  Date  with  paid time off
entitlements  remaining,  Buyer shall pay such Employee a lump sum in cash equal
to such paid time off entitlement less appropriate deductions.

      (c) Effective one year after the Closing Date, for those  Employees  still
employed  by Buyer on such  date,  Buyer  shall  grant past  service  credit for
vesting (but not for benefit accrual) under the Retirement  Benefit Plan of R.R.
Donnelley & Sons Company for all service  since the last day of hire with either
Seller or any of their  Affiliates.  Buyer shall permit entry by Employees  into
such  plan and,  subject  to  reasonable  administrative  delay for  enrollment,
Buyer's Code section 401(k) plan within thirty days after Closing (to the extent
the eligibility requirement therefor are then satisfied).

<PAGE>

      (d) Buyer shall grant past service  credit for  eligibility to participate
under  Buyer's  "welfare  plans"  (as  defined  in  Section  3(1) of ERISA)  and
seniority  credit for Buyer's  vacation  programs in which its or its affiliates
similarly situated employees are eligible to participate for Employees accepting
employment  with Buyer for all service since last day of hire with either Seller
or any of their Affiliates, shall waive any preexisting condition limitations or
restrictions,  evidence or  requirement  of  insurability  and, for all benefits
other than long term  disability  where  Sellers'  plan  provides for  continued
coverage,  any  actively  at-work  requirement  for  coverage (to the extent not
applicable under the Employee Benefit Plans in which such Employee  participates
immediately  prior to the Effective Time) and shall permit entry into such plans
and programs  immediately  as of Closing with respect to all such benefits other
than health care  benefits and as of April 1, 1999,  with respect to health care
benefits  (to  the  extent  the  eligibility   requirements  therefor  are  then
satisfied),  provided, however, that with respect to the retiree medical program
and the retiree  group life program  under the Donnelley  Group  Benefits  Plan,
prior  service will not be  recognized,  and provided,  further,  that long term
disability coverage shall be so provided by Buyer without regard to the actively
at  work  requirement  only if  Buyer's  insurer  waives  such  requirement  for
coverage, which waiver Buyer commits to pursue in good faith.

      (e) Buyer shall provide employee  benefits plans and programs to Employees
accepting  employment  with Buyer which in the aggregate for all such  Employees
are  substantially  equivalent to those provided to Buyer's  similarly  situated
employees.

      (f) Parent and Sellers agree to provide  continued  health care  (medical,
dental and vision)  coverage  through March 31, 1999, under its Employee Benefit
Plan providing the same for those Employees  accepting  employment with Buyer at
Closing,  and Buyer  agrees to pay or cause to be paid the "COBRA"  premium cost
for such coverage.

<PAGE>

            5.10. Cooperation.

      Each Seller agrees that Buyer shall be provided  reasonable  access to the
employees of each Seller or the agents of each Seller who have been  involved in
the  administration of the Employee Benefit Plans so that such Person or Persons
may assist the Buyer in the  implementation  of an employee  benefit program for
those  individuals  that Buyer  employs in the  Business.  Each Seller agrees to
cooperate with the Buyer in connection with the  implementation of such employee
benefit program by the Buyer.

            5.11. Books and Records; Personnel.

      For a period of seven years from the Closing Date:

      (a) Buyer  shall not  dispose of or destroy  any of the Books and  Records
without  first  offering  to turn over  possession  thereof to Seller by written
notice  to each  Seller  at least 30 days  prior  to the  proposed  date of such
disposition or destruction.

      (b) Buyer shall allow each Seller and their agents access to all Books and
Records upon 5 business days' advance written notice during normal working hours
at Buyer's  principal  place of business or at any location  where any Books and
Records are stored, and each Seller shall have the right, at its own expense, to
make copies of any Books and Records; provided, however, that any such access or
copying  shall be had or done in such a manner so as not to  interfere  with the
normal conduct of Buyer's business.

      (c) Buyer shall make  available  to each Seller upon  written  request (i)
copies of any Books and Records, (ii) Buyer's personnel to assist each Seller in
locating and obtaining any Books and Records, and (iii) any of Buyer's personnel
whose assistance or  participation is reasonably  required by each Seller or any
of their affiliates in anticipation  of, or preparation for,  existing or future
litigation,  Tax  Returns or other  matters in which each Seller or any of their
affiliates is involved.  Sellers shall reimburse Buyer for the reasonable salary
and  out-of-pocket  expenses  incurred in performing the covenants  contained in
this Section 1.9.


<PAGE>

            5.12. Bulk Transfers Laws.

      Buyer  hereby  waives  compliance  by Sellers with the  provisions  of any
applicable bulk transfers laws of any U.S.  jurisdiction  (including any similar
laws relating to any Taxes).  Sellers shall promptly pay and discharge when due,
or contest or litigate all claims of creditors  that are asserted  against Buyer
by reason  of  either  Seller's  non-compliance  with  such  laws and  agrees to
indemnify and hold Buyer harmless from and against and shall on demand reimburse
Buyer for any and all  Losses  suffered  by Buyer by  reason of either  Seller's
failure  to pay and  discharge  any such  claims (or  Taxes)  provided  that the
foregoing  shall not affect in any way Buyer's  obligations  with respect to the
Assumed Liabilities.

            5.13. Like-Kind Exchange.

      In the event the  Sellers  notify  Buyer by  written  notice at least five
business days before the Closing Date, Buyer agrees to cooperate with Sellers in
effecting an exchange  under Section 1031 of the Code (the "Tax Free  Exchange")
of all or part of the Purchased  Assets,  as shall be specified  pursuant to the
above notice (the "Exchange Property") including (without limitation), executing
such escrow instructions,  acknowledgments,  agreements or other instruments and
following  such payment  instructions  to effect such an exchange as the Sellers
may reasonably request; provided,  however, that the Sellers shall indemnify and
hold Buyer harmless against any cost or liability that Buyer would not incur but
for such cooperation.  Sellers may assign their rights and delegate their duties
under this  Agreement  to an escrow agent or exchange  intermediary  selected by
Sellers as necessary to effect such an exchange. Notwithstanding anything herein
to the  contrary,  Buyer shall have no  obligation  to cooperate in the Tax-Free
Exchange if such  cooperation  increases in any material respect the obligations
of Buyer relative to those otherwise set forth hereunder.

<PAGE>

            5.14. Discharge of Sellers Liabilities.

      Each Seller covenants and agrees that it will pay and discharge,  and hold
Buyer  harmless  from,  each and every  liability  and  obligation of Sellers in
respect of the Business or the Purchased Assets arising from events occurring on
or prior to the Closing Date,  excepting only those  liabilities and obligations
expressly  assumed  by  Buyer  at the  Closing  pursuant  to this  Agreement  or
instruments  of  assumption  delivered  to  Sellers  at the  Closing,  it  being
understood  and agreed that Buyer is assuming no  liabilities  or obligations of
Sellers other than liabilities and obligations so expressly assumed by Buyer.

            5.15. Discharge of Buyer's Liabilities.

      Buyer  covenants and agrees that it will pay and discharge,  and hold each
of the  Sellers  harmless  from,  the  Assumed  Liabilities  and each and  every
obligation  of Buyer in respect of the  Business as conducted by Buyer after the
Closing or the Purchased  Assets  arising from events  occurring on or after the
Closing Date, excepting the Retained Liabilities.

                                   ARTICLE VI
                CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER

      Each and every  obligation  of Buyer to be  performed  on the Closing Date
shall be subject to the satisfaction prior to or at the Closing of the following
express conditions precedent:

            6.1.  Compliance With Law.

      There shall have been obtained any and all permits, approvals and consents
of any governmental body or agency that may be necessary so that consummation of
the  transactions  contemplated  by this  Agreement  will be in compliance  with
applicable Laws, including without limitation the HSR Act.

<PAGE>

            6.2.  Accuracy of Representations and Warranties.

      Each of the  representations  and  warranties  of each  Seller  and Parent
contained in this Agreement  that is qualified by materiality  shall be true and
correct on and as of the  Closing  Date as if made on and as of such date (other
than  representations  and warranties which address matters only as of a certain
date which  shall be true and correct as of such  certain  date) and each of the
representations  and  warranties  that is not so  qualified  shall  be true  and
correct in all material respects on and as of the Closing Date as if made on and
as of such date (other than representations and warranties which address matters
only as of a  certain  date  which  shall be true and  correct  in all  material
respects as of such certain date).  Notwithstanding the foregoing, the truth and
correctness of the  representation  and warranty set forth in Section 3.26 shall
not be a condition precedent to Buyer's obligations hereunder.

            6.3.  Proceedings and Instruments Satisfactory.

      All proceedings, corporate or other, to be taken by each Seller and Parent
in connection with the  transactions  contemplated  by this  Agreement,  and all
documents  incident  thereto,  shall  be  reasonably  satisfactory  in form  and
substance to Buyer and Buyer's counsel.

            6.4.  HSR Act Waiting Period.

      Any waiting  period  applicable to the  consummation  of the  transactions
contemplated  by this  Agreement  under  the  HSR  Act  shall  have  expired  or
terminated,  and any other statutory  requirements for the valid consummation of
the transactions contemplated hereby shall have been fulfilled.

            6.5.  No Litigation.

      No investigation,  suit, action or other proceeding shall be threatened or
pending  before  any  court  or  governmental   agency  that  seeks   restraint,
prohibition,  damages or other relief in  connection  with the  Agreement or the
consummation of the transactions contemplated hereby.

<PAGE>

            6.6.  No Material Adverse Change.

      Between the date hereof and the  Closing  Date,  there shall not have been
any change in the financial  condition or results of operations of the Business,
nor any loss or damage to the Purchased Assets, whether or not insured in either
case or in the aggregate that  materially  and adversely  affects the ability of
the Sellers to conduct the Business.

            6.7.  Employment Agreements.

      Prior to the Closing,  Buyer shall have entered into Employment Agreements
with the Key Employees and such agreements  shall be in full force and effect at
Closing.

            6.8.  Consents.

      All  consents,  approvals  and waivers  from third  parties,  governmental
authorities  and other  parties  necessary  to permit  Sellers to  transfer  the
Purchased  Assets and assign the Assumed  Liabilities  to Buyer as  contemplated
hereby,  shall have been  obtained on terms  reasonably  satisfactory  to Buyer;
provided,  however,  with  respect to the  equipment  leases  listed on Schedule
1.6(b)  Sellers  and Parent  shall only be  required to deliver a consent to the
assignment to Buyer of the Lease Agreement,  dated March 23, 1998, between Xerox
Corporation and Cadmus Financial Communications at Graftech.

            6.9.  Seller's Performance.

      Each of the  obligations of Sellers to be performed or complied with on or
before the Closing  Date,  pursuant to the terms of this  Agreement,  shall have
been duly performed or complied with on or before the Closing Date.

            6.10. Good Title to Purchased Assets.

      The Sellers shall have (a) sold and conveyed all the  Purchased  Assets by
appropriate  bills  of  sale  to  Buyer,  and (b)  assigned  all  the  Accounts,
Contracts,  Intangibles,  Permits and Assumed Leases to Buyer, free and clear of
all security interests, charges or encumbrances, except Permitted Liens.

<PAGE>

            6.11. Deliveries at Closing.

      The Sellers shall have  delivered,  or caused to have been  delivered,  to
Buyer  the  following  documents,  each  properly  executed  and dated as of the
Closing Date:

            (a)   the Bill of Sale;
            (b)   the Assignment and Assumption Agreement;
            (c)   Sellers' Closing Certificate;
            (d)   the Services Agreement;
            (e)   the Printing Services Agreement;
            (f)   the Joint Marketing Agreement;
            (g)   the Opinion of Sellers' counsel, substantially  in the form of
                  Exhibit H hereto; and
            (h)   the Employment Agreements.

                                   ARTICLE VII
          CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER AND PARENT

      Each and every obligation of each Seller and Parent to be performed on the
Closing Date shall be subject to the satisfaction  prior to or at the Closing of
the following express conditions precedent:

            7.1.  Compliance with Law.

      There shall have been obtained any and all permits, approvals and consents
of any governmental body or agency that may be necessary so that consummation of
the  transactions  contemplated  by this  Agreement  will be in compliance  with
applicable Laws, including without limitation, the HSR Act.

<PAGE>

            7.2.  Accuracy of Representations and Warranties.

      Each of the  representations  and  warranties  of Buyer  contained in this
Agreement that is qualified by  materiality  shall be true and correct on and as
of  the  Closing   Date  as  if  made  on  and  as  of  such  date  (other  than
representations  and warranties  which address matters only as of a certain date
which  shall  be true  and  correct  as of such  certain  date)  and each of the
representations  and  warranties  that is not so  qualified  shall  be true  and
correct in all material respects on and as of the Closing Date as if made on and
as of such date (other than representations and warranties which address matters
only as of a  certain  date  which  shall be true and  correct  in all  material
respects as of such certain date.)

            7.3.  Proceedings and Instruments Satisfactory.

      All  proceedings,  corporate or other,  to be taken by Buyer in connection
with the transactions contemplated by this Agreement, and all documents incident
thereto,  shall be reasonably  satisfactory in form and substance to each Seller
and its counsel.

            7.4.  Consents.

      All consents,  approvals  and waivers from third parties and  governmental
authorities  and other  parties  necessary to permit each Seller to transfer the
Purchased  Assets and assign the Assumed  Liabilities  to Buyer as  contemplated
hereby shall have been obtained, on terms satisfactory to each Seller.

            7.5.  No Litigation.

      No investigation,  suit, action or other proceeding shall be threatened or
pending  before  any  court  or  governmental   agency  that  seeks   restraint,
prohibition,  damages or other relief in  connection  with the  Agreement or the
consummation of the transactions contemplated hereof.

<PAGE>

            7.6.  HSR Act Waiting Period.

      Any waiting  period  applicable to the  consummation  of the  transactions
contemplated  by this  Agreement  under  the  HSR  Act  shall  have  expired  or
terminated,  and any other statutory  requirements for the valid consummation of
the transactions contemplated hereby shall have been fulfilled.

            7.7.  Buyer's Performance.

      Each of the  obligations  of Buyer to be performed or complied  with on or
before the Closing  Date,  pursuant to the terms of this  Agreement,  shall have
been duly performed or complied with on or before the Closing Date.

            7.8.  Deliveries at Closing.

      In addition to the payment of the Initial Purchase Price, Buyer shall have
delivered,  or caused to have  been  delivered,  to the  Sellers  the  following
documents, each properly executed and dated as of the Closing Date:

            (a)   the Assignment and Assumption Agreement;
            (b)   Buyer's Closing Certificate;
            (c)   the Services Agreement;
            (d)   the Printing Services Agreement;
            (e)   the Joint Marketing Agreement;
            (f)   the Opinion of  Buyer's  counsel,  substantially  in the form
                  of Exhibit I hereto; and
            (g)   the Employment Agreements.

<PAGE>


                                  ARTICLE VIII
             ACTIONS BY SELLERS, PARENT AND BUYER AFTER THE CLOSING

            8.1.  Sellers' and Parent's Indemnity.

      (a) Upon  closing of the  transactions  contemplated  herein,  each of the
Sellers and Parent hereby,  jointly and  severally,  agree to indemnify and hold
Buyer,   its   Affiliates,   successors   and  assigns   and  their   respective
representatives ("Buyer's Indemnitees") harmless from and against, and agrees to
defend promptly Buyer's  Indemnitees from and reimburse Buyer's Indemnitees for,
any and all losses,  damages,  costs,  expenses,  liabilities,  obligations  and
claims of any kind,  including,  without limitation,  reasonable attorneys' fees
and other legal costs and expenses,  (collectively,  the "Losses"), that Buyer's
Indemnitees  may at any time suffer or incur,  or become subject to, as a result
of or  in  connection  with:  (i)  any  breach  or  inaccuracy  of  any  of  the
representations  and warranties made by Sellers or Parent in or pursuant to this
Agreement  or any  instrument  or  document  executed  by  Sellers  or Parent in
connection with or as a result of this Agreement; (ii) any failure of Sellers or
Parent to carry  out,  perform,  satisfy  and  discharge  any of its  covenants,
agreements,  undertakings,  liabilities or  obligations  under this Agreement or
under any of the documents and instruments  executed and delivered by Sellers or
Parent in connection with or as a result of this  Agreement;  (iii) the Retained
Liabilities;  and (iv) claims by third parties  against any Buyer's  Indemnitees
relating to the operation and ownership by Sellers of the Purchased Assets,  the
performance by Sellers under the Contracts and Assumed Leases and the conduct of
the  Business  prior to the  Closing  other  than with  respect  to the  Assumed
Liabilities  (hereinafter  referred  to  collectively  as  "Claims");  provided,
however,  that Buyer's Indemnitees shall have the right to be indemnified,  held
harmless from,  defended or reimbursed  under Section 8.1(a) hereof only if such
right is asserted (whether or not such Claims have actually been incurred) on or
before   twenty-four   months   after  the   Closing   Date,   except  that  the
indemnification by Sellers shall continue as to:

            (i)   the representations and warranties  set forth  in Section 3.10
and the  covenants of Sellers set forth in Section  5.14,  as to all of which no
time limitation shall apply;

            (ii)  the representations  and  warranties  set forth in Section 3.7
which shall continue until five years after the Closing Date;

            (iii) the representations and warranties set forth in Sections 3.9
and 3.15 and the  covenants of Sellers set forth in Sections  5.9, and 5.13,  as
to which the indemnification shall terminate ninety days  after  the  expiration
of  the applicable statute of limitations;

            (iv)  the  covenants  set  forth  in  Sections  8.8,  and  8.9 as to
which  the indemnification  provided  for in  this  Section 8.1 shall  terminate
ninety days after the  expiration  of the  noncompetition  period  provided  for
therein; and

            (v)   any Loss of which any  Buyer's  Indemnitee  has  notified  the
Sellers on or prior to the date such  indemnification  would otherwise terminate
in accordance with this Section 8.1, as to which the  obligation of the Sellers
shall  continue  until  the  liability  of Sellers  shall  have been  determined
pursuant  to this Article VIII, and  Sellers  shall have reimbursed  all Buyer's
Indemnitees for the full amount of such Loss in accordance with this Article
VIII.

<PAGE>

            8.2.  Buyer's Indemnity.

      (a) Upon closing of the  transactions  contemplated  herein,  Buyer hereby
agrees to indemnify and hold Parent,  Sellers and their  Affiliates,  successors
and  assigns  and  their  respective  representatives  (collectively,  "Sellers'
Indemnitees")  harmless from and against, and agrees to defend promptly Sellers'
Indemnitees from and reimburse Sellers' Indemnitees for, any and all Losses that
Sellers' Indemnitees may at any time suffer or incur, or become subject to, as a
result of or in  connection  with:  (i) any breach or  inaccuracy  of any of the
representations and warranties made by Buyer in or pursuant to this Agreement or
any instrument or document  executed by Buyer in connection  with or as a result
of this Agreement;  (ii) any failure by Buyer to carry out, perform, satisfy and
discharge  any  of  its  covenants,  agreements,  undertakings,  liabilities  or
obligations  under this  Agreement or under any of the  documents  and materials
executed and delivered by Buyer  pursuant to this  Agreement;  (iii) the Assumed
Liabilities;  and (iv)  claims by third  parties  against  Parent or the Sellers
relating to the operation and  ownership by Buyer of the Purchased  Assets,  the
performance  by Buyer under the Contracts and the Assumed Leases and the conduct
of the Buyer in  connection  with the Business  from and after the Closing Date,
other than with respect to the Retained  Liabilities;  provided,  however,  that
Sellers' Indemnitees shall have no right to be indemnified,  held harmless from,
defended or reimbursed under Section 8.2(a) hereof unless such right is asserted
(whether  or  not  such  Claims  have  actually  been  incurred)  on  or  before
twenty-four  months after the Closing Date, except that the  indemnification  by
Buyer shall continue as to:

            (i) the  covenants of Buyer set forth in Sections 5.9, 5.13 and 5.15
as to which the indemnification shall terminate thirty days after the expiration
of the applicable statute of limitations; and

            (ii) any Loss of which any Sellers' Indemnitee has notified Buyer on
or  prior  to  the  date  such  indemnification  would  otherwise  terminate  in
accordance  with this  Section  8.2, as to which the  obligation  of Buyer shall
continue  until the  liability of Buyer shall have been  determined  pursuant to
this Article VIII, and Buyer shall have reimbursed all Seller's  Indemnitees for
the full amount of such Loss in accordance with this Article VIII.

<PAGE>

            8.3.  Notice of Claims.

      Any Buyer's  Indemnitee or Sellers'  Indemnitee (the "Indemnified  Party")
seeking  indemnification  hereunder shall give to the party obligated to provide
indemnification  to such Indemnified Party (the "Indemnitor") a notice (a "Claim
Notice")  describing in reasonable detail the facts giving rise to any claim for
indemnification hereunder and shall include in such Claim Notice (if then known)
the  amount or the method of  computation  of the  amount of such  claim,  and a
reference to the provision of this Agreement or any other agreement, document or
instrument executed hereunder or in connection herewith upon which such claim is
based; provided,  that a Claim Notice in respect of any action at law or suit in
equity by or against a third Person as to which  indemnification  will be sought
shall be given promptly after the action or suit is commenced;  provided further
that  failure  to give such  notice  shall not  relieve  the  Indemnitor  of its
obligations hereunder except to the extent it shall have been prejudiced by such
failure.

            8.4.  Third Person Claims.

      If an  Indemnified  Party shall provide an Indemnitor  with a Notice Claim
with  respect to a third party  claim,  action or suit  against the  Indemnified
Party, then the Indemnitor shall have the right to conduct and control,  through
counsel of its choosing, the defense, compromise or settlement of any such third
Person  claim,  action  or suit  against  such  Indemnified  Party  as to  which
indemnification  will be sought by any  Indemnified  Party  from any  Indemnitor
hereunder if the Indemnitor has  acknowledged and agreed in writing that, if the
same is  adversely  determined,  the  Indemnitor  has an  obligation  to provide
indemnification  to the Indemnified  Party in respect  thereof,  and in any such
case the  Indemnified  Party shall  cooperate in connection  therewith and shall
furnish such records,  information  and  testimony and attend such  conferences,
discovery  proceedings,  hearings,  trials  and  appeals  as may  be  reasonably
requested  by  the  Indemnitor  in  connection  therewith;  provided,  that  the
Indemnified  Party may participate,  through counsel chosen by it and at its own
expense,  in the  defense  of any such  claim,  action  or suit as to which  the
Indemnitor has so elected to conduct and control the defense thereof.

<PAGE>

            8.5.  Limitations on Indemnification.

      Each Seller and Parent shall be required to indemnify Buyer's  Indemnitees
under  clause (i) of Section  8.1(a)  with  respect  to Losses  incurred  by the
Buyer's  Indemnitees  (other than Losses incurred as a result of inaccuracies of
the  representations  and warranties  contained in Sections 3.9, 3.10 , 3.18 and
3.26)  only to the  extent  that the  aggregate  amount of such  Losses  exceeds
$250,000  (the  "Basket");  provided,  however,  that the  Sellers' and Parent's
obligation  to  indemnify  under  clause (i) of Section  8.1(a) with  respect to
Losses  incurred by the  Buyer's  Indemnitees  (other than Losses  incurred as a
result of  inaccuracies  of the  representations  and  warranties  contained  in
Section  3.10)  shall be  limited  to the  payment  by the Seller of cash in the
aggregate in an amount equal to $7,500,000; provided, further, that with respect
to any  Losses  arising  as a result  of a  breach  of the  representations  and
warranties set forth in Section 3.26,  Seller's and Parent's aggregate liability
shall not exceed $100,000.

            8.6.  Indemnity Amounts to be Computed on After-Tax Basis.

      The amount of any  indemnification  payable under any of the provisions of
this  Article  VIII shall be (i) net of any federal or state  income tax benefit
realized or the then-present  value (based on a discount rate of 6%) of any such
income tax  benefit to be  realized  by the  indemnified  party by reason of the
facts and circumstances giving rise to the  indemnification,  and (ii) increased
by the amount of any  federal or state  income  tax  required  to be paid by the
indemnified  party on the  accrual  or receipt  of the  indemnification  payment
(including any amount payable pursuant to this clause (ii)). For purposes of the
preceding  sentence,  the amount of any state  income tax  benefit or cost shall
take into account the federal income tax effect of such benefit or cost.

            8.7.  Litigation Support.

      In the event and for so long as Buyer,  Parent or the Sellers actively are
contesting  or  defending  against  any  action,  suit,   proceeding,   hearing,
investigation,  charge,  complaint,  claim or demand in connection  with (a) any
transaction  contemplated under this Agreement,  or (b) the Business,  the other
parties will cooperate  with it and its counsel in the contest or defense,  make
available its  personnel and provide such  testimony and access to its books and
records as shall be necessary in connection with the contest or defense,  all at
the sole cost and expense of the contesting or defending party.

<PAGE>

            8.8.  Noncompetition Covenant.

      (a) Parent  agrees that for a period of five years  following  the Closing
Date,  neither Parent nor any of its Affiliates shall have a financial  interest
in or  serve  as a  principal,  partner,  director,  officer,  agent,  employee,
contractor,  or  consultant  for a  Prohibited  Business  anywhere in the United
States. The term "Prohibited  Business" shall mean (i) the design,  composition,
printing,  fulfillment,   distribution,   electronic  generation  or  electronic
dissemination  of  any  documents  and  financial  information  required  by the
Securities and Exchange  Commission (both present and future requirements should
present  requirements  change),  (ii) the  composition,  printing,  fulfillment,
distribution,  electronic  generation  or  electronic  dissemination  of  annual
reports, compliance, and similar documents for the Mutual Fund industry or (iii)
the composition, printing, fulfillment,  distribution,  electronic generation or
electronic   dissemination   of  financial  and  legal   printing   relating  to
prospectuses,  municipal  bond  and  government  agency  transactions,  variable
annuities, bankruptcy documentation or class action suits documentation. For the
purposes of this Agreement  "Prohibited Business" shall not include: (i) design,
composition,  printing,  fulfillment and distribution of printed and distributed
corporate annual reports, (ii) the provision of design, direct marketing, custom
publishing  and  advertising  services for the Mutual Fund  industry,  (iii) the
design,  composition,  printing,  fulfillment and  distribution of marketing and
collateral materials for the Mutual Fund industry,  provided,  however, that the
Parent and Sellers shall not solicit,  for a 3 year period following the Closing
Date,  such work from the NationsBank  funds,  GEFA,  Mentor,  Life of Virginia,
Morningstar,  Merrill Lynch Asset Management,  First  Union/Evergreen  funds and
Legg Mason,  (iv) the Retained  Business,  as currently  conducted,  and (v) the
printing, fulfillment and distribution of proxy statements pursuant to the terms
of the Joint Marketing Agreement.


      (b) In addition,  nothing shall prevent Parent's or the Sellers'  purchase
or  ownership,  in the  aggregate,  of  less  than  three  (3%)  percent  of the
securities of any class of any enterprise (but without  otherwise  participating
in the  activities  of such  enterprise)  if such  securities  are listed on any
national or regional  securities  exchange or have been registered under Section
12(g) of the  Securities  Exchange Act of 1934, as amended,  whether or not such
enterprise is engaged in a Prohibited  Business.  In addition,  Parent covenants
and agrees that neither it nor any of its Affiliates will divulge or make use of
any trade secrets or other  confidential  information of the Business other than
to  disclose  such  secrets  and   information  to  Buyer  or  its   Affiliates.
Notwithstanding  the foregoing,  Parent or either Seller may acquire a business,
an  ancillary  portion  (no  more  than  10%  of  total  annual  revenues  on  a
consolidated  basis) of which  sells or offers to  products  or  services in the
Prohibited Business;  provided,  however, if the purchased business is conducted
by one of the companies  listed on Schedule 8.8, Parent or Sellers,  as the case
may be, must dispose of such business. In such an instance, Buyer shall have the
exclusive right for 90 days to negotiate with Parent or Sellers, as the case may
be, regarding the purchase of the ancillary business.


      (c) Parent and Sellers agree that the foregoing  restrictive covenants are
necessary for the reasonable and proper protection of Buyer and the value of the
Business,  and that such  restrictive  covenants  are  reasonable  in respect of
subject  matter,  length of time and geographic  area.  Parent and Sellers agree
that damages at law would not be a measurable or adequate remedy for a breach of
the restrictive covenant contained herein, and therefore consent to the entry by
any court of competent  jurisdiction  of a temporary  or  permanent  restraining
order enjoining Parent or Sellers from violating any of such covenant. It is the
intent and  understanding of each party hereto that if, in any action before any
court or agency  legally  empowered  to  enforce  this  Section  8.8,  any term,
restriction, covenant or promise in this Section 8.8 is found to be unreasonable
and for that  reason  unenforceable,  then such term,  restriction,  covenant or
promise shall be deemed modified to the extent  necessary to make it enforceable
by such court or agency.

            8.9. Non-Solicitation.

      (a) Buyer  hereby  covenants  and agrees  that,  unless this  Agreement is
terminated  prior to the  Closing,  for a period of three  (3)  years  after the
Closing Date, it will not, whether for its own account or for the account of any
other Person,  endeavor to entice away,  solicit for  employment or encourage to
leave their employment, any person who is an employee of Parent or either Seller
(except with the written permission of the employer or as otherwise specifically
contemplated by this Agreement).

      (b) Parent  and  Sellers  hereby  covenant  and agree  that,  unless  this
Agreement is  terminated  prior to the Closing,  for a period of three (3) years
after the Closing Date, they will not,  whether for their own account or for the
account of any other Person,  endeavor to entice away, solicit for employment or
encourage  to leave  their  employment,  any person who is an  employee of Buyer
(except with the written permission of the employer or as otherwise specifically
contemplated by this Agreement).

<PAGE>

            8.10. Post-Closing Cooperation.

      Each of the Sellers will use its  commercially  reasonable  best  efforts,
beginning  promptly  following  the Closing,  to obtain all  remaining  consents
necessary  to transfer all rights and benefits  under all of the  Contracts  and
Assumed Leases to Buyer which have not yet been obtained.  Buyer shall cooperate
in obtaining  all such  consents.  In addition to the  foregoing,  following the
Closing  Date,  each party will  cooperate in good faith with the other and will
take all appropriate action and execute and deliver any document,  instrument or
conveyance of any kind which may be  reasonably  necessary or advisable to carry
out any of the transactions contemplated hereby.

                                   ARTICLE IX
                                   TERMINATION

      9.1.  Termination Event.

      This  Agreement  may,  by  notice  given  prior to or at the  Closing,  be
terminated:

      (a) by either  Buyer or Sellers if a material  breach of any  provision of
this  Agreement  has been  committed  by the other party and such breach has not
been waived by the first party;

      (b) (i) by  Buyer  if any of the  conditions  in  Article  VI has not been
satisfied as of the Closing Date or if  satisfaction of such a condition by such
date is or becomes  impossible  (other  than  because of the failure of Buyer to
comply with its obligations  under this Agreement) and Buyer has not waived such
condition on or before such date; or

<PAGE>

                  (ii) by Sellers,  if any of the  conditions in Article VII has
not been satisfied as of the Closing Date or if satisfaction of such a condition
by such date is or becomes  impossible  (other  than  because of the  failure of
Sellers to comply with their  obligations  under this  Agreement) and Seller has
not waived such condition on or before such date;

      (c) by mutual consent of Buyer and Sellers; or

      (d) by  either  Buyer or  Sellers  not  then in  material  breach  of this
Agreement if the Closing has not  occurred on or before  March 8, 1999,  or such
later date as the parties may agree upon.

            9.2.  Effect of Termination.

      Each party's right of termination  under Section 9.1 is in addition to any
other rights it may have under this Agreement or otherwise,  and the exercise of
such right of termination will not be an election of remedies. If this Agreement
is terminated  pursuant to Section 9.1, all further  obligations  of the parties
under this Agreement  will  terminate,  except that the  obligations in Sections
10.2 and  10.3  will  survive;  provided,  however,  that if this  Agreement  is
terminated  by a party because of the breach of the Agreement by the other party
or because one or more of the conditions to the terminating  party's obligations
under this  Agreement is not satisfied as a result of the other party's  failure
to comply with its  obligations  under this Agreement,  the terminating  party's
right to pursue all legal remedies will survive such termination unimpaired.

<PAGE>

                                    ARTICLE X
                                  MISCELLANEOUS

            10.1. Entire Agreement; Amendment.

      This  Agreement  and  the  documents  to  be  delivered   pursuant  hereto
constitute the entire  agreement  between the parties  pertaining to the subject
matter  hereof,  and  supersede  all  prior  and   contemporaneous   agreements,
understandings,  negotiations  and  discussions of the parties,  whether oral or
written,  and  there  are no  warranties,  representations  or other  agreements
between the parties in connection with the subject matter hereof.  No amendment,
supplement,  modification,  waiver or  termination  of this  Agreement  shall be
binding unless  executed in writing by the party to be bound thereby.  No waiver
of any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other  provision of this  Agreement,  whether or not similar,  nor
shall such waiver  constitute a continuing  waiver  unless  otherwise  expressly
provided.  The  representations and warranties of each party hereto contained in
this Agreement and the documents  delivered pursuant hereto shall constitute all
representations  and  warranties  of each party hereto and shall be deemed to be
material  and to have been relied upon by the other  party  notwithstanding  any
investigation heretofore or hereafter made by the other party.

            10.2. Expenses.

      Each of the  parties  hereto  shall  pay the  fees and  expenses  of their
respective  counsel,  accountants  and  other  experts  and the  other  expenses
incident to the negotiation  and preparation of this Agreement and  consummation
of the transactions contemplated hereby.

            10.3. Governing Law; Consent to Jurisdiction.

      This Agreement shall be construed and interpreted according to the laws of
the  Commonwealth of Virginia,  without regard to the conflict of law principles
or rules  thereof.  Either  party  hereto may make service on the other party by
sending  or  delivering  a copy of the  process to the party to be served at the
address  and in the manner  provided  for the giving of notices in Section  10.5
hereof.

            10.4. Assignment.

      (a)  The  rights  of  either  party  under  this  Agreement  shall  not be
assignable by such party prior to the Closing without the written consent of the
other,  except that  either  Seller may assign its rights as provided in Section
5.13,  and the rights of Buyer  hereunder may be assigned  prior to the Closing,
without the consent of Sellers, to an Affiliate,  provided that (i) the assignee
shall assume in writing all of Buyer's  obligations  to Sellers  hereunder,  and
(ii) Buyer shall not be released from any of its obligations hereunder by reason
of such  assignment.  Following the Closing,  either party may assign any of its
rights  hereunder,  but no such  assignment  shall relieve it of its obligations
hereunder.

      (b) This  Agreement  shall be binding upon and inure to the benefit of the
parties hereto and their  successors and permitted  assigns.  The successors and
permitted  assigns  hereunder shall include without  limitation,  in the case of
Buyer,  any  permitted  assignee as well as the  successors  in interest to such
permitted assignee (whether by merger, liquidation (including successive mergers
or liquidations) or otherwise).

            10.5. Notices.

      All communications,  notices and disclosures required or permitted by this
Agreement  shall be in  writing  and shall be  deemed to have been  given at the
earlier  of the  date  (a)  when  delivered  personally  or by  messenger  or by
overnight  delivery service to an officer of the other party, (b) when deposited
in the United States mail, certified or registered mail, postage prepaid, return
receipt requested, or (c) when received via telecopy,  telex or other electronic
transmission,  in all cases  addressed  to the Person for whom it is intended at
his address set forth below,  unless and until  either of such parties  notifies
the other in writing of a change of address:

      If to Parent or Sellers:      Cadmus Communications Corporation
                                    6620 West Broad Street
                                    Suite 240
                                    Richmond, Virginia 23230
                                    Attention: Bruce V. Thomas
                                    Fax: (804) 287-5683

<PAGE>


                           With a copy to:

                           Hunton & Williams
                           Riverfront Plaza, East Tower
                           951 East Byrd Street
                           Richmond, Virginia  23219-4074
                           Attention:  T. Justin Moore, III, Esquire
                           Telecopy No.:  (804) 788-8218

      If to Buyer:         R. R. Donnelley & Sons Company
                           77 West Wacker Drive
                           Chicago, Illinois 60601
                           Attention: General Counsel
                           Telecopy No.: (312) 326-7156

            10.6. Counterparts; Headings.

      This  Agreement  may be  executed in several  counterparts,  each of which
shall be deemed an original, but such counterparts shall together constitute but
one and the same  Agreement.  The Table of  Contents  and  Article  and  Section
headings in this  Agreement are inserted for  convenience  of reference only and
shall not constitute a part hereof.

            10.7. Severability.

      If any provision,  clause or part of this  Agreement,  or the  application
thereof under  certain  circumstances,  is held  invalid,  the remainder of this
Agreement,  or the  application  of such  provision,  clause or part under other
circumstances, shall not be affected thereby.

            10.8. No Reliance.

      Except as provided in Article  VIII and  Section  10.4,  no third party is
entitled  to  rely  on any of the  representations,  warranties  and  agreements
contained in this Agreement.  Buyer and Sellers assume no liability to any third
party because of any reliance on the representations,  warranties and agreements
of Buyer and Sellers contained in this Agreement.

<PAGE>

            10.9. Interpretation.

      Unless the context requires otherwise, all words used in this Agreement in
the singular  number  shall  extend to and include the plural,  all words in the
plural  number  shall  extend to and include the  singular  and all words in any
gender shall extend to and include all genders.  All  references  to  contracts,
agreements,  leases or other  understandings or arrangements shall refer to oral
as well as written matters.  The specificity of any  representation  or warranty
contained  herein  shall  not be deemed  to limit  the  generality  of any other
representation or warranty contained herein.

            10.10.      Specific Performance.

      Buyer, Parent and Sellers hereby agree that irreparable damage would occur
in the event any of the  provisions  of this  Agreement  were not  performed  in
accordance  with the terms  hereof and that the  parties  shall be  entitled  to
specific performance of the terms hereof, in addition to any other remedy at law
or equity.


<PAGE>



      IN WITNESS  WHEREOF,  each party has caused this Purchase  Agreement to be
duly executed in its name by its duly authorized  officer as of the day and year
first above written.

SELLERS:                      WASHBURN GRAPHICS, INC.



                              By:   __________________________________________
                                    Bruce V. Thomas
                                    Senior Vice President
                                      and Chief Financial Officer


                              WASHBURN OF NEW YORK, INC.



                              By:   __________________________________________
                                    Bruce V. Thomas
                                    Senior Vice President
                                      and Chief Financial Officer


PARENT:                       CADMUS COMMUNICATIONS CORPORATION



                              By:   __________________________________________
                                    Bruce V. Thomas
                                    Senior Vice President
                                      and Chief Financial Officer


BUYER:                        R. R. DONNELLEY & SONS COMPANY



                              By:   __________________________________________
                                    Cheryl A. Francis
                                    Executive Vice President
                                      and Chief Financial Officer





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Espartel Investments v. MTCC No. 993 | Aug 19, 2022
Onespace Unlimited Inc. v. Plus Development Group Corp. | Sep 19, 2022
Professional Institute of the Public Service of Canada v. Canada Revenue Agency | Jun 23, 2022
Community Savings Credit Union v. Bodnar | Jul 29, 2022
Galperti SRL v F.I.A.L. Finanziaria Industrie Alto Lario S.P.A | Jun 30, 2022
WCAT Decision A2102352 | Jul 6, 2022
WCAT Decision A2102306 | Jul 25, 2022
Thrive Capital Management Ltd. v. Noble 1324 Queen Inc. | Jul 12, 2022
Questor Technology Inc v Stagg | Sep 8, 2022
MediPharm v. Hexo and Hwang | Jul 25, 2022
Immunization rates & vaccine hesitancy | Aug 17, 2022
Morabito v. British Columbia Securities Commission | Aug 12, 2022
Killeleagh v Mountain View County (Development Authority) | Aug 24, 2022
Quality Control Council v Stanley Inspection Canada Ltd. | Sep 9, 2022
British Columbia Investment Management Corporation | Aug 17, 2022
Abbeylawn Manor Living Inc. v Sevice Employees International Union, Local 1 Canada | Jul 5, 2022
Windrift Adventures Inc. et al. v. Chief Animal Welfare Inspector | Aug 18, 2022
Irani and Khan v. Registrar, Motor Vehicle Dealers Act | Jul 14, 2022
CP REIT Ontario Properties Limited v City of Toronto | Aug 12, 2022
Potash Corporation of Saskatchewan Inc. v. The Queen | Jul 7, 2022
Wong v. Pretium Resources Inc. | Jul 22, 2022
Labourers' International Union of North America, Local 183, Union v Mulmer Services Ltd. | Aug 5, 2022
City of Mississauga v. Hung | Sep 22, 2022
Secretary of the Ministry of Health v The New South Wales Nurses and Midwives' Association (28 September 2022)
Orewa Community Church v Minister for Covid-19 Response (16 August 2022)
Yeshiva College Bondi Limited v NSW Education Standards Authority (15 August 2022)
Moreland Planning Scheme Amendment C208more | Heritage Nominations Study | Panel Report | 15 July 2022
New Zealand Tegel Growers Association Incorporated | 2 August 2022
Farrow-Smith and Comcare (Compensation) | 26 September 2022
Evolution Fleet Services Pty Ltd v Allroads Plant Pty Ltd | 14 September 2022
656621 B.C. Ltd. v David Moerman Painting Ltd. | Sep 27, 2022
Fraser Valley Packers Inc. v Raiwal Holdings Ltd | Sep 26, 2022
Parmar v Tribe Management Inc. | Sep 26, 2022
DES Studio inc. c. Shuchat | Sep 26, 2022
Van-Kam Freightways Ltd. v Teamsters Local Union No. 31 | Sep 28, 2022
Rogers Communication Inc. v British Columbia | Sep 28, 2022
Alderbridge Way GP Ltd. | Sep 28, 2022

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