AGREEMENT

THIS AGREEMENT entered into this 31st day of May 1997 by and between
Scangraphics, Inc. of 700 Abbott Drive, Broomall, Pennsylvania 19008 (herein
after called "Scangraphics") and Printfold Company, Inc. of 825 North Easton
Road, Doylestown, Pennsylvania 18901 (herein after called "Printfold")

                                   WITNESSETH:

WHEREAS Scangraphics has agreed with Printfold to manufacture scanners at
Printfold premises, utilizing Scangraphics equipment, inventory, processes and
people, with support from Printfold management: and

WHEREAS during the course of such discussions, Scangraphics has agreed with
Printfold to use certain machinery, tools, jigs and equipment, as more fully set
forth in Exhibit "A" attached hereto and made part hereof ("Equipment") and
certain information contained in documents listed in Exhibit "B" attached hereto
and made part hereof ("Documents"); and

WHEREAS during the course of such discussions, Scangraphics has agreed to supply
inventory including, but not limited to finished goods, work in progress and raw
materials for the purpose of producing scanners for Scangraphics. The initial
inventory shall be set forth as Exhibit "C" attached hereto and made a part
hereof. The inventory shall be increased and decreased from time to time with
all documentation of items received and items shipped in writing with copies to
each of the parties; and

WHEREAS the use of Equipment, Inventory and Documents is solely at the
discretion of Scangraphics.

NOW, THEREFORE in consideration of the foregoing premises and other good and
valuable considerations the parties hereto agree as follows:

         1.   The term of this Agreement is until May 31, 1998 and may be
              terminated PRIOR TO SUCH DATE by either party upon 90 days written
              notice ["TERM"].

         2.   The Equipment, Inventory and Documents shall at all times remain
              sole and exclusive property of Scangraphics. Printfold shall have
              no rights or property interest in the Equipment, Inventory and/or
              Documents, except for the right to use them in the operation of
              its business at the address set forth above for the period of this
              Agreement.

         3.   The Equipment and Inventory shall remain personal property even if
              installed in or attached to real property.



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         4. Printfold shall:

                  a.) Keep the Equipment and Inventory separate from Printfold
                      assets and except for claims, pledges, liens and
                      encumbrances created by Scangraphics, keep the Equipment
                      and Inventory at all times free and clear from all claims,
                      pledges, liens, encumbrance and process and will give
                      Scangraphics immediate notice of any attachment or other
                      judicial process attempting to affect any article of
                      Equipment and/or Inventory;

                  b.) Not Pledge, lend, create a security interest in, sublet or
                      part with possession of the Equipment, Inventory or
                      Documents or any part thereof or attempt in any other
                      manner to dispose of the Equipment, Inventory or
                      Documents, except finished goods inventory shall be
                      shipped in accordance with instruction of Scangraphics;

                  c.) To the extent utilized by Printfold personnel, cause the
                      equipment to be operated in accordance with MANUFACTURERS'
                      instructions, by competent and qualified personnel, who
                      will take all reasonable and necessary safety precautions
                      in the operation of the equipment, and

                  d.) Upon reasonable notice, permit Scangraphics agents to at
                      any time enter upon Printfold's premises for the purposes
                      of inspecting the items listed in Exhibits "A", "B" and
                      "C" hereof.

         5.   At the end of the term Printfold shall make the Equipment,
              Inventory and Documents available to Scangraphics or its agents
              for retrieval and return. Such retrieval and return shall be at
              Scangraphics expense.

         6.   Except for the gross negligence of Printfold, Printfold shall not
              be responsible of any damage to the Equipment while in its
              possession.

         7.   As used herein, "Confidential Information" shall mean all
              information contained in the Documents. Printfold acknowledges and
              agrees that Confidential Information is proprietary to, and a
              valuable trade secret of Scangraphics and any disclosure or
              unauthorized use thereof will cause irrevocable harm and loss to
              Scangraphics.

         8.   In consideration of the disclosure to Printfold of Confidential
              Information, Printfold agrees to treat Confidential Information in
              confidence and to undertake the following additional obligations
              with respect thereto:

                           a.  Use the Confidential Information solely within
                               its business;

                           b.  Will not copy in whole or in part or disclose
                               Confidential Information outside of Printfold;


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                           c.  Limit the dissemination of Confidential
                               Information to only those Printfold Employees who
                               have a need to know and have an agreement with
                               said employees to ensure compliance with the
                               terms of this agreement; and

                           d.  To return the Confidential Information including
                               all copies and records thereof including all
                               Documents to Scangraphics upon termination of
                               this Agreement.

         9.   Upon termination of this Agreement Printfold shall discontinue the
              use of any Confidential Information which is contained in the
              Documents and regardless of the termination of this Agreement, the
              obligations and restrictions of Paragraph 9 and this, Paragraph 10
              of this Agreement, shall survive the expiration, termination or
              cancellation of this Agreement and shall continue to bind
              Printfold and its successors and assigned.

         10.  Scangraphics shall insure the Equipment and Inventory against fire
              and theft covering Printfold and Scangraphics as their interests
              may appear. Scangraphics shall furnish to Printfold written
              evidence of such insurance within thirty (30) days from the date
              hereof. If Scangraphics fails to obtain and pay for such
              insurance, Printfold may do so and Scangraphics shall pay the cost
              thereof.

         11.  Scangraphics agrees to indemnify and hold Printfold and its
              respective officers, directors, shareholders, agents and employees
              (collectively "Indemnitee") harmless from any and against any
              loss, claim, demand, liability, damage, suit, cost or expense,
              including reasonable attorney's fees and costs, suffered or
              incurred by Indemnitee in connection with the operation, control,
              use or misuse of the Equipment by Scangraphics' or Printfolds'
              personnel. The provision of this paragraph shall survive the
              termination of this Agreement.

         12.  It is understood that Printfold will assist Scangraphics in the
              assembly of scanners, however, all such scanners shall remain the
              property of Scangraphics and will be disposed of upon the written
              orders of Scangraphics. Scangraphics shall reimburse Printfold for
              its management, engineering services, overhead and administration
              services, and lease of space in Printfold's facility at the rate
              of ten thousand dollars ($10,000.00) per month during the Term of
              this Agreement.

         13.  No rights or licenses, expressed or implied, are hereby granted to
              Printfold of any Confidential Information or trade secrets of
              Scangraphics as a result of or related to this Agreement.


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         14.  Printfold will not during the Term of this Agreement or for a
              period of TWO (2) years after termination of this Agreement, as a
              principal, agent, co-venturer, or in any other capacity
              manufacture or cause to be manufactured, sell or cause to be sold
              scanners in competition with Scangraphics.

         15.  This Agreement shall be construed in accordance with the laws of
              the Commonwealth of Pennsylvania.

IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed
by their duly authorized representatives.

                           SCANGRAPHICS, INC.

                           BY: /S/ LAURENCE L. OSTERWISE
                              --------------------------
                           Title: President and CEO

                           PRINTFOLD COMPANY, INC.

                           BY: /S/ RICHARD L. REX
                               -------------------
                           Title:  President

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