<PAGE>
                                                                 EXHIBIT 10 (ii)



                               SECURITY AGREEMENT

      SECURITY AGREEMENT (the "Agreement"), made this 25th day of October, 2002,
by and between, PRESSTEK, INC., a Delaware corporation with a principal place of
business at 8 Commercial Street, Hudson, New Hampshire 03051 (the "Debtor"), and
CITIZENS BANK NEW HAMPSHIRE, a guaranty savings bank organized under the laws of
the State of New Hampshire with an address of 875 Elm Street, Manchester, New
Hampshire 03101 (the "Secured Party").

                                   WITNESSETH:

      WHEREAS, Secured Party and Debtor are parties to a certain Loan Agreement
dated December 18, 1996, as amended to date (the "Loan Agreement") and to the
Loan Documents (as defined in the Loan Agreement and as amended to date);

      WHEREAS, pursuant to the Loan Agreement and the Loan Documents the Secured
Party has extended to the Debtor a certain revolving line of credit loan in the
principal amount of up to Sixteen Million Dollars ($16,000,000.00) (the
"Revolving Line of Credit Loan"), a certain mortgage term loan to the Debtor in
the original principal amount of Six Million Nine Hundred Thousand Dollars
($6,900,000.00) ("Term Loan"), and a second mortgage term loan to the Debtor in
the principal amount of Four Million Dollars ($4,000,000.00) (the "Mortgage
Loan"); and

      WHEREAS, the Revolving Line of Credit Loan, the Term Loan, the Mortgage
Loan and all other indebtedness and obligations of the Debtor to the Secured
Party are secured by the grant of security interests in all of the personal
property and assets of the Debtor and mortgages upon certain real property of
the Debtor;

      WHEREAS, in connection with certain amendments to the Loan Agreement and
Loan Documents, including the renewal of the Revolving Line of Credit Loan
thereunder, the Debtor is confirming the grant of security interests to the
Secured Party by entering into this Security Agreement. Terms not otherwise
defined herein shall have the meanings ascribed to them in the Loan Agreement.

      NOW, THEREFORE, in consideration of the willingness of the Secured Party
to make the Loans to the Debtor, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties agree
as follows:

      1. Security Interest. As security for the Secured Obligations described in
Section 2 hereof, the Debtor hereby grants to the Secured Party a first priority
security interest in and lien on the property and assets of the Debtor of the
types set forth below (hereinafter referred to collectively as the
"Collateral"):
<PAGE>
      (a) All equipment, including machinery, office equipment, furniture,
fixtures, along with all other parts, tools, trade-ins, repairs, accessories,
accessions, modifications, and replacements, whether now owned or subsequently
acquired, constructed, or attached or added to, or placed in, the foregoing
(collectively, the "Equipment");

      (b) All inventory, wherever located, including goods, merchandise and
other personal property, held for sale or lease or furnished or to be furnished
under a contract of service, or constituting raw materials, work in process or
materials used or consumed in the Debtor's business, or consigned to others or
held by others for return to the Debtor, whether now owned or subsequently
acquired or manufactured and wherever located (collectively, the "Inventory");

      (c) All accounts and accounts receivable, including, without limitation,
accounts, contracts, contract rights, chattel paper, instruments, rents,
deposits, general intangibles, and any other obligations of any kind whether now
existing or hereafter arising out of or in connection with the sale or lease of
goods or the rendering of services, and all rights now or hereafter existing in
and to all security agreements, notes, leases, licenses, franchises, supply
agreements, and other contracts securing or otherwise relating to any such
accounts, contracts, contract rights, chattel paper, instruments, rents,
deposits, general intangibles, or obligations (any and all such accounts,
contracts, contract rights, chattel paper, instruments, rents, deposits, general
intangibles, and obligations being the "Receivables", and any and all such
security agreements, notes, leases, licenses, franchises, supply agreements, and
other contracts being the "Related Contracts");

      (d) All general intangibles, including, but not limited to, corporate
names, trade names, trademarks, trade secrets, books and records, customer
lists, blue prints and plans, computer programs, tapes and related electronic
data, processing software, and all corporate ledgers;

      (e) All investment property, including, but not limited to, securities,
whether certificated or uncertificated; securities entitlement; securities
accounts; commodity contracts; and commodity accounts;

      (f) Any and all additions, accessions, substitutions or replacements to or
for any of the foregoing;

                                       2
<PAGE>
            (g) Any and all products and proceeds of any or all of the
      foregoing, including, without limitation, cash, cash equivalents, tax
      refunds and the proceeds of insurance policies providing coverage against
      the loss or destruction of or damage to any of the Collateral, or any
      indemnity, warranty, or guarantee payable by reason of loss or damage to
      or otherwise with respect to any of the Collateral (whether or not the
      Secured Party is the loss payee thereof);

            (h) All of the Debtor's after-acquired property of the kinds and
      types described in paragraphs (a) - (g) herein;

            (i) All records and data relating to any of the property described
      above, whether in the form of a writing, photograph, microfilm,
      microfiche, or electronic media, together with all of the Debtor's right,
      title, and interest in and to all computer software required to utilize,
      create, maintain and process any of such records or data or electronic
      media; and

also in (1) all checks, money, securities, bank accounts, deposit accounts, and
other accounts in the possession of or held by the Secured Party whether in the
name of the Debtor or in the name of the Secured Party, and (2) all other
property given by the Debtor to the Secured Party pursuant to this Agreement.
The property described in (1) and (2) above are held in the possession of the
Secured Party by agreement of Debtor and Secured Party. All of the said
Collateral (which throughout this Agreement includes after-acquired Collateral)
is to secure the payment and performance of all of the Secured Obligations. The
security interests granted under this Agreement are in addition to, and not in
limitation of, all existing security interests granted by the Debtor to the
Secured Party, all of which existing security interests shall remain in full
force and effect.

      2. Secured Obligations. The security interest hereby granted shall secure
the following (the "Secured Obligations"):


                        (a) The Debtor's repayment of the principal amount of
            the Revolving Line of Credit Loan, the Term Loan, the Mortgage Loan,
            together with interest, late charges, and any other applicable
            charges thereon, to the Secured Party pursuant to the Loan
            Documents;

                  (b) The Debtor's payment or performance of its obligations
            under the Loan Agreement and Loan Documents, as the same may be
            amended, modified, extended, renewed, replaced or restated;

                                       3
<PAGE>
                  (c) The payment of all other sums with interest and charges
            thereon advanced in accordance herewith to protect the validity,
            security, and priority of this Agreement, the Loan Agreement, or the
            Loan Documents; and

                  (d) Any and all other indebtedness of Debtor to Secured Party
            of every kind and description, direct or indirect, absolute or
            contingent, due or to become due, regardless of how they arose or
            were acquired, now existing or hereafter arising.

      3. Warranties and Representations of the Debtor. Debtor hereby makes the
following representations and warranties which shall survive the execution and
delivery of this Agreement and shall be continuing representations and
warranties as long as any Secured Obligation remains outstanding:

            (a) All representations and warranties made in the Loan Agreement
      and Loan Documents relating to the Debtor and the Collateral are true,
      accurate and complete in all material respects;

            (b) The Debtor's principal place of business is located at the
      address first set forth above; the Debtor's executive offices and the
      office where its books and records are kept and are to be kept concerning
      the Receivables, Related Contracts other Collateral are at the aforesaid
      address; and the Debtor has no other places of business except those set
      forth on Schedule I hereto;

            (c) The Debtor conducts business only under and through the
      corporate, business and trade name first set forth above.

            (d) No material authorization, approval or other action by, and no
      notice to or filing with, any governmental authority or other person is
      required either (i) for the grant by the Debtor of the security interests
      granted hereby or for the execution, delivery or performance of this
      Agreement by the Debtor, or (ii) for the perfection of or the exercise by
      the Secured Party of its respective rights and remedies hereunder, except
      the filing of financing statements;

            (e) The Debtor has good and marketable title to all of the
      Collateral pledged by it hereunder, free and clear of any liens, security
      interests, encumbrances or interests or claims of any other person or
      entity, except those security interests previously granted to the Secured
      Party and those set forth on Schedule II hereto, and there are no sums
      owed with respect to the Collateral other than as disclosed on the
      Debtor's financial statements delivered to the Secured Party;

                                       4
<PAGE>
            (f) Upon the filing of UCC-1 financing statements being delivered at
      or prior to the execution hereof, the Secured Party will have a valid,
      perfected security interest in all of the Collateral which may be
      perfected by filing of financing statements, subject only to preexisting
      security interests of the Secured Party and those set forth on Schedule II
      hereto;

            (g) The Debtor has not performed any acts which might prevent the
      Secured Party from enforcing any of the material terms and conditions of
      this Agreement or which would limit any of them in any such enforcement;

            (h) Schedule III attached hereto sets forth the description and
      location of all Collateral not located at the Debtor's principal place of
      business, together with a list of the record owners of and record holders
      of liens against the real estate on which such Collateral is located; and

            (i) No effective financing statements or other similar instrument in
      effect covering all or any part of the Collateral is on file in any
      recording office, except as may have been filed in favor of Secured Party
      or as disclosed on Schedule II.

      4. Affirmative Covenants of the Debtor.

            (a) The Debtor shall promptly notify and provide the Secured Party
      with a complete description of the opening of any new places of business,
      the closing of any existing places of business, the conduct of business
      under any names or through any entities other than those set forth herein,
      the relocation of any of the Collateral to any new place of business or
      any other act which would affect the financing statements filed by the
      Secured Party;

            (b) The Debtor shall continuously take all steps that are necessary
      or prudent to protect the security interests of the Secured Party in the
      Collateral;

            (c) The Debtor shall defend the Collateral against the claims and
      demands of all persons;

            (d) The Debtor shall deliver and pledge to the Secured Party,
      endorsed or accompanied by instruments of assignment or transfer
      satisfactory to the Secured Party, any instruments, documents, and chattel
      paper which the Secured Party may reasonably specify;

            (e) The Debtor shall comply, in all material respects, with all
      governmental regulations applicable to the Collateral or any part thereof
      or to the operation of the

                                       5
<PAGE>
      Debtor's business; provided, however, that the Debtor may contest any
      governmental regulation in any reasonable manner which shall not in the
      reasonable opinion of the Secured Party adversely affect the Secured
      Party's rights or the first priority of its security interest in the
      Collateral;

            (f) The Debtor shall pay promptly when due, all taxes, assessments
      and governmental charges or levies imposed upon the Collateral or in
      respect of its income or profits therefrom, as well as all claims of any
      kind, except that no such charge need be paid if (i) the validity thereof
      is being contested in good faith by appropriate proceedings, (ii) such
      proceedings do not involve any danger of the sale, forfeiture or loss of
      any of the Collateral or any interest therein; and (iii) such charge is
      adequately reserved against in accordance with the generally accepted
      accounting principles;

            (g) The Debtor shall cause the Equipment to be maintained and
      preserved in good repair and working order, and shall make all repairs,
      replacements, additions, and other improvements necessary to maintain the
      Equipment in such good condition;

            (h) The Debtor shall maintain Inventory sufficient to meet the needs
      of its business;

            (i) The Debtor shall preserve all beneficial Related Contracts;

            (j) The Debtor shall take all commercially reasonable steps
      necessary to collect the Receivables;

            (k) The Debtor shall assure that (i) no Receivable is or shall be
      subject to any defense, offset, counterclaim, discount, or allowance
      (other than usual and customary discounts and allowances made in the
      ordinary course of business), (ii) no agreement under which any deduction,
      discount, credit or allowance of any kind may be granted or allowed shall
      have been or shall thereafter be made by Debtor with any account party
      without the consent of Secured Party (other than usual and customary,
      credits, discounts and allowances made in the ordinary course of
      business), (iii) all statements made and all unpaid balances appearing in
      the invoices, documents, agreements relating to each Receivable are and
      shall be true, genuine, and correct in all respects, and (iv) no
      Receivable shall be converted to a note or other instrument unless the
      same shall be delivered to the possession of the Secured Party within ten
      (10) days of the date of execution of such note or instrument;

            (l) Debtor shall keep accurate and complete records listing and
      describing the Collateral, and when requested by Secured Party, Debtor
      shall give Secured Party a certificate listing and describing the
      Collateral and setting forth the total value of the

                                       6
<PAGE>
      Inventory, the total value of the Equipment, the amount of the Receivables
      designating how many days the Receivables are from the date of invoice,
      the face value of any instruments, and any other information Secured Party
      may request. Secured Party shall have the right at any time to inspect the
      Collateral and to audit and make copies of any records or other writings
      which relate to the Collateral or the general financial condition of
      Debtor. Secured Party may remove such records and writings for the purpose
      of having copies made thereof;

            (m) The Debtor shall advise the Secured Party promptly, in
      reasonable detail, (i) of any lien, security interest, encumbrance, or
      claim made or asserted against any of the Collateral, (ii) of any material
      change, substantial loss or depreciation in the composition of the
      Collateral, and (iii) of the occurrence of any other material adverse
      effect on the aggregate value, enforceability or collectibility of the
      Collateral or on the security interests created hereunder;

            (n) The Debtor shall give, execute, deliver and file or record in
      the proper governmental offices, any instrument, paper or document,
      including, but not limited to, one or more financing statements under the
      Uniform Commercial Code, reasonably satisfactory to the Secured Party, or
      take any action which the Secured Party may deem necessary or desirable in
      order to create, preserve, perfect, extend, continue, modify, terminate or
      otherwise effect any security interest granted pursuant hereto, or to
      enable the Secured Party to exercise or enforce any of its rights
      hereunder; and

            (o) The Debtor shall keep, and stamp or otherwise mark, any of its
      documents, instruments and chattel paper and its books and records
      relating to any of the Collateral in such manner as the Secured Party may
      reasonably require.

      5. Negative Covenants of the Debtor. Except as otherwise provided in the
Note or in this Agreement, without the prior written consent of the Secured
Party, the Debtor shall not:

            (a) Transfer, sell or assign any of the Collateral other than
      Inventory and Equipment in the ordinary course of business;

            (b) Allow or permit any other security interest or lien to attach to
      any of the Collateral, other than those in favor of the Secured Party;

            (c) File, authorize, or permit to be filed in any jurisdiction any
      financing statement relating to any of the Collateral unless the Secured
      Party is named as sole secured party;

            (d) Permit any of the Collateral to be levied upon under any legal
      process;

                                       7
<PAGE>
            (e) Permit anything to be done that may materially impair the value
      of any of the Collateral or the security therein intended to be afforded
      hereby; or

            (f) Use the Collateral in violation of any law or in any manner
      inconsistent with any policy of insurance thereon.

      6. Fixtures. It is the intention of the parties hereto that none of the
Collateral shall become fixtures. Without limiting the generality of the
foregoing, the Debtor will, if requested by the Secured Party, obtain waivers of
lien, in form satisfactory to the Secured Party, from each mortgagee or lessor
of real property (other than the Secured Party) on which any of the Collateral
is or is to be located.

      7. Insurance. Debtor shall, at its own expense, maintain insurance
covering the Collateral against such risks, with such insurers, in such form,
and in such amounts as shall from time to time be required by Secured Party, but
in any event, in such amounts and with such coverage as is customary in Debtor's
type of business. All insurance policies shall be written so as to be payable in
the event of loss to Secured Party and shall provide for thirty (30) days'
written notice to Secured Party of cancellation or modification. At the request
of Secured Party, all insurance policies shall be furnished to and held by
Secured Party. Debtor hereby assigns to Secured Party return premiums, dividends
and other amounts which may be or become due upon cancellation of any such
policies for any reason whatsoever and, during the existence of an Event of
Default (as defined hereinbelow) directs the insurers to pay Secured Party any
sums so due. Secured Party is hereby appointed as attorney irrevocable to
collect, during the existence of an Event of Default, return premiums, dividends
and other amounts due on any insurance policy and the proceeds of such
insurance, to settle any claims with the insurers in the event of loss or
damage, to endorse settlement drafts and, during the existence of an Event of
Default, to cancel, assign, or surrender any insurance policies. If, prior to
the occurrence of an Event of Default, while any Secured Obligations are
outstanding, any return premiums, dividends, other amounts or proceeds are paid
to Debtor under such policies, Debtor shall take either or both of the following
actions: (i) apply such return premiums, dividends, other amounts and proceeds
in whole or in part to the payment or satisfaction of any of the Secured
Obligations; or (ii) use such return premiums, dividends, other amounts and
proceeds for the purpose of repairing or replacing the Collateral destroyed or
damaged. If, during the existence of an Event of Default, any return premiums,
dividends, other amounts or proceeds are paid to Secured Party under such
policies, such return premiums, dividends, other amounts and proceeds shall be
applied to the payment of the Secured Obligations..

      8. Receivables. Debtor agrees that Secured Party may communicate with
account debtors in order to verify the existence, amount, and terms of any
Receivables. Upon and during the continuance of an Event of Default, Secured
Party may notify account debtors of the security interests established herein
and require that payments on Receivables be made directly to Secured


                                       8
<PAGE>
Party, and upon the request of Secured Party, Debtor shall notify account
debtors and indicate on all billings that payments and returns are to be made
directly to Secured Party. In furtherance of the foregoing, Debtor hereby
appoints Secured Party attorney irrevocable with full power, upon an Event of
Default and during the continuance thereof, to collect, compromise, endorse,
sell, or otherwise deal with the Receivables or proceeds thereof and to perform
the terms of any contract in order to create Receivables in Secured Party's name
or in the name of Debtor. This Agreement may be, but need not be, supplemented
by separate assignments of Receivables and contract rights and, if such
assignments are given, the rights and security interests given thereby shall be
in addition to and not in limitation of the rights and security interests
granted by this Agreement.

      9. Events of Default. The following events shall be deemed "Events of
Default" hereunder:


            (a) An Event of Default under the Loan Agreement or any of the Loan
      Documents;

            (b) Any representation or warranty or statement of fact made to
      Secured Party at any time by Debtor is false or misleading or becomes
      false or misleading in any material respect;

            (c) Debtor fails to observe or perform any covenant, warranty, or
      agreement required to be observed or performed by it under this Agreement,
      which default is not cured within the applicable grace period provided in
      Section X. of the Loan Agreement;

            (d) Debtor shall be in default under any obligation undertaken by
      Debtor which default has a material adverse effect on the financial
      condition of Debtor or on the value of the Collateral;

            (e) Uninsured loss, theft, damage, or destruction of any substantial
      portion of any of the Collateral; or

            (f) Debtor or any guarantor of any of the Secured Obligations is or
      becomes insolvent or is involved in any financial difficulty as evidenced
      by (i) an assignment, composition, or similar device for the benefit of
      creditors, (ii) general failure to pay debts when due, (iii) attachment or
      receivership of assets not dissolved within thirty (30) days, (iv) the
      appointment of a custodian, trustee, or receiver for a substantial portion
      of any of their respective properties, (v) the liquidation or sale of all
      or substantially all of their respective properties, (vi) the filing by
      Debtor or any guarantor of a petition under any Chapter of the United
      States Bankruptcy Code or the institution of any other proceeding under
      any law relating to bankruptcy, bankruptcy reorganization, insolvency or
      relief of Debtors, or (vii) the filing against Debtor or any guarantor of
      an involuntary petition under

                                       9
<PAGE>
            any Chapter of the United States Bankruptcy Code or the institution
            of any other proceeding under any law relating to bankruptcy,
            bankruptcy reorganization, insolvency or relief of debtors where
            such proceeding is not dismissed within sixty (60) days from the
            date on which it is filed or instituted.

      10. Rights and Remedies of Secured Party on Default. Upon the occurrence
of any Event of Default, Secured Party shall have, by way of example and not of
limitation, the following rights and remedies:

            (a) Secured Party may declare the Secured Obligations, or any of
      them, to be immediately due and payable without presentment, demand,
      protest or notice of any kind, all of which are hereby expressly waived;

            (b) In addition to all other rights and remedies contained in this
      Agreement, the Loan Agreement, and in the Loan Documents, Secured Party
      may exercise the rights and remedies accorded Secured Party by the Uniform
      Commercial Code or by any other applicable law, all of which rights and
      remedies shall be cumulative and non-exclusive to the extent permitted by
      law;

            (c) Secured Party shall have the right to enter and/or remain upon
      the Premises of Debtor, or any other place or places where any of the
      Collateral is located and kept, without any obligation to pay rent to
      Debtor or others, and remove Collateral therefrom to the premises of the
      Secured Party or any agent of Secured Party for such time as Secured Party
      may desire in order to maintain, collect, sell and/or prepare the
      Collateral for sale, liquidation or collection;

            (d) Secured Party may require the Debtor at Debtor's cost to
      assemble the Collateral and make it available to Secured Party at a place
      designated by Secured Party;

            (e) Secured Party may take possession of and use and operate the
      Collateral in the manner and for the purposes as set forth in Section 11
      hereinbelow;

            (f) Secured Party may sell, lease, or otherwise dispose of the
      Collateral as set forth in Section 12 hereinbelow;

            (g) Secured Party shall have the right to set-off, without notice to
      the Debtor, any and all deposits or other sums at any time or times
      credited or due from Secured Party to Debtor, whether in a special account
      or other account or represented by a certificate of deposit (whether or
      not matured); which deposit and other sums shall at all times constitute
      additional security for the Secured Obligations;

                                       10
<PAGE>
            (h) Secured Party may perform any warranty, covenant or agreement
      which Debtor has failed to perform under this Agreement; and

            (i) Secured Party may take any other action which Secured Party
      reasonably deems necessary or desirable to protect the Collateral or the
      security interests granted herein.

      11. Rights of Secured Party to Use and Operate Collateral. During the
existence of any Event of Default, but subject to the provisions of the Uniform
Commercial Code or other applicable law, the Secured Party shall have the right
and power to take possession of all or any part of the Collateral, and to
exclude the Debtor and all persons claiming under the Debtor wholly or partly
therefrom, and thereafter to hold, store, and/or use, operate, manage and
control the same. Upon any such taking of possession, the Secured Party may,
from time to time, at the expense of the Debtor, make all such repairs,
replacements, alterations, additions and improvements to and of the Collateral
as the Secured Party may reasonably deem proper. In any such case, subject as
aforesaid, the Secured Party shall have the right to manage and control the
Collateral and to carry on the business and to exercise all rights and powers of
the Debtor in respect thereto as the Secured Party shall deem best, including
the right to enter into any and all such agreements with respect to the leasing
and/or operation of the Collateral or any part thereof as the Secured Party may
see fit; and the Secured Party shall be entitled to collect and receive all
rents, issues, profits, fees, revenues and other income of the same and every
part thereof. Such rents, issues, profits, fees, revenues and other income shall
be applied to pay the expenses of holding and operating the Collateral and of
conducting the business thereof, and of all maintenance, repairs, replacements,
alterations, additions and repairs, replacements, alterations, additions and
improvements, and to make all payments which the Secured Party may be required
or may elect to make, if any, for taxes, assessments, insurance and other
charges upon the Collateral or any part thereof, and all other payments which
the Secured Party may be required or authorized to make under any provision of
this Agreement (including reasonable legal costs and attorneys' fees). The
remainder of such rents, issues, profits, fees, revenues and other income shall
be applied to the payment of the Secured Obligations in such order of priority
as the Secured Party deems appropriate in its sole discretion and any surplus
shall be returned to the Debtor. Without limiting the generality of the
foregoing, the Secured Party shall have the right to apply for and have a
receiver appointed by a court of competent jurisdiction in any action taken by
the Secured Party to enforce their rights and remedies hereunder in order to
manage, protect and preserve the Collateral and continue the operation of the
business of the Debtor and to collect all revenues and profits thereof and apply
the same to the payment of all expenses and other charges of such receivership
including the compensation of the receiver and to the payment of the Secured
Obligations as aforesaid until a sale or other disposition of such Collateral
shall be finally made and consummated.



                                       11
<PAGE>
      12. Rights of Secured Party to Sell Collateral. During an Event of
Default, upon (10) days prior written notice by registered or certified mail by
Secured Party to Debtor at the address of the Debtor set forth above (or at such
other address or addresses as the Debtor shall specify in writing by like notice
to the Secured Party) of the time and place of any intended disposition of
Collateral, then Secured Party shall have the right and power to sell, assign,
lease, or otherwise dispose of the Collateral from any business premises of the
Debtor, either at public auction or private sale, by liquidation sale or other
disposition, or as if the sale was being made in the ordinary course of Debtor's
business, with or without notice to the public that the said sale or disposition
is for the benefit of the Secured Party; provided, however, that if the
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market, then Secured Party shall have the
right and power to dispose of the Collateral without prior notice to Debtor and
Debtor expressly waives any rights to notice under such circumstances. The
notices described above shall be deemed to meet any requirement hereunder or
under any applicable law (including the Uniform Commercial Code) that reasonable
notification be given of the time and place of such sale or other disposition.
After deducting all costs and expenses of collection, storage, custody, sale or
other disposition and delivery (including reasonable legal costs and attorneys'
fees) and all other charges against the Collateral, the residue of the proceeds
of any such sale or disposition shall be applied to the payment of the Secured
Obligations in accordance with such order of priority as the Secured Party deems
appropriate in its sole discretion and any surplus shall be returned to the
Debtor. In the event the proceeds of any sale, lease or other disposition of the
Collateral hereunder are insufficient to pay all of the Secured Obligations in
full, the Debtor will be liable for the deficiency, together with interest
thereon at the maximum rate provided in the Note and the cost and expenses of
collection of such deficiency, including, without limitation, reasonable fees of
attorneys, experts, and agents, expenses and disbursements.

      13. Attorney-in-Fact. The Debtor hereby irrevocably authorizes the Secured
Party at any time and from time to time to sign (if required) and file in any
appropriate filing office, wherever located, any financing statement that (a)
describes the Collateral in a manner consistent with Section 1 and (b) contains
any other information required by the Uniform Commercial Code of the applicable
jurisdiction for the sufficiency or filing office acceptance of any financing
statement, including (i) whether the Debtor is an organization, the type of
organization and any organization identification number issued to the Debtor
and, (ii) in the case of a financing statement filed as a fixture filing, a
sufficient description of real property to which the Collateral relates. The
Secured Party is hereby appointed the attorney-in-fact, with full power of
substitution, of the Debtor for the purpose of carrying out the provisions of
this Agreement during the existence of an Event of Default and taking any action
and executing any instruments (including, without limitation, financing or
continuation statements, conveyances, assignments, and transfers) which the
Secured Party may deem necessary or advisable to accomplish the purposes hereof,
which appointment as attorney-in-fact is coupled with an interest and is
irrevocable. The Debtor shall indemnify and hold harmless the Secured Party from
and against any liability or damage which it may incur in the

                                       12
<PAGE>
exercise and performance, in good faith, of the Secured Party's powers and
duties as such attorney-in-fact.

      14. Waiver, etc. The Debtor hereby waives presentment, demand, notice,
protest and, except as is otherwise provided herein, all other demands and
notices in connection with this Agreement or the enforcement of the Secured
Party's rights hereunder or in connection with any Secured Obligations or any
Collateral. The Debtor further consents to and waives notice of the granting of
renewals, extensions of time for payment or other indulgences to the Debtor or
to any account debtor in respect of any Receivable, substitution, release or
surrender of any Collateral, addition or release of persons primarily or
secondarily liable on any Secured Obligation or on any Receivable or other
Collateral, or the acceptance of partial payments on any Secured Obligation or
on any account receivable or other Collateral and/or the settlement or
compromise thereof. No delay or omission on the part of the Secured Party in
exercising any right hereunder shall operate as a waiver of such right or of any
other right hereunder. Any waiver of any such right on any one occasion shall
not be construed as a bar to or waiver of any such right on any such future
occasion.

      15. Termination; Assignments, etc. This Agreement and the security
interest in the Collateral created hereby shall terminate when all of the
Secured Obligations have been paid, performed, and finally discharged in full.
In the event of a sale or assignment by the Secured Party of all or any of the
Secured Obligations held by it, such Secured Party may assign or transfer its
rights and interests under this Agreement in whole or in part to the purchaser
or purchasers of such Secured Obligations, whereupon such purchaser or
purchasers shall become vested with all of the powers and rights of such Secured
Party hereunder, and such Secured Party shall thereafter be forever released and
fully discharged from any liability or responsibility hereunder, with respect to
the rights and interests so assigned.

      16. Notices. All notices, requests, demands and other communications
provided for hereunder shall be in writing (including telegraphic communication)
and shall be either mailed by certified mail, return receipt requested, or
delivered by overnight courier service, to the applicable party at the addresses
first set forth above, or, as to each party, at such other address as shall be
designated by such parties in a written notice to the other party complying as
to delivery with the terms of this Section. All such notices, requests, demands
and other communication shall be effective on the date of first attempted
delivery.

      17. Miscellaneous.

            (a) The powers conferred on the Secured Party hereunder are solely
      to protect its interest in the Collateral and shall not impose any duty
      upon it to exercise any such powers. Except for the safe custody of any
      Collateral in its possession and the accounting for monies actually
      received by it hereunder, the Secured Party shall not have any duty as

                                       13

<PAGE>
      to any Collateral or as to the taking of any necessary steps to preserve
      any right of it or of the Debtor against other parties pertaining to any
      Collateral;

            (b) No provision hereof shall be amended except by a writing signed
      by the Secured Party and the Debtor;

            (c) Any provision of this Agreement which is prohibited or
      unenforceable shall be ineffective to the extent of such prohibition or
      unenforceability without invalidating the remaining provisions hereof;

            (d) This Agreement shall be binding upon and shall inure to the
      benefit of the successors and assigns of the Secured Party and the Debtor;

            (e) No delay, failure to enforce, or single or partial exercise on
      the part of the Secured Party in connection with any of its rights
      hereunder shall constitute an estoppel or waiver thereof, or preclude
      other or further exercises or enforcement thereof and no waiver of any
      default hereunder shall be a waiver of any subsequent default; and

            (f) This Agreement shall be governed as to its validity,
      interpretation and effect in accordance with the laws of the State of New
      Hampshire.

            (g) Notwithstanding any other provision of this Agreement or the
      other Loan Documents to the contrary, the security interests granted
      hereunder to the Secured Party shall not be, and shall not deemed to be,
      an assignment of any contract or agreement of the Debtor which does not
      permit such an assignment under the terms and conditions of such contract
      or agreement; provided, however, that the foregoing shall in no manner
      limit the effect of the collateral assignment hereunder to the Secured
      Party of the accounts arising under such contracts or agreements for the
      payment of money now due or hereafter becoming due to the Debtor
      thereunder, or of the security interests of the Secured Party therein, or
      of the Secured Party's rights with respect thereto under this Agreement.

                                       14
<PAGE>
      IN WITNESS WHEREOF, the undersigned have set their hands and seals to this
Agreement all as of the day and year first above written.

                                          PRESSTEK, INC.


/s/ Jennifer McKay Tardif                 By:   /s/ Edward J. Marino
-------------------------                       --------------------------------
Witness                                         Signature and Title,
                                                Duly Authorized

                                          CITIZENS BANK NEW HAMPSHIRE


  /s/ Patricia Bonner                     By:   /s/ Lawrence Gloekler
-----------------------                         --------------------------------
Witness                                         Signature and Title,
                                                Duly Authorized

                                       15
<PAGE>
                               SECURITY AGREEMENT

                                   SCHEDULE I

                        List of Other Business Locations













                                       16
<PAGE>
                               SECURITY AGREEMENT

                                   SCHEDULE II

                   List of Other Liens and Encumbrances, etc.










                                       17
<PAGE>
                               SECURITY AGREEMENT

                                  SCHEDULE III

                            Other Collateral Location












                                       18