GENERAL SECURITY AGREEMENT (BORROWER)
                      -------------------------------------

      This General  Security  Agreement  ("Agreement")  dated May 12, 1999 is by
Unidigital Inc., a Delaware  corporation  ("Borrower"),  in favor of Fleet Bank,
N.A., a national banking  association,  as  Administrative  Agent for itself and
ratably for the benefit of the Lender  Parties and the Hedge Banks (the "Secured
Party").  The Lender  Parties and the Hedge Banks are  collectively  referred to
herein as the "Lenders."


                               W I T N E S S E T H
                               - - - - - - - - - -


      WHEREAS,  the Secured  Party and the Lenders  have entered or are about to
enter into certain financing  arrangements with the Borrower,  pursuant to which
the  Lenders  may make  loans and  provide  other  financial  accommodations  to
Borrower;

      NOW,  THEREFORE,  in consideration of the mutual conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency  of  which is  hereby  acknowledged,  the  parties  hereto  agree as
follows:


SECTION
1.    DEFINITIONS
      -----------

      All terms used  herein  which are defined in Article 1 or Article 9 of the
Uniform  Commercial Code shall have the meanings given therein unless  otherwise
defined in this  Agreement.  All references to the plural herein shall also mean
the singular and to the singular  shall also mean the plural  unless the context
otherwise  requires.  All  references  to  Borrower,  the Secured  Party and the
Lenders  pursuant to the  definitions set forth in the recitals hereto or to any
other person herein, shall include their respective  successors and assigns. The
words "hereof",  "herein",  "hereunder",  "this  Agreement" and words of similar
import when used in this Agreement  shall refer to this Agreement as a whole and
not any particular  provision of this Agreement and as this Agreement now exists
or may hereafter be amended, modified, supplemented, extended, renewed, restated
or  replaced.  The word  "including"  when  used in this  Agreement  shall  mean
"including,  without limitation". An Event of Default shall exist or continue or
be continuing  until such Event of Default is waived in accordance  with Section
7.3 or is cured in a manner  reasonably  satisfactory  to the Secured Party,  if
such Event of Default is capable of being cured as reasonably  determined by the
Secured Party. Any accounting term used herein unless otherwise  defined in this
Agreement shall have the meanings  customarily  given to such term in accordance
with GAAP. For purposes of this  Agreement,  the following  terms shall have the
respective meanings given to them below:

      1.1  "Accounts"  shall mean all present  and future  rights of Borrower to
payment  for  goods  sold or  leased  or for  services  rendered,  which are not
evidenced  by  instruments  or  chattel  paper,  and  whether  or not  earned by
performance.


<PAGE>


      1.2  "Credit  Agreement"  shall  mean the Credit  Agreement,  of even date
hereof,  by and among Borrower,  the Secured Party and the Lenders,  as the same
now exists and may  hereafter  be  amended,  modified,  supplemented,  extended,
renewed,  restated or replaced.

      1.3  "Equipment"  shall  mean all of  Borrower's  now owned and  hereafter
acquired  equipment,  machinery,  computers  and computer  hardware and software
(whether  owned  or  licensed),   vehicles,  tools,  furniture,   fixtures,  all
attachments, accessions and property now or hereafter affixed thereto or used in
connection  therewith,  and  substitutions  and replacements  thereof,  wherever
located.

      1.4 "Event of  Default"  shall have the  meaning  set forth in Section 6.1
hereof.

      1.5 "L/C  Cash  Collateral  Account"  shall  mean the L/C Cash  Collateral
Account  established  by Borrower with the Secured  Party to provide  collateral
security with respect to outstanding  letters of credit,  as provided for in the
Credit Agreement.

      1.6 "GAAP" shall mean  generally  accepted  accounting  principles  in the
United  States of  America  as in  effect  from time to time as set forth in the
opinions and pronouncements of the Accounting  Principles Board and the American
Institute of Certified Public  Accountants and the statements and pronouncements
of  the  Financial  Accounting  Standards  Board  which  are  applicable  to the
circumstances as of the date of determination consistently applied.

      1.7 "Hedge  Banks" shall have the meaning  ascribed  thereto in the Credit
Agreement.

      1.8 "Information  Certificate"  shall mean the Information  Certificate of
Borrower  constituting  Exhibit A hereto  containing  material  information with
respect  to  Borrower,  its  business  and  assets  provided  by or on behalf of
Borrower  to the  Secured  Party or any of the  Lenders in  connection  with the
preparation  of this  Agreement  and the other Loan  Documents and the financing
arrangements provided for herein.

      1.9  "Inventory"  shall  mean all of  Borrower's  now owned and  hereafter
existing or acquired  raw  materials,  work in process,  finished  goods and all
other inventory of whatsoever kind or nature, wherever located.

      1.10  "Lender  Parties"  shall have the  meaning  ascribed  thereto in the
Credit Agreement.

      1.11 "Loan  Documents"  shall  have the  meaning  ascribed  thereto in the
Credit Agreement.

      1.12  "Obligations"  shall mean any and all  obligations,  liabilities and
indebtedness  of every  kind,  nature and  description  owing by Borrower to the
Secured  Party  and/or any of the Lenders  and/or their  respective  affiliates,
including  principal,  interest,  charges,  fees,  costs and  expenses,  however
evidenced,  whether as  principal,  surety,  endorser,  guarantor or  otherwise,
whether  arising under the Credit  Agreement,  this Agreement and the other Loan
Documents  or  otherwise,  whether now existing or  hereafter  arising,  whether
arising  before,  during or after the initial or any renewal  term of the Credit
Agreement  or after the  commencement  of any case with  respect to the Borrower
under the United States  Bankruptcy Code or any similar  statute  (including the
payment of interest and other  amounts which would accrue and become due but for
the  commencement  of such case,  whether  or not such  amounts  are  allowed or
allowable  in  whole  or in part in such  case),  whether  direct  or  indirect,
absolute or contingent,


                                      -2-
<PAGE>


joint  or  several,  due  or  not  due,  primary  or  secondary,  liquidated  or
unliquidated, secured or unsecured, and however acquired by the Secured Party or
any of the Lenders.

      1.13 "Obligor" shall mean any other guarantor,  endorser, acceptor, surety
or other person liable on or with respect to the Obligations or who is the owner
of any property which is security for the Obligations, other than Borrower.

      1.14 "Person" or "person" shall have the meaning  ascribed  thereto on the
Credit Agreement.

      1.15  "Records"  shall mean all of Borrower's  present and future books of
account of every kind or nature, purchase and sale agreements,  invoices, ledger
cards, bills of lading and other shipping evidence, statements,  correspondence,
memoranda, credit files and other data relating to the Collateral or any account
debtor,  together with the tapes,  disks,  diskettes and other data and software
storage  media and  devices,  file  cabinets  or  containers  in or on which the
foregoing  are stored  (including  any rights of  Borrower  with  respect to the
foregoing maintained with or by any other person).

      Any term  defined in the Credit  Agreement  and used herein shall have the
respective  meanings ascribed to such terms therein,  unless specified otherwise
herein.


SECTION 2.  GRANT OF SECURITY INTEREST
            --------------------------

      To secure payment and  performance  of all  Obligations,  Borrower  hereby
grants to the Secured Party a continuing  security interest in, a lien upon, and
a right of set off against, and hereby assigns to the Secured Party as security,
the following property and interests in property, whether now owned or hereafter
acquired or existing, and wherever located (collectively, the "Collateral"):

      2.1 Accounts;

      2.2 all present and future contract rights, general intangibles (including
tax and duty refunds, registered and unregistered patents,  trademarks,  service
marks, copyrights,  trade names, applications for the foregoing,  trade secrets,
goodwill, processes, drawings, blueprints,  customer lists, licenses, whether as
licensor or licensee,  choses in action and other claims and existing and future
leasehold  interests in equipment,  real estate and  fixtures),  chattel  paper,
documents, instruments, letters of credit, bankers' acceptances and guaranties;

      2.3 all present and future monies, securities, credit balances,  deposits,
deposit  accounts  and other  property  of  Borrower  now or  hereafter  held or
received  by or in transit to the  Secured  Party,  any of the Lenders or any of
their affiliates or at any other depository or other institution from or for the
account of Borrower  whether for  safekeeping,  pledge,  custody,  transmission,
collection or otherwise,  and all present and future liens,  security interests,
rights, remedies, title and interest in, to and in respect of Accounts and other
Collateral,  including (a) rights and remedies  under or relating to guaranties,
contracts  of  suretyship,  letters of credit  and  credit  and other  insurance
related  to the  Collateral,  (b)  rights  of  stoppage  in  transit,  replevin,
repossession,  reclamation  and other rights and  remedies of an unpaid  vendor,
lienor or secured party, (c) goods described in invoices,  documents,  contracts
or  instruments  with  respect  to, or  otherwise  representing  or  evidencing,
Accounts or other Collateral, including returned,


                                      -3-
<PAGE>


repossessed  and  reclaimed  goods,  and (d) deposits by and property of account
debtors or other persons securing the obligations of account debtors;

      2.4 Inventory;

      2.5 Equipment;

      2.6 Records; and

      2.7 L/C Cash Collateral Account;

      2.8 all right,  title and interest of Borrower in the Master Agreement (as
defined in the Credit  Agreement) and each  transaction  entered into thereunder
(including, without limitation, all amounts payable and deliverable thereunder),
and  the  benefit  of any  guarantee  of  other  credit  support  in  connection
therewith; and

      2.9 all  products and proceeds of the  foregoing,  in any form,  including
insurance proceeds and any claims against third parties for loss or damage to or
destruction of any or all of the foregoing.


SECTION 3.  COLLATERAL COVENANTS
            --------------------

      3.1 Accounts Covenants.
          ------------------

            (a) The Secured Party shall have the right at any time or times,  in
the Secured  Party's name or in the name of a nominee of the Secured  Party,  to
verify the validity, amount or any other matter relating to any Account or other
Collateral, by mail, telephone, facsimile transmission or otherwise.

            (b) Borrower  shall  deliver or cause to be delivered to the Secured
Party,  with  appropriate  endorsement  and  assignment,  with full  recourse to
Borrower,  all chattel paper and  instruments  which Borrower now owns or may at
any time acquire  immediately  upon Borrower's  receipt  thereof,  except as the
Secured Party may otherwise agree.

            (c) The  Secured  Party  may,  at any time or times that an Event of
Default exists or has occurred and is continuing,  (i) notify any or all account
debtors that the Accounts  have been  assigned to the Secured Party and that the
Secured Party has a security  interest  therein and the Secured Party may direct
any or all accounts debtors to make payment of Accounts  directly to the Secured
Party,  (ii)  extend the time of payment  of,  compromise,  settle or adjust for
cash,  credit,  return  of  merchandise  or  otherwise,  and upon  any  terms or
conditions, any and all Accounts or other obligations included in the Collateral
and  thereby  discharge  or release  the  account  debtor or any other  party or
parties in any way liable  for  payment  thereof  without  affecting  any of the
Obligations,  (iii) demand,  collect or enforce  payment of any Accounts or such
other  obligations,  but without any duty to do so, and the Secured  Party shall
not be liable for its failure to collect or enforce the payment  thereof nor for
the  negligence  of its agents or attorneys  with respect  thereto and (iv) take
whatever  other action the Secured Party may deem necessary or desirable for the
protection of its interests.  At any time that an Event of Default exists or has
occurred and is continuing,  at the Secured  Party's  request,  all invoices and
statements  sent to any account  debtor  shall state that the  Accounts and such
other obligations have been assigned to the Secured Party and are


                                      -4-
<PAGE>


payable directly and only to the Secured Party and Borrower shall deliver to the
Secured Party such  originals of documents  evidencing  the sale and delivery of
goods or the  performance of services giving rise to any Accounts as the Secured
Party may require.

      3.2 Inventory Covenants. With respect to the Inventory: (a) Borrower shall
          -------------------
at all times maintain inventory records  reasonably  satisfactory to the Secured
Party keeping  correct and accurate  records  itemizing and describing the kind,
type,  quality and quantity of  Inventory,  Borrower's  cost  therefor and daily
withdrawals  therefrom and additions thereto;  (b) Borrower shall not remove any
Inventory  from the locations set forth or permitted  herein,  without the prior
written  consent of the  Secured  Party,  except for sales of  Inventory  in the
ordinary  course of Borrower's  business and except to move  Inventory  directly
from one location set forth or permitted  herein to another such  location;  (c)
Borrower  shall  produce,  use,  store  and  maintain  the  Inventory,  with all
reasonable care and caution and in accordance  with applicable  standards of any
insurance and in conformity with applicable laws (including the  requirements of
the  Federal  Fair  Labor  Standards  Act of 1938,  as  amended  and all  rules,
regulations and orders related thereto); (d) Borrower assumes all responsibility
and  liability  arising from or relating to the  production,  use, sale or other
disposition  of the  Inventory;  (e)  Borrower  shall not sell  Inventory to any
customer on approval,  or any other basis which  entitles the customer to return
or may obligate  Borrower to repurchase such Inventory;  (f) Borrower shall keep
the  Inventory in good and  marketable  condition;  and (g) Borrower  shall not,
without  prior  written  notice to the  Secured  Party,  acquire  or accept  any
Inventory on consignment or approval.

      3.3 Equipment Covenants. With respect to the Equipment: (a) Borrower shall
          -------------------
keep the  Equipment  in good order,  repair,  running and  marketable  condition
(ordinary wear and tear excepted); (b) Borrower shall use the Equipment with all
reasonable care and caution and in accordance  with applicable  standards of any
insurance and in conformity  with all applicable  laws; (c) the Equipment is and
shall be used in Borrower's business and not for personal,  family, household or
farming use; (d) Borrower  shall not remove any Equipment from the locations set
forth or permitted herein,  except to the extent necessary to have any Equipment
repaired or maintained in the ordinary  course of the business of Borrower or to
move  Equipment  directly  from one location  set forth or  permitted  herein to
another such  location and except for the movement of motor  vehicles used by or
for the  benefit  of  Borrower  in the  ordinary  course  of  business;  (e) the
Equipment is now and shall  remain  personal  property  and  Borrower  shall not
permit  any of the  Equipment  to be or  become  a part  of or  affixed  to real
property; and (f) Borrower assumes all responsibility and liability arising from
the use of the Equipment.

      3.4 Power of Attorney. Borrower hereby irrevocably designates and appoints
          -----------------
the  Secured  Party  (and  all  persons  designated  by the  Secured  Party)  as
Borrower's true and lawful  attorney-in-fact,  and authorizes the Secured Party,
in  Borrower's  or the  Secured  Party's  name,  to: (a) at any time an Event of
Default or event which with  notice or passage of time or both would  constitute
an Event of Default  exists or has occurred and is continuing (i) demand payment
on Accounts or other  proceeds of  Inventory or other  Collateral,  (ii) enforce
payment of Accounts by legal  proceedings  or otherwise,  (iii)  exercise all of
Borrower's rights and remedies to collect any Account or other Collateral,  (iv)
sell or assign any Account upon such terms,  for such amount and at such time or
times as the Secured  Party deems  advisable,  (v) settle,  adjust,  compromise,
extend or renew an  Account,  (vi)  discharge  and release  any  Account,  (vii)
prepare,  file and sign  Borrower's  name on any proof of claim in bankruptcy or
other similar document against an account debtor,  (viii) notify the post office
authorities to change the address for delivery of Borrower's  mail to an address
designated  by the Secured  Party and open and dispose of all mail  addressed to
Borrower,  (ix) do all acts and  things  which  are  necessary,  in the  Secured
Party's


                                      -5-
<PAGE>


determination,  to fulfill  Borrower's  obligations under this Agreement and the
other Loan  Documents,  (x) take control in any manner of any item of payment or
proceeds  thereof,  (xi)  endorse  Borrower's  name upon any items of payment or
proceeds  thereof  and  deposit  the same in the  Secured  Party's  account  for
application to the Obligations,  (xii) endorse  Borrower's name upon any chattel
paper, document, instrument,  invoice, or similar document or agreement relating
to any  Account  or any goods  pertaining  thereto or any other  Collateral  and
(xiii) sign Borrower's name on any  verification of Accounts and notices thereof
to  account  debtors  and (b) at any time to (i) have  access to any  lockbox or
postal  box  into  which  Borrower's  mail is  deposited  and  (ii)  execute  in
Borrower's  name and file any UCC financing  statements  or amendments  thereto.
Borrower  hereby  releases the Secured  Party and its  officers,  employees  and
designees from any liabilities  arising from any act or acts under this power of
attorney and in furtherance thereof,  whether of omission or commission,  except
as a result of the Secured Party's own gross negligence or wilful  misconduct as
determined  pursuant  to a final  non-appealable  order of a court of  competent
jurisdiction.

      3.5 Right to Cure.  The Secured  Party may,  at its  option,  (a) cure any
          -------------
default by  Borrower  under any  agreement  with a third party or pay or bond on
appeal any judgment  entered  against  Borrower,  (b)  discharge  taxes,  liens,
security  interests or other encumbrances at any time levied on or existing with
respect to the Collateral  and (c) pay any amount,  incur any expense or perform
any act which, in the Secured Party's  judgment,  is necessary or appropriate to
preserve,  protect,  insure or  maintain  the  Collateral  and the rights of the
Secured  Party with respect  thereto.  The Secured  Party may add any amounts so
expended to the Obligations and charge Borrower's account therefor, such amounts
to be  repayable  by  Borrower on demand.  The  Secured  Party shall be under no
obligation  to effect such cure,  payment or bonding and shall not, by doing so,
be deemed to have assumed any  obligation or liability of Borrower.  Any payment
made or other  action  taken by the Secured  Party under this  Section  shall be
without  prejudice to any right to assert an Event of Default  hereunder  and to
proceed accordingly.

      3.6 Access to  Premises.  From time to time as  requested  by the  Secured
          -------------------
Party,  at the  cost and  expense  of  Borrower,  (a) the  Secured  Party or its
designee shall have complete access to all of Borrower's  premises during normal
business  hours and after  reasonable  notice  to  Borrower,  or at any time and
without  notice to Borrower if an Event of Default exists or has occurred and is
continuing,  for  the  purposes  of  inspecting,   verifying  and  auditing  the
Collateral and all of Borrower's books and records,  including the Records,  and
(b) Borrower  shall  promptly  furnish to the Secured  Party such copies of such
books and records or extracts  therefrom as the Secured  Party may request,  and
(c) use during normal  business hours such of Borrower's  personnel,  equipment,
supplies and premises as may be reasonably necessary for the foregoing, provided
that such use does not unreasonably disrupt the business of the Borrower, and if
an Event of Default  exists or has occurred and is continuing for the collection
of Accounts and realization of other Collateral.


SECTION 4.  REPRESENTATIONS AND WARRANTIES
            ------------------------------

      Borrower  hereby  represents  and  warrants to the  Secured  Party and the
Lenders the  following  (which shall  survive the execution and delivery of this
Agreement):

      4.1 Chief  Executive  Office;  Collateral  Locations.  The chief executive
          ------------------------------------------------
office of Borrower and Borrower's Records  concerning  Accounts are located only
at the  address set forth  below and its only other  places of business  and the
only other locations of Collateral, if any, are the addresses set forth in


                                      -6-
<PAGE>


the Information  Certificate,  subject to the right of Borrower to establish new
locations in  accordance  with Section 5.2 below.  The  Information  Certificate
correctly  identifies any of such locations  which are not owned by Borrower and
sets forth the owners and/or  operators  thereof,  and to the best of Borrower's
knowledge, the holders of any mortgages on such locations.

      4.2 Priority of Liens;  Title to  Properties.  The security  interests and
          ----------------------------------------
liens  granted to the  Secured  Party  under this  Agreement  and the other Loan
Documents  constitute  valid and  perfected  first  priority  liens and security
interests  in and upon the  Collateral  subject  only to the liens  indicated on
Schedule  4.2  hereto and the other  liens  permitted  by the Credit  Agreement.
Borrower  has good and  marketable  title to all of its  properties  and  assets
subject to no liens,  mortgages,  pledges,  security interests,  encumbrances or
charges of any kind,  except those  granted to the Secured Party and such others
as are  specifically  listed on Schedule  4.2 hereto or  permitted by the Credit
Agreement.

      4.3 Bank Accounts.  All of the deposit  accounts,  investment  accounts or
          -------------
other  accounts  in the name of or used by  Borrower  maintained  at any bank or
other financial institution are set forth on Schedule 4.3 hereof, subject to the
right of Borrower to  establish  new  accounts in  accordance  with  Section 5.3
below.

      4.4 Survival of Warranties; Cumulative. All representations and warranties
          ----------------------------------
contained in this Agreement or any of the other Loan Documents shall survive the
execution  and delivery of this  Agreement and shall be deemed to have been made
again to the  Secured  Party  and the  Lenders  on the  date of each  additional
borrowing or other credit  accommodation under the Credit Agreement and shall be
conclusively  presumed  to have  been  relied  on by the  Secured  Party and the
Lenders  regardless of any  investigation  made or information  possessed by the
Secured Party or any of the Lenders.  The  representations  and  warranties  set
forth herein shall be cumulative and in addition to any other representations or
warranties  which Borrower shall now or hereafter give, or cause to be given, to
the Secured Party or any of the Lenders.


SECTION 5.  AFFIRMATIVE AND NEGATIVE COVENANTS
            ----------------------------------

      5.1 New Collateral  Locations.  Borrower may open any new location  within
          -------------------------
the  continental  United  States  provided  Borrower (a) gives the Secured Party
fifteen (15) days prior written  notice of the intended  opening of any such new
location and (b) executes and delivers,  or causes to be executed and delivered,
to the Secured Party such agreements,  documents, and instruments as the Secured
Party may deem reasonably necessary or desirable to protect its interests in the
Collateral at such location, including UCC financing statements.

      5.2 Insurance.  Borrower  shall, at all times,  maintain with  financially
          ---------
sound and reputable  insurers  insurance with respect to the Collateral  against
loss  or  damage  and  all  other  insurance  of the  kinds  and in the  amounts
customarily insured against or carried by corporations of established reputation
engaged in the same or similar businesses and similarly situated.  Said policies
of insurance shall be  satisfactory to the Secured Party as to form,  amount and
insurer.  Borrower shall furnish  certificates,  policies or endorsements to the
Secured  Party as the Secured  Party shall  require as proof of such  insurance,
and,  if  Borrower  fails to do so, the  Secured  Party is  authorized,  but not
required,  to obtain such  insurance  at the expense of  Borrower.  All policies
shall provide for at least thirty (30) days prior written  notice to the Secured
Party of any cancellation or reduction of coverage and that the Secured


                                      -7-
<PAGE>


Party may act as attorney for Borrower in obtaining, and at any time an Event of
Default exists or has occurred and is continuing,  adjusting, settling, amending
and canceling such insurance. Borrower shall cause the Secured Party to be named
as a loss payee and an  additional  insured (but without any  liability  for any
premiums)   under  such   insurance   policies   and   Borrower   shall   obtain
non-contributory  the Secured Party's loss payable endorsements to all insurance
policies in form and substance  satisfactory to the Secured Party.  Such Secured
Party's  loss  payable  endorsements  shall  specify  that the  proceeds of such
insurance  shall be payable to the Secured Party as its interests may appear and
further  specify that the Secured  Party shall be paid  regardless of any act or
omission by Borrower or any of its affiliates.  At its option, the Secured Party
may apply any  insurance  proceeds  received by the Secured Party at any time to
the cost of  repairs  or  replacement  of  Collateral  and/or to  payment of the
Obligations,  whether  or not then due,  in any order and in such  manner as the
Secured  Party may determine or hold such  proceeds as cash  collateral  for the
Obligations.

      5.3 Additional Bank Accounts.  Borrower shall not, directly or indirectly,
          ------------------------
open, establish or maintain any deposit account, investment account or any other
account with any bank or other  financial  institution,  other than the accounts
set  forth in  Schedule  4.3  hereto,  except:  (a) as to any new or  additional
accounts  which  contain  any  Collateral  or proceeds  thereof,  with the prior
written consent of the Secured Party and subject to such  conditions  thereto as
the Secured  Party may  establish and (b) as to any accounts used by Borrower to
make payments of payroll,  taxes or other  obligations to third  parties,  after
prior written notice to the Secured Party.

      5.4 Costs and Expenses.  Borrower shall pay to the Secured Party on demand
          ------------------
all costs,  expenses,  filing fees and taxes paid or payable in connection  with
the preparation,  negotiation,  execution, delivery, recording,  administration,
collection, liquidation, enforcement and defense of the Obligations, the Secured
Party's rights in the Collateral,  this Agreement,  the other Loan Documents and
all  other  documents  related  hereto or  thereto,  including  any  amendments,
supplements  or consents  which may  hereafter be  contemplated  (whether or not
executed) or entered  into in respect  hereof and  thereof,  including:  (a) all
costs and expenses of filing or recording  (including  Uniform  Commercial  Code
financing statement filing taxes and fees, documentary taxes,  intangibles taxes
and  mortgage  recording  taxes  and fees,  if  applicable);  (b) all  insurance
premiums,  appraisal  fees and search fees; (c) costs and expenses of preserving
and  protecting  the  Collateral;  (d) costs and  expenses  paid or  incurred in
connection  with obtaining  payment of the  Obligations,  enforcing the security
interests and liens of the Secured  Party,  selling or otherwise  realizing upon
the Collateral, and otherwise enforcing the provisions of this Agreement and the
other Loan  Documents or  defending  any claims made or  threatened  against the
Secured Party arising out of the  transactions  contemplated  hereby and thereby
(including preparations for and consultations  concerning any such matters); and
(e)  the  reasonable  fees  and   disbursements  of  counsel   (including  legal
assistants) to the Secured Party in connection with any of the foregoing.

      5.5 Further  Assurances.  At the request of the Secured  Party at any time
          -------------------
and from time to time, Borrower shall, at its expense, at any time or times duly
execute and deliver,  or cause to be duly executed and  delivered,  such further
agreements,  documents and instruments,  and do or cause to be done such further
acts as may be necessary or proper to  evidence,  perfect,  maintain and enforce
the  security  interests  and the  priority  thereof  in the  Collateral  and to
otherwise  effectuate the provisions or purposes of this Agreement or any of the
other Loan  Documents.  Where permitted by law,  Borrower hereby  authorizes the
Secured  Party to execute and file one or more UCC financing  statements  signed
only by the Secured Party.


                                      -8-
<PAGE>


SECTION 6.  EVENTS OF DEFAULT AND REMEDIES
            ------------------------------

      6.1 Events of Default. The occurrence or existence of any Event of Default
          -----------------
under the Credit  Agreement is referred to herein  individually  as an "Event of
Default", and collectively as "Events of Default".

      6.2 Remedies.
          --------

            (a) At any time an Event of Default  exists or has  occurred  and is
continuing,  the Secured  Party shall have all rights and  remedies  provided in
this Agreement,  the other Loan Documents, the Uniform Commercial Code and other
applicable law, all of which rights and remedies may be exercised without notice
to or consent by  Borrower or any  Obligor,  except as such notice or consent is
expressly  provided  for  hereunder or required by  applicable  law. All rights,
remedies and powers  granted to the Secured  Party  hereunder,  under any of the
other Loan Documents,  the Uniform  Commercial Code or other applicable law, are
cumulative,  not exclusive and enforceable,  in the Secured Party's  discretion,
alternatively,  successively,  or concurrently on any one or more occasions, and
shall include,  without limitation,  the right to apply to a court of equity for
an  injunction  to  restrain a breach or  threatened  breach by Borrower of this
Agreement or any of the other Loan Documents. The Secured Party may, at any time
or times,  proceed  directly  against  Borrower  or any  Obligor to collect  the
Obligations without prior recourse to the Collateral.

          (b) Without  limiting the foregoing,  at any time an  Event of Default
exists  or has  occurred  and is  continuing,  the  Secured  Party  may,  in its
discretion and without limitation, (i) accelerate the payment of all Obligations
and demand immediate payment thereof to the Secured Party (provided,  that, upon
                                                           --------
the  occurrence of any Event of Default  described in Section 6.01 of the Credit
Agreement,  all  Obligations  shall  automatically  become  immediately  due and
payable),  (ii) with or without  judicial  process or the aid or  assistance  of
others,  enter upon any  premises  on or in which any of the  Collateral  may be
located  and  take   possession  of  the  Collateral  or  complete   processing,
manufacturing and repair of all or any portion of the Collateral,  (iii) require
Borrower,  at Borrower's  expense, to assemble and make available to the Secured
Party any part or all of the Collateral at any place and time  designated by the
Secured Party, (iv) collect, foreclose, receive, appropriate, setoff and realize
upon any and all  Collateral,  (v) remove any or all of the Collateral  from any
premises on or in which the same may be located for the purpose of effecting the
sale,  foreclosure or other  disposition  thereof or for any other  purpose,(vi)
sell,  lease,  transfer,  assign,  deliver or  otherwise  dispose of any and all
Collateral  (including  entering into contracts with respect thereto,  public or
private  sales at any  exchange,  broker's  board,  at any office of the Secured
Party or  elsewhere)  at such  prices  or terms as the  Secured  Party  may deem
reasonable, for cash, upon credit or for future delivery, with the Secured Party
having the right to purchase the whole or any part of the Collateral at any such
public  sale,  all of the  foregoing  being  free  from any  right or  equity of
redemption of Borrower,  which right or equity of redemption is hereby expressly
waived and released by Borrower.  If any of the  Collateral is sold or leased by
the Secured  Party upon credit  terms or for future  delivery,  the  Obligations
shall not be reduced  as a result  thereof  until  payment  therefor  is finally
collected  by the Secured  Party.  If notice of  disposition  of  Collateral  is
required by law,  five (5) days prior  notice by the  Secured  Party to Borrower
designating  the time and place of any public  sale or the time after  which any
private sale or other intended disposition of Collateral is to be made, shall be
deemed to be reasonable  notice thereof and Borrower waives any other notice. In
the event the Secured Party  institutes  an action to recover any  Collateral or
seeks recovery of any Collateral by way of prejudgment  remedy,  Borrower waives
the posting of any bond which might otherwise be required.


                                      -9-
<PAGE>


            (c) The  Secured  Party may apply the cash  proceeds  of  Collateral
actually  received by the Secured  Party from any sale,  lease,  foreclosure  or
other  disposition of the Collateral to payment of the Obligations,  in whole or
in part and in such order as The  Secured  Party may elect,  whether or not then
due.  Borrower  shall remain  liable to the Secured Party for the payment of any
deficiency  with  interest  at the  highest  rate  provided  for  in the  Credit
Agreement  and all costs and expenses of collection  or  enforcement,  including
attorneys' fees and legal expenses.


SECTION 7.  JURY TRIAL WAIVER; OTHER WAIVERS
            AND CONSENTS; GOVERNING LAW
            --------------------------------

      7.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.
          ---------------------------------------------------------------------

            (a) The validity,  interpretation  and enforcement of this Agreement
and the other Loan  Documents  and any dispute  arising out of the  relationship
between the parties  hereto,  whether in contract,  tort,  equity or  otherwise,
shall be governed by the internal laws of the State of New York.

            (b) Borrower  irrevocably  consents and submits to the non-exclusive
jurisdiction  of the State of New York and the United States  District Court for
the  Southern  District of New York and waives any  objection  based on venue or
forum non conveniens with respect to any action instituted therein arising under
----- --- ----------
this  Agreement or any of the other Loan  Documents  or in any way  connected or
related or  incidental  to the  dealings  of Borrower  and the Secured  Party in
respect  of this  Agreement  or the other  Loan  Documents  or the  transactions
related  hereto or  thereto,  in each case  whether now  existing  or  hereafter
arising, and whether in contract, tort, equity or otherwise, and agrees that any
dispute  with  respect  to any such  matters  shall be heard  only in the courts
described above (except that the Secured Party shall have the right to bring any
action or proceeding against Borrower or its property in the courts of any other
jurisdiction  which the Secured Party deems necessary or appropriate in order to
realize on the Collateral or to otherwise enforce its rights against Borrower or
its property).

            (c) Borrower hereby waives  personal  service of any and all process
upon it and  consents  that all such service of process may be made by certified
mail  (return  receipt  requested)  directed  to its  address  set  forth on the
signature  pages hereof and service so made shall be deemed to be completed five
(5) days after the same shall have been so deposited in the U.S.  mails,  or, at
the  Secured  Party's  option,  by service  upon  Borrower  in any other  manner
provided under the rules of any such courts.  Within thirty (30) days after such
service, Borrower shall appear in answer to such process, failing which Borrower
shall be deemed in default  and  judgment  may be entered by the  Secured  Party
against Borrower for the amount of the claim and other relief requested.

            (d)  BORROWER  AND THE  SECURED  PARTY  MUTUALLY  HEREBY  KNOWINGLY,
VOLUNTARILY AND  INTENTIONALLY  WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF
ANY  CLAIM  BASED  HEREON,  ARISING  OUT OF,  UNDER OR IN  CONNECTION  WITH THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENTS  CONTEMPLATED TO BE EXECUTED IN CONNECTION
HEREWITH  OR ANY COURSE OF  CONDUCT,  COURSE OF  DEALINGS,  STATEMENTS  (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY.  THIS WAIVER  CONSTITUTES A MATERIAL
INDUCEMENT  FOR THE SECURED  PARTY AND THE LENDERS TO ACCEPT THIS  AGREEMENT AND
MAKE LOANS PURSUANT TO THE TERMS OF THE CREDIT AGREEMENT.


                                      -10-
<PAGE>


            (e) The  Secured  Party  shall not have any  liability  to  Borrower
(whether in tort, contract, equity or otherwise) for losses suffered by Borrower
in connection with, arising out of, or in any way related to the transactions or
relationships  contemplated  by this  Agreement,  or any act,  omission or event
occurring  in  connection  herewith,  unless  it is  determined  by a final  and
non-appealable  judgment  or court order  binding on the Secured  Party that the
losses were the result of acts or omissions  constituting  gross  negligence  or
willful misconduct. In any such litigation,  the Secured Party shall be entitled
to the  benefit of the  rebuttable  presumption  that it acted in good faith and
with the exercise of ordinary care in the performance by it of the terms of this
Agreement and the other Loan Documents.

      7.2  Waiver  of  Notices.   Borrower  hereby   expressly   waives  demand,
           -------------------
presentment,  protest and notice of protest and notice of dishonor  with respect
to any and all instruments and commercial  paper,  included in or evidencing any
of the Obligations or the Collateral,  and any and all other demands and notices
of any kind or nature whatsoever with respect to the Obligations, the Collateral
and this Agreement,  except such as are expressly provided for herein. No notice
to or demand on Borrower which The Secured Party may elect to give shall entitle
Borrower to any other or further notice or demand in the same,  similar or other
circumstances.

      7.3  Amendments  and Waivers.  Neither this  Agreement  nor any  provision
           -----------------------
hereof shall be amended,  modified,  waived or discharged orally or by course of
conduct,  but only by a written agreement signed by an authorized officer of the
Secured Party, and as to amendments,  as also signed by an authorized officer of
Borrower.  The Secured Party shall not, by any act, delay, omission or otherwise
be deemed to have expressly or impliedly waived any of its rights, powers and/or
remedies  unless  such waiver  shall be in writing  and signed by an  authorized
officer of the Secured Party.  Any such waiver shall be enforceable  only to the
extent  specifically  set forth  therein.  A waiver by the Secured  Party of any
right,  power and/or remedy on any one occasion  shall not be construed as a bar
to or waiver of any such right,  power  and/or  remedy  which the Secured  Party
would  otherwise  have  on any  future  occasion,  whether  similar  in  kind or
otherwise.

      7.4 Waiver of  Counterclaims.  Borrower waives all rights to interpose any
          ------------------------
claims,  deductions,   setoffs  or  counterclaims  of  any  nature  (other  then
compulsory  counterclaims)  in any  action or  proceeding  with  respect to this
Agreement,  the Obligations,  the Collateral or any matter arising  therefrom or
relating hereto or thereto.

      7.5 Indemnification.  Borrower shall indemnify and hold the Secured Party,
          ---------------
the Lenders and their directors,  agents,  employees and counsel,  harmless from
and against any and all losses, claims, damages, liabilities,  costs or expenses
imposed on,  incurred by or asserted  against any of them in connection with any
litigation,  investigation,  claim or proceeding commenced or threatened related
to the negotiation,  preparation, execution, delivery, enforcement,  performance
or  administration  of  this  Agreement,   any  other  Loan  Documents,  or  any
undertaking or proceeding related to any of the transactions contemplated hereby
or any act,  omission,  event  or  transaction  related  or  attendant  thereto,
including  amounts paid in settlement,  court costs, and the reasonable fees and
expenses of counsel.  To the extent that the  undertaking to indemnify,  pay and
hold harmless set forth in this Section may be unenforceable because it violates
any law or public  policy,  Borrower  shall pay the maximum  portion which it is
permitted  to  pay  under  applicable  law to the  Secured  Party  or any of the
Lenders,  as the case may be, in satisfaction of indemnified  matters under this
Section.  The foregoing  indemnity shall survive the payment of the Obligations,
the  termination  of this  Agreement and the  termination  or non-renewal of the
Credit Agreement.


                                      -11-
<PAGE>


SECTION 8.  MISCELLANEOUS
            -------------

      8.1 Notices.  All  notices,  requests  and demands  hereunder  shall be in
          -------
writing and (a) made to the  Secured  Party as follows:  Fleet  Bank,  N.A.,  as
Administrative  Agent,  1185 Avenue of the Americas,  New York,  New York 10031,
Attention:  Ms.  Beth  Goodman,  Vice  President  and to  Borrower  at its chief
executive  office set forth below,  or to such other address as either party may
designate by written notice to the other in accordance with this provision,  and
(b) deemed to have been given or made: if delivered in person,  immediately upon
delivery;  if by telex,  telegram or facsimile  transmission,  immediately  upon
sending and upon confirmation of receipt; if by nationally  recognized overnight
courier  service with  instructions  to deliver the next  business  day, one (1)
business day after sending;  and if by certified mail, return receipt requested,
five (5) days after mailing.

      8.2 Partial  Invalidity.  If any provision of this Agreement is held to be
          -------------------
invalid  or  unenforceable,   such  invalidity  or  unenforceability  shall  not
invalidate  this Agreement as a whole,  but this Agreement shall be construed as
though  it did not  contain  the  particular  provision  held to be  invalid  or
unenforceable  and the rights and  obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.

      8.3.  Successors.  This Agreement,  the other Loan Documents and any other
            ----------
document  referred to herein or therein  shall be binding upon  Borrower and its
successors  and assigns and inure to the  benefit of and be  enforceable  by the
Secured  Party and its  successors  and  assigns,  except that  Borrower may not
assign its rights under this  Agreement,  the other Loan Documents and any other
document  referred to herein or therein without the prior written consent of the
Secured Party.

      8.4  Entire  Agreement.  This  Agreement,  the other Loan  Documents,  any
           -----------------
supplements hereto or thereto,  and any instruments or documents delivered or to
be delivered in connection herewith or therewith represents the entire agreement
and  understanding  concerning the subject matter hereof and thereof between the
parties  hereto,  and  supersede  all other  prior  agreements,  understandings,
negotiations  and   discussions,   representations,   warranties,   commitments,
proposals,  offers and contracts  concerning the subject matter hereof,  whether
oral or  written.  In the event of any  inconsistency  between the terms of this
Agreement and any schedule or exhibit hereto,  the terms of this Agreement shall
govern.


                                      -12-
<PAGE>


      IN WITNESS WHEREOF, Borrower has caused these presents to be duly executed
as of the day and year first above written.

                                            BORROWER
                                            --------

                                            UNIDIGITAL INC.

                                            By: /s/ William E. Dye
                                               ---------------------------------

                                            Title: Chief Executive Officer

                                            CHIEF EXECUTIVE OFFICE:
                                            -----------------------

                                            229 West 28th Street

                                            New York, New York 10001


                                      -13-

<PAGE>