ASSET PURCHASE AGREEMENT



     Agreement  made as of the 8th day of April,  1999 by and  among  Unidigital
Inc., a Delaware  corporation with its principal office at 229 West 28th Street,
New York, New York 10001  ("UNIDIGITAL"),  its wholly owned  subsidiary,  Unison
(NY),  Inc., a Delaware  corporation with its principal office at c/o Unidigital
Inc., 229 West 28th Street, New York, New York (the "BUYER"), Progress Graphics,
Inc., a New Jersey  corporation  with its principal office at 418 Summit Avenue,
Jersey City, New Jersey 07306 (the  "SELLER"),  and Mario DeVita,  the holder of
all the issued and outstanding capital stock of the Seller (the  "SHAREHOLDER").
The Seller and the Shareholder are sometimes  collectively referred to herein as
the "SELLING PARTIES."

                              Preliminary Statement
                              ---------------------

     The  Seller is engaged  principally in the business of printing and graphic
arts services (the  "BUSINESS").  The Buyer desires to purchase,  and the Seller
desires to sell,  certain of the assets and the Business of the Seller,  for the
consideration  set forth  below and the  assumption  of certain of the  Seller's
liabilities  set  forth  below,  subject  to the terms  and  conditions  of this
Agreement.

     NOW,  THEREFORE,  in consideration  of the mutual promises  hereinafter set
forth and other good and valuable consideration,  the receipt of which is hereby
acknowledged, the parties hereby agree as follows:

     1.    Sale and Delivery of the Assets
           -------------------------------

     1.1   Delivery of the Assets.
           ----------------------

           (a)  Subject to and upon  the terms and conditions of this Agreement,
except as specifically  provided in Section 1.1(b) hereof, at the closing of the
transactions  contemplated by this Agreement (the  "CLOSING"),  the Seller shall
sell,  transfer,  convey,  assign and deliver to the Buyer,  and the Buyer shall
purchase  from the Seller,  free and clear of all liens,  liabilities,  security
interests, leasehold interests and encumbrances of any nature whatsoever (except
as otherwise expressly provided herein), all of the properties, assets and other
claims,  rights and interests of the Seller or which are used in the Business of
whatever  kind,  character  or  description,  whether  real,  personal or mixed,
tangible or intangible, wherever situated, including without limitation:

               (i)     all inventories of raw materials, work in process,  goods
in transit (i.e.,  inventories  purchased by, but not delivered to, the Seller),
finished goods,  office supplies,  maintenance  supplies,  packaging  materials,
spare parts and similar items (collectively, the "INVENTORY");

               (ii)    all accounts  receivable and notes receivable  (including
any  security  held by the Seller for the payment  thereof)  (collectively,  the
"ACCOUNTS RECEIVABLE");

               (iii)   those prepaid expenses set forth in Schedule 1.1(a)(iii);
                                                           --------------------
<PAGE>

               (iv)    all  rights  under  the  contracts,  agreements,  leases,
licenses,  purchase orders,  customer sales agreements and other instruments set
forth on Schedule 2.9(b) and Schedule 2.13(a) attached hereto (collectively, the
         ---------------     ----------------
"CONTRACT RIGHTS");

               (v)     all  customer payment records; accounts;  customer lists;
production records; technical,  manufacturing and procedural manuals; employment
and personnel records;  and other useful business records,  including electronic
media,  and any  confidential  or other  information  which has been  reduced to
writing,  utilized in the  conduct of or relating to the  Business or the Assets
(as hereinafter defined), subject to the Seller's right to retain copies thereof
which the Seller reasonably  requires for its ongoing  operation,  winding-up or
dissolution;

               (vi)    all  rights  of  the  Seller  under  express  or  implied
warranties  from the  suppliers  of the Assets to the extent  transferable  (but
excluding such rights insofar as the same pertain to liabilities retained by the
Seller hereunder);

               (vii)   the  motor  vehicles and  other  rolling stock  listed on
Schedule 1.1(a)(vii);
--------------------

               (viii)  all  of the machinery,  equipment, tools, dies,  tooling,
production   fixtures,   maintenance   machinery   and   equipment,   computers,
telecommunication  systems,  fittings  and other  office  equipment,  furniture,
leasehold  improvements  and construction in progress on the date hereof whether
or not reflected as capital assets in the accounting records of the Seller which
are owned by the Seller  and used or useful in the  Business  including  but not
limited to all of the  foregoing  located at the locations set forth on Schedule
                                                                        --------
1.1(a)(viii) (collectively, the "FIXED ASSETS");
------------

               (ix)    all right, title and interest of the Seller in and to all
intangible  property rights relating to the Business,  including but not limited
to inventions, discoveries, trade secrets, processes, formulas, know-how, United
States and foreign patents, patent applications,  trade names, including but not
limited to the name  "Progress  Graphics,  Inc." or any  derivation  thereof and
those names  listed on Schedule  2.20  attached  hereto,  trademarks,  trademark
                       --------------
registrations,  applications for trademark registrations,  copyrights, copyright
registrations,  certification  marks,  industrial designs,  technical expertise,
research data and other similar property and the  registrations and applications
for  registration  thereof owned by the Seller or, where not owned,  used by the
Seller in the Business and all goodwill  associated  therewith  and all licenses
and other agreements to which the Seller is a party (as licensor or licensee) or
by which the Seller is bound relating to any of the foregoing  kinds of property
or rights to any  "know-how" or disclosure  or use of ideas  (collectively,  the
"INTANGIBLE PROPERTY");

               (x)     all       transferable     approvals,     authorizations,
certifications,  consents,  variances,  permissions,  licenses and permits to or
from, or filings, notices or recordings to or with, federal, state, foreign, and
local  governmental  authorities as held or effected by the Seller in connection
with the Assets;

                                      -2-
<PAGE>

               (xi)    all of the  Seller's goodwill and the  exclusive right to
use the names of the Seller as all or part of a corporate name;

               (xii)   except as specifically provided in Section 1.1(b) hereof,
all other assets,  properties,  claims, rights and interests of the Seller which
relate to the Business  and exist on the date  hereof,  of every kind and nature
and description, whether tangible or intangible, real, personal or mixed;

               (xiii)  all bank accounts of the Business; and

               (xiv)   cash or cash equivalents ("CASH").

           (b)  Notwithstanding the  provisions  of  Section  1.1(a)  above, the
assets to be transferred to the Buyer under this Agreement shall not include (i)
any of  Seller's  rights or  consideration  under  this  Agreement,  or (ii) any
refunds of  federal,  state,  foreign  or local  income or other tax paid by the
Seller, or (iii) any insurance policies currently held by the Seller and related
premium  agreements  for  general  liability,   product  liability  and  workers
compensation  insurance for periods  prior to the date hereof,  or (iv) any real
estate owned by the Selling Parties or any of their respective  affiliates,  and
any  improvements  made to such  real  estate,  or (v)  those  assets  listed on
Schedule 1.1(b) attached hereto (collectively, the "EXCLUDED ASSETS").
---------------

           (c)  The  Inventory, Accounts   Receivable,  Contract  Rights,  Fixed
Assets,  Intangible Property, Cash and other properties,  assets and business of
the Seller  described in Section 1.1(a) above,  other than the Excluded  Assets,
shall be referred to collectively as the "ASSETS."

     1.2   Further Assurances.
           ------------------

           (a)  At the Closing, the Seller  shall  execute and deliver a Bill of
Sale (the "BILL OF SALE") substantially in the form attached hereto as Exhibit A
                                                                       ---------
and the assignments  described in Sections  7.12(b) and (c) hereof.  At any time
and from time to time after the  Closing,  at the  Buyer's  request  and without
further consideration,  the Selling Parties (or their successors) promptly shall
execute and deliver such  assignments  of leases and other  instruments of sale,
transfer,  conveyance,  assignment and confirmation, and take such other action,
as the Buyer may reasonably  request to more  effectively  transfer,  convey and
assign to the Buyer,  and to confirm the Buyer's title to, all of the Assets and
the  Business,  to put the  Buyer in actual  possession  and  operating  control
thereof,  to assist Buyer in exercising  all rights with respect  thereto and to
carry out the purpose and intent of this Agreement.

           (b)  The Selling Parties and the Buyer each will use its best efforts
to obtain as promptly as possible written  consents to the transfer,  assignment
or  sublicense to the Buyer of all  agreements,  commitments,  purchase  orders,
contracts,   licenses,   leases,  rights  and  other  contract  documents  being
transferred  pursuant  to Section  1.1(a)  hereof  where the  approval  or other
consent of any other person is required.  If any such approval or consent cannot
be  obtained,  or if

                                      -3-
<PAGE>

the parties  hereafter agree in writing that it is not in their  respective best
interests to obtain any such approval or other consent, the Selling Parties will
cooperate with the Buyer in any reasonable  arrangement  designed to provide the
Buyer with  substantially the same benefits as if such approval or other consent
had been obtained and the transfer effected on or before the date hereof.

     1.3   Assumption of Liabilities.
           -------------------------

           (a)  At the  Closing,  the  Buyer   shall  execute  and   deliver  an
Instrument  of   Assumption  of   Liabilities   (the   "ASSUMPTION   AGREEMENT")
substantially  in the form  attached  hereto as Exhibit B,  pursuant to which it
                                                ---------
shall assume and agree to (i) perform,  pay and  discharge,  in accordance  with
their  respective  terms,  all those  liabilities  and  obligations set forth on
Schedule  1.3(a)  attached  hereto which were incurred in the ordinary course of
----------------
business of the Business and are  outstanding on the date hereof,  not to exceed
the sum set forth on Schedule 1.3(a) unless  otherwise  agreed by the Buyer (the
                     ---------------
obligations   set  forth  in  (i)  are   collectively,   the  "ASSUMED   CURRENT
LIABILITIES");  (ii) perform in  accordance  with their terms those  obligations
outstanding on the date hereof under the Contract  Rights;  and (iii) perform in
accordance with their terms those liabilities arising after the date hereof from
any agreement,  contract, commitment or other contract documents which the Buyer
has requested be  transferred to it pursuant to Section 1.1(a) but which has not
been so  transferred  due to the  failure of the Seller to obtain the consent or
approval  required  for such  transfer,  provided  that the Buyer  has  received
substantially  the same benefit of such  contract as if such consent or approval
had been  obtained  (the  obligations  set  forth in (i),  (ii) and  (iii)  are,
collectively, the "ASSUMED LIABILITIES").

           (b)  Except as otherwise provided herein,  the Buyer shall not assume
any of the liabilities of the Selling Parties and shall purchase the Assets free
and clear of all liens, mortgages,  security interests,  encumbrances and claims
and the Selling Parties each  represent,  warrant and agree that the Buyer shall
not be or become liable for any claims, demands,  liabilities or obligations not
expressly  assumed in this  Agreement of any kind  whatsoever  arising out of or
relating  to the  conduct  of the  Business  by Seller or the  Assets or Assumed
Liabilities prior to the date hereof. Without limiting the foregoing,  the Buyer
shall not at the Closing assume or agree to perform,  pay or discharge,  and the
Selling  Parties  shall  remain  unconditionally  liable for,  all  obligations,
liabilities and commitments,  fixed or contingent,  of the Selling Parties other
than the Assumed Liabilities, including but not limited to:

               (i)     severance,  termination  or  other  payments or  benefits
(including,  but not limited to,  post-retirement  benefits) including,  but not
limited to,  those owing under the Seller's  severance  policy,  any  employment
agreement to any employees  (union or non-union)  or any  collective  bargaining
agreement  with  any  employees  (including,  but not  limited  to the  Seller's
collective  bargaining  agreement with the Amalgamated  Lithographers of America
(the   "COLLECTIVE   BARGAINING   AGREEMENT")),   sales  agents  or  independent
contractors employed by the Seller prior to the Closing (collectively, "SELLER'S
EMPLOYEES"),  liabilities  arising  under any federal,  state,  local or foreign
"plant closing law",  liabilities  accruing under the Seller's  employee benefit
plans, vacation pay plans or programs, retirement plans, and liabilities for any
Employee Plan (as defined in

                                      -4-
<PAGE>

Section 2.21 except those liabilities to Seller's Employees who become employees
of the Buyer after the  Closing  relating  solely to and  arising  solely out of
their term of employment with the Buyer);

               (ii)    worker's compensation claims arising from events prior to
the Closing;

               (iii)   profit sharing,  stock option or other stock-based awards
made to Seller's Employees;

               (iv)    liabilities for  any  federal,  state,  local  or foreign
income taxes (including interest, penalties and additions to such taxes)  or any
deferred income taxes of the Selling Parties;

               (v)     liabilities for any  payroll  taxes (including  interest,
penalties and  additions to such taxes),  except those  liabilities  to Seller's
Employees who become employees of the Buyer after the Closing relating solely to
and arising solely out of their term of employment with the Buyer;

               (vi)    liabilities  incurred  for  violations  of   occupational
safety,  wage,  health,  welfare,  employee  benefit  or  environmental  laws or
regulations prior to the date hereof;

               (vii)   liabilities to the extent related to the Excluded Assets;

               (viii)  any tax (including but not limited to any federal, state,
local or foreign  income,  franchise,  single  business,  value  added,  excise,
customs,  intangible,  sales,  transfer,  recording,  documentary  or other tax)
imposed upon, or incurred by, the Selling Parties, if any, in connection with or
related to this Agreement or the  transactions  contemplated  hereby  (including
interest, penalties and additions to such taxes);

               (ix)    liabilities for  any commercial rent  taxes to the extent
accrued but not paid prior to the date hereof;

               (x)     other than  the Assumed  Liabilities,  any liabilities of
the Seller to third  parties  arising out of the failure of the Seller to obtain
any necessary  consents to the assignment to the Buyer of contracts or leases to
which the Seller is a party  (including  damages  asserted by third  parties for
breach of such contracts or leases due to the failure to obtain such consents);

               (xi)    liabilities,  contingent  or  otherwise,  which  are  not
disclosed on Schedule 1.3(a);
             ---------------

               (xii)   liabilities  for  borrowed  money or  liabilities,  other
than the Assumed Liabilities, to creditors of the Selling Parties;

                                      -5-
<PAGE>

               (xiii)  liabilities of  the Seller for any state  franchise taxes
or  annual  license  or  other  fees  relating  to  qualification  as a  foreign
corporation or authorization to do business in such states (including  interest,
penalties and additions to such taxes and fees); and

               (xiv)   any other liabilities  of any kind or nature  whether now
in  existence  or arising  hereafter  not  expressly  assumed by the Buyer under
Section 1.3(a) hereof.

     1.4   Purchase   Price  and  Consideration  for   Consulting   Duties   and
           ---------------------------------------------------------------------
Restrictive Covenants.
---------------------

           (a)  The purchase price for the Assets shall be the assumption by the
Buyer of the Assumed  Liabilities.  The consideration for the undertaking by the
Shareholder as a consultant to the Buyer under Section 9.10 and the  restrictive
covenants  under  Section 9.3 shall be (i) 86,059  shares  ($500,000)  of common
stock,  par value $0.01 per share,  of  Unidigital  ("COMMON  STOCK"),  and (ii)
certain additional  post-closing payments in the event certain performance goals
of the Business are achieved.

           (b)  The  Buyer shall pay to  the Shareholder on  or before  June 30,
1999 an  amount  equal to all funds or  credits  advanced  to the  Seller by the
Shareholder  during the month of April 1999 ("SELLING  SHAREHOLDER  ADVANCE" and
"ADVANCE  REPAYMENT")  which Selling  Shareholder  Advance shall be evidenced by
copies of checks or other  appropriate  writing in the books and  records of the
Seller.  The Advance  Repayment  shall be evidenced by a promissory  note of the
Buyer,  substantially in the form attached hereto as Exhibit C (the "NOTE"),  to
                                                     ---------
be executed and  delivered  within five (5) business  days of  submission of the
evidence of the Selling Shareholder Advance being delivered to the Buyer.

           (c)  In addition  to the  foregoing,  in  the  event  revenues of the
Business (the  "REVENUES")  for any of the  twelve-month  periods  ending on the
first,  second and third  anniversaries of the Closing Date exceed Three Million
Dollars  ($3,000,000) (the "REVENUE TARGET"),  the Shareholder shall be entitled
to five percent  (5%) of any amounts in excess such  twelve-month  period.  Such
amounts,  if any,  shall be payable to the  Shareholder no later than sixty (60)
days after the completion of each such twelve-month  period and shall be payable
in cash, Common Stock or some combination thereof, at the sole discretion of the
Buyer. If such amounts are paid in Common Stock,  the Buyer shall deliver to the
Seller that number of shares of Common Stock which shall be computed by dividing
(i) the amount to be paid in Common Stock under this Section  1.4(c) by (ii) the
average  closing  price of the Common Stock for the 52-week  period  immediately
preceding  the  first,  second or third  anniversary  of the  Closing  Date,  as
applicable.

           (d)  In the event of a dispute  regarding the amount of the Revenues,
the Seller  shall  notify the Buyer in writing  (the  "DISPUTE  NOTICE")  within
twenty (20) calendar days after notice of the Revenues has been delivered to the
Seller setting forth the amount, nature and basis of the dispute.

                                      -6-
<PAGE>

     Within the  following  thirty (30) days,  the parties  shall use their best
efforts to resolve such dispute.  Upon their failure to do so, the dispute shall
be submitted for arbitration as follows:

               (i)     The arbitrator  shall  be a "Big Five" public  accounting
firm  located  in the City of New York,  State of New York  (other  than Ernst &
Young LLP), unless both parties agree on the selection of another arbitrator. In
the event the selected arbitrator declines or is unable to serve for any reason,
the parties  shall select  another  arbitrator.  Upon their  failure to agree on
another  arbitrator,  the  jurisdiction of the Supreme Court of the State of New
York shall be invoked to make such selection.

               (ii)    The arbitrator shall  follow the  Commercial  Arbitration
Rules of the American  Arbitration  Association,  except as  otherwise  provided
herein.  The arbitrator shall  substantially  comply with the rules of evidence;
shall grant essential but limited  discovery;  shall provide for the exchange of
witness  lists and  exhibit  copies;  shall  conduct  a  pretrial  and  consider
dispositive  motions.  Each party shall have the right to request the arbitrator
to make findings of specific factual issues.

     The  arbitrator  shall  complete  its  proceedings  and render its decision
within  forty (40) days after  submission  of the  dispute  to it,  unless  both
parties agree to an extension. Each party shall cooperate with the arbitrator to
comply  with  procedural  time  requirements  and the failure of either to do so
shall entitle the arbitrator to extend the arbitration  proceedings  accordingly
and to impose sanctions on the party  responsible for the delay,  payable to the
other party.

     In the event the  arbitrator  does not  fulfill its  responsibilities  on a
timely basis, either party shall have the right to require a replacement and the
appointment of a new arbitrator.

               (iii)   The decision of the arbitrator shall be final and binding
upon the parties and accordingly a judgment by a court of competent jurisdiction
may be entered in accordance therewith.

     1.5   The Closing. The Closing  shall  take  place  at  the offices of  the
           -----------
Seller located at 418 Summit  Avenue,  Jersey City, New Jersey (or at such other
place as the  parties  may agree in writing) on April 8, 1999 or such other date
mutually  designated by Seller and Buyer.  The date on which the Closing is held
is referred to in this  Agreement  as the "CLOSING  DATE." At the  Closing,  the
parties shall make the closing deliveries referred to in Sections 7.12 and 8.6.

      1.6  Allocation of Purchase  Price.  The aggregate amount  of the Purchase
           -----------------------------
Price shall,  for tax purposes  only, be allocated  among the Assets and Assumed
Liabilities  substantially  in accordance with the amounts set forth on Schedule
                                                                        --------
1.6. The Seller and the Buyer agree that they will not take any  position  which
---
is materially  inconsistent with the allocations  provided for in this Agreement
in preparing income, capital or franchise tax returns.

                                      -7-
<PAGE>

     2.    Representations of the Selling Parties
           --------------------------------------

           The representations and warranties made by the Selling Parties herein
or in any instrument or document furnished in connection  herewith shall survive
the Closing until (and including) the fifth anniversary of the date hereof.  The
representations and warranties in this Section 2 or in any document delivered to
the Buyer  pursuant to this Agreement are deemed to be material and the Buyer is
entering into this Agreement relying on such representations and warranties. The
Selling  Parties,  jointly and severally,  represent and warrant to the Buyer as
follows (it being understood that all references in this Section 2 to the Seller
shall be deemed to include  any of  Seller's  subsidiaries,  unless the  context
otherwise requires):

     2.1   Organization.  The  Seller is a corporation  duly organized,  validly
           ------------
existing and in good standing under the laws of the state of its  incorporation,
and has all  requisite  power and  authority  (corporate  and  other) to own its
properties,  to carry on its  business  as now being  conducted,  to execute and
deliver this Agreement and the agreements contemplated herein, and to consummate
the transactions contemplated hereby. Schedule 2.1 sets forth the authorized and
                                      ------------
outstanding  capital  stock of the Seller as well as the  record and  beneficial
owners thereof.  Except as set forth on Schedule 2.1, the Seller does not own or
                                        ------------
control or participate in, directly or indirectly, any corporation, partnership,
association or business entity.  The Seller is duly qualified to do business and
in good standing in all  jurisdictions in which its ownership of property or the
character of its business requires such  qualification.  Schedule 2.1 contains a
                                                         ------------
true,  correct  and  complete  list of all of the  jurisdictions  in  which  the
ownership  of the  property  used in the  Business or the nature of the Business
requires qualification.

     2.2   Authorization.  The execution and delivery of this Agreement (and all
           -------------
other agreements provided for herein) by the Seller, and the consummation by the
Seller of all transactions  contemplated hereby, has been duly authorized by all
requisite  corporate and shareholder  action.  This Agreement and all such other
agreements and  obligations  entered into and undertaken in connection  with the
transactions  contemplated hereby to which the Seller is a party constitutes the
valid and legally binding obligations of the Seller,  enforceable against it, in
accordance  with their  respective  terms except as such  enforceability  may be
limited by  bankruptcy,  insolvency,  reorganization  or similar laws  affecting
creditors'  rights  generally.  The execution,  delivery and  performance by the
Seller  of this  Agreement  and the  agreements  provided  for  herein,  and the
consummation by the Buyer of the transactions  contemplated  hereby and thereby,
will not,  with or without  the giving of notice or the passage of time or both,
(a) violate the  provisions  of any law,  rule or  regulation  applicable to the
Seller; (b) violate the provisions of the Certificate of Incorporation or Bylaws
of the Seller;  (c) violate any judgment,  decree,  order or award of any court,
governmental body or arbitrator; or (d) conflict with or result in the breach or
termination of any term or provision of, or constitute a default under, or cause
any acceleration under, or cause the creation of any lien, charge or encumbrance
upon the  properties  or  assets  of the  Seller  pursuant  to,  any  indenture,
mortgage, deed of trust or other instrument or agreement to which any of them is
a party or by which any of them or any of their  properties  is or may be bound,
other than with respect to  obligations of Seller which will be discharged at or
prior to Closing.  Schedule 2.2 attached  hereto sets forth a true,  correct and
                   ------------
complete list of all consents,

                                      -8-
<PAGE>

approvals,   permissions,   licenses,   authorizations  and  other  requirements
prescribed  by law,  rule,  regulation  or by  contract in  connection  with the
consummation by the Seller of the  transactions  contemplated by this Agreement.
Except as indicated on Schedule  2.2, all such items have been or will be, prior
                       -------------
to the date hereof, obtained and satisfied.

     2.3   Ownership of the Assets. Except as set forth on Schedule 2.3 attached
           -----------------------                         ------------
hereto, there are no claims, liabilities,  liens, pledges, charges, encumbrances
and/or   equities  of  any  kind   affecting  the  Assets   (collectively,   the
"ENCUMBRANCES"). Except as set forth on Schedule 2.3, the Seller is the true and
                                        ------------
lawful owner of the Assets,  and has the right to sell and transfer to the Buyer
good  and  marketable  title to all  Assets,  which  are  free and  clear of all
Encumbrances.  Except as set forth on Schedule 2.3, the delivery to the Buyer of
                                      ------------
the  instruments  of transfer of ownership  contemplated  by this Agreement will
vest good and marketable title to all Assets in the Buyer, free and clear of all
liens, mortgages, pledges, security interests,  restrictions, prior assignments,
encumbrances  and  claims of any kind or  nature  whatsoever.  The  Assets to be
conveyed to the Buyer hereunder  constitute all properties,  assets,  rights and
claims  which  are  necessary  to or  used in the  conduct  of the  Business  as
currently conducted by the Seller.

     2.4   Financial Statements.
           --------------------

           (a)  The Seller has previously  delivered  to the Buyer its unaudited
balance  sheets  as of  December  31,  1996,  1997  and  1998,  and the  related
statements of operations, shareholders' equity and changes in financial position
of the Seller for the fiscal years then ended,  and its unaudited  balance sheet
as of March 31, 1999, and the related  statements of  operations,  shareholders'
equity and changes in the financial  position of the Seller for the three months
then ended (collectively, "FINANCIAL STATEMENTS"). The Financial Statements have
been prepared consistently with the past accounting practices of the Seller.

           (b)  The  Financial  Statements  are accurate  and  complete  in  all
material  respects,  and  fairly  present,  as of their  respective  dates,  the
financial condition,  retained earnings (deficit), assets and liabilities of the
Seller and the results of  operations  of the Seller's  business for the periods
indicated.

     2.5   Litigation.  Except as set forth on Schedule 2.5, the Seller is not a
           ----------                          ------------
party to, or to the Selling Parties' best knowledge threatened with, and none of
the Assets are subject to, any litigation,  suit, action,  investigation (to the
best of the Selling Parties' knowledge), grievance, arbitration,  proceeding, or
controversy  or  claim  before  any  court,   administrative   agency  or  other
governmental  authority  relating to or  affecting  the Assets or the  business,
properties, condition (financial or otherwise) or prospects of the Business. The
Seller is not in violation of or in default with respect to any judgment, order,
award, writ, injunction,  decree or rule of any court,  governmental department,
commission,  agency,  instrumentality,   arbitrator,  administrative  agency  or
governmental  authority  or any  regulation  of  any  administrative  agency  or
governmental  authority,  where such  violation or default would have a material
adverse effect upon the Assets, the business,  properties,  condition (financial
or  otherwise)  or  prospects  of  the  Business  or  the  consummation  of  the
transactions  contemplated hereby (a "MATERIAL ADVERSE EFFECT").  The Seller

                                      -9-
<PAGE>

has not received notice of any product liability claim,  warranty claim or other
claim  whatsoever  which, if decided  adversely,  would have a Material  Adverse
Effect.

     2.6   Insurance.  Schedule 2.6 sets forth a true, correct and complete list
           ---------   ------------
of all fire, theft, casualty, general liability, workers compensation,  business
interruption,  environmental impairment, product liability, automobile and other
insurance  policies  insuring  the Assets or business of the Business and of all
life insurance policies maintained for any employees of the Business, specifying
the type of coverage,  the amount of coverage,  the premium, the insurer and the
expiration date of each such policy (collectively, the "INSURANCE POLICIES") and
all claims  made under such  Insurance  Policies  since  January 1, 1996.  True,
correct  and  complete  copies  of all  of  the  Insurance  Policies  have  been
previously  delivered by the Seller to the Buyer. The Insurance  Policies are in
full force and effect and, to the best  knowledge of the Seller,  are in amounts
and of a nature  which  are  adequate  and  customary  for the  business  of the
Business. Except as set forth on Schedule 2.6, all premiums due on the Insurance
                                 ------------
Policies or renewals thereof have been paid and there is no default under any of
the  Insurance  Policies,  except where such default  would result in a Material
Adverse Effect. Except as set forth on Schedule 2.6, the Seller has not received
                                       ------------
any  notice or other  communication  from any issuer of the  Insurance  Policies
canceling or  materially  amending  any of the  Insurance  Policies,  materially
increasing  any  deductibles  or  retained  amounts  thereunder,  or  materially
increasing the annual or other  premiums  payable  thereunder,  and, to the best
knowledge of the Selling Parties, no such cancellation, amendment or increase of
deductibles, retainers or premiums is threatened.

     2.7   Inventory.  Schedule 2.7 sets forth a true, correct and complete list
           ---------   ------------
of the Inventory as of the date hereof,  including a  description  and valuation
thereof. The Seller shall use commercially  reasonable efforts to insure that at
the Closing, the Inventory will consist of items of a quality and quantity which
are usable or saleable ("Usable  Inventory"),  without discount and at values at
least equal to the values  indicated on the latest balance sheet included in the
Financial  Statements,  in the ordinary course of business,  except as otherwise
reserved or provided for in accordance with the procedures set forth on Schedule
                                                                        --------
2.7,  conducted by and within the normal operating cycle of the Business.  In no
---
event  shall the Buyer be  required  to pay for  Inventory  which is not  Usable
Inventory.

     2.8   Fixed Assets.  Schedule 2.8 sets  forth a true, correct  and complete
           ------------   ------------
list of all Fixed Assets as of the date hereof,  including a description and the
cost and  accumulated  depreciation  on an  aggregate  basis with respect to all
Fixed Assets.  Except as set forth in Schedule  2.8, as of the date hereof,  the
                                      -------------
Fixed Assets are in condition and repair  sufficiently  operational  (apart from
ordinary  wear  and  tear) to  enable  the  Buyer to  conduct  the  business  in
essentially  the same manner in which it has  heretofore  been  conducted by the
Seller.

     2.9   Leases.  As  of the date  hereof, the  Seller is not  a party to  any
           ------
ground lease which the Seller uses in the operations of the Business.

     2.10  Change in  Financial  Condition and  Assets.  Except as  set forth on
           -------------------------------------------
Schedule  2.10,  since  December 31, 1998,  there has been no change which would
--------------
result in a Material  Adverse

                                      -10-
<PAGE>

Effect.  Except as set forth on  Schedule  2.10,  the  Selling  Parties  have no
                                 --------------
knowledge of any existing or threatened occurrence, event or development related
to the Assets or the business, properties, condition (financial or otherwise) or
prospects of the Business which could have a Material Adverse Effect.

     2.11  Accounts Receivable.  Schedule  2.11  sets forth a true,  correct and
           -------------------   --------------
complete list of all Accounts  Receivable,  including an aging thereof as of the
date  hereof.  All  Accounts  Receivable  arose out of the sales of inventory or
services in the ordinary  course of business and are  collectible  in the values
set forth on Schedule 2.11 net of the respective reserves,  if any, shown on the
             -------------
latest balance sheet included in the Financial  Statements  (which reserves,  to
the best knowledge of the Seller,  are adequate and calculated  consistent  with
past  practice).  Except as set forth on  Schedule  2.11,  there is no  contest,
                                          --------------
claim,  or right of  set-off,  other  than  returns  in the  ordinary  course of
business,  under any contract or agreement with any account debtor of an Account
Receivable relating to the amount or validity of such Account Receivable.

     2.12  Books  and  Records.  The  sales records and  expense accounts of the
           -------------------
Seller with respect to the  Business,  all of which have been made  available to
the Buyer,  are in all  material  respects  complete  and  correct and have been
maintained in accordance with good business practice.

     2.13  Contracts and Commitments.
           -------------------------

           (a)  True, correct and complete copies of  all material contracts and
agreements,  whether  written or oral,  which relate to the  Business  have been
previously delivered by the Seller to the Buyer.

           (b)  Schedule 2.13(b) attached  hereto sets forth a true, correct and
                ----------------
complete list of the contracts and agreements,  whether  written or oral,  which
are to be assigned  from the Seller to the Buyer at the  Closing  (collectively,
the "CONTRACTS").

           (c)  Except as  set  forth on  Schedule  2.13(c),  the  continuation,
                                          -----------------
validity  and  effectiveness  of each  Contract  would  not be  affected  by the
transfer  thereof to the Buyer under this  Agreement and all such  Contracts are
assignable to the Buyer without a consent and:

               (i)     each  Contract  is a valid  and binding  agreement of the
Seller,  enforceable  against the Seller in accordance  with its terms,  and the
Selling  Parties have no knowledge  that any Contract is not a valid and binding
agreement of the other parties thereto:

               (ii)    to the best knowledge of the Selling Parties,  the Seller
has fulfilled  all material  obligations  required  pursuant to the Contracts to
have been performed by it prior to the date hereof;

               (iii)   to  the  best  knowledge  of  the  Selling  Parties,  the
Seller is not in material breach of or default under any Contract,  and no event
has  occurred  which with the  passage of time or giving of notice or both would
constitute such a default,  result in a loss of

                                      -11-
<PAGE>

rights or result in the  creation  of any  lien,  charge or  encumbrance  on the
Assets, thereunder or pursuant thereto (an "INCHOATE DEFAULT"); and

               (iv)    to the best knowledge of the Selling Parties, there is no
existing  material breach or default by any other party to any Contract,  and no
Inchoate Default.

     2.14  Compliance with Laws. The Seller has all requisite  licenses, permits
           --------------------
and  certificates,  including  health and safety permits,  from federal,  state,
local and foreign authorities  necessary in all material respects to conduct the
Business and own and operate the Assets  (collectively,  the "PERMITS"),  except
where the failure to have such licenses, permits or certificates would result in
a Material Adverse Effect. Schedule 2.14 sets forth a true, correct and complete
                           -------------
list of all such Permits,  copies of which previously have been delivered by the
Seller to the Buyer.  To the best knowledge of the Selling  Parties,  the Seller
has not  engaged in any  activity  which would cause or,  permit  revocation  or
suspension  of any  such  Permit  and no  action  or  proceeding  looking  to or
contemplating  the  revocation  or  suspension  of any such Permit is pending or
threatened.  To the best knowledge of the Selling Parties, there are no existing
material  defaults or  Inchoate  Defaults  by the Seller  under any Permit.  The
Selling  Parties  have no  knowledge  of any  material  default  or  claimed  or
purported or alleged  material  default or Inchoate  Defaults on the part of any
party in the  performance of any obligation to be performed or paid by any party
under any Permit.  Except as set forth in Schedule 2.14, the consummation of the
                                          -------------
transactions   contemplated  by  this  Agreement  will  in  no  way  affect  the
continuation, validity or effectiveness of the Permits or require the consent of
any third party under any such  Permit.  The Seller is not in  violation  of any
law, regulation or ordinance (including but not limited to laws,  regulations or
ordinances  relating to building,  zoning, land use or similar matters) relating
to its properties,  the violation of which could have a Material Adverse Effect.
The business of the Seller does not violate,  in any material  respect,  and the
Seller is not in  violation  of, any  federal,  state,  local or  foreign  laws,
regulations  or orders,  the  violation  or  enforcement  of which  would have a
Material  Adverse  Effect.  Except as set forth on Schedule 2.14, the Seller has
                                                   -------------
not received any notice or communication from any federal,  state,  foreign,  or
local governmental or regulatory authority or otherwise of any such violation or
noncompliance  and  has not  received  any  notice  prior  to  such  time of any
violation that has not been cured.

     2.15  Employee Relations.
           ------------------

           (a)  The Seller is in  compliance  with all material  federal, state,
local and foreign laws respecting employment and employment practices, terms and
conditions of employment,  and wages and hours, and is not engaged in any unfair
labor  practice,  and there are no arrears  in the  payment of wages or taxes or
workers compensation assessments or penalties.

           (b)  Except as set forth on Schedule 2.15:
                                       -------------

               (i)     none  of Seller's  Employees are represented by any labor
union;

                                      -12-
<PAGE>

               (ii)    there  is  no unfair  labor  practice  complaint  against
the Seller  pending  before the  National  Labor  Relations  Board or any state,
foreign, or local agency affecting the Seller;

               (iii)   there  is no pending labor strike or other material labor
trouble  affecting the Seller  (including but not limited to any  organizational
campaign);

               (iv)    there is no material labor grievance  pending  against or
affecting the Seller;

               (v)     there are no pending organizing activities respecting the
Seller's Employees;

               (vi)    there are no pending arbitration proceedings  arising out
of or under any collective  bargaining agreement to which the Seller is a party,
or to the best knowledge of the Selling Parties, any basis for which a claim may
be made under any collective bargaining agreement to which the Seller is a party
affecting the Seller's Employees; and

               (vii)   there is no  pending litigation,  or other proceeding  or
basis for an  unasserted  claim  against the Seller by any  employee or group of
employees or independent contractor or group of independent contractors which is
based on claims arising out of any employee's or group of employees'  employment
relationship  with  the  Seller  or any  independent  contractor's  or  group of
independent  contractors'  independent  consulting  relationship with the Seller
(insofar as such relationship pertains to the Business of the Seller), including
but not limited to claims for contract, tort, discrimination, employee benefits,
commissions, wrongful termination, age discrimination, sexual harassment, sexual
discrimination and any and all common law or statutory claims.

           (c)  The   Seller has  not   violated  the  Worker   Adjustment   and
Retraining  Notification Act, 29 U.S.C. Sections 2101-09 (the "WARN ACT") or any
similar state or local law.

     2.16  Absence of Certain  Changes or Events.  Since  December 31, 1998, the
           -------------------------------------
Selling Parties have operated the Business in the ordinary course and, except as
set forth on Schedule 2.16, there has not been:
             -------------

           (a)  any  change in  the business, financial condition  or results of
operations of the Business that has had or could  reasonably be expected to have
a Material Adverse Effect;

           (b)  any  change in any of the  Assets or any change in the manner of
conducting  the Business that has had or could  reasonably be expected to have a
Material Adverse Effect;

           (c)  any  damage, destruction  or  loss  (whether or  not covered  by
insurance)  that has had or could  reasonably  be  expected  to have a  Material
Adverse Effect;

                                      -13-
<PAGE>

           (d)  any material  change in the accounting  methods or principles of
the Seller that would be  required  to be  disclosed  under  generally  accepted
accounting principles;

           (e)  any material  transaction  made by the  Seller  relating  to the
Assets or Business  (including  the  acquisition or disposition of Assets) other
than in the  ordinary  course of business  consistent  with past  practice or as
otherwise permitted or contemplated by this Agreement;

           (f)  any  lien, security  interest or  other  Encumbrance  created or
assumed by the Seller on any of the Assets other than the Assumed Liabilities;

           (g)  any  recall  notices  authorized  or  issued  for  any  products
relating to the  Business or any safety  investigations  issued  relating to the
Business;

           (h)  any  notice of litigation, warranty  claim or products liability
claim relating to the Business;

           (i)  any entering  into, amendment  or  termination  of any  material
contract, agreement, lease, franchise,  security,  instrument, permit or license
between the Seller and any party that has had or could reasonably be expected to
have a Material Adverse Effect; or

           (j)  any existing agreement or arrangement made by the Seller to take
any action that would cause any representations or warranty in this Section 2.16
to be untrue or incorrect.

     2.17  Customers.  The Seller has  heretofore provided  to the Buyer a true,
           ---------
correct and complete list of the names and addresses of all current customers of
the Seller. Except as set forth on Schedule 2.17, none of the 15 customers which
                                   -------------
accounted  for the largest  dollar  volume of purchases  from the Seller for the
twelve  month   periods   ended   December  31,  1997  and  December  31,  1998,
respectively,  has  notified  the  Seller  that it intends  to  discontinue  its
relationship with the Seller nor, to the best of the Selling Parties' knowledge,
does  there  exist  any  actual  or  threatened  termination,   cancellation  or
limitation of, or any  modification  or change in, the business  relationship of
the Seller with any such  customer  nor does there exist a present  condition or
state of facts or  circumstances  known to the Seller  involving  such customers
which would  materially  adversely affect the Business or prevent the Buyer from
conducting the Business after the consummation of the transactions  contemplated
by this Agreement in essentially the same manner in which it has heretofore been
conducted by the Seller. The Seller has no consignment sales in effect as of the
date  hereof  and no  customer  has any  return  rights  except  as set forth on
Schedule 2.13(a).
----------------

     2.18  Suppliers. Schedule 2.18 sets forth a true, correct and complete list
           ---------  -------------
of the names and  addresses of the ten  suppliers of the Seller which  accounted
for the largest  dollar  volume of  purchases by the Seller for the twelve month
periods ended December 31, 1997 and December 31, 1998, respectively.  The Seller
is not a  party  to any  requirements  contract  relating  to  the

                                      -14-
<PAGE>

purchase of inventory,  finished  goods or other property used in the conduct of
the  Business.  None of the Seller's  suppliers  has notified the Seller that it
intends to discontinue its relationship with the Seller, nor raise its prices so
as to materially  adversely  affect the Business nor, to the best of the Selling
Parties'  knowledge,  does  there  exist any actual or  threatened  termination,
cancellation  or limitation of, or any  modification  or change in, the business
relationship  of the  Seller  with any such  supplier,  nor does  there  exist a
present  condition  or  state of facts  or  circumstances  known to the  Selling
Parties  involving such suppliers which would  materially  adversely  affect the
Business  or  prevent  the  Buyer  from   conducting   the  Business  after  the
consummation of the  transactions  contemplated by this Agreement in essentially
the same manner in which it has  immediately  heretofore  been  conducted by the
Seller.

     2.19  Prepayments  and Deposits.  Except as set forth on Schedule 2.19, the
           -------------------------                          -------------
Seller has no prepayments or deposits from customers for products to be shipped,
or services to be performed, by the Seller after the date hereof.

     2.20  Trade Names and Other Intangible Property.
           -----------------------------------------

           (a)  Schedule 2.20  attached  hereto sets forth a  true,  correct and
                -------------
complete list and a description of all Intangible  Property.  True,  correct and
complete copies of all licenses and other agreements  relating to the Intangible
Property have been previously  delivered by the Seller to the Buyer. The Selling
Parties  have no  knowledge  of any default or claimed or  purported  or alleged
default  or state of facts  which  with  notice  or lapse of time or both  would
constitute  a  default  on the  part  of any  party  in the  performance  of any
obligation  to be  performed  or paid by any  party  under any such  license  or
agreement. During the past five years the only name by which the Seller has been
known or  which  the  Seller  has used is its  corporate  name set  forth in the
preamble of this Agreement.

           (b)  Except as otherwise  disclosed in Schedule 2.20 attached hereto,
                                                  -------------
the Seller is the sole and exclusive owner, free and clear of all liens,  claims
and restrictions,  of all Intangible Property and all designs,  permits,  labels
and packages used on or in connection  therewith.  The Intangible Property owned
by the Seller is sufficient to conduct the Business, as presently conducted. The
Seller has received no notice of, and has no knowledge of any basis for, a claim
against it that any of its  operations,  activities,  products  or  publications
infringes on any patent,  trademark,  trade name,  copyright  or other  property
right of a third party,  or that it is  illegally  or otherwise  using the trade
secrets,  formulae  or any  property  rights  of  others.  Except  as  otherwise
disclosed  in  Schedule  2.20,  the  Seller (i) has no  disputes  with or claims
               --------------
against any third party for  infringement  by such third party of any trade name
or other Intangible  Property of the Seller,  and (ii) is not obligated or under
any  liability  whatsoever  to make any  payments by way of  royalties,  fees or
otherwise  to any  owner or  licensee  of, or other  claimant  to,  any  patent,
trademark,  trade name,  copyright or other property right,  with respect to the
use  thereof or in  connection  with the conduct of the  Business or  otherwise.
Prior to the  Closing,  the Seller has taken all steps  reasonably  necessary to
protect its right, title and interest in and to the Intangible Property.  Except
as set forth in Schedule 2.20, the consummation of the transactions contemplated
                -------------
by  this

                                      -15-
<PAGE>

Agreement will in no way affect the  continuation,  validity or effectiveness of
the Intangible  Property or require the consent of any third party in respect of
the Intangible Property.

     2.21  Employee Benefit Plans.
           ----------------------

           (a)  ERISA.  Except  as  set forth  on  Schedule  2.21,  neither  the
                -----                              --------------
Seller nor any person, firm,  corporation or entity which is (or within the past
five years has been) a member  with the Seller of a  "controlled  or  affiliated
group",  within the  meaning  of Section  414(b),  (c),  (m),  (n) or (o) of the
Internal  Revenue  Code of  1986,  as  amended  (the  "CODE"),  has  maintained,
sponsored or  contributed  to any  "pension  plan" within the meaning of Section
3(2)  of the  Employee  Retirement  Income  Security  Act of  1974,  as  amended
("ERISA"),  any "welfare  plan" within the meaning of Section 3(1) of ERISA,  or
any other employee benefit plan,  program,  practice or arrangement,  whether or
not subject to ERISA (a "NON-ERISA PLAN") (such pension plans, welfare plans and
non-ERISA plans of the Seller being herein referred to as the "EMPLOYEE PLANS").
Except as set forth on Schedule  2.21,  the Seller has provided the Buyer with a
                       --------------
true, correct and complete copy of each pension plan, each welfare plan and each
non-ERISA plan listed on such Schedule,  together with a copy of the most recent
summary plan  description and annual report (if applicable) with respect to each
such plan.  Except as set forth on Schedule  2.21,  each  pension plan listed on
                                   --------------
such  Schedule is a  "qualified  plan"  within the meaning of Section 401 of the
Code. Except as set forth on Schedule 2.21, each pension plan, each welfare plan
                             -------------
and each  non-ERISA  plan  listed  on such  Schedule  has been  administered  in
accordance  with its terms,  and each  pension  plan and  welfare  plan has been
operated and  administered  in accordance  with all applicable  requirements  of
ERISA and the  Code.  Without  limiting  the  generality  of the  foregoing,  no
trustee,  administrator,  sponsor,  or other  party-in-interest  or disqualified
person,  has engaged or participated in any  "prohibited  transaction",  as that
term is defined in Section  4975(c)(1) of the Code,  with respect to any pension
plan or welfare plan listed on Schedule 2.21. Without limiting the generality of
                               -------------
the  foregoing,  in  connection  with all welfare or  non-ERISA  plans which are
subject to  continuation  coverage  under Section 4980B of the Code, all notices
and elections  with respect to such  coverage have been made in compliance  with
the requirements of Section 4980B. With respect to each "defined benefit pension
plan",  as defined in Section 3(35) of ERISA,  identified on Schedule  2.21: (i)
                                                             --------------
the fair  market  value of the assets  thereof  as of the date  hereof is as set
forth  on  such  Schedule;  (ii)  the  present  value  of all  accrued  benefits
thereunder, determined as if such pension plan terminated on the date hereof, is
as set forth on Schedule 2.21; (iii) if any such plan is a "multiemployer plan",
                -------------
as  defined in  Section  3(37) of ERISA,  the  present  value of the  contingent
liability of the Seller both in the event of the termination of such plan and in
the event that the Seller withdraws  therefrom is as set forth on Schedule 2.21;
                                                                  -------------
(iv) no such plan has incurred an "accumulated funding deficiency", as such term
is defined in Section 302 of ERISA, and (v) no such pension plan has terminated,
nor has any  "reportable  event",  within the meaning of Section  4043 of ERISA,
occurred with respect to such plan.  All  contributions  for all periods  ending
prior to the date hereof  (including  periods  from the first day of the current
plan  year to the date  hereof)  will be made  prior to the date  hereof  by the
Seller in accordance  with past practice with respect to pension plans,  welfare
plans and non-ERISA plans.  All insurance  premiums  (including  premiums to the
Pension Benefit Guaranty  Corporation)  have been paid in full,  subject only to
normal retrospective adjustments in the ordinary course of business, with regard
to

                                      -16-
<PAGE>

applicable plans for policy years or other  applicable  policy periods ending on
or before the date hereof.

           (b)  Claims and Litigation.  Except as set forth on Schedule 2.21, to
                ---------------------                          -------------
the best of the Selling Parties'  knowledge,  there are no threatened or pending
claims,  suits or other  proceedings  by present or former  employees of Seller,
plan  participants,  beneficiaries  or spouses of any of the above, the Internal
Revenue Service, the Pension Benefit Guaranty Corporation,  or any other pension
or entity  involving any Employee Plan,  including  claims against the assets of
any trust,  involving any Employee  Plan, or any rights or benefits  thereunder,
other  than  ordinary  and  usual  claims  for  benefits  to   participants   or
beneficiaries,  including claims pursuant to domestic relations orders and there
is no basis for any legal action,  proceeding or  investigation  with respect to
such plans.

     2.22  Leased Premises.
           ---------------

           (a)  Schedule  2.22 contains a true, correct and complete list of the
                --------------
address and legal description of all leased premises (the "BUSINESS PREMISES").

           (b)  There is no pending  or, to the best  knowledge  of the  Selling
Parties,  threatened  condemnation or eminent domain  proceeding with respect to
the Business Premises.

           (c)  Except as  set  forth  on Schedule  2.22,  there are no taxes or
                                          --------------
betterment or special  assessments other than ordinary real estate taxes pending
or payable against the Business Premises and there are no contingencies existing
under which any  assessment  for real estate  taxes may be  retroactively  filed
against the  Business  Premises;  the Selling  Parties  have no knowledge of any
proposed  special  assessment that may affect the Business  Premises or any part
thereof;  there are no  penalties  due with  respect to real estate taxes and/or
impositions,  and all real estate taxes and/or impositions  (excepting those for
the current year that are not yet due and payable)  with respect to the Business
Premises  have been paid in full;  there are no taxes or levies,  permit fees or
connection fees which must be paid respecting existing curb cuts, sewer hookups,
water-main hookups or services of a like nature.

           (d)  The  Business Premises comply in all material respects  with the
requirements   of   all   building,   zoning,   subdivision,   health,   safety,
environmental,  pollution control, waste products,  sewage control and all other
applicable statutes,  laws, codes,  ordinances,  rules, orders,  regulations and
decrees (collectively,  the "GOVERNMENT  REGULATIONS") of any and all government
agencies, and any non-compliance will not result in a Material Adverse Effect on
the Business Premises.  To the extent set forth in Schedule 2.14, the Seller has
                                                   -------------
obtained and provided to the Buyer all consents, permits, licenses and approvals
required  by such  Government  Regulations,  and to the  best  knowledge  of the
Seller,  such  consents,  permits,  licenses and approvals are in full force and
effect,  have been  properly  and  validly  issued,  and on or prior to the date
hereof  will be  assigned  to the Buyer by the Seller to the extent the same are
assignable.  Except as set forth in Schedule 2.14, there is no uncured breach of
                                    -------------
any condition or  requirement  imposed by, or pursuant to, any permit or license
issued with respect to the Business Premises,

                                      -17-
<PAGE>

which breach  would have a Material  Adverse  Effect on the  Business  Premises.
There is no action  pending or, to the best of the Selling  Parties'  knowledge,
threatened  by any  government  agencies  claiming  that the  Business  Premises
violates such Government Regulations or threatening to shut down the Business or
the use of the Assets or to  prevent  the  Assets  from being used as  presently
used.

           (e)  Except as set forth  on  Schedule  2.22, there  are no  actions,
                                         --------------
suits,  petitions,  notices or proceedings pending, given or, to the best of the
Seller's knowledge,  threatened by any persons or government agencies before any
court,  government agencies or  instrumentalities,  administrative or otherwise,
which if given,  commenced or concluded would have a Material  Adverse Effect on
the value, occupancy, use or operation of the Business Premises.

           (f)  Except as set forth  on Schedule 2.22,  the Selling Parties  (i)
                                        -------------
have not  received  notice and (ii) have no  knowledge  of the  existence of any
outstanding notice:

               (A)  from  any  federal,  state,  county,  municipal  or  foreign
authority alleging any health, safety, pollution, environmental, zoning or other
violation  of law with  respect to the Leased  Premises or any part thereof that
has not been entirely corrected; or

               (B)  from  any insurance company or  bonding company with respect
to any defects or inadequacies in the Business Premises or any part thereof that
would  adversely  affect the  insurability  of same or cause the  imposition  of
extraordinary  premiums or charges  therefor or any  termination  or  threatened
termination of any policy of insurance or bond relating thereto.

     2.23  Bank Accounts; Securities. Set  forth  in Schedule 2.23 is a  list of
           -------------------------                 -------------
all bank  accounts,  safe deposit  boxes,  money market funds,  certificates  of
deposit,  stocks,  bonds, notes and other securities in the names of or owned or
controlled by the Seller, all of which are included in the Assets.

     2.24  Disclosure.  No representation  or warranty by the Selling Parties in
           ----------
this Agreement or in any Exhibit hereto, or in any list, statement,  document or
information  set  forth  in or  attached  to  any  Schedule  delivered  or to be
delivered  pursuant  to this  Agreement,  contains  or will  contain  any untrue
statement of a material fact or omits or will omit any material  fact  necessary
in order to make the statements  contained  therein not misleading.  The Selling
Parties  have  disclosed  to the  Buyer all  material  facts  pertaining  to the
transactions contemplated by this Agreement.

     2.25  Brokers.  All  negotiations  relative  to  this  Agreement  and   the
           -------
transactions  contemplated hereby have been carried on by the Seller without the
intervention  of any other  person  in such  manner as to give rise to any valid
claim for a finder's fee, brokerage commission or other like payment.

     2.26  Preservation  of  Assets.  The  Seller  has  not  sold,  assigned  or
           ------------------------
transferred any of the Assets, other than in the ordinary course of business, or
declared  or paid any  dividend  or other  distribution  in respect of shares of
capital stock or made any purchase, redemption or other

                                      -18-
<PAGE>

acquisition,  directly or indirectly,  of any outstanding  shares of its capital
stock, since January 1, 1997.

     2.27  Environmental Compliance.
           ------------------------

           (a)  The  Seller  has  obtained  all  permits,  licenses   and  other
authorizations  required  under  Federal,  state and  local  laws,  relating  to
protection of the Environment (as defined below), including laws relating to any
Release  (as  defined  below) of or presence  of  pollutants,  contaminants,  or
hazardous  or  toxic  materials  or  wastes  into or in  soil,  surface  waters,
groundwaters, land, stream sediments, surface or subsurface strata, ambient air,
and/or  any  environmental   medium  (the  "ENVIRONMENT")  or  relating  to  the
manufacture,   processing,  distribution,  use,  treatment,  storage,  disposal,
transport  or  handling  of  pollutants,  contaminants  or  hazardous  or  toxic
materials or waste,  except where failure to obtain such  permits,  licenses and
other  authorizations  would not result in a Material  Adverse Effect.  Schedule
                                                                        --------
2.27  hereto  sets  forth a  complete  and  accurate  list of all such  permits,
----
licenses and other authorizations  obtained by the Seller,  copies of which have
been delivered to the Buyer. The Seller is in full compliance with all terms and
conditions  of such  permits,  licenses and other  authorizations,  except where
failure to be in compliance  would not result in a Material  Adverse Effect.  To
the best of the  Selling  Parties'  knowledge,  except as set forth on  Schedule
                                                                        --------
2.27, there are no proposed or pending changes in the Federal,  state, county or
----
local laws,  regulations,  standards,  or in the Seller's  permits,  licenses or
authorizations relating to pollution or protection of the Environment that would
increase the present costs of compliance with such laws or change any methods of
operation of the Business after the Closing.

           (b)  Except as indicated on Schedule  2.27 neither the Seller nor, to
                                       --------------
the best of the Selling  Parties'  knowledge,  any of the  Seller's,  employees,
agents, contractors or subcontractors have, used, generated,  processed, stored,
transported, recycled, Released or otherwise handled any Hazardous Materials (as
defined below) except as permitted by law, on or about any real property related
to the Seller's business,  including, but not limited to, real property formerly
owned  by  the  Seller  (collectively,  the  "SELLER  REAL  PROPERTY")  and  the
facilities now or formerly leased or operated by the Seller  (collectively,  the
"SELLER  FACILITIES").  Additionally,  except as  indicated  on  Schedule  2.27,
                                                                 --------------
neither the Seller  Facilities nor the Seller Real Property is being used or has
ever  previously  been  used  for  the  generation,  use,  processing,  storage,
transportation,  recycling, Release or handling of any Hazardous Materials other
than in compliance with or as permitted by law. In addition, except as indicated
on Schedule 2.27, neither the Seller Facilities nor the Seller Real Property has
   -------------
ever been affected by any Hazardous  Materials  Contamination  or  Environmental
Condition.  The  Seller,  in the  conduct  of its  business,  is and has been in
material compliance with all Environmental  Laws.  Notwithstanding any statement
or representation to the contrary in any affidavit or other document, the Seller
affirmatively  represents  that as of the date  hereof,  the Seller has made all
filings  required  by RCRA and that there have been no failures by the Seller to
timely  report under CERCLA  Section 103 or RCRA Section 304. The Seller has not
received any written notice from any governmental  authority or any other person
respecting or related to any actual, threatened or potential Release or presence
of any Hazardous  Materials or any non-compliance with any Environmental Laws as
to which any

                                      -19-
<PAGE>

such claimed  noncompliance  presently  exists.  Notwithstanding  the  preceding
sentence, the Seller has not received any notice from any governmental authority
respecting  noncompliance  with  RCRA  and has not  been  notified  that it is a
potentially  responsible  party in connection with any site or facility governed
thereby or has any liability for offsite disposal of any Hazardous Material.  No
investigation, administrative proceeding, consent order or agreement, limitation
or  settlement  with  respect  to  Hazardous   Materials,   Hazardous  Materials
Contamination or Environmental Condition is, to the best of the Selling Parties'
knowledge,  proposed,  threatened,  anticipated  or in force with respect to its
business, nor has such property ever been on any Federal or state "Superfund" or
"Super Lien" list.

     As used herein "HAZARDOUS  MATERIALS"  include any (i) "HAZARDOUS WASTE" as
defined by The Resource Conservation and Recovery Act of 1976 (42 U.S.C. Section
6901  et  seq.),  as  amended  from  time  to  time  ("RCRA"),  and  regulations
      --  ---
promulgated   thereunder;   and   "Hazardous   Substance"   as  defined  by  The
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C.  Section  9601 et seq.),  as amended  from time to time  ("CERCLA"),  and
                      -- ---
regulations  promulgated  thereunder;   (ii)  asbestos;   (iii)  polychlorinated
biphenyls;  (iv) any  substance,  the  presence of which on the  premises of the
Seller's  business,  is prohibited by applicable law; (v) oil,  petroleum or any
petroleum products or by-products;  (vi) any other substance which, according to
applicable law, requires special handling or notification of any Federal,  state
or local governmental entity in its collection,  processing,  handling, storage,
transport, treatment or disposal or exposure thereto; (vii) any substance, which
if not  properly  disposed  of,  may  pollute,  contaminate,  harm or  have  any
detrimental effect on the Environment; (viii) underground storage tanks, whether
empty,  filled  or  partially  filled  with any  substance;  and (ix) any  other
pollutant,  toxic substance,  hazardous  substance,  hazardous waste,  hazardous
material or hazardous substance as regulated by or defined in or pursuant to any
Environmental  law or any other  Federal,  state,  or local  environmental  law,
regulation, ordinance, rule, or by-law, whether existing on or prior to the date
hereof.

     As used  herein,  "HAZARDOUS  MATERIALS  CONTAMINATION"  shall  mean,  with
respect  to  any  premises,   building  or  facilities   or,  the   Environment,
contamination by a Release or the presence of Hazardous Materials.

     As used herein,  "ENVIRONMENTAL  CONDITION"  shall mean any condition  with
respect  to the  Environment  on or off the  Seller  Real  Property  and  Seller
Facilities,  whether or not yet  discovered,  which  could or does result in any
damage, loss, cost, expense,  claim,  demand,  order, or liability to or against
the  parties  hereto by any third  party  (including,  without  limitation,  any
government entity), including,  without limitation, any condition resulting from
the operation of Seller's  business  and/or the operation of the business of any
other property owner or operator in the vicinity of the Seller Real Property and
Seller  Facilities  and/or any activity or operation  formerly  conducted by any
person or entity on or off the Seller Real Property and Seller Facilities.

     As used  herein,  "RELEASE"  shall  mean any  spilling,  leaking,  pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing.

                                      -20-
<PAGE>

     As used herein, "ENVIRONMENTAL LAWS" shall mean any environmental or health
and/or  safety-related  law,  regulation,  rule,  ordinance,  or  by-law  at the
Federal,  state,  or  local  level,  whether  existing  as of the  date  hereof,
previously enforced, or subsequently enacted,  including but not limited to: (i)
Comprehensive Environmental Response,  Compensation,  and Liability Act of 1980,
as amended by the Superfund  Amendments and Reauthorization Act of 1986, 42 USCA
601 et  seq.;  (ii)  Solid  Waste  Disposal  Act,  as  amended  by the  Resource
    --  ---
Conservation  and Recovery Act of 1976,  as amended by the  Hazardous  and Solid
Waste  Amendments of 1984, 42 USCA 6901 et seq.;  (iii) Federal Water  Pollution
                                        -- ---
Control  Act of 1972 as amended by the Clean Water Act of 1977,  as amended,  33
USCA 1251 et seq.;  (iv) Toxic  Substances  Control Act of 1976, as amended,  15
          -- ---
USCA 2601 et seq.;  (v) Emergency  Planning and Community  Right-to-Know  Act of
          -- ---
1986, 42 USCA 11001 et seq.; (vi) Clean Air Act of 1966, as amended by the Clean
                    -- ---
Air Act of 1986,  as amended by the Clean Air Act  Amendments  of l990,  42 USCA
7401 et seq.; (vii) National  Environmental  Policy Act of 1970, as amended,  42
     -- ---
USCA 4321 et seq.;  (viii) Rivers and Harbors Act of 1970,  as amended,  33 USCA
          -- ---
401 et seq.; (ix) Endangered  Species Act of 1973, as amended,  16 USCA 1531, et
    -- ---                                                                    --
seq; (x) Occupational  Safety and Health Act of 1970, as amended, 29 USCA 651 et
---                                                                           --
seq.; (xi) Safe Drinking Water Act of 1974, as amended, 42 USCA 300 et seq., and
---                                                                 -- ---
any other federal,  state, or local law,  regulation,  rule,  ordinance or order
currently in existence which governs:

               (i)     the  existence,  cleanup and/or remediation  of toxic  or
hazardous materials;

               (ii)    the Release, emission, discharge or presence of Hazardous
Materials into or in the Environment;

               (iii)   the control of Hazardous Materials; or

               (iv)    the  use,  generation,   transport,  treatment,  storage,
disposal, removal or recovery of Hazardous Materials.

     2.28  Purchase for Investment.  The Shareholder represents  that he  is  an
           -----------------------
"accredited  investor",  within the meaning of Regulation D under the Securities
Act of 1933, as amended (the "1933 ACT"), and is acquiring the Common Stock and,
if applicable, the Note (collectively,  the "SECURITIES"),  for his own account,
for investment  purposes only, and not with a view to the resale or distribution
of all or any part thereof.  The  Shareholder  has not offered or sold, and will
not offer or sell,  any  portion of the  Securities  and has no present  plan or
intention  of dividing  such  Securities  with others or  reselling or otherwise
disposing  of any  portion  of the  Securities,  either  currently  or after the
passage of a fixed or  determinable  period of time,  or upon the  occurrence or
nonoccurrence of any predetermined event or circumstance. The Shareholder agrees
not to  distribute  or to transfer any of the  Securities  in the United  States
except  in  compliance  with all  applicable  United  States  federal  and state
securities laws. The Shareholder further recognizes that the Securities will not
be registered  under the 1933 Act or the securities  laws of any state,  and the
transfer  of the same will be  restricted  under such laws,  and the  Securities
cannot be sold except

                                      -21-
<PAGE>

pursuant to an effective  registration statement under such laws or an available
exemption  from  such  registration,   and  the  certificates  representing  the
Securities will bear a legend to such effect.  The Shareholder  acknowledges and
understands  that  Unidigital is under no obligation to register the Securities.
The Shareholder  agrees not to distribute or to transfer any of the Common Stock
within two years after the date hereof. The Shareholder is aware of Unidigital's
business  affairs  and  financial  condition,  has  had the  opportunity  to ask
questions of Unidigital's  management  with respect to its business  affairs and
financial condition and has acquired sufficient information (including,  but not
limited to,  Unidigital's Form 10-KSB for the fiscal year ended August 31, 1998,
Unidigital's   1998  annual  report,   Unidigital's  1998  proxy  statement  and
Unidigital's Form 10-Q for the quarter ended November 30, 1998) about Unidigital
to reach an informed and knowledgeable decision to acquire the Securities.

     2.29  Solvency.  The Seller is not now insolvent, and will  not be rendered
           --------
insolvent  by  any  of the  transactions  contemplated  by  this  Agreement.  In
addition,   immediately   after  giving  effect  to  the   consummation  of  the
transactions  contemplated by this Agreement, (i) the Seller will be able to pay
its debts as they become due,  (ii) the property of the Seller does not and will
not  constitute  unreasonably  small  assets,  and  the  Seller  will  not  have
unreasonably  small assets and will not have  insufficient  assets with which to
conduct its  present or proposed  business,  and (iii)  taking into  account all
pending and threatened litigation, final judgments against the Seller in actions
for money damages are not reasonably  anticipated to be rendered at a time when,
or in amounts such that, the Seller will be unable to satisfy any such judgments
promptly  in  accordance  with their  terms  (taking  into  account  the maximum
probable  amount  of  such  judgments  in any  such  actions  and  the  earliest
reasonable  time at which such judgments might be rendered) as well as all other
obligations of the Seller.  The cash available to the Seller,  after taking into
account all other anticipated uses of the cash of the Seller, will be sufficient
to pay all such judgments  promptly in accordance  with their terms.  As used in
this  Section  2.29,  (x)  "insolvent"  means that the sum of the  present  fair
salable value of the Seller's  assets is less than the Seller's  debts and other
probable  liabilities,  and (ii) the term "debts"  includes any legal liability,
whether matured or unmatured,  liquidated or  unliquidated,  absolute,  fixed or
contingent, disputed or undisputed or secured or unsecured.

     2.30  Knowledge  of  Misrepresentation.  As of the date hereof, neither the
           --------------------------------
Selling Parties nor any authorized representative of the Selling Parties has any
actual personal  knowledge of (i) any  representation  made by Unidigital or the
Buyer  herein  which is false or  inaccurate,  (ii) any breach of warranty  made
herein by  Unidigital  or the  Buyer or (iii)  any state of facts  which if made
known  to  Unidigital  or the  Buyer  would  cause  any  representation  made by
Unidigital or the Buyer to be false or inaccurate or which would  presently,  or
with the passage of time,  cause  Unidigital or the Buyer to be in breach of any
warranty  given by Unidigital or the Buyer.  In the event that prior to Closing,
the Selling Parties or any authorized  representative of the Selling Parties has
any actual personal knowledge (i) that any representation  made by Unidigital or
the Buyer  herein is false or  inaccurate,  (ii) of any breach of warranty  made
herein by  Unidigital  or the Buyer or (iii) of any state of facts which if made
known to  Unidigital  or the  Buyer  would  cause  any  representations  made by
Unidigital or the Buyer to be false or inaccurate or which would  presently,  or
with the passage of time,  cause  Unidigital or the Buyer to be in breach of any

                                      -22-
<PAGE>

warranty  given by Unidigital or the Buyer  hereunder,  then in such event,  the
Selling Parties' sole remedy shall be to terminate this Agreement (or proceed to
Closing and waive such misrepresentation).

     3.    Representations of the Buyer and Unidigital
           -------------------------------------------

           Representations  and warranties  made  by   the Buyer  and Unidigital
herein or in any instrument or document  furnished in connection  herewith shall
survive the Closing  until (and  including)  the fifth  anniversary  of the date
hereof. The Buyer and Unidigital represent and warrant to the Seller as follows:

     3.1   Organization  and  Authority.  Each of the  Buyer  and Unidigital  is
           ----------------------------
duly  organized and validly  existing and in good standing under the laws of the
State of Delaware,  and has requisite  power and authority to own its properties
and to carry on its  business  as now  being  conducted.  Each of the  Buyer and
Unidigital  has full  power to  execute  and  deliver  this  Agreement,  and the
Instrument of Assumption and to consummate the transactions  contemplated hereby
and thereby.

     3.2   Authorization. The  execution and delivery of  this Agreement  by the
           -------------
Buyer and Unidigital  and the agreements  provided for herein to which each is a
party,  and the  consummation  by the Buyer and  Unidigital of all  transactions
contemplated  hereby,  have  been duly  authorized  by all  requisite  corporate
action.  This Agreement and all such other  agreements  and written  obligations
entered into and  undertaken in connection  with the  transactions  contemplated
hereby  constitute the respective  valid and legally binding  obligations of the
Buyer  and  Unidigital,  enforceable  against  them  in  accordance  with  their
respective  terms except as such  enforceability  may be limited by  bankruptcy,
insolvency, reorganization or similar laws affecting creditors rights generally.
The  execution,  delivery and  performance  of this Agreement and the agreements
provided for herein,  and the  consummation  by the Buyer and  Unidigital of the
transactions  contemplated  hereby and  thereby,  will not,  with or without the
giving of notice or the passage of time or both,  (a) violate the  provisions of
any law, rule or regulation  applicable to the Buyer or Unidigital;  (b) violate
the provisions of the organizational  documents of the Buyer or Unidigital;  (c)
violate any judgment,  decree, order or award of any court, governmental body or
arbitrator applicable to the Buyer or Unidigital; or (d) conflict with or result
in the  breach or  termination  of any term or  provision  of, or  constitute  a
default under,  or cause any  acceleration  under,  or cause the creation of any
lien,  charge  or  encumbrance  upon the  properties  or  assets of the Buyer or
Unidigital  pursuant  to,  any  indenture,  mortgage,  deed of  trust  or  other
agreement or instrument to which it or its properties is a party or by which the
Buyer or Unidigital is or may be bound.  Schedule 3.2 attached hereto sets forth
                                         ------------
a true, correct and complete list of all consents and approvals of third parties
that  are  required  of  the  Buyer  and  Unidigital  in  connection   with  the
consummation  by the Buyer and Unidigital of the  transactions  contemplated  by
this Agreement.

     3.3   Regulatory  Approvals.  All consents, approvals,  authorizations  and
           ---------------------
other  requirements  prescribed  by any law,  rule or  regulation  which must be
obtained or satisfied by the

                                      -23-
<PAGE>

Buyer and Unidigital and which are necessary for its  consummation  by the Buyer
and  Unidigital of the  transactions  contemplated  by this  Agreement have been
obtained and satisfied.

     3.4   Brokers.   All negotiations  relative  to  this  Agreement  and   the
           -------
transactions  contemplated  hereby  have  been  carried  on  by  the  Buyer  and
Unidigital  without the  intervention  of any other  person in such manner as to
give rise to any valid claim for a finder's fee,  brokerage  commission or other
like payment.

     3.5   Examination Opportunity.  The Buyer  acknowledges  that the Buyer and
           -----------------------
its authorized  representative  have had the opportunity to examine the Seller's
books and records with respect to the  operations  of the Business and any other
books,  records,  documents or writings  with respect to the  operations  of the
Business  in the  possession  or under the control of the Seller  involving  the
subject  of  the  within   transaction   deemed  desirable  by  Buyer  prior  to
consummating  the  within  transaction.  To the extent  the  Buyer's  inspection
relates to the  inspection of documents,  the Buyer will arrange with the Seller
to inspect such documents off the premises of the Facility whenever possible.

     3.6   Knowledge  of  Misrepresentation.  As of the date hereof, neither the
           --------------------------------
Buyer nor any  authorized  representative  of the Buyer has any actual  personal
knowledge  of (i) any  representation  made by Seller  herein  which is false or
inaccurate,  (ii) any breach of warranty  made herein by the Seller or (iii) any
state of facts which is made know to the Seller  would cause any  representation
made by Seller to be false or inaccurate or which would  presently,  or with the
passage of time,  cause the Seller to be in breach of any warranty  given by the
Seller  hereunder.  In the  event  that  prior  to  Closing,  the  Buyer  or any
authorized  representative  of Buyer has any actual personal  knowledge (i) that
any  representation  made by Seller herein is false or  inaccurate,  (ii) of any
breach of  warranty  made  herein  by the  Seller or (iii) of any state of facts
which if made known to the Seller would cause any representations made by Seller
to be false or inaccurate or which would presently, or with the passage of time,
cause the  Seller to be in breach  of any  warranty  given by Seller  hereunder,
then,  in such  event,  the  Buyer's  sole  remedy  shall be to  terminate  this
Agreement (or proceed to Closing and waive such misrepresentation).

     3.7   Assignments.  There  are  no  facts  presently  known  to  the  Buyer
           -----------
concerning  the Buyer or the Seller  that  would  preclude,  prevent,  impair or
otherwise  delay the  transfer  of the  Assets,  which are  subject to  security
interests  being  assumed by the Buyer,  which are  conditions  precedent to the
timely completion of the within  transaction other than as set forth in Schedule
                                                                        --------
3.7, to the extent that any  required  approvals  are not  obtained by the Buyer
---
prior to Closing, the Buyer waives same.

     4.    Confidentiality; Public Announcements
           -------------------------------------

           4.1  Confidentiality.   None  of  the  information   not   previously
               ---------------
disclosed  to the  public  or not  generally  known to  persons  engaged  in the
business of the Seller or the Buyer which shall have been furnished by the Buyer
or  the  Seller  to  the  other  party  in  connection  with  the   transactions
contemplated  hereby shall be disclosed  by such  receiving  party to any person
other

                                      -24-
<PAGE>

than their respective employees, directors, attorneys,  accountants or financial
advisors  or  other  than  as  contemplated   herein.  In  the  event  that  the
transactions  contemplated by this Agreement shall not be consummated,  all such
information  which shall be in writing shall be returned to the party furnishing
the  same,  including,  to the  extent  reasonably  practicable,  all  copies or
reproductions  thereof which may have been prepared,  and neither party shall at
any time thereafter  disclose to third parties,  or use, directly or indirectly,
for its own benefit,  any such information,  written or oral, about the business
of the other party hereto.

     4.2   Public  Announcements.  Any  public  announcement, press  release  or
           ---------------------
similar   publicity  with  respect  to  this   Agreement  or  the   transactions
contemplated  hereby shall be issued, if at all, at such time and in such manner
as the Buyer determines. Unless consented to by the Buyer in advance or required
by applicable  law,  prior to the Closing,  the Selling  Parties shall keep this
Agreement strictly  confidential and may not make any disclosure related to this
Agreement to any person.  The Selling  Parties and the Buyer shall  consult with
each other  concerning  the means by which the  Seller's  Employees,  customers,
suppliers and others  having a business  relationship  with the Selling  Parties
will be informed of the transactions  contemplated  hereby,  and the Buyer shall
have the right to be  present  for any such  communication.  The  Seller  hereby
acknowledges  that this  Agreement  may be filed by  Unidigital as an exhibit to
certain registration  statements and/or reports filed by it pursuant to the 1933
Act or the Securities Exchange Act of 1934, as amended.

     5.    Employee Matters
           ----------------

     5.1   Seller's Employees.  The  Seller has  furnished to  the Buyer  a list
          -------------------
containing  the names of  Seller's  Employees,  including  each such  employee's
status,  social  security number and current  compensation.  The Selling Parties
hereby  acknowledge that the Buyer and Unidigital have no current plans to offer
employment  to  all of  the  Seller's  Employees  affected  by the  transactions
contemplated hereby. The Buyer and/or Unidigital may, however,  offer employment
to some of the Seller's  Employees under such terms and conditions as may be set
by the Buyer or  Unidigital,  as the case may be. The Selling  Parties agree and
acknowledge  that neither the Buyer nor  Unidigital  shall assume the Collective
Bargaining  Agreement or any other collective  bargaining  agreement between the
Seller and any of the Seller's Employees,  notwithstanding any specific terms to
the contrary contained in any such collective bargaining agreement.

     5.2   Future Changes.  Nothing in this Section 5 shall require the Buyer to
           --------------
retain any of Seller's  Employees  for any period of time after the date hereof.
Subject to  requirements  of applicable law, the Buyer reserves the right at any
time after the date hereof to terminate  such  employment  and amend,  modify or
terminate any term or condition of employment, including without limitation, any
employee benefit plan, program, policy, practice or arrangement.

     5.3   Plant  Closing.  None  of   the Selling  Parties  has,   directly  or
           --------------
indirectly, taken or omitted to take any action which may result in the Seller's
or the Buyer's  liability  to any person or entity  under the WARN Act. The term
"any  action"  does not include the sale and  acquisition  contemplated  by this
Agreement and the liability  under the WARN Act, if any,  which results from

                                      -25-
<PAGE>

the  Seller's  termination  of  employees  in  connection  with  such  sale  and
acquisition is the sole responsibility of the Seller.

     5.4   Reporting  of  Data.  The  Buyer  and  the  Seller  shall compile and
           -------------------
furnish to each other such actuarial and employee data as shall be required from
time to time for each party to perform and fulfill  its  obligations  under this
Section 5.

     5.5   Pending  Litigation.  With respect to any  litigation  pending, or to
           -------------------
the knowledge of the Selling Parties  threatened,  as set forth in Schedule 2.21
                                                                   -------------
hereto, which claim alleges violation of any nondiscrimination  laws, collective
bargaining  agreements,  employment contract and termination thereof or wage and
hour laws,  the Seller  shall  fully  defend  such  claim.  The Seller  shall be
responsible  for any monetary  damages  awarded in connection  therewith.  It is
understood  by the  parties  that if the  Seller  chooses  to settle  any matter
relating to any of the foregoing,  including the terms and conditions thereof of
any back pay claims,  such  settlement  shall be at the sole  discretion  of the
Seller and the Seller shall be solely responsible for the payment or performance
of any such settlement terms.

     6.    Further Agreements of the Parties
           ---------------------------------

     6.1   Expenses. Except  as   otherwise   specifically  provided   in   this
           --------
Agreement, Buyer and Seller shall bear their own respective expenses incurred in
connection with this Agreement and in connection  with all obligations  required
to be performed by each of them under this Agreement.

     6.2   Transfer  Taxes.  Any sales taxes,  real  property  transfer or gains
           ---------------
taxes,  recording fees or any other taxes payable as a result of the sale of the
Assets or any other action  contemplated  by this Agreement shall be paid by the
Seller.

     7.    Conditions to Obligations of the Buyer
           --------------------------------------

           The obligations of the Buyer  under this Agreement are subject to the
fulfillment,  at the Closing,  of the following  conditions  precedent,  each of
which may be waived in writing in the sole discretion of the Buyer:

     7.1   Continued  Truth  of Representations  and  Warranties of  the Selling
           ---------------------------------------------------------------------
Parties;  Compliance  with  Covenants and Obligations. The  representations  and
-----------------------------------------------------
warranties  of the Selling  Parties  shall be true and  correct in all  material
respects  on and as of the date  hereof.  The Seller  shall have  performed  and
complied in all material respects with all covenants  required by this Agreement
to be performed or complied with by it prior to or at the date hereof.

     7.2   Corporate and Shareholder Proceedings. All corporate, shareholder and
           -------------------------------------
other proceedings required to be taken on the part of the Seller to authorize or
carry out this Agreement and to convey, assign,  transfer and deliver the Assets
shall have been taken.

     7.3   Other   Governmental  Approvals.  All courts  of  law,   governmental
           -------------------------------
agencies,  departments,  bureaus,  commissions and similar bodies,  the consent,
authorization  or approval of

                                      -26-
<PAGE>

which is necessary under any applicable  law, rule,  order or regulation for the
consummation  by the Seller of the  transactions  contemplated by this Agreement
and the operation of the Seller's  business by the Buyer,  shall have  consented
to,  authorized,  permitted  or approved  such  transactions  including  but not
limited to, all  clearance  certificates  required  pursuant  to any  applicable
retail sales tax  legislation  required in connection with the completion of the
transactions contemplated herein.

     7.4   Consents  of Lenders, Lessors  and  Other Third  Parties. The  Seller
           --------------------------------------------------------
shall have received the consents and approvals of all lenders, lessors and other
third  parties  whose consent or approval is required in order for the Seller to
consummate the transactions contemplated by this Agreement.

     7.5   Adverse Proceedings. No action  or proceeding by  or before any court
           -------------------
or other  governmental  body shall have been instituted by any governmental body
or person  whatsoever  which shall seek to restrain,  prohibit or invalidate the
transactions  contemplated  by this Agreement or which might affect the right of
the Buyer to own or use the Assets after the Closing.

     7.6   Opinion  of  Counsel.  The Buyer  shall  have received an  opinion of
           --------------------
Contant,  Scherby & Atkins, counsel to the Seller, dated as of the Closing Date,
substantially in the form attached hereto as Exhibit D (the "OPINION OF SELLER'S
                                             ---------
COUNSEL").

     7.7   Board  of Directors  and  Shareholder  Approval.  The  directors  and
           -----------------------------------------------
shareholders  of  the  Seller  shall  have  duly  authorized  the   transactions
contemplated by this Agreement.

     7.8   Title to  Assets.  At the Closing,  the Buyer shall  receive good and
           -----------------
marketable title to all Assets, free and clear of all liens, mortgages, pledges,
security interests, restrictions, prior assignments,  encumbrances and claims of
any  kind  or  nature  whatsoever,   other  than  those  involving  the  Assumed
Liabilities.

     7.9   Environmental Reports;  Compliance  with  Laws.  The Buyer  shall not
          -----------------------------------------------
have  received  unsatisfactory  environmental  reports  from  its  environmental
consultants  and at any time prior to the Closing shall not have discovered that
any Leased  Premises fail to comply in any material  respect with all applicable
federal,  foreign, state or local environmental,  zoning, land use, and wetlands
laws, rules and regulations.

     7.10  Fire, Casualty or Eminent Domain. If  any non-material portion of the
           --------------------------------
Assets  are,  prior to the  Closing,  either  damaged by fire or other  casualty
insured  against or taken,  in whole or in part, by eminent domain  proceedings,
then the Buyer shall accept said Assets in their damaged or diminished condition
together  with an  assignment  to Buyer  of all  insurance  and/or  condemnation
proceeds  payable with respect to such fire,  casualty or loss or terminate this
Agreement.  If any material  portion of the Assets are so damaged or taken,  the
Buyer shall have the right to terminate this Agreement.

                                      -27-
<PAGE>

     7.11  Due Diligence Review. The  Buyer shall have completed a due diligence
           --------------------
review of the  Business,  the results of which  review are  satisfactory  to the
Buyer in Buyer's sole discretion.

     7.12  Closing Deliveries.  The Buyer shall have received at or prior to the
           ------------------
Closing each of the following documents:

           (a)  the Bill of Sale;

           (b)  such instruments of  conveyance,  assignment  and transfer,  and
motor vehicle transfers and safety inspection certificates,  if any, in form and
substance  reasonably  satisfactory  to the Buyer,  as shall be  appropriate  to
convey,  transfer and assign to, and to vest in, the Buyer,  good and marketable
title to the Assets other than the Intangible  Property,  subject to the Assumed
Liabilities applicable thereto.

           (c)  such instruments  of  conveyance,  assignment  and  transfer  in
form  and  substance  reasonably  satisfactory  to  the  Buyer  and  in  a  form
appropriate  to file, if required,  with the United States Office of Patents and
Trademarks,  sufficient  to convey,  transfer and assign to, and to vest in, the
Buyer, good and marketable title to the Intangible Property;

           (d)  all  existing  technical data, formulations,  product literature
and other documentation relating to the Assets;

           (e)  such existing  contracts,  files and  other  data  and documents
pertaining to the Assets as the Buyer may reasonably request;

           (f)  a certificate of the Seller's President and such other documents
evidencing  satisfaction  of the  conditions  specified in this Section 7 as the
Buyer shall reasonably request;

           (g)  a certificate of  the Secretary of  the Seller  attesting to the
incumbency of the Seller's officers,  respectively,  and the authenticity of the
resolutions  authorizing the transactions  contemplated by the Agreement and the
organizational documents of the Seller;

           (h)  the Opinion of Seller's Counsel;

           (i)  the  Amendment  of  the  Certificate  of  Incorporation  of  the
Seller to  discontinue  the use of the name  "Progress  Graphics,  Inc." and the
Seller's  undertaking  to file  any  instruments  as may be  necessary  with any
governmental   authority   to  change   their   corporate   names  and   foreign
qualifications; and

           (j)  such other documents, instruments or certificates  as the  Buyer
may reasonably request in order to evidence the accuracy of the Selling Parties'
representations or compliance by Seller with its covenants hereunder.

                                      -28-
<PAGE>

     8.    Conditions to Obligations of the Seller
           ---------------------------------------

           The obligations of the Seller under this Agreement are subject to the
fulfillment,  at the Closing,  of the following  conditions  precedent,  each of
which may be waived in writing at the sole discretion of the Seller:

     8.1   Continued  Truth  of Representations and Warranties of  the Buyer and
           ---------------------------------------------------------------------
Unidigital;  Compliance with Covenants and Obligations.  The representations and
------------------------------------------------------
warranties  of the  Buyer and  Unidigital  in this  Agreement  shall be true and
correct in all material respects as of the date hereof. The Buyer and Unidigital
shall have performed and complied with all covenants  required by this Agreement
to be performed or complied with by each of them prior to the date hereof.

     8.2   Corporate and  Shareholder Proceedings. All  corporate,  shareholder,
           ---------------------------------------
legal and other  proceedings  required  to be taken on the part of the Buyer and
Unidigital to authorize or carry out this Agreement shall have been taken.

     8.3   Approvals.   All  other governmental agencies, departments,  bureaus,
          ---------
commissions and similar bodies, the consent,  authorization or approval of which
is  necessary  under any  applicable  law,  rule,  order or  regulation  for the
consummation  by the Buyer and Unidigital of the  transactions  contemplated  by
this Agreement shall have consented to,  authorized,  permitted or approved such
transactions.

     8.4   Consents of  Lenders, Lessors  and  Other  Third  Parties.  The Buyer
           ----------------------------------------------------------
and  Unidigital  shall have  received all  requisite  and material  consents and
approvals  of all  lenders,  lessors and other third  parties  whose  consent or
approval is required in order for the Buyer and  Unidigital  to  consummate  the
transactions contemplated by this Agreement,  including but not limited to those
set forth on Schedule 3.2 attached hereto.
             ------------

     8.5   Adverse Proceedings. No action or  proceeding by or before  any court
           -------------------
or  other governmental body shall have  been instituted by any governmental body
or person whatsoever  which shall seek to restrain, prohibit or  invalidate  the
transactions  contemplated  by this Agreement or which might affect the right of
the  Seller to  transfer  the  Assets or would  affect the right of the Buyer to
acquire the Assets.

     8.6   Closing  Deliveries.  The Seller and the  Shareholder,  respectively,
           -------------------
shall have received at or prior to the Closing each of the following documents:

           (a)  a  certificate of the Buyer's Chief  Executive Officer  and such
other  documents  evidencing  satisfaction  of the conditions  specified in this
Section 8 as the Seller shall reasonably request;

           (b)  a certificate of  the  Secretary  or Assistant  Secretary of the
Buyer attesting to the incumbency of the Buyer's  officers,  the authenticity of
the resolutions authorizing the transactions  contemplated by this Agreement and
the organizational documents of the Buyer;

                                      -29-
<PAGE>

           (c)  a  certificate of  Unidigital's Chief Executive Officer and such
other  documents  evidencing  satisfaction  of the conditions  specified in this
Section 8 as the Seller may reasonably request;

           (d)  a  certificate  of  the  Secretary  or  Assistant  Secretary  of
Unidigital  attesting  to the  incumbency  of  Unidigital's  officers,  and  the
authenticity of the resolutions  authorizing  the  transactions  contemplated by
this Agreement and the organizational documents of Unidigital;

           (e)  the Assumption Agreement executed  by the Buyer and  accepted by
the Seller;

           (f)  an opinion   of  Buchanan  Ingersoll  Professional  Corporation,
counsel to the Buyer,  dated as of the Closing Date,  substantially  in the form
attached hereto as Exhibit E; and
                   ---------

           (g)  such other documents, instruments or certificates  as the Seller
may reasonably request.

     8.7   Business Premises  Lease.  The  Buyer shall  have  entered  into  the
           ------------------------
Business Premises Lease referred to in Section 9.9 hereof.

     9.    Post-Closing Agreements
           -----------------------

     9.1   Proprietary Information.
           -----------------------

           (a)  The Selling Parties shall hold in confidence, and use their best
efforts to have all officers,  shareholders,  directors  and  employees  hold in
confidence,  all knowledge and  information of a secret or  confidential  nature
with respect to the Business, and shall not disclose, publish or make use of the
same  without  the  consent  of the  Buyer,  except  to  the  extent  that  such
information  shall have  become  public  knowledge  other than by breach of this
Agreement by the Selling  Parties or by any other persons who have agreed not to
disclose, publish or make use of such information.

           (b)  The Selling Parties agree that the  remedy at law for any breach
of this Section 9.1 would be  inadequate  and that the Buyer  and/or  Unidigital
shall be entitled to  injunctive  relief in addition to any other  remedy it may
have upon breach of any provision of this Section 9.1.

           (c)  The foregoing to the contrary  notwithstanding,  no information,
written or oral, shall be construed or considered  confidential  information and
thereby subject to the  restrictions of this Section 9.1 if such information was
(i) generally  available to the public other than as a result of a disclosure by
the  Selling  Parties  or  anyone  to whom  the  Selling  Parties  transmit  the
information in violation  hereof,  (ii) in the possession of the Selling Parties
or  known  to the  Selling  Parties  on a  non-confidential  basis  prior to its
disclosure to the Selling  Parties,  (iii) available to the Selling Parties on a
non-confidential  basis from a source other than the Buyer or Unidigital  who is
not bound by a  confidentiality  agreement with the Buyer or Unidigital,  as the

                                      -30-
<PAGE>

case may be, or (iv) available in trade  publications,  reference books or other
resources  and which may be compiled by any  person's  decisions  of preparing a
report or memorandum containing such information.

     9.2   Solicitation  or  Hiring of Former  Employees.  Except as provided by
           ---------------------------------------------
law or with the written consent of the Buyer,  for a period of three years after
the date hereof,  the Selling  Parties and any persons or entities  that are not
natural   persons,   that   directly   or   indirectly,   through  one  or  more
intermediaries,  control,  are  controlled by, or are under common control with,
the Seller (the "CORPORATE AFFILIATES"),  shall not solicit any person who was a
Seller's Employee on the date hereof, and has been employed,  and not terminated
without cause,  by the Buyer,  to terminate his employment  with the Buyer or to
become an employee of the Seller or its Corporate  Affiliates or hire any person
who was such an employee on the date hereof.

     9.3   Non-Competition Agreement.
           -------------------------

           (a)  For a period of five (5) years  after the date  hereof,  neither
the Selling Parties nor any Corporate Affiliate shall directly or indirectly (i)
manufacture,  market or sell any product which has the same or substantially the
same  function  and primary  application  as any  existing  or proposed  product
manufactured,  marketed  or sold by the Seller on or prior to the date hereof or
(ii) engage in, manage,  operate,  be connected with or acquire any interest in,
as  an  employee,  consultant,  advisor,  agent,  owner,  partner,  co-venturer,
principal, director,  shareholder, lender or otherwise, any business competitive
with the  business of the Seller,  Unidigital  or the Buyer as  conducted on the
date  hereof  (a  "COMPETITIVE  BUSINESS"),  in the  United  States or any other
country in which the Seller,  Unidigital or the Buyer conducted  business during
the two years prior to the date hereof,  except that the Selling Parties and any
Corporate  Affiliates  may  own,  in the  aggregate,  not  more  than  1% of the
outstanding  shares of any  publicly  held  corporation  which is a  Competitive
Business which has shares listed for trading on a securities exchange registered
with the Securities and Exchange  Commission or through the automatic  quotation
system of a registered securities association.

           (b)  The parties hereto agree that the duration  and geographic scope
of the  non-competition  provision set forth in this Section 9.3 are reasonable.
In the event  that any court  determines  that the  duration  or the  geographic
scope,  or both,  are  unreasonable  and that such  provision  is to that extent
unenforceable,  the parties hereto agree that the provision shall remain in full
force and effect for the  greatest  time  period and in the  greatest  area that
would not render it unenforceable.  The parties intend that this non-competition
provision shall be deemed to be a series of separate covenants, one for each and
every  county of each and every  state of the United  States of America and each
and every  political  subdivision  of each and every country  outside the United
States of America where this provision is intended to be effective.  The Selling
Parties  agree  that  damages  are an  inadequate  remedy for any breach of this
provision and that the Buyer shall,  whether or not it is pursuing any potential
remedies at law, be entitled to equitable  relief in the form of preliminary and
permanent  injunctions  without  bond or  other  security  upon  any  actual  or
threatened breach of this non-competition  provision.  If the Selling Parties or
any  Corporate  Affiliate  shall  violate this Section 9.3, the duration of this
Section 9.3 automatically  shall be

                                      -31-
<PAGE>

extended as against such violating party for a period equal to the period during
which such party shall have been in violation of this Section 9.3. The covenants
contained  in this  Section  9.3 are  deemed  to be  material  and the  Buyer is
entering into this Agreement relying on such covenants.

     9.4   Sharing of Data.  The Selling  Parties  and  their  duly   authorized
           ---------------
representatives  shall have the right for a period of seven years  following the
date  hereof to have  reasonable  access to and,  the right to copy any of, such
books,   records  and  accounts,   including   financial  and  tax  information,
correspondence,   production  records,  employment  records  and  other  similar
information  as are  transferred  to the  Buyer  pursuant  to the  terms of this
Agreement for the limited purposes of concluding its involvement in the business
of the Seller prior to the date hereof and for  complying  with its  obligations
under applicable securities,  tax,  environmental,  employment or other laws and
regulations.  The Buyer and/or  Unidigital  shall have the right for a period of
seven years following the date hereof to have reasonable  access to those books,
records and accounts,  including financial and tax information,  correspondence,
production  records,  employment records and other records which are retained by
the Seller pursuant to the terms of this Agreement to the extent that any of the
foregoing  relates to the  Business  transferred  to the Buyer  hereunder  or is
otherwise  needed by the Buyer  and/or  Unidigital  in order to comply  with its
obligations under applicable securities, tax, environmental, employment or other
laws and regulations.

     9.5   Cooperation in Litigation. Each  party  hereto  will fully  cooperate
           -------------------------
with the other in the defense  or prosecution  of any litigation  or  proceeding
already instituted or which may be instituted hereafter against or by such party
relating to or arising out of the conduct of the Business  prior to or after the
date hereof (other than litigation arising out of the transactions  contemplated
by this Agreement and except as otherwise expressly provided herein).  The party
requesting such  cooperation  shall pay the  out-of-pocket  expenses  (including
legal  fees and  disbursements)  of the party  providing  such  cooperation  and
reasonable compensation for the time spent of its officers, directors, employees
and agents  reasonably  incurred in connection  with providing such  cooperation
while  assisting  in the  defense  or  prosecution  of any  such  litigation  or
proceeding (other than litigation  arising out of the transactions  contemplated
by this Agreement and except as expressly provided herein).

     9.6   Customer  and  Other  Business  Relationships.  During the period for
           ---------------------------------------------
which  consulting  services  are  provided  to  the  Buyer  by  the  Shareholder
hereunder,  the  Shareholder  will  cooperate  with the Buyer in its  efforts to
continue and maintain, with lessors, licensors,  customers,  suppliers and other
business  associates  of the Seller,  the same business  relationships  with the
Buyer after the Closing as maintained  with the Seller before the Closing,  with
respect to the business to be carried on by the Buyer utilizing the Assets.  The
Selling  Parties will refer to the Buyer all inquiries  relating to the Business
from customers and all such other persons. The Selling Parties will not take any
action designed or intended to have the effect of  discouraging  any customer or
such other person from continuing or maintaining the same such business with the
Buyer after the  Closing.  The Selling  Parties  shall use their best efforts to
satisfy any  liability  or  obligation  not assumed by the Buyer  hereunder in a
manner which is not detrimental to the Buyer's  relationships with suppliers and
vendors.

                                      -32-
<PAGE>

     9.7   Subrogation.  If  the  Buyer  or  Unidigital  becomes liable  for  or
           -----------
suffers  any damage with  respect to any matter  that was  covered by  insurance
maintained  by the  Selling  Parties  at or before  the  Closing,  the Buyer and
Unidigital, as the case may be, shall be and hereby are subrogated to any rights
of the Selling Parties under such insurance coverage.  The Selling Parties shall
promptly  remit to the Buyer or  Unidigital,  as the case may be, any  insurance
proceeds any of them may receive on account of any such liability or damage.

     9.8   Continuation  Period.  The parties  hereto understand  and agree that
           --------------------
the Business shall continue to be operated by the Buyer in the Seller's  present
facilities  located at the Business Premises from the Closing Date through April
30, 1999 (the "TERMINATION  DATE").  After the Termination Date, the Buyer shall
have no further  obligation to operate the Business at the Business Premises and
shall not operate the  Business at the  Business  Premises  without the Seller's
written  consent,  but the Buyer shall have the right to store the Assets at the
Business Premises until the last day of the term of the Business Premises Lease.

     9.9   Business Premises Lease.  After the Closing,  the Buyer shall use and
           -----------------------
occupy the Business Premises pursuant to a lease therefor,  substantially in the
form attached hereto as Exhibit F (the "BUSINESS PREMISES LEASE"). The execution
                        ---------
and delivery of the Business Premises Lease shall be effected at the Closing.

     9.10  Consulting Duties.
           -----------------

           (a)  For  a period of two (2) years after the Closing,  to the extent
his health  and other  activities  permit,  at the  request  of the  Buyer,  the
Shareholder  shall provide  consulting duties as mutually agreed to by the Buyer
and the  Shareholder.  The Shareholder  agrees to make himself  available to the
extent  required  to  perform  such  consulting  duties.  The means by which the
Shareholder  performs such consulting  duties shall be determined by Consultant,
in his sole discretion.

           (b)  The Shareholder  shall  perform   the  duties  hereunder  as  an
independent  contractor.  The  Shareholder  shall receive no benefits  otherwise
enjoyed by employees of the Buyer.  It is expressly  understood  and agreed that
the  Consultant  shall have no authority to act,  represent or bind Buyer or any
affiliate  thereof in any manner,  except as may be agreed expressly by Buyer in
writing  from  time  to  time.  As an  independent  contractor,  the  Consultant
recognizes and agrees that no federal,  state or FICA  withholdings will be made
by Buyer on the  Shareholder's  behalf and that the Shareholder  shall be solely
responsible for payment of all taxes of any type attendant to the  Shareholder's
payments pursuant to Section 9.10(c).

           (c)  For  the performance  of  all  the Shareholder's services  to be
rendered  pursuant  to  the  terms  of  this  Agreement,  Buyer  will  reimburse
reasonable  business  expenses incurred by the Shareholder in the performance of
his duties  hereunder in accordance  with Buyer's  policies  then in effect.  In
addition to the  foregoing,  Buyer  shall pay the  Shareholder's  expenses  with
respect to his  automobile  and driver;  provided,  however,  that such expenses
                                         --------   -------
shall not exceed $530 per month.

                                      -33-
<PAGE>

     10.   Indemnification.
           ---------------

     10.1  Indemnification by the Selling Parties.
           --------------------------------------

           (a)  Each of  the Selling  Parties  (sometimes  hereinafter  referred
to as  "INDEMNITOR")  shall be liable for and does hereby agree to indemnify the
Buyer,  Unidigital and their  respective  officers and directors (each sometimes
hereinafter  referred  to as  "INDEMNITEE")  against,  and hold each  Indemnitee
harmless  from,  and  reimburse  each  Indemnitee  for,  any and all Damages (as
hereafter  defined) in the manner and to the extent set forth in this Section 10
("INDEMNIFICATION OBLIGATION").

           (b)  As used in  this Section 10, the term  "DAMAGES"  shall mean and
include all losses and costs, expenses, liabilities and damages sustained by the
Indemnitee with respect to each and every  Indemnifiable  Claim which arises out
of or results from a breach of any representation or warranty, covenant or other
agreement of the Selling Parties set forth in this Agreement, including, without
limitation,  any Damages arising out of the Collective Bargaining Agreement,  or
in any  documents  executed  by the  Selling  Parties  in  connection  with  the
transactions described herein.

           (c)  The  following  terms  shall  be   used   with  respect  to  the
Indemnification Obligation:

               (i)     "SURVIVING OBLIGATIONS"  shall  mean  any Indemnification
Obligation  owed to an Indemnitee for Damages  suffered by such  Indemnitee as a
result of any breach of any representation,  warranty or covenant by the Selling
Parties  contained in this Agreement or in any  certificate  or other  documents
delivered in connection therewith, which survive the Closing.

               (ii)    "INDEMNIFIED EXPENSES" shall mean all costs  and expenses
(including  reasonable  attorney's fees) incurred by the Indemnitee with respect
to enforcing any Surviving  Obligations,  or in defending an Indemnitee from the
claim of a creditor of such  Indemnitee  (other than with  respect to an Assumed
Liability)  which claim,  if not defended,  would result in a lien on any of the
Assets, if not defended by the Selling Parties as hereinafter provided.

               (iii)   "INDEMNIFIABLE CLAIM" shall mean a claim for Damages duly
assertable by the Indemnitee hereunder.

               (iv)    "UNDISCLOSED  LIABILITIES"  shall mean those  liabilities
of the  Selling  Parties  not  disclosed  to the  Buyer  or  Unidigital  in this
Agreement or in any  certificate  or document  delivered  by Selling  Parties in
connection herewith.

           (d)  Indemnification   Procedure.  The  procedure  with  respect   to
                ---------------------------
Indemnitor's Indemnification Obligation is as follows:

                                      -34-
<PAGE>

               (i)     Indemnitee  shall give  Indemnitor  written notice of any
claim for Damages  promptly  upon  receipt of notice of any third party claim or
discovery  of  facts  which  give  rise to a  direct  claims  by it for  Damages
hereunder.

               (ii)    Indemnitee shall have the right to control the defense of
(and settle in its  discretion)  any third  party  claim,  action or  proceeding
giving rise to an Indemnifiable Claim, except that the Indemnitor shall have the
right to assume the defense, with independent counsel reasonably satisfactory to
the Indemnitee,  at its own expense,  of any such matter or its  settlement.  If
Indemnitor  settles any third party claim,  it agrees to perform such settlement
in accordance  with the terms thereof.  Notwithstanding  the foregoing,  no such
settlement  shall impose any obligation upon, or result in the entry of judgment
against, the Indemnitee.  Reasonable  attorney's fees and related costs incurred
by an Indemnitee in defense of an  Indemnifiable  Claim shall be an  Indemnified
Expense.

               With respect to any such  claim  by a third  party that is now or
shall hereafter be instituted against the Seller and an Indemnitee for which the
Seller is insured ("INSURED CLAIM"),  the defense of such Insured Claim shall be
undertaken  by the Seller's  insurance  company and any claim,  loss or judgment
shall be satisfied  by such  insurance  company to the extent of the  applicable
coverage.

               (iii)   The Indemnitor  and Indemnitee  agree  to render  to each
other such  assistance as they may reasonably  require of each other in order to
ensure the proper and adequate  defense of any such claim,  action or proceeding
instituted by a third party. If Indemnitor should fail to diligently process any
third  party  claims for which it assumed  the  defense  (other  than an Insured
Claim,  which shall be the duty of the Seller's insurance  company),  Indemnitee
may do so with  counsel  of its choice and the  reasonable  attorney's  fees and
related costs thereof shall be an Indemnified Expense.

               (iv)    If Indemnitor admits  in  writing or does not  dispute in
writing any  Indemnifiable  Claim made by the Indemnitee within thirty (30) days
of written  notice thereof  ("CLAIM  NOTICE"),  Indemnitor  shall pay the amount
claimed due or may  undertake  the defense of any third party claim which is the
basis of such Indemnifiable Claim within thirty (30) days of the Claim Notice.

               (v)     If   Indemnitor   disputes   its   liability   for   such
Indemnifiable Claim ("CLAIM DISPUTE"), it shall do so in writing ("CLAIM DISPUTE
NOTICE")  and if the  parties  have not  resolved  the  dispute or agreed upon a
procedure  to effect  same  within  thirty  (30) days from the date of the Claim
Dispute  Notice,  same shall be resolved by arbitration as hereinafter  provided
for. During the period of any such Claim Dispute,  the Indemnitee or Indemnitor,
as the case may be,  shall  defend  any such  third  party  claim,  and if it is
determined  in such  arbitration  proceeding  that the  Indemnitor is not liable
therefor,  the Indemnitee shall pay to the Indemnitor the amount of Indemnitor's
reasonable cost and expenses and reasonable  attorney's fees paid or incurred in
such defense, if any.

                                      -35-
<PAGE>

           (e)  Limitation   Upon  Indemnification  Obligation   of  Indemnitor.
                ----------------------------------------------------------------
Indemnitor's  obligations  pursuant  to this  Section  10 shall not apply in the
following instances:

               (i)     with respect to Indemnified Expenses, if there is a Claim
Dispute  and  the  Indemnitor  is  successful  therein  and is  held  to have no
Indemnification Obligation; or

               (ii)    with  respect  to  Undisclosed Liabilities,  if same  are
liabilities  for which the Selling  Parties are  covered by  insurance  or other
contractual indemnification (collectively,  "INSURED LIABILITIES") to the extent
that such  insurance or other  contractual  indemnification  is actually paid in
satisfaction of such Undisclosed Liabilities; or

               (iii)   with  respect  to  a  breach  of  any  representation  or
warranty  of the  Selling  Parties  to the  extent  that the  Buyer  had  actual
knowledge,  as of the date of the  Closing,  that  there  was a  breach  of such
representation or warranty.

     10.2  Recovery   of  Damages.  Upon  agreement  of  the  parties   ("DAMAGE
           ----------------------
AGREEMENT")  or upon  issuance of any  arbitration  award with  respect  thereto
("DAMAGES  AWARD") as to the amount of Damages  for which  Indemnitor  is liable
hereunder (collectively,  "DAMAGE DETERMINATION"),  the Indemnitor shall pay the
amount thereof to the Indemnitee  hereunder  within ten (10) days of the date of
the Damage Determination.  If not so paid, the Buyer shall have the right of set
off against monies net due to the Indemnitor  until the amount due is paid, with
Indemnitor  paying  Indemnitee  interest  thereon at the same  interest  rate as
Seller is entitled under the Note.

     10.3  Indemnification  of  Buyer.  From and  after the  Closing  Date,  the
           --------------------------
Buyer (sometimes  hereinafter referred to as "INDEMNITOR") agrees to, indemnify,
defend and hold harmless the Selling Parties (sometimes  hereinafter referred to
as  "INDEMNITEE")  from and  against  any and all losses  and  costs,  expenses,
liabilities and damages actually  suffered by the Selling  Parties,  which arise
out of or result from a breach of any  representation  or warranty,  covenant or
other  agreement  of  Buyer  which  survives  the  Closing  ("BUYER'S  SURVIVING
OBLIGATIONS"),  together  with  Indemnified  Expenses  incurred  by the  Selling
Parties with respect to Surviving Obligations.

           The procedure for the assertion and satisfaction of said claim by the
Selling Parties shall be same as set forth above in this Section 10, except that
the  Selling  Parties  shall  be the  Indemnitee  and  the  Buyer  shall  be the
Indemnitor, respectively.

     10.4  Other Rights and Remedies Not Affected.  The  indemnification  rights
           --------------------------------------
of the parties  hereto  under this  Agreement  shall be subject  to,  and deemed
effective as of, the Closing of the transactions  contemplated hereunder and are
independent  of, and in addition to such rights and  remedies as the parties may
have at law or in equity for any fraud or intentional  misrepresentations and is
exclusive  of the Buyer's  right to seek  specific  performance,  rescission  or
restitution,  none of which rights or remedies  shall be affected or  diminished
hereby.

     10.5  Survival  of  Representations  and  Warranties.  All representations,
           ----------------------------------------------
warranties  and  agreement  made  by the  parties  in this  Agreement  or in any
agreement,  document,  statement,  list,

                                      -36-
<PAGE>

certificate  or  instrument  furnished  hereunder  or  in  connection  with  the
negotiation,  execution  and  performance  of this  Agreement  shall survive the
Closing for a period of five (5) years thereafter.

     10.6  Limitation  of  Indemnification.  Notwithstanding  the provisions  of
           -------------------------------
Sections  10.1 and 10.3  above,  the  respective  indemnification  rights of the
parties  hereto set forth in said  Sections  shall be  subject to the  following
limitations:

           (a)  Any claim  for  indemnification  hereunder  shall be  net of any
actual tax benefit or insurance  proceeds  received by the Indemnified  Party in
respect of such claim.

           (b)  No party  shall  assert a claim  for  indemnification  hereunder
unless  the  amount  of  such  claim,   together   with  all  other  claims  for
indemnification  which may be asserted by such party hereunder,  exceeds $25,000
in the  aggregate;  provided,  however,  the  foregoing  shall not  restrict the
                    --------   -------
ability  of any  Indemnified  Party to recover  the full  amount of any claim or
claims which exceed $25,000 in the aggregate.

           (c)  The maximum liability of the Selling Parties for indemnification
hereunder  shall not exceed the  greater  of (i) the sum of the  purchase  price
hereunder or (ii) $100,000.

     10.7  Accounts  Receivable.  In addition to the provisions of Section 10.1,
           --------------------
the Seller  shall also  indemnify  the Buyer for the face value of all  Accounts
Receivable  which existed as of the Closing,  but are not  collected  within one
hundred  twenty (120) days after  Closing,  upon the Buyer's  request  therefor,
provided that the Buyer has used commercially reasonable efforts to collect such
receivables.  If the Buyer shall thereafter  collect any Account  Receivable for
which it has received an indemnification payment from the Seller pursuant to the
immediately  preceding  sentence,  the Buyer shall  promptly remit the amount so
collected to the Seller.

     10.8  Cooperation.  The parties hereto agree to render to each  other such
           -----------
assistance as they may reasonably require of each other and to cooperate in good
faith with each other in order to ensure the proper and adequate  defense of any
claim,  action, suit or proceeding brought by any third party. Where counsel has
been selected by the Selling Parties or by the Buyer, the Selling Parties or the
Buyer,  as the case may be,  shall be  entitled  to rely upon the advice of such
counsel in the conduct of the defense.

     10.9  Confidentiality.  The parties agree to  cooperate in such a manner as
           ---------------
to preserve in full the confidentiality of all confidential business records and
the attorney-client and work-product privileges.  In connection therewith,  each
party  agrees  that (a) it will use its best  efforts,  in any  action,  suit or
proceeding  in which it has assumed or  participated  in the  defense,  to avoid
production of confidential  business records and (b) all communications  between
any party hereto and counsel  responsible for or participating in the defense of
any action,  suit or proceeding shall, to the extent possible,  be made so as to
preserve any applicable attorney-client or work-product privilege.

                                      -37-
<PAGE>

     10.10 Right of  Offset.  Subject  to  the  provisions of Section  10.7, the
           ----------------
Buyer may offset any and all Damages  owned by the Selling  Parties to the Buyer
pursuant  to this  Section 10 against the Note and any other  payments  owed the
Seller under  Section  1.4.  Neither the exercise of nor the failure to exercise
such right  shall  constitute  an election or remedies or limit the Buyer in any
manner in the  enforcement of any other legal or equitable  remedies that may be
available to the Buyer.

     10.11 Limited   Right   of  Rescission.  Other   than   for   a     willful
           --------------------------------
misrepresentation  by the Seller or the Shareholder,  the Buyer waives any right
to rescission for a breach of a representation  or warranty by the Seller or the
Shareholder.

     11.   Notices. Any  notices or other  communications required  or permitted
           -------
hereunder   shall   be   sufficiently    given   if   in   writing    (including
telecommunications)  and  delivered  personally  or  sent by fax or  other  wire
transmission  (with  request for  assurance in a manner  typical with respect to
communications  of that type),  federal  express or other  overnight air courier
(postage  prepaid),  registered or certified  mail (postage  prepaid with return
receipt  requested),  addressed as follows or to such other address of which the
parties may have given notice:

           To the Seller:               Progress Graphics, Inc.
                                        418 Summit Avenue
                                        Jersey City, New Jersey 07356
                                        Attn:  Mr. Mario DeVita
                                        Tel. No.:  (201) 653-0717
                                        Fax No.:   (201) 653-1361

           With a copy to:              Contant, Scherby & Atkins
                                        33 Hudson Street
                                        Hackensack, New Jersey  07601
                                        Attn:  Richard Jon Contant, Esq.
                                        Tel. No.:  (201) 342-1070
                                        Fax No.:  (201) 342-5213

           To the Buyer or Unidigital:  Unidigital Inc.
                                        229 West 28th Street
                                        New York, New York  10001
                                        Attn:  Mr. William  Dye, Chief Executive
                                               Officer
                                        Tel. No.:  (212) 244-7820
                                        Fax No.:  (212) 244-7815


                                      -38-
<PAGE>

           With a copy to:              Buchanan Ingersoll Professional
                                          Corporation
                                        500 College Road East
                                        Princeton, New Jersey  08540
                                        Attn:  David J. Sorin, Esq.
                                        Tel. No.:  (609) 987-6800
                                        Fax No.:  (609) 520-0360

Unless otherwise specified herein, such notices or other communications shall be
deemed  received (a) on the date delivered,  if delivered  personally or by wire
transmission with evidence of successful  transmittal provided;  (b) on the next
business day after mailing or deposit with an overnight air courier; or (c) five
business days after being sent, if sent by registered or certified mail.

     12.   Successors  and  Assigns.  This Agreement  shall be binding  upon and
           ------------------------
inure to the benefit of the parties hereto and their  respective  successors and
assigns.  Neither  the  Seller  nor the Buyer may assign all or a portion of its
rights and obligations  hereunder without the prior written consent of the other
party,  except  that the Buyer may  assign  all or a portion  of its  rights and
obligations  hereunder  to an Affiliate  of the Buyer,  provided  that the Buyer
shall remain liable for the  performance of the Buyer's  obligations  under this
Agreement. Any assignment in contravention of this provision shall be void.

     13.   Entire Agreement; Amendments; Attachments.
           -----------------------------------------

           (a) This  Agreement,  all  Schedules and  Exhibits  hereto,  and  all
agreements  and  instruments  to be  delivered  by the parties  pursuant  hereto
represent the entire understanding and agreement between the parties hereto with
respect to the subject  matter  hereof and  supersede all prior oral and written
and  all  contemporaneous  oral  negotiations,  commitments  and  understandings
between such  parties  except as expressly  provided  herein.  The Buyer and the
Seller,  by the consent of their  respective  Boards of  Directors,  or officers
authorized by such Boards, may amend or modify this Agreement, in such manner as
may be  agreed  upon,  by a  written  instrument  executed  by the Buyer and the
Seller.

           (b) If the provisions of any Schedule or  Exhibit  to  this Agreement
are  inconsistent  with the provisions of this Agreement,  the provisions of the
Agreement  shall prevail.  The Exhibits and Schedules  attached  hereto or to be
attached hereafter are hereby incorporated as integral parts of this Agreement.

     14.   Expenses.  Except as otherwise  expressly  provided herein, the Buyer
           --------
and the  Seller  shall  each pay  their own  expenses  in  connection  with this
Agreement and the transactions contemplated hereby.

                                      -39-
<PAGE>

     15.   Governing Law.  This  Agreement shall be governed by and construed in
           -------------
accordance  with  the laws of the  State of New  Jersey,  without  reference  to
conflicts of laws rules or principles.

     16.   Section Headings.  The  section headings  are for the  convenience of
           ----------------
the  parties  and in no  way  alter,  modify,  amend,  limit,  or  restrict  the
contractual obligations of the parties.

     17.   Severability.  The invalidity or unenforceability of any provision of
           ------------
this  Agreement  shall not affect the  validity or  enforceability  of any other
provision of this Agreement.

     18.   Counterparts.  This  Agreement  may  be  executed  in  one  or   more
           ------------
counterparts,  each of which shall be deemed to be an original, but all of which
shall be one and the same document.

     19.   Currency.  Unless otherwise indicated, all dollar amounts referred to
           --------
in this Agreement are in United States funds.

     20.   Waiver.  The rights and  remedies of the  parties  to this  Agreement
           ------
are  cumulative  and not  alternative.  Neither the failure nor any delay by any
party in exercising any right,  power,  or privilege under this Agreement or the
documents  referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further  exercise of such right,  power,
or privilege or the exercise of any other right,  power,  or  privilege.  To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents  referred to in this Agreement can be discharged
by one party,  in whole or in part, by a waiver or  renunciation of the claim or
right  unless in writing  signed by the other  party,  (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given,  and (c) no  notice  to or demand on one party  will be deemed to be a
waiver of any  obligation of such party or of the right of the party giving such
notice or demand to take further  action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.

     21.   Ambiguity in Drafting.   Each  party shall have been deemed  to  have
           ---------------------
participated  equally  in the  drafting  of this  Agreement  and the  agreements
contemplated  hereby  and any  ambiguity  in any  such  contracts  shall  not be
construed against any purported author thereof.

     22.   Dispute Resolution.
           ------------------

           (a) Any  and all disputes or controversies  arising hereunder, except
as otherwise  provided for in Section 1.4, shall be submitted to arbitration and
shall  be  settled  by  arbitration   by  a  panel  of  three  (3)   arbitrators
("ARBITRATORS"),  in accordance  with the rules then  pertaining of the American
Arbitration Association, and judgment upon the decision rendered may be endorsed
in any court of competent jurisdiction. The cost of such arbitration proceedings
shall  be  borne  equally  by the  parties,  each of  which  shall  bear its own
attorney's fees, except as hereinafter provided.

           (b) If  it is  determined by the  Arbitrators  that one  party was in
default hereof

                                      -40-
<PAGE>

(the "DEFAULTING  PARTY"),  which default either: (i) resulted in the Defaulting
Party unjustifiably  terminating this Agreement or any agreement entered into at
the Closing  contemplated  hereby; (ii) justified the termination thereof by the
other party; or (iii)  warranted the institution or defense of such  arbitration
claim by the non-defaulting  party, the Defaulting Party shall bear the costs of
the arbitration  proceeding and pay to the other party the reasonable attorney's
fees and costs  incurred in such  proceeding,  which amounts shall be separately
determined by the  Arbitrators in such  proceeding and become part of the amount
of the Arbitration award, payable by the Defaulting Party to the other party.

           (c) If  the  Defaulting  Party  does not  pay to  the other party the
arbitration award within ten (10) days of written demand therefor, and the other
party shall institute suit in a court of competent  jurisdiction to enforce said
decision,  the  Defaulting  Party  shall  pay the  other  party  the  reasonable
attorney's fees and court costs incurred in such action.

           (d) Refusal of  one (1) party to  arbitrate  shall  entitle any other
party  hereto to  specifically  enforce  this  Agreement in a court of competent
jurisdiction, and as a result of said refusal to arbitrate, shall be entitled to
receive its cost and  reasonable  attorney's  fees incurred in such  enforcement
action.

           (e) Nothing  herein is intended to  preclude  any party  hereto  from
seeking   injunctive   and/or   equitable  relief  from  a  court  of  competent
jurisdiction  in any event of default for which  there is no adequate  remedy at
law.


                            [SIGNATURE PAGE FOLLOWS]


                                      -41-
<PAGE>

     IN WITNESS  WHEREOF,  this  Agreement has been duly executed by the parties
hereto as of and on the date first above written.

(Corporate Seal)                            SELLER:

ATTEST:                                     PROGRESS GRAPHICS, INC.



/s/ Joseph Matos                            By: /s/ Mario DeVita
---------------------------------              ---------------------------------
Joseph Matos, Assistant Secretary              Name:   Mario DeVita
                                               Title:  President


                                            SHAREHOLDER:


                                            /s/ Mario DeVita
                                            ------------------------------------
                                            Mario DeVita


(Corporate Seal)                            BUYER:

ATTEST:                                     UNISON (NY), INC.



/s/ Peter Saad                              By: /s/ William E. Dye
--------------------------------               ---------------------------------
Peter Saad, Secretary                          Name:   William E. Dye
                                               Title:  Chairman of the Board


(Corporate Seal)

ATTEST:                                     UNIDIGITAL INC.



/s/ Peter Saad                              By: /s/ William E. Dye
-------------------------------                ---------------------------------
Peter Saad, Assistant Secretary                Name:   William E. Dye
                                               Title:  Chief Executive Officer


                                      -42-
<PAGE>