CANCELLATION AGREEMENT

         This Cancellation Agreement (the "Agreement") is dated as of September
4, 2001, between PrimeSource Corporation, a Pennsylvania corporation (the
"Company") and Donald James Purcell, an individual ("Purcell").

                                   BACKGROUND

         WHEREAS, the Company and Purcell executed an Employment Agreement dated
as of December 31, 1997 (the "Employment Agreement"), whereby the parties
established certain terms and conditions and imposed certain obligations on
themselves regarding the employment of Purcell, including but not limited to
certain rights upon the occurrence of a change-of-control, as defined therein;
and

         WHEREAS, the Company has executed an Agreement and Plan of Merger with
Fuji Photo Film U.S.A., Inc., Enovation Graphic Systems, Inc., and FPF
Acquisition Corp., dated September 4, 2001 (the "Merger Agreement"), that would
trigger the change-of-control provisions of the Employment Agreement; and

         WHEREAS, the Company and Purcell desire to cancel and terminate the
Employment Agreement and to establish a full and final settlement of any and all
compensation due Purcell under Section 3(c) of the Employment Agreement as a
result of the change-of-control of the Company and the cancellation and
termination of the Employment Agreement; and

         WHEREAS, the Company desires to continue the employment of Purcell as
the Vice President and General Manager of Prime Distribution East, and Purcell
desires to continue to serve as Vice President and General Manager of Prime
Distribution East of the Company.

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth below and for other good and valuable consideration, and intending to
be legally bound hereby, the parties agree as follows:

         1.       CANCELLATION OF EMPLOYMENT AGREEMENT.

                  (a) The Employment Agreement is hereby cancelled and shall be
of no further force and effect as of the "Effective Date." The Effective Date
shall be the later of the following dates: the date of the consummation of the
Offer (as defined in the Merger Agreement), i.e. the date on which the shares
tendered in the Offer are accepted for payment, and the date on which Purcell is
paid the consideration set forth in Section 1(b) below. As of the Effective
Date, neither the Company nor Purcell shall have any further rights or
obligations under the Employment Agreement.

                  (b) In consideration of the cancellation of the Employment
Agreement, and in full satisfaction of the Company's obligations under Section
3(c) of the Employment Agreement with respect to the change-of-control resulting
from the Merger Agreement, the Company agrees to pay to Purcell the aggregate
amount of $420,000.00 on or before the fifth business day following the
consummation of the Offer. The Company shall withhold from such payment all
amounts which it is required under applicable federal, state or local laws to
withhold for applicable income, withholding and/or employment taxes.




         2.       EFFECT OF CANCELLATION.

                  (a) Notwithstanding anything contained herein to the contrary,
Purcell's employment with the Company as its Vice President and General Manager
of Prime Distribution East shall continue on an employment at-will basis, with
the same compensation, perquisites and benefits as existed prior to the
Effective Date, provided Purcell shall have no rights under Section 3(c) of the
Employment Agreement with respect to the change-of-control resulting from the
Merger Agreement except as provided in Section 1(b) above. By way of example
only, and not by way of limitation, after the Effective Date Purcell will
continue to participate in the Company's present and future insurance programs,
pension plan, SERP, 401(k) Savings Plan, stock option plans, management
incentive plans and other similar or dissimilar plans applicable to executives
of the Company, as may be in effect from time-to-time and as the same may be
amended or modified, including but not limited to all rights thereunder as a
result of the change-of-control resulting from the Merger Agreement.

                  (b) This Agreement does not limit Purcell's right to
indemnification as an officer either directly from the Company or through its
directors and officers liability insurance policy for claims arising out of
Purcell's service as a director or officer of the Company, or any of its
subsidiaries or affiliates, or as trustee, administrator or fiduciary of any of
its employee benefit plans.

                  (c) Purcell expressly acknowledges and agrees that the
consideration payable under Section 1(b) above does not constitute
"compensation" for purposes of the Supplemental Executive Retirement Plan.

         3.       BINDING EFFECT. This Agreement shall inure to the benefit of
and shall be binding upon the Company, its successors and assigns, and any
corporation which may acquire all or substantially all of the assets of the
Company or into which the parties may be consolidated or merged, and shall inure
to the benefit of Purcell and his personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. Upon
Purcell's death, all amounts to which he is entitled hereunder, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
Purcell's devisee, legatee, or other designee, or, if there be no such designee,
to Purcell's estate.

         4.       ENTIRE AGREEMENT. This Agreement represents the entire
agreement of the parties and supersedes all prior understandings and agreements
between the parties relating to the subject matter of the cancellation and
termination of the Employment Agreement. This Agreement may not be modified or
amended except by an instrument in writing signed by the parties hereto.


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                  IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year above first written.

WITNESS:

/s/ Karen L. Feiter                         /s/ Donald James Purcell
-------------------------------------       ----------------------------------
                                            DONALD JAMES PURCELL

ATTEST:                                     PRIMESOURCE CORPORATION


/s/ William A. DeMarco                      BY: /s/ James F. Mullan
-----------------------------------             --------------------------------
                                            NAME:   JAMES F. MULLAN
                                            TITLE:  PRESIDENT


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